Crypto Currency & Self Destruction

My understanding of finance is fairly basic. In order to function in society you need to work to earn money, which you can then spend or save for a rainy day. Your money can be in a bank, in investments, or under the matress. Banks are there, backed up by collateral, to keep your money safe, accessible & earning interest. Investments may do well & earn you profit, or badly & you lose money.

Modern finance is way beyond my understanding. Since we sold off half our gold reserves between 1999 - 2002 at the lowest gold price in 20 years, we no longer have as much actual wealth to underpin banking. Stability is crucial for national economies, as gold helps preserve wealth and purchasing power when other assets may lose value. In addition, these gold reserves act as a safety net for Central Banks and help ensure they meet their obligations during times of financial crisis. 

Quantitative easing, where banks purchase financial assets, and essentially increase the cash flow in the economy, literally seems to me like printing monopoly money. But what do I know? It can lead to asset inflation, wealth inequality, and potential for long-term instability. It can also lead to distortions in the housing market, devaluation of currency, and difficulties in reversing the policy. 

Crypto currency is way beyond my skill set. Crypto exists digitally or virtually and uses cryptography to secure transactions. Crypto currencies don't have a central issuing or regulating authority, instead using a decentralized system to record transactions and issue new units. This is a public ledger called blockchain, a record of all transactions updated and held by currency holders. Bitcoin came first in 2009. Now there are thousands of crypto currencies. To me that is "mumbo jumbo". Individual cryptocurrency projects or platforms, but seemingly not all, can be fraudulent and resemble Ponzi schemes. Some cryptocurrency projects, particularly Initial Coin Offerings (ICOs), have been falsely marketed as investments offering high returns with little risk, resembling Ponzi schemes. Warren Buffett called the digital currency Bitcoin “probably rat poison squared.”

 

Having said all of that, my major beef is that, along with Streaming & AI, Crypto is really bad for the environment. Each bitcoin transaction generates carbon emissions roughly equivalent to driving a gasoline-powered car between 1,600 and 2,600 kilometres.Crypto high energy use often leads to increased greenhouse gas emissions, contributing to climate change. In 2018 the level of emissions produced by Bitcoin sat between the levels produced by the nations of Bolivia and Portugal combined. Crypto's complex Proof of Work (PoW) process, requires substantial computational power. If electricity fails blockchains would be unable to verify transactions.

Basically, we are not Lemmings running over the cliff. We are human beings on the road to perdition & self destruction. 

My Trade Deficit v Trumps

I have a trade deficit with M&S & Sainsbury's among others. I buy most of my food & household goods from them. I must have spent a fortune over the years. But they don't reciprocate, they don't buy anything from me. So I'm really p..... off. I think I should operate tariffs against them. The fact that I don't make anything they might want to buy is immaterial. A trade deficit is unfair & annoying. I feel badly mistreated. 

That is the "logic" behind what Trump has done with tariffs worldwide. He certainly didn't base them on a combination of existing tariffs and other trade barriers (like regulations). He had a mathematical formula 

that no one had ever heard of which took the trade deficit for the US in goods with a particular country, divided by the total goods imports from that country and then divided that number by two. He simply thought he could eliminate the US's goods trade deficit with each country. Unbelievable!

Americans spend and invest more than they earn. The US buys more from the world than it sells. As long as that continues, the US will continue to keep running a deficit despite increasing tariffs with global trading partners. The "great deal maker" simply doesn't understand economics & trade. Worse still, if there are any dissenting voices, & there are, he doesn't listen. All he listens to is the sycophants who actually clap him in televised cabinet meetings. It's all about ego & image.

Thomas Sampson of the London School of Economics said: "There is no economic rationale for doing this and it will cost the global economy dearly." He is not alone.

The markets showed Trump exactly what they thought of his tariffs. Stocks plummeted. Trump panicked & there is a 90 day pause for everyone except China. He is in a trade war with China now. Good luck with that Trumpy. 

This is all very unstable & seat of the pants / back of an envelope stuff. The markets don't like instability. They want to plan years ahead. You don't invest in a new factory or new machinery if the world is unstable. You batten down the hatches.  

Meanwhile people lose jobs & things cost more. Just what America voted for!

 

Protectionism

Trump doesn't seem to understand that he is not protecting America by imposing tariffs. Quite the opposite, but more of that later. Tariffs are normally put on goods, not on entire countries. Trump is acting like a Mafia boss going round businesses for "protection money" so that he won't do something worse. Considering the harm already done it's hard to imagine what that might be, but I'm sure Trump will do his best.

