Saturday 31 December 2011

Saturday, December 31, 2011 Posted by Jake 2 comments Labels: , ,
At the end of December 2011, the Office of National Statistics (ONS) published a report on what we are worth: "Human Capital Estimates 2010" 

This is not about what we own minus what we owe, but what we as animate objects, are worth. Our "Human Capital". The ONS' definition of Human Capital is:

“the knowledge, skills, competencies and attributes embodied in individuals that facilitate the creation of personal, social and economic well-being.”

You may be flattered to know that:

  • "The UK’s human capital stock was worth £17.12 trillion in 2010."
  • "This is more than two-and-a-half times the UK National Accounts estimated value of the UK's tangible assets - buildings, vehicles, plant and machinery etc - at the beginning of 2010."

It may, or perhaps may not, give you a warm fuzzy feeling to know that you are valued at an average of just over £425,000:

Monday 26 December 2011

Monday, December 26, 2011 Posted by Jake 2 comments Labels: , , , , , , ,
"Never waste a good crisis". Who first said it - I don't know. But using a crisis as a smokescreen to push through changes irrelevant to the crisis itself is a tactic used by leaders great and small. A golden chance to quickly make changes that under normal non-crisis conditions they could never get away with. From the head of a household cutting pocket money, to the head of a company cutting jobs and pay, to the head of a government cutting pension entitlements.

Pensions are part of employees' compensation - that is "pay" to the likes of most of us. Far from ballooning out of control, employees' compensation has been falling as a percentage of Gross Domestic Product for years. 

What this means is that as the country gets richer, the share paid to ordinary ripped-off Britons has fallen, as can be seen from this data from the Office of National Statistics 

Graph of Compensation of employees as % of Gross Domestic Product: CP SA (Quarterly) (The ONS defines "Compensation of employees" as wages, salaries and social contributions made by employers).

A phenomenon that really kicked off in 2000, during the last Labour government, and being followed through with a vengeance by the current Tory-LibDem coalition. The jump in the employees' share of GDP seen in 2008-10 has nothing to do with greater fairness, and everything to do with the slump in GDP. Current government policies to freeze pay and cut pensions (public and private) aim to get things back to abnormal.

Ordinary Brits get their share of the nation's wealth mainly as pay and pensions. Reducing the pay and pensions share means increasing the share that goes to dividends, capital gains, and other forms of wealth that are all for the less than ordinary Briton.

"Something has got to be done!"; "Just get on with it!"; "Carpe diem!". Panic the people into accepting drastic action. Panic MPs into voting for it, panic unions into submitting to it, panic the citizens into lying back and thinking of England.

Saturday 24 December 2011

Saturday, December 24, 2011 Posted by Jake 1 comment Labels:
We present the Ripped-Off Britons Quiz.

With forty multiple-choice questions on the rip-offs of the year, we aim to provide half an hour of fun and provoke half a pint of bile. 

Use the quiz at your next party or social gathering, or in a lesson at school. 

In this post the questions are given in a form that is easy for you to print off or display on your computer screen for all to see. We also provide the answers in a separate post - >>>>click here<<<<.

Those that rip us off are confident that we will not hold it against them. Not because we forgive, but because we forget. Their scams make the news for a couple of days, and then fade away. From banks to energy companies to political parties, they all let us down with total predictability and total impunity.

In the words of Adam Smith, the great icon of capitalism,
"The real and effectual discipline which is exercised over a workman is that of his customers. It is the fear of losing their employment which restrains his frauds and corrects his negligence."

Our forty questions will help the participants in the quiz remember the frauds and negligences we ripped-off Britons have suffered. With links to our stories, giving the details behind the rip-offs. 
Saturday, December 24, 2011 Posted by Jake 1 comment Labels:
This post gives the answers to the Ripped-Off Britons Quiz. If you want to see the quiz without answers then click  >>>HERE<<<

Thursday 22 December 2011

Thursday, December 22, 2011 Posted by Jake 2 comments Labels: , , , ,
And so, in December 2011 the expected deluge of money from the European Central Bank arrived. Loans at a fixed rate of 1% for 3 years, to stave off, more likely only postpone, the dénouement of the Euro crisis. But, as is often the case with the weather, the deluge of money didn’t fall where it would have done the most good.

