Tuesday, 8 June 2010

Who Are Our Creditors?

David Cameron made a passable attempt yesterday to soften us up for the coming reduction in our living standards or as Mr Cameron put it, "Decisions which will affect our whole way of life for a generation." He wants us to believe we can influence the government's decisions. If only.

He said that on current trends, Britain would be paying, by 2015, £70bn a year in interest on the national debt. To whom/where do we owe such sums of taxpayers' money? Remember, the government is currently borrowing nearly £0.5bn per day.

People are feeling confused and insecure because they just don't understand where all the money has gone.

The following was a letter in a local paper and the writer (whose name and address I have withheld) sums up what I think may be the thoughts of many:

Sir,—And so the slaughter of jobs starts and the misery begins.

The government is making the working man and woman pay for the massive errors and mismanagement of the financial institutions and previous governments.

The government bailed out the banks that caused the misery through gross incompetence and greed and we pay by losing our jobs. Where is the justice?

The people who made and are making the decisions remain in work with lucrative salaries and outrageous bonuses and pay offs?

Whereas many working class people will face financial ruin, loss of property, poverty and many will struggle to feed their families. Justice?

Surely the fundamental role of the UK government and ministers who ask us to vote for them is to keep the UK in employment?

There are so many questions that I and millions of others want answers to.

For example, why aren’t the banks paying back the billions they are due to the UK which in turn will save jobs? Why are the people who got us into this mess not brought to justice? Why does the working person have to suffer? Why are the government ministers, executives and top-paid civil servants still paid gross amounts of bonuses? I am sick of the injustices we suffer in this sick and greedy world.


Macheath said...

A friend's ex-husband tried to include several thousand pounds of 'unused overdraft capacity' in her divorce settlement, claiming that it counted as an asset.

It then emerged that he had taken out a mortgage for 110% of the purchase price of their house the year before.

Impossible? Foolish? Not, it seems, when you work in the banking world - he and his fellow bankers saw it as a shrewd move.

A month after the house was sold, prices plummeted. My friend narrowly escaped financial disaster; I only wish that Britain had been so lucky.

Hythlodaeus said...

I was wondering the other day, if Britain and other recession hit countries in the West might actually consider reforming the World Bank and IMF now that they are dependant on them.

It's only been 9 years since they promised to reform them to help deal with Africa's debt with little or no changes made in the meantime. Incidentally, I believe we're still collecting debts from other countries.

subrosa said...

What amazes me in these situations Macheath is why anyone, regardless of intelligence, could consider buying 110% of the worth of something. Of course that's what the banks did and here we are today.

Your friend had a very narrow escape. Recently I read house prices here in Scotland rose by 6.5% in the last quarter.

subrosa said...

Haven't we hard mutterings about that Hythodaeus, yet as you say nothing of value has resulted.

It's hard to find information about our debtors. Mind you, I'm not the best googler in the world, but I have spent some time trying to find info.

Dramfineday said...

Another facet of this, as alluded to above, is personal debt levels. Thinking about it, the banks went out of their way for years to encourage personal debt at an extravagant level – loans, credit cards, stores cards, mortgages dodgy investment plans etc., and a lot of people fell for it. The banks were attempting to enslave a generation and, they have largely succeeded! Sorry if you think the term Slave is too strong but, had all things remained equal, people would have been paying a huge proportion of their earnings to the banks for the rest of their lives. Debt without end; and encouraged by a load of smoke and mirrors politicians and their city chums.
Now we have the REAL spectre of unemployment, home repossessions, foreclosures, bankruptcy and a declining economy, in short a real recession, and still the merciless will make money.
Now I’d like to suggest that until every penny of the bailout money is repaid, not one penny piece should go to shareholders or for staff bonuses – all profits, plus substantial repayments per annum, should be made until it is all paid back (plus interest of course). After all that’s what banks were doing to us......sauce for the goose, etc!
Had this been “Dram world” the leading figures in this fiasco would have been (fairly) tried for economic sabotage and taken out and (fairly) shot as a warning to the others that some things come with too great a price.
If ever there was a time for biblical resonance then it’s the revelation that greed truly is a mortal sin.....the ancients were certainly onto something with that one!

Sue said...

I'm just not paying tax anymore. Not to any government.

We work on a cash in hand or barter system and I'm ending up with the same amount of money that I did before.

Michael said...

Don't blame the banks. Blame Gordo. The government set the rules, reserve levels etc that the banks worked to.

Why were the rules so lax? So liebour could claim the end of boom and bust.

For example did liebour coff up when Equitable Life went tits up? No, they refused to compensate people despite the failure of treasury supervision.

Joe Public said...

Aw c'mon, it's not that bad!

That local (Nth o' the Border) MP got iDave's salary reduced from £194k to £150k. That has to be a proud economic achievement.

Allan said...

Agree with pretty much everything that has been said in the letter, even if it read's like the election address for Wendy Alexander at next years Holyrood elections. Like Ms Alexander's leaflet no doubt, there was no mention of "light touch regulation" - the reason that so many financial companies bought debt ridden companies. RBS didn't bother waiting for a key debt report on ABN Amro before buying the company, with disasterous results.

New Labour's appropriation of Thatcherite ecconomic policy has been a disaster for this country. Remember, it was Blair & Brown who enobled at least 3 of the four Horsemen of the Economic Apocalypse - Goodwin, McKillop and Stevenson (the Chairman of HBOS) - for services to the financial industry. Indeed.

subrosa said...

Debt without end - very apt Dram. That's what the banks have been ensuring. Each and every one of us are in hock to them for a lifetime.

That's the way it should be Dram. After all, if one of us was bankrupt we wouldn't be able to spend money anywhere other than for basic living and paying off debt.