To protect something is to preserve or guarantee it, often by legislation. Protectionism is shielding a country's domestic industries from foreign competition by taxing imports, using import tariffs, quotas on imports, or the use of subsidies. Protectionism raises prices on imported goods for consumers so causes inflation. Domestic producers may be better off if consumers buy alternative goods made at home. It may preserve some jobs, but considering what Musks DOGE has done, that seems very unlikely. Many American jobs have already gone. Generally it's a right wing, nationalist, way of doing economics. In Trumps case, he is completely re-writing the playbook & the markets are responding in horror.

China in particular is playing hardball. "Losing face"in China is equal to losing the respect of others, so avoiding this situation ("saving face") is very important in Chinese culture. The Chinese government prides itself on being strong & cannot afford to allow Trump to win this fight, however much it costs them, because it would make them look weak. The imposition of 125% on Chinese goods is frankly ridiculous.

I think I am fairly rational, so I find it impossible to imagine the reasoning, (I use the term loosely in Trumps case), or rationale, that led him to go down this self destructive route. Unless America can find a way to stop him, I think they are doomed & the world will suffer the consequences until he is booted out. 

I just hope that can happen before he serves his full term. Wake up America! 

Sycophants

A person who acts obsequiously towards someone important in order to gain advantage is a sycophant. In simple terms a leech, parasite or a toady. Sycophants are obsequious. They are too eager to help or agree with someone more important than them. As in my favourite Hans Christian Anderson story - The Emperors New Clothes, where the emperor is exposed before his subjects as a vain idiot wearing nothing.

https://andersen.sdu.dk/vaerk/hersholt/TheEmperorsNewClothes_e.html

I imagine, by now, you can see where I'm going with this. Trump is surrounded by sycophants who will tell him what he wants to hear, however bizarre. 

The latest tariff debacle is a case in point. The evidence over decades since the Wall Street crash shows that tariffs do not work. The Smoot-Hawley Tariff Act sparked the crash & everything that followed. Yesterday global stock markets were reeling as the worse-than-expected levies were seen to damage US and global economic growth even as they pushed inflation higher. Tariffs cause recession.

Consumers, both individuals and businesses, are negatively impacted by higher prices. Tariffs reduce demand for foreign goods which negatively impacts relations with other countries. A consumption tax costs less than a tariff if the goal is to lessen consumption of imported goods.

Only 35% of Trump's Cabinet graduated from "elite" institutions, where previous administrations ranged between 52% and 60%. Out of 28 members only 8 have degrees from elite institutions like the Ivy League schools and MIT, Stanford and Oxford. It's a definite shift away from expertise. Scott Bessant the treasury secretary seems well educated & qualified, so it is hard to understand why he would go against the consensus about tariffs. The key qualification is loyalty, which brings me neatly back to sycophants.

Speaking truth to power has never been more important. The capacity for Trump to do real harm internationally on so many fronts is enormous. We really do need world leaders to unite & challenge his unfounded & protectionist policies. America will suffer from them too. 

 

 

 

 

Tax Should be Taxing

I truly don't mind paying tax. It is important that tax should be commensurate with income though. So I do think that the wealthiest should pay the same proportion of their income as the poor. Most income groups are taxed at 20% in the UK after a tax free allowance of £12,570. (Your allowance is zero if your income is £125,140 or above). If you are better off tax increases, but not proportionately. Over £125,141 you pay 45% 

Countries in Scandinavia pay quite a lot more basic tax & get better services. 

Netherlands – 49% ...

Sweden – 50% ...

Belgium – 53.7% ...

Austria – 55% ...

Denmark – 55.9% ...

Japan – 55.97% ...

Finland – 56.95% ...

Those in the lowest decile of income earners in the UK pay tax at around 44% on their  income and gains in financial wellbeing, whilst those in the top decile pay at 21.5%, less than half that rate. Why? What is the logic?

There isn't any that I can see, other than making the wealthy even more wealthy & the poor poorer. Wealth inequality is ever increasing in the UK. In 2021 the richest 50 families in the UK held more wealth than the bottom 33.5 million people. The wealthiest 1% of households had wealth of at least £3,121,500, while the least wealthy 10% had £16,500 or less. 

That can't be acceptable surely. Nor can placing the biggest tax burden on the least wealthy.There are several arguments -

• Taxing the wealthy excessively could discourage investment, entrepreneurship, and economic growth, potentially leading to job losses and a decline in overall prosperity. 
• High taxes could cause wealthy individuals and businesses to relocate to countries with lower tax rates, leading to a loss of tax revenue and skilled labor. 
• Strong opposition from the wealthy themselves, although there is a group of 250 wealthy individuals, (Patriotic Millionaires), who are actually asking to be taxed.

