Saving The Economy

While it is essential that effective measures need to be taken to stimulate the economy, careful consideration must be given to the form that the measures take and the effects – by no means all of them good – that the measures have on different groups of people. In my opinion we need to assist the long-suffering saving community.

There has in my opinion been far too much reliance on keeping official interest rates low. This feeds directly through to savers though some borrowers, especially the less well off, are charged horrendous, usurious rates quite legally. There should be a much greater emphasis on public works such as useful aspects of transport infrastructure, particularly rail (and I do not mean HS2 here), power generation and increasing the nation’s pitiful fuel storage capacity.

In the present circumstances low bank rate and quantitative easing have only limited positive impacts on the real economy as we endure the worst recession (quibble about definitions if you must) since the 1930s. Furthermore, rock bottom interest rates hit savers immediately and have only been partly passed on (in some cases loan charges have been put up by banks) to borrowers.

Savings are the bedrock on which long term investment should be built. Not only this, but savers, particularly older people in or near retirement, have had their incomes severely reduced by interest rates which continue to be at derisory levels on savings accounts even at banks such as the Co-op that it might be thought had retained some shred of respectability. Ways must be found to moderate this highly adverse impact on responsible people who are trying to live within their means, provide for themselves and indeed set a good example to others.

Furthermore, the economic effect of rate cuts can even be the opposite of that intended. The substantial income reductions for savers mean that they have less money available to spend. Indeed in Japan in the 1990s the experience was that as interest rates were progressively pared back people saved even harder to make up the lost income and so deflating the economy. But then the Japanese can be more traditional, a quality that is reflected in the fact that the Yen has risen and the Pound has fallen. How we have lost our way!

As we have seen, it is certainly no use relying on the commercial banks to be reasonable about interest rates to savers. There needs to be action by the Government. We certainly need banks that are operated in the people’s interest and which provide secure and reasonable returns to savers. If the Government won’t provide such a bank then local authorities should be encouraged to step in to act in the public interest.

You guessed it - re-instate the Birmingham Municipal Bank. Why do I keep on plugging this? Because hopefully it will become clear in the fullness of time that the commercial banks are useless so far as ordinary people and small firms are concerned and that politicians will stop deceiving themselves that their friends and bankrollers in high finance will ever consider the people, the economy and the nation as much as their ever-beloved bonuses.

Banks Take Note!

The following is claimed to be a letter that was sent to a bank in the US by an 86-year-old woman. I can't vouch for the authenticity but it certainly makes a 'telling' point! The letter was published in New York Times. Apparently the bank concerned was amused, but has it or any other bank here or in the US changed its ways as a result or is it just something to laugh at while they count their bonuses?


"Dear Sir:

I am writing to thank you for bouncing my check with which I endeavoured to pay my plumber last month.

By my calculations, three nanoseconds must have elapsed between his presenting the check and the arrival in my account of the funds needed to honour it. I refer, of course, to the automatic monthly deposit of my entire pension, an arrangement which, I admit, has been in place for only eight years. You are to be commended for seizing that brief window of opportunity, and also for debiting my account $30 by way of penalty for the inconvenience caused to your bank. My thankfulness springs from the manner in which this incident has caused me to rethink my errant financial ways.

I noticed that whereas I personally answer your telephone calls and letters, when I try to contact you, I am confronted by the impersonal, overcharging, pre-recorded, faceless entity which your bank has become.

From now on, I, like you, choose only to deal with a flesh-and-blood person. My mortgage and loan repayments will therefore and hereafter no longer be automatic, but will arrive at your bank, by check, addressed personally and confidentially to an employee at your bank whom you must nominate.

Be aware that it is an offense under the Postal Act for any other person to open such an envelope. Please find attached an Application Contact which I require your chosen employee to complete. I am sorry it runs to eight pages, but in order that I know as much about him or her as your bank knows about me, there is no alternative. Please note that all copies of his or her medical history must be countersigned by a Notary Public, and the mandatory details of his / her financial situation (income, debts, assets and liabilities) must be accompanied by documented proof. In due course, at MY convenience, I will issue your employee with a PIN number which he/she must quote in dealings with me. I regret that it cannot be shorter than 28 digits but, again, I have modelled it on the number of button presses required of me to access my account balance on your phone bank service. As they say, imitation is the sincerest form of flattery.

Let me level the playing field even further. When you call me, press buttons as follows:


Immediately after dialling, press the star (*) button for English

1. To make an appointment to see me.

2. To query a missing payment.

3. To transfer the call to my living room in case I am there.

4. To transfer the call to my bedroom in case I am sleeping

5. To transfer the call to my toilet in case I am attending to nature.

6. To transfer the call to my mobile phone if I am not at home.

7. To leave a message on my computer. A password to access my computer is required. Password will be communicated to you at a later date to that Authorized Contact mentioned earlier.

