The Tories and the Great Pension Release Stunt

I've been thinking long and hard about the release of pension funds that the Tories announced in the budget. It's unlike the Tories to trust working people with large sums of money when they could leave it in the hands of their fat cat cronies in the City to continue to rip us off with fees and charges on money that's locked into their wallets. What, I ask myself, could the motive be ? Well, I'm no Robert Peston but I can tell you what I think.

The Tories are in trouble. Not economic trouble, with the support of the Lib Dems they have the brass neck to screw the poor to bail them out of that. They are in political trouble. One of the problems that all governments face is that the economic cycle lasts for about 8 years, despite Gordon Brown thinking you can abolish boom and bust. That's just the way it is, You can stretch it or shorten it but not by much. But the parliamentary cycle only lasts for 5 years. If you come into government at the wrong time you are in political trouble come the next election.

Osborne came into government at the start of the downturn and 4 years later he has an upturn. Exactly as anyone who knows about these things would have predicted irrespective of any government action. But growth is very weak and the brakes he put on the economy by restricting the incomes of those who have to spend 100 % of their income every week means that consumption, which fuels growth, can't accelerate the economy to the extent that real cost of living issues will have been solved by the next election. Basically the upturn will be too slow for voters to feel better off by the time they go to the polls.

Now if you're a Tory chancellor then you can't just go giving money to poor people who will spend it, so traditionally, to pump up growth by consumption he would resort to fiscal easing, or as it is better known, printing money. But that's been tried and the ailing banks just kept the money to shore up their ailing balance sheets. It didn't make its way into the consumption side of the economy so the effects of the multiplier weren't produced. I suppose I should really try to explain the multiplier but it's complicated. So imagine you have £100 and put down a 10% deposit on a piece of furniture. You can produce £1000 of consumption from £100 of cash. That'll do as an explanation for the moment I think.

In any case, another round of printing money would have a very bad effect on the UK credit rating. It's already under severe threat, so as an option, that would have to be a last resort. So in the pragmatic way that the Tories always adopt in a crisis he has looked around to see who has money he can get his hands on. Releasing the pension handcuffs will produce significant tax revenue in the year of the election but it will have the added, and perhaps more important effect of injecting massive consumption into the economy. The effect on inflation he can brazen out because inflation is starting from a very low base, and a bit of inflation in the system will help consumption as well. People will be more inclined to buy now if they think things will be more expensive in the near future, and it is obvious that a lot of the released pension money will be spent, bringing into play the multiplier. And a lot will go into 'buy-to-let' property fuelling a house price boom and there's nothing like your property value rising to bring UKIP voters back onside. It'll be a price bubble of course, but as we all know, in a price bubble it's only the last fool in the chain who suffers, but it might not burst before the election.

So this act of generosity to workers by the most elitist chancellor in living memory is, as far as I can see, no more than a political stunt to try to get the Tories back into power with a majority government at the next election, and if they have to wreck the pensions industry to do it then so be it. Thatcher did it with the coal industry for the same reasons, but the miners were the enemy. Osborne is so desperate he will do it to his friends. He's in real trouble and his generosity is no more or less than a very destructive election stunt. There were many other better ways to act against the rip off artists of the pension industry, but they wouldn't have been quite so politically expedient.

Treasury Select Committee and the Robber Barons

I think one of the most telling things to come out of the Treasury Select Committee hearings is the fact that not one of the 4 heads of HBOS or RBS had any sort of banking credentials or qualifications. This was the 'Old Boy Network' exposed for what it really is; a completely self-serving systematic robbing of both staff and ordinary shareholders by a greedy elite. One of the sacked heads is being retained by his former employer at £60k a month as a consultant. It runs across the whole of the sector, sitting on each others boards as non-executive directors playing you scratch my back and I'll scratch yours in each others remuneration committees while forcing down wages for junior counter staff in the name of cost cutting and efficiency, and getting more bonuses for the savings they make. Well, they have shown us efficiency in action and they shouldn't only be apologising to the Commons, to their staff, or to their shareholders. They should be apologising to the whole country which they have forced to the point of bankruptcy with their greed, and especially to the minimum wage workers who will lose their jobs in every sector of the economy, not just the financial sector, because of their greed. They should be barred from holding directorships, because the morally bankrupt are much more despicable than the economically bankrupt. It's sick.

Alistair Darling (of the City)'s Second Bank Bail Out

It's like deja vu and so very predictable. Having concealed the true extent of their gambling losses in the hope that there would be a resurgence in confidence the major banks have now, with results due to be published and the previously incompetent regulator taking a close interest, been forced to admit the real depth of the shit they are in and come to government (me and you) for more money.

This looks more and more like more than just incompetence and it is really time that the Serious Fraud (Farce) Office took a much greater interest, but that would damage confidence and confidence tricksters like New Labour and their big business cronies depend on confidence.

Capitalism is crumbling due largely to its own values of greed and inequality.

I've posted a link to The Red Banker in the Sidebar for a socialist analysis.

Big Dave Cameron and Consensus Politics

I just saw Big Dave Cameron on the telly saying that there is no alternative to Big Gordy's master plan. As I suspected neither he nor the Prime Minister seem to have heard of socialism, even although they seem to be in favour of nationalising banks hand over fist.