Greed is a sin. Greed using other people's money unwisely is even a greater sin.

subrosa said...

Good for you Sue! I wish it was possible here but unfortunately many are disinterested.

subrosa said...

Oh Michael, you're touching on a sensitive subject there. I could bore you to tears with the ineffectiveness of the Treasury Select Committee and the FSA. Both government areas which are only hot air.

subrosa said...

That local MP did away with the 10p tax rate Joe and that helped me.

subrosa said...

Allan, I didn't read it in that manner. It just struck me as a letter anyone would write to a newspaper about the situation.

I believe there is a lot more to be disclosed re the Lloyds TSB and RBS takeovers. The 'I'll scratch your back and you scratch mine' syndrome.

That's the reason the four were elevated to ermine.

Allan said...

What i mean is that I can see, a year into the cuts, New Labour painting themselves as the good guy's and using very similar language to empasise with redundant workers. It has partly happened already with the "Ripped Off Glasgow" campaign from last year.

On Lloyds TSB, i'm sure there was a story that Brown was seen talking to Victor Blank (the Chairman of Lloyds TSB) a few weeks before the Lloyds TSB-HBOS merger was announced. Blank is of course an old pal of Brown's, having been an exec at The Mirror.

subrosa said...

They'll be practicing that already Allan for next year's elections. I think the redundancies will be the biggest issue of that campaign and labour will go flat out about them. Of course labour supporters will believe every word - that if labour get back into power at Holyrood there will be no one without a job in Scotland.

Aye Blank is one of them.

banned said...

Your anonymised letter writer has a somewhat sentimental idea of the way that the the world works but I too would like the makers of the decisions that led to the bank bailout identified, sacked, have their houses and pensions sequested and their children condemned to state education.

Anonymous said...

I used to be a Manager with TSB. I have some 2000 shares.
When I read about the proposed take over of HBOS, I could not believe it because I knew that LloydsTsb had virtually no exposure to the sub-prime mortgage fiasco or the inventment banking melt down.
I voted 'against' the merger proposal.
What amazed me was the 90+% vote in favour at the EGM.

Only later did I realise that the vast majority of shares in LloydsTsb are owned by pension funds and, no doubt, 'overseas investors'. There is no doubt in my mind, in retrospect, that these organisations were also heavily invested in HBOS. How could they possibly vote 'against' and risk HBOS going backrupt?
In retrospect, what I should have done with my TSB shares was to sell when the amalgamation with Lloyds took place. What persuaded me not to at the time was that the divident from LoydsTsb was very good. Now, for as long as, there is no dividend.

This whole mess should be a warning to private investors:

By all means invest in a small way in small companies, but the moment that that company is taken over or amalgamates, sell up and re-invest elsewhere.

subrosa said...

It may be slightly sentimental banned but it's the way many see the situation I think.

Not everyone is too interested in how the world works but they do know unfairness.

subrosa said...

Hi junican, thanks for that story. A good piece of advice I'd say.

Crinkly & Ragged Arsed Philosophers said...

Well, a toxic pie chart of capitalisms ability to not only bite the hand that feeds it but to take a fair sized chunk out of the body its attached to.

Should be a song about that!

It's the super rich who make the rules and take the profits.

While the rich play in the game.

And the poor are bled as harvest, left with nought but puerile pain.

But, if we're daft and apathetic enough to let them, they're daft an greedy enough to continue with the idiocy that feathers their nest at our expense.

joe90 kane said...

"Decisions which will affect our whole way of life for a generation."
- Hopefully such decision-making will include the decision to make the spending of our tax-payers money more transparent and more accountable.

People are feeling confused and insecure because they just don't understand where all the money has gone.
- Spot on subrosa.
A full account should be given of the greatest single re-distribution of public wealth in the modern history of Britian.
It went somewhere - where is it?

I would expect the Tories to exploit any situation to play up the fact that public services they don't like are going to be attacked. The fact is, the Tories are just using scare-tactics and exploiting feelings of vulnerability on the part of the public to do what they always love to do anyway, attack public services which benefit the public whilst supporting and subsidising public services which provide profits and jobs for their pals in private buisness (aka neo-liberalism).

Andy Newman on Socialist Unity makes a case for not falling for Tory plans to attack public services and that the budget deficit isn't as big a problem as the Tories are making out -
No Need for Drastic Cuts
08 June 2010

all the best

subrosa said...

I would agree RA and I know the music I'd use to your lyrics.

The solution lies in our hands, you're so right. Will we do anything. No. We'll just talk about it and how incensed we are.

subrosa said...

The same non-existent money just went round the big boys Joe.

I don't think the tories are behaving any differently to labour if they were in the same position.

Andy Newman makes one error. There is a difference between deficit and debt. Debt needed to be reduced. Think about it - the people who get into debt and end up paying only interest for years; never paying off the capital.

joe90 kane said...

Thanks subrosa.

Just to say, I'm not trying to make a case for the Labour Party or anything. Far from it.

Debt-slavery or wage-slavery isn't much of a future for anyone. I bet medieval serfs didn't have this many obligations hanging over them.

Someone made the point that we've escaped the New Labour Police State concentration camp to wind up in the Tory workhouse-poorhouse state.

all the best

There is a difference between deficit and debt.
- I'll put that point to Andy.

subrosa said...

I don't see a good future for many Joe,sadly. Labour blew it. They spent money we didn't have. They turned a blind eye to the financial institutions which were pushing the same fake money round and round.

People were getting 110% mortgages. When they defaulted who was left broke? That's right, the poor souls who believed a 110% mortgage was ok - because the bank or building society said so.

I'm sure Andy already knows there's a difference. Our debt is far more important than the deficit. All countries have deficits.

You may well be right about the police state to the workhouse. In fact the more I think about it that's could well be an accurate forecast.

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