Category Archives: Banks

#oneaday59: It’s that time of year again……

January sees most of us count the cost of our Christmas excesses and work out how we are going to make ends meet once we have paid off all of our bills from the seasonal loveliness called Christmas.

But for some, January is bonus time. Yep, the banks will be rewarding their top performers who have so skillfully steered their companies through the worst financial times for 50 years, and as they say ‘quite right too’. The politicians are fearful, again, that if bonuses are too high, us non bankers may moan and be disobedient. They did the same last year after all. Just so we are all aware of the rules and etiquette, today Mr Bob Diamond, CEO of Barclays warned the politcal leaders of Britain, for now a United Kingdom, not to try and influence their decisions. Sound familar? We will know soon enough what obscene levels of ‘compensation’ will be paid to these people, but what action will we actually take? A year ago I wrote this. We now how the #Occupy movement and our local version in the City of London is still there, making a point of sorts.

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So all the tough talk about ‘us all being in this together ‘ (sic) (for those non residents of the UK, this was the phrase introduced by David Cameron, now Prime Minister of the UK at the Conservative party conference in October 2009 and has been the rallying call in these tough times) has proved to be a little wide of the mark. As purchase tax, or value added tax (VAT) as it was rebranded some years back rose 14% to 20% on the 4th of January, and thousands of public and private jobs are slashed,  as deep and rapid cuts to the welfare state and the education system,  the majority of folk in the UK are now getting used to a time of austerity. And you know what, we have no choice. The economy of the UK has taken a major battering, why, well in truth there are so many factors it would be a long essay and stuff that I simply don’t understand. But basically we spent more than we earned and we have to do our financial porridge for some years.

One factor that does stand out amongst all the others however, is the fact that some of our banks became insolvent in 2008. Instead of ‘the bank calling the debt in’ as normally happens when businesses and institutions fail, this time the banks carried the debts and could not meet their commitments. There was no one bank to call all the other banks in so to speak. They really were ‘all in it together’. The decision was taken, we are told, in the national interest, by Prime Minster Gordon Brown to bail the banks out. Amazingly no one actually seems to know to what extent. Namely we don’t know the final number. Some sources quote upwards of £1 Trillion. in the case of RBS (Royal Bank of Scotland) we are told that the citizens of the UK now own 83% of the shares. In return for these share the nation poured £45Billion in cash, insured £280Billion of risky loans and set aside a further £8Billion in case things get really bad. So you’d have thought as majority shareholders in this company, we i.e our Government would have had a say in how that business should be run, in the national interest and all that.

But the Government insisted earlier today (when I wrote this anyway) it would not intervene to stop Royal Bank of Scotland’s chief executive, Stephen Hester, earning up to £9Million for last year’s work. Furthermore it will not seek to cap the bonus pool of more than £1Billion that the bank intends to pay it’s high earners. A spokesman for David Cameron said: “We’ve made a broad statement which is about the need to see some restraint and some responsibility from the banks, but we are not going to set bonus pools for individual banks.”

We know the sketch here. Money talks blah, blah. But for all the recent fighting political talk – see below – of those who govern us, those that our pickled voting system has thrust upon us, right or wrong, is always the same. It is just talk and talk, unlike property is cheap.  Indeed the extra tax rate/levy on bonuses from last year has been wiped out,  replaced by a lesser yielding tax on the banks’ balance sheets.

So if you are young and  live in London, or are trying to buy a house in London, or indeed in the countryside close to London – aka The Stock Broker Belt as it used to be called when VAT was purchase tax, one of the consequences of this indecent and bloated excess is that property prices will rise again, thus putting property even further off the radar of those starting out in their working life, those trying to bring up a family. The very same people, many of them pay as you earn (PAYE) tax payers (you know the ones who pay the correct amount of tax as they do not have access to fancy schemes for tax optimisation) are royally being shafted.

The youth should always be at the centre of any society’s future, yet they find themselves over taxed, if they are lucky enough to have a job, under served and utterly betrayed. And the bank band played on. Pfffff. I am not given to cheap prejudice, but I can tell you now, I have complete and utter contempt for these people.

So there you go and to keep it interesting, I have a meeting with our bank manager planned for next week to discuss our  ‘facility ‘for 2011. The name of that bank? I will give you 3 guesses. You should get it right first time. Wish me luck.

Footnote what our leaders said when in Government (courtesy of The Independent )

‘It is wholly untenable to have millions of people making sacrifices in their living standards only to see the banks getting away scot-free – the banks should not be under any illusion: this Government cannot stand idly by.’ – NICK CLEGG, Deputy Prime Minister17 NOVEMBER 2010

‘I make no apology for attacking spivs and gamblers who did more harm to the British economy than Bob Crow [the RMT union leader] could achieve in his wildest Trotskyite fantasies, while paying themselves outrageous bonuses underwritten by the taxpayer.’ – VINCE CABLE, 22 SEPTEMBER 2010

‘Every decision the banks make like that [paying large bonuses] makes it more difficult to keep a tax regime that they might favour.’ DAVID CAMERON, Prime Minister 17 DECEMBER 2010

‘We will not allow money to flow unimpeded out of those banks into huge bonuses, if that means money is not flowing out in credit to the small businesses who did nothing to cause this crash and suffered most in it.’ – GEORGE OSBORNE, Chancellor of the Exchequer 4 OCTOBER 2010

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And just in case you need to see the man in action here you go

We now how the #Occupy movement and our local version in the City of London is still there, making a point of sorts. It has all been peaceful and I for one hope it stays that way. But surely we can take more effective action? Like all change our bank accounts to a bank that has some ethics – like the Co-Operative? It is easy, if a little time consuming and think of the effect if there was a mass defection from the banks that are too big to fail…..

