Our message to Ripped-Off Britons: be resolute! Rip-offs harm everyone: victims, perpetrators, and bystanders.

It is said to be impossible for a person to strangle himself with his own bare hands. Apparently when you pass out your grip loosens (we do not recommend that you try this). Does what applies to a person apply to a nation? Britain is now in the throes of gripping its own neck, with the top striving to cut down what goes to the regions below. Those at the head of the country forget that while it is the nose (above the neck) that sucks in the oxygen, it is the lungs (below the neck) that pass that vital element to allow the whole including the head to survive; it is the stomach (below neck) that digests the nutrition masticated by the mouth (above neck); it is the arms (you probably get it by now) that put on the makeup and brush the hair that makes the face look so fetching. However those at the head of the nation who hold the political and economic levers manoeuvre to restrict the stuff of economic life – pay and pensions, education and opportunity, and freedom from rip-offs – flowing to the main body of the nation. And they claim it is for our own good, as “we are all in it together”.

We believe capitalism is a good thing. But it has been misrepresented and misconstrued as a culture of “grab and get away with what you can”. From bankers’ bonuses to MPs expenses this has infected every sector of Britain. “Capitalism” and the “Free Market” are good things, but labelling something as one of these does not make it good. Shakespeare’s wisdom, from the mouth of Romeo’s Juliette, “a rose by any other name would smell as sweet”, also applies to a stink-hole which by any other name still stinks.

Changing the culture of rip-offs in Britain has as much to do with the ripped-off as the rippers. It is not a matter of our looking harder for the best deal and switching providers more vigorously. All the misleading and teasing make the choice of banks, insurers, energy, telecoms and other goods and services providers, and also of political parties, a case of out of the frying pan into another frying pan. We ripped-off Britons need to change our mind-set.

In this post, we suggest three changes in all of our Ripped-Off British attitudes.

Adam Smith, that icon of capitalism, envisaged an “invisible hand” which urges events in the best possible direction as a result of everybody behaving selfishly. Bankers, MPs, top executives, the leaders have all done their part straining their selfishness to the utmost. The big fish in the pond see no reason to do otherwise, selfishly misrepresenting their actions, to themselves as well as to the general public, as “Capitalism” and the “Free Market”. “Doing god’s work” is how the chief of Goldman Sachs described the bankers, shortly after they had put a torch to the World economy.

But for us minnows, we the ripped-off Britons, selfishness is neither a sufficient nor necessary condition. Selfishness requires us to care nothing for the bankers, MPs and executives. But selfishness also requires us to care nothing for other ripped-off Britons.

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Human Capital - British government puts a value on Britons

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:

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Liebrary: Pension costs are ballooning out of control? Actually, the share of GDP going in pay and pensions has been DROPPING!

"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 

(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.

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Ripped-Off Britons Quiz - without answers

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. 

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Ripped-Off Britons Quiz - WITH ANSWERS!

This post gives the answers to the Ripped-Off Britons Quiz. If you want to see the quiz without answers then click  >>>HERE<<<

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European Central Bank unlimited loan facility - apres le deluge, encore un deluge

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?

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HMRC complicit with £25bn of tax dodged by corporates?

Chris discusses the revelations

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Christmas is a time for giving bankers their bonuses. A festive guest blog from a trading floor in the City

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?

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Liebrary: Is cutting pensions needed for the country to recover from the Banking Crisis?

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. 

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Liebrary: FSA fines don't penalise, but are actually used to subsidise the financial services industry

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.

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