I struggle to have much sympathy with any of that. The wealthy have advisors who utilise the loopholes in our ridiculously complex tax system to minimise what they pay. The big four accounting firms not only advise taxpayers, they also have their fingers in the pie of advising HMRC. Unbelievably they sit on tax advisory panels and also second staff to government to provide technical advice when tax legislation is amended or created. I simply cannot believe they are impartial & unbiased. Talk about letting foxes into the henhouse.

The whole thing is a mess & it's the majority of ordinary taxpayers who don't get a fair deal.

 

Inherited Wealth & Inheritance Tax

I've probably mentioned before I don't believe in inherited wealth. So many reasons, but mainly - an accident of birth shouldn't be able to determine that you have wealth, position or influence that you haven't earned in any way whatsoever. I also think that wealth you have been given, but not worked for, means less than wealth you have created yourself through your own endeavours. I don't believe that wealth should be concentrated in a very small percentage of the population. We humans need to be altruistic & share what we have. We can and should be prepared to even out wealth distribution fairly. That doesn't mean I believe in giving hand outs to people who aren't prepared to make any effort to support themselves. But we can & should support people who are struggling to have the basics in life. It also doesn't mean that I am not prepared to help my family or friends if they get into financial difficulty.

I actually think that the excesses of many of the extremely wealthy are obscene in light of the fact that people are starving, dying of curable disease, don't have clean water & sanitation, are displaced & don't have homes.....I don't know how they justify it. 

I actually don't mind paying taxes, including inheritance tax. I would be willing to pay more if it would improve life & support people who needed help. I do, however, object to our outdated & complex tax system, which very few people, including tax officers understand.

A report by IFS researchers, funded by the Nuffield Foundation, argued that the parts of the UK tax system that dictate how different forms of income are taxed are not fit for purpose. "There is no pain-free way to fix the current tax system: any meaningful reform will create losers as well as winners. But keeping the status quo is also a choice – one that unfairly penalises ordinary employees and investors, and creates inefficiency and administrative costs that make us all poorer.” "This report highlight(s) the unfairness, inefficiency and complexity inherent in the current approach to taxing different forms of income, specifically the different treatment of employment and labour income compared to business ownership and capital incomes. This penalises employees and distorts investment decisions, to the detriment of social well-being". 

The tax Competitive Index has repeatedly selected Estonia as having the best tax code in the OECD.  "Estonia’s transparent and simple tax system attracts investments with no corporate income tax, no capital tax, no property transfer taxes". The UK is 26th in the 2022 list.

Surely we can do better than this? The UK government uses the tax system  to achieve social and political goals rather than simply using tax systems for what they are good at – raising revenue for government spending.

I've been fortunate to become far more financially secure than my parents were. Partly due to both my husband & I having secure professional jobs with good pensions & partly due to circumstances in the property market. If people with disposable wealth simply hold on to it all & pass it on to their children we perpetuate unfairness & inequality. 

Not all are born equal, but all should have equal opportunities.

Instant Gratification

We fortunate ones, (Haves), are used to instant gratification. We want to go somewhere, we get in our cars or use a public transport system. We want to buy something, we use our credit cards, which delays actually paying for it. We have clean water on tap. We have instant gas & electricity for light & heat. We have shops & online outlets everywhere for anything our hearts desire. We have takeaways & restaurants. We have a huge selection of leisure opportunities. We have hobbies we enjoy in our spare time. We go on holidays. We have purchasing power & we are safe. We have expectations of what we are entitled to & we are blessed. We take all of this & more for granted. 

https://worldpopulationreview.com/country-rankings/standard-of-living-by-country - The UK ramks 22 in the quality of life index.

According to World Vision 

• 719 million people — 9.2% of the world’s population — are living on less than $2.15 a day.
• Children and youths account for two-thirds of the world’s poor, and women represent a majority in most regions.
• Extreme poverty is largely concentrated in sub-Saharan Africa.
• 24% of the world’s population, which equates to 1.9 billion people, live in fragile contexts, characterized by impoverished conditions and dire circumstances.
• By 2030, more than half of the world’s poor will live in fragile contexts.
• About 63% of people older than 15 who live in extreme poverty have no schooling or only some basic education.
• 1.2 billion people in 111 developing countries live in multidimensional poverty, accounting for 19% of the world’s population.
• 593 million children are experiencing multidimensional poverty.
• Over 37 million people were living in poverty in the U.S. in 2021. Children account for 11.1 million of those.