The ECB showed a bit of Christmas spirit, and offered unlimited funding for 3 years at a fixed 1% interest rate. A few days later, nearly €500 billion had been borrowed. Who were the borrowers of this cheap money? Where did the money come from? Are we all saved?

In reverse order:

Question:             Did this wall of cash relieve nations imposing draconian cuts on their citizenry? Nations that were haemorrhaging money paying up to 18% interest on their borrowings from the banks?

Answer:             No. This loan facility was not open to national governments. This makes no difference to the loan burdens on governments. In fact, it extends the burden as it prolongs the time before the lending banks demand their money back, leading to some countries defaulting.

Question:            Where did all this lending money come from? Is this a resurgence of confidence, with investors around the world at last putting their hands in the pockets of their hanfus, kimonos, and saris?

Wednesday 21 December 2011

Wednesday, December 21, 2011 Posted by Hari No comments Labels: , , ,
Chris discusses the revelations

Sunday 18 December 2011

Sunday, December 18, 2011 Posted by Jake 1 comment Labels: , , , , ,
By Honestly Banking, undercover banker

Hooray! We the bankers of Britain will soon be getting our richly deserved  Christmas Bonuses! You ripped-off Britons should be grateful. Without our bonuses, we would have already abandoned you and emigrated to Switzerland to flash our cash in the milk bars, get drizzled with premium chocolate, and ski. Competitor banks are always waving their wads under our noses. We’re not greedy. If we were greedy, we’d have gone already.  Of course every silver lining has a cloud. The biggest problem with the bonus is how to spend it. A new Porsche? Mega-flat, school fees, credit card bill, something shiny from Tiffany's? And if some slackers don’t get a bonus, at least there is a free cup of coffee and some drama too (see later).

Much has been written about the bonus culture and the excesses of the banking system. How is it that in these austere times banks are making so much profit they can pay huge bonuses again? Without doubt being a banker can be one of the most lucrative jobs going. Not only is there a healthy salary, lots of fringe benefits, but also the motivation of the juicy bonus.

There are long hours and lots of stress, but there’s also a nice air conditioned office and a subsidised canteen. Not really a hardship spending long hours in this environment.

Many bankers are there for the intellectual stimulation, but really most are not there for charitable reasons or to make the world a better place – it’s all about profit.

Pay in the fancy lingo of Human Resources is known as compensation. This starts to give an insight into the motivation of workers in general and bankers in particular. Compensation in this context is payment for the bankers’ skills and time. The fixed element of a banker’s pay is the salary and the bonus is the variable part.

The salary is the agreed rate for the job. This is driven allegedly by ‘market conditions’, but it’s really about how much the banker has been able to negotiate, or in reality how much the headhunter has over sold the banker in order to increase their fee (typically up to 40% of the salary). Even better if they have negotiated a ‘guaranteed’ bonus. This means that a banker will be paid a bonus regardless of performance - nice work if you can get it!

Guarantees are used as sweeteners to aid the pain of moving from one bank to another. The reality is you may have to give up your bonus at one bank when you leave, so it’s a bribe really. Signing bonuses are another nice wheeze - new job, fancy title, a big pile of cash upfront. You don’t even need to perform for a couple of years by which time you will be ready for another move anyway! Wow, Christmas has come early!

Just as Santa is hard at work in the workshop with the elves making toys and deciding who gets them, the banks’ bonus committees are doing the same thing.

Typically the bonus committee is made up of senior bankers and departmental heads with input from HR, compliance, legal etc. It’s actually a totally pointless exercise as it will have been decided who is getting a good bonus and who isn’t. The point of all the hangers-on at this bloated meeting is firstly ‘inclusion’ - makes people feel important - and secondly to ensure that there is the appearance of a rigorous process in place.

This appearance of process is actually important. If it can’t be shown that there is rigor, the bank is leaving itself open to claims of discrimination. In fact most banks have now put some weasel words into their employment contracts about bonuses being discretionary. They also go to great lengths to emphasis the rigor of the process, but also to make it as opaque as possible. They go even further by prohibiting staff from discussing bonuses and making doing so a sackable offence.

The criteria that are really used are as follows:
·        Do we want to retain them?
·        Have they made us money?

