Category Archives: Politics

Do you want to pay for the next Bank failure?

15th April 2010

By Graham Reid & JR Max Wheel

Last time, the taxpayer paid to save the Banks AFTER they crashed. Governments are now proposing that they pay IN ADVANCE of the next one. Why?- because they haven’t a clue how to stop it happening.  Have they told us? Of course not because they think we are too stupid to notice.
Think about this for one moment.  Whatever governments like to call taxes, levies, duties and tariffs and whoever they tell us is going to pay them, it is always us because these charges are passed on in higher prices and if they cannot, then profits fall, share prices fall and our pensions fall. Whichever way you cut it, we pay for the whole issue. The only difference is which body they use to collect it for them.
They actually believe that the public are so stupid that they will not notice that they are only calling for a swingeing tax on Banks and bankers because there is an election looming.
Not only that, but they are now arguing amongst themselves at G20 level about what this levy should be based upon, how long it should last, whether or not all Banks should pay it even if they did not need bailing out (e.g. Canadian Banks and others) and for what the proceeds should be used.
It is incredible to think that they have had so many hours of meetings on Bank taxes and none whatsoever discussing possible structures to avoid a future financial collapse when we are so far over the top in terms of the indebtedness pattern in the West that we are in serious danger of falling straight through the black hole that is our public finances and that no one will address it until it is too late. The Bond markets will soon tell us.
They also say that banks must keep and raise more capital at the same time as they tell us they are forcing them to lend it. It can’t be both; so which one do they really want? Will they give us an answer? No; they never ever give a straight answer to a simple question.
Yes, some banks were reckless but only because Governments encouraged them through poor policy decisions and failed dismally to regulate them properly. Why, because they are economically illiterate and yes that includes the saintly one, dear Vince! You only have to look at his latest proposals to see just how little he understands this marketplace.  Vince Cable is prepared to destroy our pre-eminence in financial services for his own political gain, whilst making it impossible to employ anyone worthwhile but presenting it as a saintly act of retribution.
Do not listen to all this rhetorical claptrap. Ask the question “what do we gain from your punishing tax on banks reducing the capital that you tell us you want them to increase?” Answer came there none I suspect.  What is the real answer?  We have been putting proposals to them for the last 18 months or more and still they do absolutely nothing.
Why not create a system of banking that protects our savings 100% but also lets the reckless ones pay in full for their mistakes not us? That is what we have recently proposed and received a deafening silence in reply.   Our suggestions were recently published on 6th April, so we won’t bore you with the detail here save to say that banks can and should be the engine of growth if properly regulated by the Bank of England and that this can be achieved without breaking them up as St. Vince is so determined to do to the detriment of us all.  The sooner our political masters understand that banks are the main artery for the recovery of the economy, then the sooner we will be back in positive growth territory. Ever since the 1980’s investment banks have been behind innovative thinking associated with the creation of global wealth in industry, commerce, the public sector and technology.
Some rebalancing in the economy is of course required as it cannot be right that 40% of all profits in the US came from Banks whose main aim was trading profits based on assuming speculative positions. It is imperative to move towards a more realistic economic scenario where lending is both wanted and available.
A simple “segmentation” of the savings section from the risky bit is not too difficult to achieve if the lawmakers are allowed to do it. Creating a rescue fund not only encourages the taking of ever higher risks but is only necessary if there is something to be rescued. Change the G20 agenda to tackling the problem not creating another one.

The Great UK Immigration debate – good, bad and muddled social thinking

JR Max Wheel

25 February 2010. 9.30h

Every now and then television produces a documentary that strikes a real chord- Evan Davis’s “The Day the Immigrants Left” (BBC1) was one of those (rare) moments even if it ended with a jarring note of political correctness. The storyline was that migrant workers in the small market town of Wisbech, Cambridgeshire had not only embedded themselves economically, but were more productive, reliable and better motivated than the home-grown product. The latter, mainly unemployed, were revealed as lazy, poorly-educated and whingeing, blaming the migrants for taking their jobs. Conclusion: from a few days experiment of trialling the Brits conclusively demonstrated that they were not up to snuff, failing to turn up, slow and generally lacking drive.

Wisbech is predominantly agricultural, both labour intensive market gardening and big prairie style farming with a number of major companies, including Premier Foods, Del Monte, Ralston Purina to name a few, plus major food packers for Britain’s supermarkets.

There is a back story here though and a major missed opportunity by the BBC and that is the dependency culture problem.

The author knows this area well; it is about as far from the well-heeled streets of Cambridge, with its cosmopolitan population: indeed many citizens of Cambridge rarely, if ever, go beyond its confines, so you might well argue that so far as the citizens of Wisbech (and other small Cambridgeshire market towns) that this super science hub might as well be on the moon.

There are some real victims here. Wisbech in recent years,  something of a rural backwater has had to cope with mass immigration from Poland, Portugal, Lithuania, and Latvia. Portuguese, Polish, and Russian are regularly heard on the streets. It is asking a lot for a relatively isolated town to accept such a radical change which has occurred mainly over a period of less than 5 years. That migrants are determined, hard-working, and driven is hardly news: what was also revealed is that the local community has been utterly failed, in terms of education, health, and opportunity. The town contains some of the most socially deprived wards in the county. It has a history of outbreaks of violence, clashes between Roma people and locals, settling of scores by a 12 bore, it was nicknamed the “Wild East.” At root is a culture of welfare dependency, as unskilled agricultural jobs initially shrank and packaging plants invested in higher tech machinery. Being relatively (for the UK) remote, incomers can easily and understandably be regarded as a threat and not only to jobs but housing and other “rights.” The Government’s mangled immigration policy has done little to prepare the town for such a culture shock, nor until very recently begun to address local needs. The result is a disaffected generation of young people, often growing up in workless households.

This is not the stand-ups usual rural East Anglian joke –“ Hey, gimme six”  a more than passing reference to a rural past which included both inter-breeding, even incest. This is a failure on multiple levels. This needs to be peeled back in exactly the same way as the immigration issue. Only one MP, pace the good work done by Iain Duncan-Smith, has been consistent on the travesty that is the UK tax and benefit culture and that is Frank Field; he was memorably side-lined by Tony Blair in favour of the spiteful, self-righteous Harriet Harman, QC, MP, Labour’s Deputy Leader. This is the real background here and it should not be ducked, as it is the other side of the coin. The Immigration Minister when later asked about the issues could only bluster about Government initiatives, like New Deal (for young adults). I have seen them in action, they do not work, they are designed typically top down and God forbid that you should look for a job whilst on benefits because the latter will vanish, should you work more than 16 hours a week or as a couple, 30 hours/ week. This is stupidity and waste on an epic scale.

Finally Cambridgeshire rural folk are neither stupid nor unfriendly. Thomas Clarkson, the great anti slavery campaigner was a native of Wisbech, an irony not explored by the programme. So was Octavia Hill, a founder of the National Trust, and Lillian Ream the well-known 20th.C photographer.

Time for a serious re-think otherwise the successful agri-business will collapse, leaving the town even worse off!