These are the "Have Nots". Absolute poverty is when a person cannot afford the basics, such as food, shelter, and clothing. Relative poverty is a household income below a certain percentage, typically 50% or 60%, of that country’s median income. Even if a person’s income is above the poverty line, their family may still not have basic services such as electricity, access to clean water, sanitation, and education.

https://www.worldvision.org/sponsorship-news-stories/global-poverty-facts#how-many

 

The question is how on earth can this extreme polarisation be changed so that human beings everywhere get a reasonable share of the things we feel are necessary for a good life? If we cannot solve that problem & reduce the disparity between people, the world will continue on the disastrous path it is on currently. Worldwide instant communication means that the disposessed & the Have Nots know how the other half live. The Haves also know, very clearly, just how fortunate they are. 

It isn't a recipe for worldwide peace & harmony. We have to learn to share. We Haves need to forgo some of our "perks". If we don't, armies & fortresses won't protect us from the displaced, the disenfranchised & the economically challenged who have very little to be grateful for. 

There are 2,640 billionaires with a total net wealth of $12.2 trillion. Today Bernard Arnault CEO of LVMH is the richest man in the world with $211 billion. Followed closely by Elon Musk with $180 billion. There are 47 million millionaires globally. 28,420 are so-called centi-millionaires worldwide.

How is it acceptable for individuals & their families to have this level of wealth when so many are suffering huge deprivation? It's a resipe for civil unrest.  

 

Money & Economics

One of the worst things about being a widow is total responsibility for everything that is involved in running a life & home today - No one to share the jobs with. The absolute bane of my life is money & everything associated with it. I always put off reconciling my bank statements & switching insurances. When you know that your time available is diminishing by the hour, you resent even more having to do jobs that you hate.

Translating my complex but relatively simple economic reality to UK & world economics is utterly baffling. In the last weeks & months we have had the funeral of the Queen, the coronation of the King, Eurovision, sending arms to Ukraine, multiple costly strikes, the earthquake response, expensive public enquiries....All of which total millions even billions of taxpayers money. There may not be a "magic money tree", but this government do seem to find money from somewhere to fund expensive & sometimes questionable expenditure. 

We must have contingency funds for vital support for dire events at home & worldwide. But I really do question the cost benefit analysis that seems to justify spending 125 million $ on the coronation ceremony alone. The three day event, including the concert cost far more. The argument is always that these events, like Eurovision, generate a lot of tourist income. I'm sure they do, but my maths skills aren't up to understanding how that is calculated or whether it is justifiable in the current circumstances.

The bottom line for me is that millions in the UK live in unsuitable accommodation, (3.6 million children, 9.2 million working age adults and 2 million pensioners), or are homeless (271,000 at least in Jan 2023 including 123,000 children). The statistics for food bank use in the UK are shocking. In 2022/23 approximately 2.99 million people used a foodbank in the United Kingdom. Not just the unemployed, but working poor.

https://www.statista.com/statistics/382695/uk-foodbank-users/

It is hard not to blame our government who have been in power for 13 years. The whole point of government is that they have the Civil Service & huge numbers of advisors & researchers with access to information that we don't have. They are in a position to make decisions & plan for the long term future using reliable information. In housing, for example they know demographic trends years in advance. Yet the UK has consistantly failed to provide enough housing for it's citizens. 

They knew that experts warned of a pandemic years befor it happened, but were totally unprepared for it.

Ukraine has effectively been on a war footing with Russia since 2014 when Russia took over Crimea, but a report in 2019 said the conservatives had cut MOD spending by 25% while in power.

Our so called democracy is based on governments who don't take the long view & look at the consequences of actions. They depend on focus groups to tell them what is likely to get them re-elected & that is their main driver. Once politicians have power, they want to keep it at any cost. Just look at Turkey today if you don't believe that.

The simple fact is that the rich are getting richer & the poor are getting poorer & the gap between the two is increasing all the time. The UK has a very high level of income inequality compared to other developed countries.It's a recipe for disaster.

 

https://equalitytrust.org.uk/scale-economic-inequality-uk

 

Broke & Broken - World Debt

The UK owes £4.8 trillion - (A sum of money it is impossible to comprehend & which covers all liabilities). The National Debt is different & stands at over £1 trillion.
http://www.nationaldebtclock.co.uk/

It is arguable that this money can never be repaid.

We have Government Debt & World Liabilities.