These two things decide your bonus. If you’ve had a huge year but they want to get rid of you, you will get a ‘price signal’ by a small or zero bonus and thence a free cup of coffee at your ‘exit interview’. Alternately if they want to retain you, you may get a better bonus that you expected. All the other criteria, rankings, scoring systems are just smoke and mirrors and people justifying their jobs.

So what has your average banker done to earn a bonus?
Sunday, December 18, 2011 Posted by Jake 2 comments Labels: , , , , ,
Pensions are deferred pay. Pensions are not charity, nor a handout, nor any other form of benevolence. Your employer, private or public sector, holds back some of what it owes you for your labour and pays it to you when you are retired.

Pensions are paid for by corporate profits (private sector) or taxes (public sector).

Cutting pensions is a pay cut on employees which allows companies to increase their profits or hand them to shareholders, and governments to cut taxes.

Is the current Banking Crisis a reason for special measures on pensions? The reality is mature economies recover from crises. To see the evidence, take a look at what happened to the US economy in the last century, particularly after the two World Wars.

Two World Wars required massive spending, first to destroy and then to rebuild nations. But government spending quickly returned to its original trend.

The Banking Crisis required massive spending to bail out the banks. There is no reason to think that cutting pensions is needed for the recovery to happen. Apart from anything else, the reduced pensions costs will not have any impact in time for the current crisis.

Are pension being cut because they were ballooning out of control? The government's own figures show this is not the case.

Pensions are being cut to reduce the cost to companies in the private sector, and to reduce taxes for the public sector.

The Banking Crisis is being used as a smokescreen to increase inequality in the most unequal country in western Europe. 

Reducing pensions would be a rip-off that is imposed on current and future generations. 
Sunday, December 18, 2011 Posted by Jake 2 comments Labels: ,
If you thought the £millions in fines the FSA imposes on naughty financiers goes to help their victims, you clearly haven't been paying attention to the fact that this is Ripped-Off Britain.
  • The FSA is funded by fees levied on financial services companies.
  • FSA fines go towards paying FSA costs.
  • This reduces the amount of the fees paid by financials services companies.
An FT report quotes Which?, the consumer organization, saying
"The industry's record fines this year will result in a huge discount on its annual levy to the Financial Services Authority (FSA)"

In the FSA's 2011-12 annual report, it is stated 
"During 2011/12 we collected penalties of £70.7m (2010/11 £86.2m), 

which will be used to reduce the fees levied by us across relevant fee blocks in future years."

i.e. reduces FSA fees paid by the financial services industry.

The FSA claims that the real penalty on firms is the compensation they have to pay their customers. For instance, victims are receiving 8% interest on the refunds they are getting for the banks' payment protection insurance (PPI) scam. 8% is way more than they could get keeping the money in a savings account.

But think on this. Many of the people who had money swiped by the banks use credit cards and other high cost loans. The interest on these loans that they could have otherwise paid off is typically 20% or more. By having their money pinched by the banks, they will still make a significant overall loss even after getting 8% interest on the refunds.

And in the case of PPI, some estimates claim £4.5 billion of ripped-off money has been held by the banks over the years. That's £4.5 billion the banks were lending out at interest rates well in excess of 8%. Netting a further profit for the bankers. 

As we have said before, fines are one of the most lucrative investments the banks can make.
Sunday, December 18, 2011 Posted by Jake 4 comments Labels: , , , , , ,
The UK government says that raising pensions by the Consumer Price Index (CPI) instead of the Retail Price Index (RPI) is the fair thing to do. This is inspite of the fact that pensioners, who are already struggling financially, will lose a large chunk of their income.

So what would have happened if MPs' pay and perks had been linked to inflation?:

An MP’s allowances in 1975, of £3,200, would have risen by 2007 to £19,367 if RPI inflation had been applied. In fact the actual figure was £90,505.

Friday 16 December 2011

Friday, December 16, 2011 Posted by Hari No comments Labels: , , ,
Fee dishes the dirt on an unscrupulous estate agent

Tuesday 13 December 2011

Tuesday, December 13, 2011 Posted by Hari No comments Labels: , , , , ,
Chris and Fee hit on a way for small retailers to survive

Sunday 11 December 2011

Sunday, December 11, 2011 Posted by Jake 3 comments Labels: , , ,
“The hands of a healer”, those blessed appendages of gifted individuals whose mere touch can make all sorts of maladies simply go away. Brit-Artists have joined the saints, gurus and fakirs. The malady our arty countrymen can cure by the application of their hands is tax flu. Like alchemists turning lead into gold, they can turn rubbish into multimillion pound objets d'art of tax dodging.

