Where angels fear to tread..

So, here I am, rushing in like a fool… (and interspersing my rant with palinisms, thus inspiring complete confidence in the down-home wisdom of anything I say)

I can understand pretty well nothing about the “credit crunch.” Except that we seem to have got worse and worse at naming things. The “Great Depression” has a certain grandeur. The “credit crunch” sounds like a crappy breakfast cereal.

* hey joe*

And naming things seems to be the crucial component of this crisis. When “money” is the cause of the whole fiasco, it must be so much a matter of what people believe. Money is paper backed up by promises. If you don’t trust the promises, what value does the paper have? As far as I can see, once money is divorced from production there is nothing to back it up.

If a steelworks goes bankrupt, it has assets: plant, materials, the skills of its workforce. Someone else can buy its carcass and make steel. If a bank goes bankrupt, all it has is the ghost of bits and bytes on a computer system. You surely couldn’t treat the financial skills of its money-making experts as a saleable commodity, on the present showing.


Is it possible that enough people have £50,000 in savings to make it worth the UK government’s electoral while to guarantee £50,000 rather than £33,000?

How the fuck could anyone “save” £50k? The “savings” word conjures up an image of respectable austerity. Making do and mending. People buying supermarket own-brand tins of beans, rather than the costlier branded version. Darning sweaters rather than throwing them out at the first hint of a hole. Do me a favour, guv. (Affects cockney accent.)

This sort of stuff might save you £50 a year at most. So that’s a thousand years of savings then. Let’s be insanely generous in the estimate. Imagine our conceptual saver is dining on bread and dripping (I’m not sure what that is, but it sounds economical) and saving £500 a year. That still means it would take a hundred years to save £50k

I can think of a few circumstances in which a reasonably well paid person might have £50k (such as having sold their house and keeping hold of the money until they can buy another.) However, people in that situation can’t account for any notable fraction of the population.

So let’s do away with any idea that the £50k limit represents “savings” rather than bank deposits. The newspapers are full of the horrific possibility that people with more savings (maybe about 3% of the bank customer population) might take their money to another EC country, unless the government guarantees it all. In fact, all EC countries seem to be facing this horrific possibility and are randomly guaranteeing or not guaranteeing all deposits, depending on the time of day.

*you betcha*

Hmm. Isn’t that the nature of global capitalism? This free movement of money, yada, yada, that we’ve been getting told (for decades) is the solution to all social evils. The money supply must be freed from constraints. The markets bring prosperity through some miraculous trickle-down effect. Any constraints upon the money markets would destroy free trade, and so on.

So, how confused am I? Don’t tell me that was made-up stuff? Who’d have thought it?

Irony upon irony. The IMF reckons the US economy (and hence, the rest of the world’s economy) is in much worse shape even than we’ve been told.

* big shout out to class 6b*

In its latest twice-yearly Global Financial Stability Review, the Washington-based institution dramatically raised its estimate of losses to the US banking system to around $1.4 trillion (£800bn), 45% up from the $945bn it estimated in April and reaffirmed just two months ago.(from the Guardian)

So the billions that Congress has finally agreed to hand over are not going to cover more than a little section of the losses? (The spare $billions that can be instantly conjured up from the vaults but just weren’t available to prop up failing real industries or to provide free healthcare system?)

As soon as banks are in trouble, nationalising them is acceptable. Once as they start to show any profit again, they’ll be handed right back, of course.

If there aren’t a few people with wealth beyond the proverbial dreams of avarice, the rest of us are in trouble, you see.

Well, no, I don’t really see. However, I can quite see how the losses of the mega rich have trickled down, so that minimum wage-earning taxpayers get a democratic share in those losses.

We were being told, only recently, that taxing the mega rich was a “bad thing” because, then, we wouldn’t benefit from their wealth-creating magic if they weren’t free to accumulate as much wealth as they wanted. How satisfying to find that they now believe in share and share alike.

*winks girlishly*

5 thoughts on “Where angels fear to tread..

  1. Do people need to have £50k of savings in their account to feel like the guarantee affects them? There’s also the matter of aspiration. There’s been a lot of people going out and buying decking for the back garden and avant-garde cushions for the living-room to boost the value of their house. As anyone who watches TV knows your house is a gold-mine. Or at least it would be if the housing market wasn’t in the toilet too, but the kind of people who think they can make money doing up their own house aren’t going to be too bothered about that. There’s the lottery too. What’s the point of winning £50m on a rollover if you only get to keep £50k of it?

    Your problem Heather is that you will insist on paying attention to reality. 😛

    Still it could all be solved. I’m working on the lyrics for a charity single to raise money to solve the crisis. But so far all I have is:
    A bitter wind is blowing through the city,
    The parties all have very few delights,
    The bonuses are barely multi-millions,
    (Bono shouts out this next line: )
    Spare a thought this Christmas time for your parasites.

    I thought “Bleed the World” would make a good title.

  2. No need to be insulting to hard working savers.

    `How the fuck do you save 50K’?

    Get a decent paying job (a good education can help but isn’t necessary), and then spend less than you earn. It’s as simple as that.

    And what’s wrong with `mending and making do’? If that’s what it takes – it’s a lot smarter than being in or on the verge of debt your whole life, don’t you think? Let alone more sustainable and less wasteful. No need to look down your nose at it, `I can’t cook/sew/fix stuff!’ is hardly a badge of honour worth wearing, is it?

  3. Mike

    Where to start?

    Insulting hard-working savers? What???? Where?

    And you are speaking to the uncrowned queen of making do, although, admittedly, not of mending.

    Most people, no matter how hard they work and how well they are educated and how good they are at darning socks don’t have £50k.

    How many people can “save” £50k? You could maybe get £50k from an Inheritance or a business deal, or you could live at the expense of relatives and save all your money. But very few people could save £50k from their wages? Is it insulting to these few people to say that they are pretty much in the minoroty.

    Alun made a good point about aspiration. Some people might aspire to being able to save £50k but hoping doesn’t make it so.


    Great idea. This was in Newsbiscuit the other day. http://newsbiscuit.com/article/geldof-launches-bank-aid-as-markets-plummet-370

  4. michael, i really fail to see how heather has been insulting to hard working savers, while your comment seems to imply that people who don’t have over £50k in the bank are badly educated or frivolous with their money.

    The average “hard working” person with a good education is taking home under £2k per month. From this they will have to pay in the region of £800 per month for rent/mortgage, another £400 on food and £150 on fuel. The truly austere will be able to save £650 per month. After 10 years they’ll hit the savings limit… If they haven’t cracked and say, bought a car. Thor forbid they are daft enough to get married….

    The government figures, and banking figures, point to 93% of all UK savers having under £35k and 95% being under the £50k threshold. Not all of these will be spendaholics.

    The sad truth is, as with all things, the poor will be forced (through increased bank charges, taxation etc) to provide insurance for a rich minority. That is not an insult on the rich, but it is unfair on the poor.

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