8. To return to the main menu and to listen to options 1 through 7.

9. To make a general complaint or inquiry. The contact will then be put on hold, pending the attention of my automated answering service.

0. This is a second reminder to press* for English. While this may, on occasion, involve a lengthy wait, uplifting music will play for the duration of the call.


Regrettably, but again following your example, I must also levy an establishment fee to cover the setting up of this new arrangement. May I wish you a happy, if ever so slightly less prosperous New Year?


Your Humble Client"

Trees for Life

Birmingham Trees for Life is an inspirational project devoted to promoting awareness and understanding throughout the city of the value and importance of trees. Trees for Life also campaign to raise money to enable more trees to be planted, and to encourage the involvement of everyone, especially young people, in planting trees.

Whether you live near an open space that needs more trees, or would like to plant a tree to commemorate a special event, or are just want to do your bit for the environment, Birmingham Trees for Life could be of interest to you. If you are a Birmingham-based business, perhaps you would like to get out and do something of value to your community – why not sponsor tree planting or tree-related activity in your city?

Every winter BTFL organises tree planting events in parks and public open spaces across the city. The City Council owns these parks and BTFL works in partnership with the Parks Managers, Rangers and Friends of Parks. If you know of a park near you that needs more trees, please get in touch.

This year BTFL will be holding no fewer than thirty events and are looking to begin planning events for next year. I have taken part in some of these events in the last couple of years and judging from the experience and enthusiasm of schools so far involved I am sure that the educational as well as the environmental benefits are very great.

More information and a list of all upcoming events organised by Birmingham Trees for Life can be found on their website at

 http://www.btfl.org.uk

or if you would like to contact BTFL directly you can do that either by email to:

 bhamtreesforlife@gmail.com

or by post to:

Birmingham Trees for Life

The Birmingham Civic Society

9 Margaret Street

Birmingham B3 3BS

More Charles Dickens than Adam Smith

The recent 200th anniversary of the birth of Charles Dickens reminded me that many of his characters, drawn from life, had a great struggle to keep warm with miserly bosses and an economic structure designed to benefit the few. This thought rang some bells. The recent modest and overdue fuel price reductions will have an equally modest effect on ordinary people struggling to raise families and pay mortgages and the millions who are already in fuel poverty. And there has been talk recently that the coldish snap may mean prices going up again!

In my view, the fuel companies benefit from a so-called ‘market’ where the main competition is about getting away with new charges and inflated prices, making more profits, taking bigger bonuses and treating people as monetary cannon fodder They point to rising prices in wholesale ‘markets’. They choose the timing and extent of price changes to suit themselves. Like other notorious sections of business today, they operate in effect, quite legally, as an informal cartel. They set their prices and margins in the same way and take it in turns to hike prices according to what they think they can get away with. Whether its gas, electricity or petrol one thing is certain, unless there is action rather than talk they will get away with a lot more of our money and their profits will not suffer one bit as a result.

Still, at least we needn’t lose sleep at night worrying about their executives’ remuneration; they at least will be comfortable in success or failure. Even if pensioners can’t afford to keep a room warm and you can't afford to use your car at least the board will still have money to burn!

In my opinion there should certainly be windfall taxes on fuel, power (and other) profiteering – the only question should be about the extent. It is clearly wrong that companies should make fat and inflated profits while people struggle to make ends meet, faced with rapidly rising costs for other essentials such as food or even hanging on to their own homes.

Electricity generation is now dominated by six firms that can in turn dominate you and me. Industry ‘regulation’ in all quarters has been weak under successive governments and will remain so. The exhortation to ‘shop around’ is worth little over time, it is a nuisance to do and a third of switchers actually make themselves worse off. And do they think that elderly people who have built the country up should be spending their retirement ‘switching’ between fuel companies (and banks) to reduce the extent to which they are exposed to highway robbery?

In my view also it is no defence for these organisations to retort that they are operating globally. Who has paid to make their fat global profits possible in the first place? We have! We’ve already paid ‘global’ companies with the British jobs they have exported and the higher prices they extract from us for the same products sold in other countries. This has fattened their profits and we’re entitled to a return on that too!

Since privatisation, foreign owned firms with even less concern for people here, sell North Sea gas to themselves during the summer for storing it in Europe and reselling here at higher prices in the winter. Those companies who use (by whose consent?) the label ‘British’ should be made to act as if they were. Big business in general should not be a morality-free zone. They should think of those who have to eke out a small pension. They talk about their tough choices. How would they like to try the really tough choice between food and warmth?

Those who take big from society should also give back in comparable measure. Long gone are the days when some of those in near monopoly positions could be relied on to do this to some extent on their own account – or to be socially responsible in the first place. So they need now to be taught by national action about the national interest and the common good not to mention gaining an understanding the Dickensian world that they are helping to re-create.