As Britain gradually slips back to “Victorian levels of inequality”, loopholes are being opened for the wealthy to avoid tax by exercising their gracious patronage. It is not from benevolence, but for tax avoidance that they can making donations to charities, the nation, and to eager entrepreneurs looking for startup investment. And, as a welcome relief from the usual government policy of taking from the poor to give to the rich, some of these tax changes take from the rich to give to the extremely rich.

Make no mistake, in spite of their protests the wealthy have been very well served by our tax system. This is evident from the graph produced by the IFS, showing that tax on the wealthy has been slashed by nearly 40% between 1978 and 2011.

It is not just the income tax burden that has been lifted from the rich. Other taxes the rest of us pay have been waived through circuitous bypasses. The Daily Telegraph reported that a third of houses sold for more than £1m dodge paying stamp duty, costing £1billion in lost taxes (i.e. saving the wealthy £1billion in taxes). This wheeze is pulled off by placing ownership of the house into a company. Instead of selling the house, paying 5% stamp duty on the property transfer, you sell the company and pay just 0.5% stamp duty on the equity transfer. And for an annual fee of £30,000, the government sells around 5,400 non-doms the right to avoid tax on overseas income that the rest of us have to pay. These 5,400 each paid an average £1million in tax on their UK income according to the Treasury, a tantalising reflection of the amount they manage to avoid by paying what is to them a paltry £30k protection money to the treasury. All strictly legally.

However, in this time of national crisis, when every tax-pound goes to digging the nation out of its mire of debt, our taxmen have striven to shave back the tax-avoidance privileges from the merely wealthy to benefit only the extraordinarily wealthy.

Sunday, December 11, 2011 Posted by Jake 2 comments Labels: , , ,
As we pointed out in an earlier post, the maths shows that overall bankers' performance is no better than a monkey can do picking stocks at random - effectively like an index tracker. 

An academic study has found that Hedge Funds, who justify massive remuneration to their staff by their superior performance, actually perform only a teensy bit better than the market average. The industry gets away with this fib simply by not including their bad performances in their figures.

If premier league football clubs could rank themselves this way, they would all be champions with 100% wins - because they would not report the times they lost or drew.

Alpha is the posh term for the profit an actively managed fund earns over the index linked market average. Hedge Fund managers justify their vast remuneration by claiming consistent average returns of 3%-5% above the market. And they have managed to fool academics, regulators, and most importantly investors for years. The study shows that average returns are closer to 0.05% per quarter above the market.

Extracts from report:

Friday 9 December 2011

Friday, December 09, 2011 Posted by Hari No comments Labels: , , , ,
KJ and his father weigh up private healthcare over NHS treatment

Tuesday 6 December 2011

Tuesday, December 06, 2011 Posted by Hari No comments Labels: , , , , ,
And it could be before their five-year bonds have matured

Sunday 4 December 2011

Sunday, December 04, 2011 Posted by Jake No comments Labels: , , , , ,
By Deborah Hargreaves, Chair of the High Pay Commission
British business is facing a crisis. The public has lost faith in the corporate sector, which it sees as monolithic, money-grabbing and uncaring. Excessive pay for company bosses has added to the malaise. As those on middle and low incomes face a sharp squeeze in their living standards, corporate leaders are awarding themselves 49% pay rises. These bosses see little irony in then lobbying to repeal the 50p top rate of tax paid by those on £150,000 or more. These are the same leaders who are arguing for real-term cuts to the minimum wage, because, after all, aren't we all facing times of unparalleled austerity?
Directors' hypocrisy over pay reinforces the view among the public that businessmen are "in it for themselves". It is worrying that trust in big business has sunk to this extent when there is so much emphasis on the private sector leading us out of the economic crisis. In polling for the High Pay Commission, 79% of those questioned said pay and bonuses were out of control.
Our year-long inquiry has led us to believe that excessive top pay levels are not only corroding trust in business but also damaging society and the economy as a whole. In the last 30 years we have seen rewards channelled upwards. The top 0.1% of earners have pulled away from the rest at a rapid pace. In 1980, for instance, the boss of Barclays was earning 14.5 times average pay at the bank; the current boss, however, is on 75 times the average, representing a 4,899% rise over that 30 years.

