Bulls, Bears, Lemmings And Lemons
Having “power without responsibility - the prerogative of the harlot throughout the ages” is how Rudyard Kipling described some journalists of his time.
Of course, it could also serve the financial communities of the current era, who like to demand plaudits for keeping the country financially afloat when the going is good, but do not want to admit any blame for bankrupting the world when their colossal gambles blow up in their faces.
Banks and major financial institutions love to compare themselves with powerful beasts and pretend that they are the tamers of a frightening jungle full of fearsome creatures, that they occupy the pinnacle of natural selection, but they bleat like frightened lambs trying to negotiate a deep puddle when they want rescuing by the taxpayers they are otherwise forever ready to swindle.
This time, they have followed each other helter-skelter into the sub-prime mortgage con because they each thought the other was going to make a fortune and they were too scared and stupid to check whether the boat they thought they could not afford to miss was actually about to capsize and sink.
This from The Guardian:
The hard-hitting Financial Stability Forum report blamed feckless investors and irresponsible banks for exacerbating the credit crunch, which has pushed America to the brink of recession. Ben Bernanke, chairman of the US Federal Reserve, has already slashed interest rates by 2.25 per cent in the last five months - the fastest cuts for more than 25 years - in a desperate attempt to contain the crisis.
Presenting the first findings from their study of the credit crunch, the central bankers revealed a catalogue of failures that allowed risky ’sub-prime’ lending to Americans with shaky credit records to career out of control, through what they called ‘the complex network of interdependencies in the financial system’.
One culprit was the lavish performance-pay regime on Wall Street and in the City, which, they say, ‘encouraged disproportionate risk-taking with insufficient regard to longer-term risks’. The secretive ‘off balance sheet’ accounting used by many banks to hide their borrowing was also criticised.
By the way, ‘the complex network of interdependencies in the financial system’ is too complicated a way of putting it. ‘The blind leading the blind’ or ‘a fool and his money are soon parted’ put it simpler and better.
So, the fact that the world is now in economic turmoil, possibly with a major global recession becoming an unavoidable outcome is down to a bunch of greedy bankers.
Anyone see any hands going up to claim responsibility?
Of course not. What we get instead is the shrill screaming of the scared little lamb who thinks he might be asked to pay some tax. Of course, picking up the bill for the profligacy and irresponsibility of big business has traditionally been the job of the small, individual taxpayer. No government likes to pass the begging bowl amongst the rich in case the job offers fail to materialise when you get to the sunny side of that magical revolving door.
How many banking jobs does Tony Blair hold at the moment, by the way?
The Times Online makes a veiled threat to the government not to tax these wonderful, sleek, thoroughbred animals, who put food on everyone’s tables:
The City of London earns the living of the United Kingdom. Without the City’s earning power, Britain might dwindle into an insolvent dwarf, the Northern Rock of nations.
[...]
International businesses choose their locations not only on existing costs and tax rates, but also on estimate of future costs and taxes. Their boards thought, correctly, that Mr Blair believed in entrepreneurial competition and wanted to keep British taxes as competitive as possible. They had thought the same of Mrs Thatcher. They felt there were unlikely to be unpleasant surprises from either prime minister, but they have never trusted Gordon Brown in the same way, though they hoped that Mr Blair would not allow Mr Brown to adopt anti-business policies. When Mr Brown became Prime Minister, businessmen felt less safe, but were prepared to wait and see. Now Mr Brown himself and Mr Darling are introducing this new regime for non-doms, even though it will cover a large proportion of executives of all international businesses, including banks.
Apart from the fact that this is the best example recently of the way in which big business is not even pretending to disguise the fact that it barks orders at elected governments and expects to be obeyed, would it not be more honest to say that when this bunch of bankers make a mess of things, they are never too proud to go cap in hand to the government to ask it to hand over the odd 50 billion squid of taxpayers’ money.
For all the grand posturings and fine facades, banks are actually financial lemons run by a herd of spivs who are good at sums when the money is rolling in and run around like headless chicken when they are asked to behave like rational, moral human beings.
Did you want to go into banking when you lose office, Mr Brown?
Egg On Face Of Bunch Of Bankers
Bankers are very far from being the cleverest people on earth, but because they deal in money, rather than, say, vegetables, people think that they are very special. Special needs would be more accurate.
This is what one City banker said of his own trade: “[it is] always sensible to work on the assumption that banks are mad, they behave like lemmings, there is always something they all go and do that then explodes”.
This is David Freud, the chap who advises the government on stopping payments to benefits claimants.
He also said that banking was recently a “pioneering piratical industry where we made up the rules” and that the City is still “morally ambiguous because it’s so competitive”.
So, when bankers themselves cannot find a good word to say about their own trade, it is hardly surprising that Egg, owned by one of the biggest bankers of all, Citigroup, should make such a complete and utter hash of dumping its customers in an attempt to make up for its losses in the sub-prime mortgage market.