Capitalism was failing the people of this country for years before the Iron Woman (she's no lady) finally took away all semblance of restraint. It has finally failed completely. The more freedom the market has to steal the more it will steal from the people of the country. Senior executives will get no bonuses this year, but they will be allowed to retain the bonuses the received while they were seriously failing to do their jobs properly. No doubt bonuses were based on results, but we should go back now that we know better what the result of their greed really is.

Shame.

Resignations and Sackings in the UK Banks

Since my post earlier today it appears that heads are starting to roll in the major banks that I bought yesterday. Not before time.

Credit Crunch, Gordon Brown and My Money

The whole financial system has been changing faster than I can post, but just to update myself, it appears I have bought a number of dud banks which were being run by a squad of disreputable self-seeking gamblers who lost all the country's money. The solution to the problem is obvious, let's give them more money?? As far as I can see only one banking head has had the decency to resign so we should be pressing for the dismissal of the other culprits. Big Gordy, the big clunking fist, is being re-cast as the saviour of the known universe (he has a plan!).

So let's ask the uncomfortable questions.

Who is going to be sacked for their obvious negligence?

Why was there no money to eliminate fuel poverty, because pensioners will die this winter again?

What will be sacrificed to provide the money Big Gordy is going to use to feather bed the rich and greedy who chased the fast buck all over the known world (and Iceland)?

What's to stop the same greedy bastards doing the exact same thing again now that they know that they are so big governments can't let them be losers in the world casino?

How is the taxpayers money going to be ring fenced so that every greedy bastard who has lost money and has a passing acquaintance with an equally greedy lawyer wont be jumping up and down with a writ claiming negligence on the part of some other greedy bastard now that they know the banks have some money?

Financial Institutions and Toothless Regulators

It looks as if they might just about stopped the financial world from unravelling but recent events make my previous comments (12th September) look strangely prophetic. The banks with the most money are gobbling up the lesser banks and we all know the consequences of that for the workers in the financial services industry. The corridors of the Parliament (both in Westminster and Edinburgh) are awash with crocodile tears as the Capitalist system creaks under the strain of unfettered greed. Apparently 'Greed is good' doesn't apply any more.

Meanwhile the regulator issues a toothless ban on short selling of the shares of banks and insurance until the end of the year. The whole system of share trading has turned into a giant casino where no-one really knows the rules, because there are no effective rules. Big Gordy and Smirky Salmond might try to scapegoat the short sellers, but they were acting completely within the law, and it is Governments which still make the law. The fact that there are too many financial institutions in the USA and the UK which have grown so large that if they are allowed to go down they take the country with them is a national disgrace. It means that they can indulge in massively risky behaviours in the knowledge that the taxpayer will cover the losses should they fail.

The real answer is to break them up, and sooner rather than later and preferably put them into public ownership so that the workers who generate the profits share in the success of the enterprise, rather than the present situation where the greed generates massive losses, the workers lose their jobs, the bosses walk away with all the remaining assets, and the taxpayer bears the loss.

This crisis was avoidable, and had the regulators real powers to stop abuse then the people would have been better protected.

Nationalisation of Financial Institutions

Now that the UK has effectively nationalised Northern Rock (almost the first birthday of the nationalisation) and the USA has effectively nationalised both Fannie Mae and Freddie Mac, we can only applaud this new spirit of public ownership. It's just a pity that the taxpayer always seems to get lumbered with the losers rather than the shareholders who were paid large dividends rather than creating reserves to see their companies through financial crises. It's also a pity that the same spirit of providing a safety net for investors couldn't have been brought to bear on the problems of Farepak, but then their investors weren't already the rich so they don't count for much to Big Gordy.

Just a further comment on the global financial meltdown. Money doesn't just disappear, so if everyone is going to get poorer, who is going to get richer? Capitalists are fighting like ferrets in a sack each trying to save his own arse at the expense of the rest and, as usual, the poorest will pay the price and the rich will get richer. Banks are queueing up to buy each other at bargain basement prices and it's about time the national and international regulators stepped in and sorted out this fucking mess they have allowed to be created by pure greed.

I'm Back

It's been a while but but I'm back in the land of the Blogosphere and hope to be posting regularly again soon.

Meanwhile you have let it all go to the dogs. Where has all of the piss-taking gone. Surely the big clunking fist deserves more than he's getting. Labour are paying the price of their own corporatism. As they moved away from community values and individuals and tied themselves firmly to capitalism they are suffering from the credit squeeze in the same way as the banks and financial institutions they have come to love. The English middle classes, don't you just love them. They have reduced voting with your wallet to an art form. Labour are getting what they deserve in the English local elections, but the Tories under Big Dave Cameron are no better, in fact they are remarkably similar.

The SNP have made a complete arse of things in Scotland. They have not increased the council tax, but instead have cut services to the most vulnerable right through the country. But surely the same price for less is an increase. Perhaps they should re-introduce 'O' level arithmetic. They carry on with PFI schools and hospitals even although they opposed them previously. What happened to those extra police, student debt, a referendum and an end to the council tax Oh, and by the way, where is Sir Sean's new house?

The Lib/Dems, well, anything at all for a taste of power please, including kissing Salmond's arse.
They have become a parody of themselves. Remember when they stood for something, even if it was something different in every town. Now they stand for nothing.

That's enough to start back with.