During the same period average UK wages have gone up threefold and pay for a senior policeman or schoolteacher has risen sixfold. Of course, leading Barclays today is a different proposition, but the lives of a policeman and headteacher have also changed beyond recognition in that time.
Since the mid-1970s the general workforce's share of GDP has shrunk by 12%. For years, this sleight of hand went unnoticed – we all felt we were getting richer on the back of a rising housing market. But as the economic crisis has started to bite, the fact that company bosses seem to be living in a different world has become increasingly apparent.
Sunday, December 04, 2011 Posted by Jake 7 comments Labels: , , , , , , ,
A succession of government reports have shown that public sector pensions are not ballooning out of control, as is shown by this summary of government figures produced by the Institute of Fiscal Studies

And yet all the main political parties - Conservative, LibDem and Labour - are united in continuing to spout the opposite. 

Even without the shenanigans currently being fought over – raising retirement age; changing inflation link from RPI to CPI; changing from final salary to career average – the cost would stabilise (as shown by the Treasury 2004 forecast). This is inspite of the overall population aging, as is shown by the Office of National Statistics graph below. 

The ONS population pyramid graph shows how the population will age between 2010 and 2035. ONS figures state that the number of retired people in the UK will grow by 28%, from 12.2 million in 2010 to 15.6 million in 2035. 

Inspite of this growth in numbers of pensioners, there is still no explosion in pension costs as a share of national income. This is because national income is expected to grow more than enough to support this. The current proposals being pushed through actually bring the pensioners' share of national income below the current level, inspite of pensioners being a bigger share of the population.

The Hutton proposals will reduce the share of wealth, inspite of the share of pensioners rising. Why?

Pensions are paid for by company profits and tax. Cutting pensions is nothing about affordability, and everything about moving wealth from the poor to the rich. 

And that in a country that is already the most unequal in Europe, according to OECD stats:

Thursday 1 December 2011

Thursday, December 01, 2011 Posted by Hari No comments Labels: , , , , , , ,
Chris's pension fund manager chum chews over the obscenely large slice he takes from your savings pot

Monday 28 November 2011

Monday, November 28, 2011 Posted by Hari No comments Labels: , , , , ,
KJ and Fee discuss the UK's housing shortage

Sunday 27 November 2011

Sunday, November 27, 2011 Posted by Jake 2 comments Labels: , , , , , ,
Euro debt is being passed around like a ticking bomb wrapped in gilt edged paper. In this explosive game of pass-the-parcel, governments and banks are colluding in leaving the prize in the hands of ordinary ripped-off Europeans, including us Britons.

Greece, Spain, and even Germany are having trouble borrowing money. But, to be clear, they are not borrowing money to pay their running costs – keeping public services going – but to pay off their bankers. 

Governments borrow billions. To try and keep the costs down, they borrow money for different lengths of time, typically between 3 months and 30 years, so they can negotiate better terms with different types of investors. This means they have to continually re-finance their debt. As one loan becomes due, they borrow another chunk of money to pay it off. The Economist newspaper shows the gory details: figures for France, Italy and Spain show they need to borrow fresh € billions each week not to fund fresh spending but just to pay back their existing loans.

Sometimes a government may find itself a little financially embarrassed and ask for more time. The bankers will tweak up the cost, pocket some fees, buy everyone a good dinner, and roll the loan over. 

The Greek government has for some time been in a position where it can't pay. Money isn't there, it isn't approaching, it isn't anywhere in sight, not a sniff of it. This is when the bankers get worried. It is no different to the sub-prime mortgage crisis, except the banks can't foreclose on Greece. Nor on Spain, Italy, and certain other embarrassing states.

