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Monday, 9 July 2012

Let The Banks Fail

The Bank of England recently announced a new tranche of Quantitative Easing. Or, as the more watchful amongst us call it, Money For Mates because, although it's always sold as injecting cash into the economy to stimulate growth, QE almost always involves no physical cash at all and its main purpose is to bolster the balance sheets of our major banks. Thus far, the Bank of England has committed £375 billion to this programme.

Just for the sake of context, that's £375,000,000,000. Or, to put it another way, about three times as much as the UK Government spends each year on Pensions; three times as much as we spend on Health; more than four times what we spend on Education; and nine times more than our annual Defence budget.

The hope was that this would encourage banks and financial institutions to lend more. The evidence shows that this has not been particularly successful and that the banks have held on to as much of this new 'cash' as they thought they could conceivably get away with. 'Fine,' some will say, 'it's a price worth paying to prop up the banks. Banks failing would be a disaster.'

We might never get an accurate figure for the initial bank bailouts - totally separate from QE - but a reasonable estimate appears to be in the region of £1.2 trillion.

A total spend, over four years, on the banking sector of close to £1.6 trillion.

One wonders how much it might have cost to save the UK coal-mining sector and the jobs of around 100,000 men, thereby preventing the social and economic devastation of dozens of communities?

How about the British steel-making industry? Shipbuilding? Car manufacturing?

For how long could all four industries been sustained with £1.6 trillion and rising?

Of course, those workers had the misfortune to be in industries that were not centred on London and the south-east of England. It is clearly more acceptable to Westminster Governments (especially Tory ones) that the social fabric of Corby, Castleford, Consett, Cardiff and Cumnock be devastated before the millponds of Chigwell, Chobham and Chertsey should suffer a ripple.

Those workers in the traditional heavy industries of the last century contributed little to their downfall; the 'workers' in the banking sector were not only responsible for their own house of sand disintegrating but managed to take everyone else down with them.

The men of the mines, steel mills, shipyards and car production lines worked hard for a decent days pay. Those in the trading rooms and back offices were greedy, irresponsible bastards who gambled our money in pursuit of obscene pay cheques and million pound bonuses.

The rewards for the honest, hard-workers? Multi-generational unemployment with the prospect of positions in call-centres if their luck was in. For the bankers? Trillions of our money in bail-outs; jobs saved; business as usual; bonuses continued; and the manipulation of Libor rates.

But, of course, many cry, we couldn't let the banks fail, could we? Well, yes, we could.

Let's be clear. Retail banking would have survived. Properly run, it's a profitable business. That side of banking would have been saved.

Merchant banking. Casino banking. We could have happily let that fail. Sure some dealerships would have sold less Aston Martins. Powerboat sales would, no doubt, have plummeted. Some high-end restaurants would have struggled. But those who spent other people's money would have been jobless. Big deal.

But what about our deposits?

Well, unless you had more than £53,000 in the bank, you were covered by Government guarantees. In most cases, that guarantee would have covered you for individual accounts at separate banking institutions. Joint accounts with a partner would have been covered up to £106,000. These days the figures have been raised to £85,000 in line with European regulations, so even fewer of us fall into the affected categories. Of course, even if you tend to have more than that lying around in bank accounts, then you're also likely to have access to 'specialist' accounting or brokerage services to mitigate your risk.

The average Briton has around £2,200 in bank accounts, with one in four having nothing at all; the averages pushed up by those in the 95th percentile and above who have serious money in the banks. So forget all the guff that the banks were saved for our benefit - those billions were spent for those that already have the wealth.

The Tories always tell us that the market is king; that market forces must be allowed to decide everything. That's what accounted for mining, steel, shipbuilding and car manufacturing in this country. Well, let the markets decide what happens to the banks and withdraw the bailouts and the quantitative easing and let's see what happens.

But then, of course, the banks, the financial institutions, the big pension funds and other corporate investors ARE 'the markets'. They decided that towns throughout the Midlands and the North could be allowed to die. They're now voting that the City of London should survive.

Turkeys don't vote for Christmas - especially greedy, fat, bloated, corrupt turkeys.

Thursday, 5 July 2012

Argylls Dead; But Irony Alive and Kicking

So, the cap badge remains but today the United Kingdom Government, Her Majesty's Government, effectively disbanded the Argyll & Sutherland Highlanders. At the same time, Her Majesty installed her grandson, William, as a Knight of the Order of the Thistle - the highest honour available in Scotland. Apparently.

Well, call me an old romantic but perhaps many in Scotland previously considered the highest honour available would be the opportunity to serve in the defence of Her Majesty's Realm alongside comrades drawn from the same part of Scotland; sharing the regimental history and all that military heritage we're told is an integral part of the positive case for Union; rather than having the good fortune to enter the world via the birth canal of Charles' concubine of the moment.

However, as Her Majesty's Government seems intent on denying young Scots that opportunity in the future, I look forward to the announcement of a compensatory apprenticeship scheme that focuses on medal and sash making - allowing us to keep up with the demand for honours amongst Liz's immediate family.

The British Army, in 1978, numbered around 160,000. By the time these new measures are fully in effect, it will have shrunk to around 80,000. During this transformation, Scotland's infantry regiments have been decimated - the reward for three hundred years of service to the Union.

Now, perhaps we should be thankful that the world is in such fine fettle that we no longer need such troop numbers. That would be a matter of celebration for all. But it's never that simple is it? In fact, for all the politician's talk about these changes being about the effectiveness of the military instead of cost-saving; it is indeed completely about cost-saving.

At the moment, we have just over 100,000 personnel in the Regular Army with 15,000 Reservists. A total of 115,000.

Under the new plans, we'll have the 80,000 Regulars and 30,000 Reservists. Or 110,000.

So the world isn't safer. The MOD has virtually the same amount of firepower to call on when the next Iraq blows up, it just gets it on the cheap! So, Syria and Iran should not take any comfort from these announcements - we might still be coming for you next!

Of course, we have other priorities requiring funding, so it may be a little harsh to criticise the Government. After all, aircraft carriers with no aircraft and upgraded weapons of mass destruction don't pay for themselves, do they?

Although in an age when we're constantly reminded that the real future threats to this country are from terrorist organisations and not other states, it's unclear what use Trident will be. Or aircraft carriers - even if they had planes on the deck.

Luckily an independent Scotland won't have Trident or aircraft carriers. So, perhaps, we might be able to pay for a few more actual soldiers (perhaps even reconstituting the Scottish regiments); hopefully making us safer from those dastardly terrorists.

Unfortunately not, it seems. As both The Herald and The Scotsman very helpfully told us this week, an independent Scotland would be particularly susceptible to a 9/11 style attack because we might not be able to afford the most sophisticated fighter aircraft. Funny, but I'm sure the Americans had the world's most sophisticated aircraft and air defence systems. Wonder what went wrong?

Because the Scottish quality(?) press can't be wrong. Can they?