Act NOW.

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#oneaday53: Democracy know your [place in] history

According to Wikipedia, ‘Democracy is generally defined as a form of government in which all the people have an equal say in the decisions that affect their lives. Ideally, this includes equal (and more or less direct) participation in the proposal, development and passage of legislation into law. It can also encompass social, economic and cultural conditions that enable the free and equal practice of political participation. ‘

The term itself comes from the Greek  word δημοκρατία – (dēmokratía) “rule of the people”,which was coined from δῆμος (dêmos) “people” and κράτος (Kratos) “power”, in the middle of the 5th-4th century BC to denote the political systems then existing in some Greek city-states, notably Athens following a popular uprising 508BC – again all according to Wikipedia.

Thus when the Western world heaved a collective sigh of relief a week ago when it was announced that a ‘deal’ had been done to ‘help’ Greece out with their debts. The deal was done by a few, behind closed doors and without agreat deal of democracy seemingly in play. Immediately ‘the markets’ cheered, bought and sold stock and overall bought more than they sold. Markets went up and everyone hailed salvation. No doubt some stock market dealers made a tidy sum that day.

Seven days on and the reluctant Prime Minister of Greece, Mr George Papandreou  who was elected on the back of a previous, highly corrupt regime incidentally, decided to call a time out on this EU move. Far from unilateral agreement on the part of the Greek
government on behalf of its people, George decided to get the ultimate buy in or buy out from his citizens and call a referendum.

This may or may not get through the Greek Parliament of course, and today it seems like it may not, but it feels like the first move of solidarity between the Greek people and their elected leaders for some time. It feels well overdue. Despite the fact that Greece has by all accounts been living the life of Riley on the back off corruption, back handers, inflated pay for all and very little economic infrastructure to support it all, this does feel right, despite what ‘the markets’ feel about it. Indeed the fact that politicians around the world are hostage to these financial markets highlights the complete and utter lack of democracy nowadays. No one voted for the people who run these markets, but seemingly they are the true masters of the universe, above law and free of any moral dignity other than to worship at the altar of Mammon.

Mr Papandreou has decided that his last hurrah will be an ironic nod to that ancient Greek principle of democracy. Ask the people simply ‘do you want to say yes to the loan accord from the EU, yes or no to Europe and yes or no to the Euro’.  Meanwhile the likes of Goldman Sachs, very much the puppet masters in this Greek tragedy will no doubt move on to their next deal, their next commission rake off and even bigger profits. The ‘Occupy’ movement will not go away until the elected leaders of democracies around the world take control of the financiers and their markets and ensure power is shared and not monopolised by the relatively few investment bankers and hedge funders who have fiddled and stolen from the many.

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#oneaday 37: Diamonds on the soles of his shoes

Monday’s  news that Barclays Bank chief executive, Mr Bob Diamond has had his bonus of at least £6.5m which rises to twice that with other perks, should surprise no one. Despite all the talk of restraint, bankers like everyone else, are programmed to get what they can as fast as they can. No amount of money is ever enough, and these boys and girls need to earn as much as possible. Don’t blame the people, blame the system. Actually scrub that, the people make the system, so blame them.

When most of us are gearing our spending downwards and cutting back, for some out there, this is just not a feature of their daily lives. We can get angry, indeed I am surprised that we are not angrier, but we could also use our teeny weeny amount of individual power and band together to make a difference.

For most of us the choice of bank for  most of us is a question which few of us really think about. Indeed we rarely change banks, unlike our insurance company, mobile phone supplier, supermarket, energy supplier and pub, most of us perceive very little between the banks. I read Mervyn King, the Governor of the bank of England, has made comments that call into question the real value banks put on their customers. He is right. When was the last time you ever got anything positive from your bank? If they ever send you a letter it normally tells you of a change in terms and conditions. If you have the mind of a lawyer you may actually be able to spot the difference between the ‘before’ and ‘after’, good luck with that little puzzle. Most times letters from banks cost you money!

 But we do have a choice. All banks rely on the capital deposited by customers being lent out to other customers, with a margin difference in interest rates representing their profits. If they can’t get access to the money from savers, it can be tricky for banks.

 Therefore, if you are a customer of a bank, look carefully at what they do for you. Are their charges competitive? Do they value you as a customer, do they have any ethics, do they pay their staff excessive bonuses? We all have a choice. We can work collectively to force change. Don’t think for a moment that any bank will make life easy for you, they won’t. Our account number is not portable, unlike our mobile phone number. You have to set up all direct debits and standing orders, and that is hassle. Making informed choices about which bank is the right one is not exactly easy. Banks spend millions of Pounds, Dollars and Euros building their brands to make them look attractive. Lewis Hamilton, The Premier League and the Six Nations may earn a few quid extra, but don’t be fooled. Look at the ethical behaviour and track record of these institutions. Most of them have a shocking record, Barclays are as good or bad as the rest. Maybe consider an organisation like the Co-Operative Bank who don’t seem to believe that their senior staff are ‘Masters of the Universe’, and appear to be a little more normal, if that is possible of course.

 So there is one way that those of us who are Barclays customers can make a difference. We can simply close our accounts and take our business elsewhere. Yes there maybe some work to do along the way, but how can true progress be made without effort?

 Maybe then Mr Diamond will wake up and smell his coffee, he may even jump on one of his lovely bikes and cycle off into the evening mist. Or maybe that will be idealistic wishful thinking, let’s see if we can make a difference. Spread the word. Change? We Can.

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