When a state says it can't pay, it is because new lenders aren't willing to loan money to pay off old lenders. Bankers are now left with two options:
a) Write off the loan, and take a whacking loss
b) Find a sucker on whom the loan can be palmed off (guess who)

Wednesday 23 November 2011

Wednesday, November 23, 2011 Posted by Hari No comments Labels: , , , , , ,
The gang discuss how to eradicate the influence of donors on the major political parties

Saturday 19 November 2011

Saturday, November 19, 2011 Posted by Jake No comments Labels: , , , , , ,
The debate on reducing the deficit circles stubbornly around two options:
Option1:           Cutting spending
Option2:           Continuing spending with borrowed money

Neither the previous Labour nor the current Conservative led government wanted to waste a good crisis: both eagerly took the opportunity to reduce the circumstances of us ripped-off Britons by cutting salaries, pensions, benefits, and laying people off. Proposals have been made to water down the minimum wage and allow employers to dismiss staff without a reason. Borrow more, or cut benefits and sack the less well off. The repeated lie that "we are all in this together". Both political parties chose to ignore the third option staring us in the face. The third way may not be a pretty option, but in this crisis none of them are. The third way, whisper it softly, a well targeted tax aimed at the best kept open secret tax haven.

Tax avoidance has taken many of its tactics from the natural world, including running and hiding, with the British government licensing many of the hidey-holes in Britain and in British overseas territories around the world for anyone who can afford the fees.

Another effective method used by plants and animals is disguise. By disguising themselves as another dangerous creature, harmless tasty bite-size morsels can successfully avoid their predators. As an example, the otherwise succulent spicebush swallowtail caterpillar scares off predators by mimicking a snake. (Picture from wikimedia by Michael Hodge). Financial services are masters at this tactic, claiming to tax or regulate them more would make the whole economy feel distinctly unwell and fall over. Government ministers of all shades, perhaps looking forward to topping up their retirement incomes with the occasional £25k fee making speeches at professional dinners, find this argument highly compelling.

Intriguingly, however, it is the opposite tactic not much used in nature that has proved the single most successful tax avoidance ruse in the UK. Little beasts sitting in plain site with a “Here I am! Defenceless and Delicious!” sign was presumably a ruse extinguished early on in the evolutionary race. The practitioners were rapidly snapped up and digested.  And yet, as a tax avoidance tactic it has been a thundering success. Highly visible displays of wealth - property, jewellery and other valuables - elicit not a nibble from the hungry taxman. A tactic like this can only work for those creatures who sit at the top of the food chain. 

The wealth that comes to us in the form of salaries, interest on bank savings, and the few other sources of income most people have are quickly and pitilessly taxed.

In the UK, the predatory taxmen have been instructed by their political handlers from successive governments not to take a bite out of another source of our more privileged brethren’s growing wealth: “Unrealised capital gains”.

Unrealised capital gains mount up in a chap’s possessions. The capital gain is the difference between what was originally paid for it, and its current value. It comes in the changing value of the property and share portfolios, the collections of furniture, art, jewellery and other such movable and immovable property, and a well funded pension. 

Friday 18 November 2011

Friday, November 18, 2011 Posted by Hari 2 comments Labels: , ,
Fee and KJ discuss one of the worst offenders for unpaid internships

Wednesday 16 November 2011

Wednesday, November 16, 2011 Posted by Hari No comments Labels: , , ,
The gang discuss recent inflation figures and the best way to manage them down

Sunday 13 November 2011

Sunday, November 13, 2011 Posted by Jake No comments Labels: , , , , , ,

The government’s initial response to the petition to make financial education in schools compulsory is that it isn’t really necessary. All that is needed, claims the government, is to encourage parents to teach their kids, and to tweak an existing non-compulsory “Personal, Social, Health, and Economic” school course about which I will come back to below.

Once again, our rulers see their prime responsibility as helping the companies help themselves. Successive governments have ensured weak laws, puny regulators, and now they would withhold education from children. After all, consumer law puts the responsibility of being "reasonably well informed" on the consumer. Keeping customers ignorant is a loophole in consumer law that bankers riding camels can canter through.

Times have changed so little, with the mass of the population regarded by our supposed guardians as lawful prey. Presumably they see themselves not as shepherds, but as game-keepers. 

The British ruling classes once had a simple formula when it came to their children. Knowing they needed a male heir and a couple of spares (in case of accidents) to ensure the inherited lands and chattels stayed in the family, they bred at least a brace and a half of sons. To keep the boys gainfully employed they plotted their career paths thus:

  • The oldest inherited
  • The second joined the army
  • The third became a priest
Not only did this keep the purse strings in family hands, it also kept those strings tied firmly as a garrotte around the neck of the nation. In churches around the country congregations once enthusiastically sang:

All creatures great and small,
All things wise and wonderful,
The Lord God made them all.