In The Guardian:
John McFall, chairman of the powerful Treasury Select Committee, said: ‘The motives of Egg need clear explanation if this a case of them ditching long-standing creditworthy customers because they make no money out of them. Perhaps this is an issue that requires an Office of Fair Trading investigation.’
Last October The Observer revealed how consumers with blameless credit ratings are being refused credit cards and consumer groups report that the practice is spreading.
Peter Thornton, a Liberal Democrat councillor in the Lake District, has been an Egg customer for over five years. He received a letter terminating his credit card on Friday. He said: ‘This is more than an amazing PR blunder. There’s a huge amount of people in my position. I’m on a lower interest rate because presumably they’ve assessed me as a good risk. Every business would benefit from losing 10 per cent of the least profitable customers, but the rest of us realise we can’t do that because it would be a PR disaster. They’re on the radio saying it’s just bad risk people they’re getting rid of. I feel slandered by that.’
Of course, banks and bankers are slightly higher on the social spectrum than MPs, but still way below common criminals, confidence tricksters and convicted grandmother-sellers.
According to the BBC News, Egg’s own statement is appropriately arrogant and stupid, as would befit a banker:
A spokesman for Egg said: “We are sorry some customers are upset after receiving notification we are ending their credit card arrangement, but they are people we do not feel it is appropriate to lend any money to.”
He added: “The decision was taken after an extensive one-off review of our credit card book following acquisition by Citigroup.”
“We can certainly understand the concerns, but even if people are up-to-date with repayments, they are people we decided we no longer wish to lend money to regardless of their status.”
The spokesperson for the British Bankers Association almost hits the nail on the head, if you convert what she says to what she actually means:
Angela Knight, chief executive of the British Bankers Association, said that Egg’s action was “a sensible way of looking after a business”.
“Whilst it is lovely to spend, it is the paying back that is always the difficulty. It might seem a bit hard to say to people ‘You do need to stop spending’ but it does actually make real sense so to do.”
If you read this as: “It is lovely when the banks are making loads of money on the backs of people when times are good, but as soon as things get harder for us, we will drop you like a stone” you will be nearer to the truth.
The BBC also kindly lists some customer comments about the actions of these not-so-clever bankers:
I too have just received one of these letters. I have had an Egg card for almost 8 years and have never missed a payment (like others here I usually pay off the balance if I have one) and have never gone over my limit and my credit rating is excellent. It seems to me that Egg are picking on those who are in control of their finances and therefore not paying them lots of interest. If they deem fit to remove my Egg card, I shall be removing my Egg Savings (which has a far larger balance than my Egg card!). I think this is disgraceful behaviour on their part.
Mary, EdinburghI received the letter yesterday. What angered me most was the suggestion that the decision may have been the result of some detrimental entry to my credit report, causing me to fear that I may have been the victim of identity theft. This put me to the needless expense of obtaining a copy of my credit report, which of course is fine. The letter from Egg consisted of a tissue of lies which were merely a smoke-screen for the real reason behind the decision which I suspect is that I don’t use the card enough. Why couldn’t they just be honest and say that - but then I suppose the two words “honest” and “banking” don’t sit well together these days do they!
Chris O’Shea, Woking, Surrey
Of course, nobody would expect the people at Egg or any others with banker-sized brains to remember the Northern Rock crisis of a few months ago and how a run on a bank caused it to collapse.
Bankers actually need customers more than customers need the so-called services of any individual bank.
It might not do Egg any harm if people started withdrawing their savings and writing to them telling them that you no longer wish to deposit your money with a bank which you find behaves in an untrustworthy way and may not be creditworthy anyway.
The Real Climate Change Conference
While George Bush and his corporate cronies try to deflect attention from the UN climate change conference, the real thing is still happening and getting more headlines.
Al Jazeera has this:
Delegates from more than 150 countries are attending a forum on climate change at the United Nations headquarters in New York as part of the 62nd UN General Assembly.
Monday’s meeting, which has been organised by Ban Ki-moon, UN secretary-general, wants governments to commit to a climate conference this December in Bali.
The Bali conference is concerned with a timetable for negotiations that aims to conclude in 2009 with a deal to accelerate and deepen cuts in emissions of greenhouse gases.
[...]
The US rejects the Kyoto protocol, which requires 36 industrial nations to reduce greenhouse emissions from industry, agriculture and transport by an average of five per cent below 1990 levels by 2012.
The European Union (EU) has committed to reduce emissions by at least an additional 20 per cent by 2020, but concerns remain that without US co-operation, any plan will be extremely limited in its effectiveness.
George Bush, the US president, who has opposed negotiated limits on gases, will not take part in Monday’s meeting.
He is due to attend a small dinner after the summit, joining a gathering of key leaders hosted by Ban.
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