The rich man in his castle,
The poor man at his gate,
God made them high and lowly,
And ordered their estate.

To keep the poor at the first son’s gate, the third son would tell the population that god willed it so, and the second son threatened to thump them if they dared touch the railings.

Times change. Inheritance no longer goes automatically to the oldest male – not even the British crown. The priesthood and the army are no longer careers of choice among the wealthy. And that “rich man in his castle” verse has disappeared from the hymn in many modern hymnals.

However, “plus ça change, plus c’est la même chose”, the more things change the more they stay the same. From the way we Britons continue to be ripped off, it seems that the new mercantile gentry now dispose of their children thus:

  • The oldest becomes a banker
  • The second a regulator
  • The third a judge
  • The illegitimates become MPs
Land is not the cash-cow it once was - the cash-cow is now us ripped-off Britons. How else can we explain the series of ‘great escapes’ the financial services industry has pulled off? All passed with a cheery wave by the regulators and the courts: excessive overdraft charges; pillaging with-profits fund assets; excessive pension charges; the rip-off of teaser rates. Scams costing ripped-off Britons literally £billions that regulators, judges, and parliament have decreed to be just fine.

The illegitimates in parliament have given their initial response to the  petition to make Financial Education compulsory in schools, which successfully reached its target 100,000 signatures. Reaching this target means the government must consider debating it in Parliament. The government asserts that this task can be taken on by parents helping out their kids, plus tweaking the PSHE curriculum a bit.

They claim that “Parents can also play a crucial role in helping young people to become financially aware..” Really? Repeated corporate shenanigans have shown that companies from banks to telecoms to energy to supermarkets find bamboozling their adult customers a very easy challenge. One reason parents are so easily ripped off is because there was no compulsory financial education during their school days.

So let’s take a closer look at the government’s other assertion that improving the quality of “Personal, Social, Health and Economic (PSHE) education” will prepare the children for the world of finance. We assume, being the optimists we are, that the government’s idea of preparation doesn’t involve laying the sucklings on a silver tray with an apple in their mouths and sprigs of parsley between their toes. So what is PSHE is all about?

Friday 11 November 2011

Friday, November 11, 2011 Posted by Hari No comments Labels: , , , , , , , ,
Chris and his wife get their cheque book out

Wednesday 9 November 2011

Wednesday, November 09, 2011 Posted by Hari No comments Labels: , , ,
The gang discuss ways to make Britons waste less food

Sunday 6 November 2011

Sunday, November 06, 2011 Posted by Jake 3 comments Labels: , , , , , , , ,
Ripped-off Britons
So the Church lifted its threat to send in large padded men to throw the campers out, and the protest outside St. Paul’s Cathedral in London continued. In a conversion on the road to the High Court worthy of St. Paul himself, the clergy suddenly realised “what Jesus would do” if he were physically, as well as spiritually, in the Cathedral. Jesus would be applying the toe of his physical sandal to their highly embroidered clerical backsides. Who were the greater malefactors when Jesus threw the money lenders out of the temple in Jerusalem? The moneymen, who were suckering customers with every rip-off man’s laws and the regulators permitted? Or the priests who succoured the moneymen?

This blog has repeatedly stated: deal with the excessive profits and the bonuses will deal with themselves. For Ripped-Off Britons to be less ripped off, the amount of the bankers’ bonus in itself is irrelevant. It is the rip-offs that pay for the bonuses that are the problem.

Blocking bankers' bonuses can easily be dismissed as being envy driven. On the other hand, reducing rip-off profits is just good sense. Bankers will argue that their profits aren’t rip-offs, but are the fruits of their being extremely clever and courageous. The hilarious speech by Bob Diamond, the boss of Barclays Bank, on the BBC is a good example of what they want us to believe. Having said in January 2011 that the “period for remorse and apology” was over, his latest position is “we have to accept responsibility for what has gone wrong". “We know it's not enough just to apologise” says uncle Bob. 

Diamond pointed out that banks provide an important service, including putting together a pool of investors who can lend money to, among others, governments to service their debt. He said that government debt as a proportion of GDP is

He didn’t need to look back 10 years, 3 years would have been enough as the debt more than tripled in 2008 at one of the heights of the banking crisis, because governments borrowed money to bail out the banks. And the banks now make handsome profits lending money to governments to cover the loans taken by governments to bail out the banks.

 Diamond went on to talk about the people he had met, including

  • When I was in Yorkshire earlier this year, I met R&R Ice Cream. R&R Ice Cream started as a small family business...
  • I also met with Swann Morton in Sheffield, the home of steel manufacturing. They began in the 1930s making razor blades for the UK.
  • Sukhpal Singh is an entrepreneur I met in Cambridge who came here as a refugee from Uganda in the 1970s. At the age of 18 he borrowed £5,000 - from his father and from a local bank - to buy a car parts shop in North London.

In the post-speech interview with BBC Radio4’s John Humphrys, Diamond said that Bankers can be cuddly. So lets take a closer look at how cuddly they are, in an area where just about every one of us is affected – our bank accounts.

With Which?, the organisation championing consumers, and the ironically named Financial Services Authority (FSA), whose purpose has never been clear, highlighting potential problems with Packaged Current Accounts, we shall look more generally at personal bank accounts which earn the banks £billions in charges. (The FSA’s hyperactivity in the final months before its abolition is akin to a drunken uncle who having disgraced himself at dinner insists on doing the washing up to try and leave behind a more positive memory.) We shall see whether the £billions of profits are the rewards of being extremely clever and cuddly, or just the proceeds of thuggish muggings.

Friday 4 November 2011

Friday, November 04, 2011 Posted by Hari No comments Labels: , ,
A job seeker lies to Chris about his qualifications in order to secure work

Wednesday 2 November 2011

Wednesday, November 02, 2011 Posted by Hari 1 comment Labels: ,
Fee and KJ discuss the Danish pension launch in the UK

Sunday 30 October 2011

Sunday, October 30, 2011 Posted by Jake 1 comment Labels: , , , ,
Martin Lewis, of fame, started an e-petition to the British government: “Make financial education a compulsory part of the school curriculum”. To see the petition, now closed, click >>HERE<<. The petition successfully exceeded the 100,000 needed to be considered for debate in Parliament. The higher the number of signatures, the harder it will be for MPs with their ignominious record of failing to legislate against rip-offs to consider and reject debating this in parliament.
Ripped-off Britons: Internal struggles

We share an objective with Martin Lewis. The objective: to build financial capability among Britons, and make them less ripped-off. This is a struggle on many fronts, but none more fundamentally important and potentially effective than education in schools. Astute young people protect themselves, their friends and relatives, and later their own children - creating a virtuous circle.

The rippers-off come from all sectors – energy, telecoms, retail – but they are lead by the example set by the financial services industry. They rip off because it is profitable and they rarely suffer any significant sanction. The most effective sanction could be applied by educating the customers to see and understand how they are being ripped off  - customers turning away and rejecting the deals because they can spot the rip-off in the first place.

Imagine, a school syllabus that includes the various rip-offs of the past. Homework analysing the impact of a rip-off - parents by helping their children at home will themselves learn. A class project to "design your own rip-off", to help the student understand the mentality of the corporate executives who create and promote these things. Examinations and assessments, and more...

The banks and insurers spend great fortunes on building trust with us Britons. They are already going into schools to build trust with the children, explaining why it’s a good idea to save, to borrow, and to insure. But unsurprisingly they fail to drum into the little darlings how to spot and avoid the rip-offs.

After all, every successful rip-off stands on a foundation of truth:
  • Saving is a good idea:  
    • Though excessive fund charges can swipe upto 50% of your investment, leaving you in poverty in spite of a lifetime’s saving. And if you are not eternally vigilant, your savings accounts with tempting "bait" rates are sure to drop to a measly 0.1%.
  • Borrowing is a good idea:
    • Except when you are tempted into taking on excessive debt by continual hikes in your credit card limit. Or by low teaser rates, that then jump up after a few months to strangle your finances.
  • Insuring is a good idea:
    • Unless you are sold insurance that it is impossible for you to claim on.
Building trust is their first step. “My word is my bond”, the banker’s lofty statement as he looks you straight in the eye, appealing for your trust. “Trust me and take me at my word. If I say it is a great product, then you can assume it is, so just sign here”. Make no mistake - Financial Services and other industries will look you straight in the eye, and then poke a sharp stick into it to try and pinch your eyeball.

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