We borrow money from:-

• UK pension funds/insurance companies (29%)
• Private corporations / other financial institutions
• UK building societies. (e.g. building societies buy government gilts to invest their savings to get a decent return.)
• UK Banks
• UK Private investors
• Foreign investors (foreign banks and foreign investment firms (2015 approx 25%)
• Bank of England Asset Purchase facility (Quantitative easing)

https://www.economicshelp.org/blog/4098/economics/who-does-the-uk-owe-money-to/

We are broke & have been for years. We are not alone - Japan, Greece, Italy & America are in the list of top 10 most indebted countries in relation to their Gross National Product (GDP). The world is broke & no one is fixing it.
https://www.statista.com/statistics/268177/countries-with-the-highest-public-debt/

 

I'm not a statistician or a financial whizz. I can barely do my personal banking. In my simplistic way of operating this seems completely unsustainable & actually bonkers! I can only come to the conclusion that the Free Market, Capitalist model is so broken that it is not possible to fix it.

What I don't understand is why anyone, in their right mind, lends money to countries who obviously don't know how to balance their books or spend money wisely? Again, in my very simplistic way of looking at this, all the money that is sloshing around in the world is worth b..... all. It's worthless bits of pretty paper & soon everyone is going to realise that.

God, (if s/he is out there), alone knows what will happen then.

Naming & Shaming.

The problems I described re transferring money from the Coventry Building Society & Post Office Savings earlier this week moved on at a snails pace early this morning. I phoned & spoke to real people. Both assured me that the money had in fact been transferred. Hooray I thought! Out of the woods. But no.

My money goes into some sort of financial limbo land. Seemingly no one can access it, least of all me. My money will appear in my Santander current account by 4.30 tomorrow. This is because these companies do not comply with best practice & use immediate electronic transfer. They use their own antedeluvian FPS system. Why neither of them can transfer direct to my solicitor as others have done is beyond me.

I was even told an out & out "porky". I was told that I should contact Santander because it was down to them to retrieve the money. Not true, Santander have to wait for the money to arrive. When it does, the good news is that they will respond to my transfer request & the money will go immediately to my solicitor. Thank goodness one financial institution is operating in the 21st century. But, the bad news is that it will probably be last thing tomorrow afternoon & completion is the next day.

Then there is BT. I wrote them a letter of complaint about my house move on the 12th August. I won't bore you with the detail, but basically I just terminated my contract on the 29th on the house I have sold. I have a better deal with Plusnet for Phone & Broadband in the new house. I have not had any response whatsoever. I have had to speak to 4 different people & waste well over an hour on the phone, at different times, queuing trying to resolve this. I still don't know whether I'm going to have a problem in the new house with both BT & Plusnet supposedly providing my phone line. I was told by one of the people I spoke to that it wasn't possible to cancel my contract when I move! There is no facility to fax or email BT & there is a mega problem trying to get through to them on the phone.

Finally Co-Op Insurance who do my buildings & contents. Another letter of complaint sent on the 5th August because they didn't do what they are supposed to when I exchanged contracts. What should have happened is that my current house should have been put "on risk" because my purchaser became liable for insurance cover & I became liable for the house I'm buying. I can't tell you how many variations of that I was told to do by Co - Op call centre staff - all 5 of them! No answer to my letter & no one gave me the correct information & updated the policy. I spoke to a person today who said he couldn't deal with it & there is no phone number to call for complaints. However I did discover that my new house is not insured & my current house is. All I could do is send an email to "customer feedback". So, my letter of complaint has been acknowledged, but not acted on & I have not been covered by the appropriate insurance since the beginning of August. I will be moving in in 2 days time & I probably won't be insured.
 
It's a good job I don't have any senior representative of any of these companies in front of me. I think I might well do them physical harm! This is incompetence as well as negligence. It is the worst possible customer service & it ads hugely and unnecessarily to the stress of moving house. It really shouldn't be like this & it is all down to staff training, proper protocols & sufficient people in call centres being in place. Hundreds of people move house every day. There is no excuse for the change over not to be reasonably smooth & for companies not giving their customers the right information.

Once this is sorted & I have moved & have the time I am going to refer this to the relevant ombudsmen. I don't hold out much hope that it will make very much difference though. All any customer wants is staff who know their job & do it properly. If they don't, in my experience, it's often not their fault - It's the organisation itself & the systems it operates. They should be ashamed.

Banks - Restrictive Practices

I am having to cash in a lot of savings accounts to pay the shortfall between the house I'm selling & the one I'm buying. I notified all the financial institutions in plenty of time that I would need the money today to transfer to my solicitors in advance of completion on the 29th August. Then I sat back & thought everything would be fine. How naive!

What has become blindingly obvious in a very stressful day is that each financial institution - bank, building society, or "other" operates according to very different rules. I have to ask why? Especially as we all know that everyone just clicks the "terms & conditions" box without reading the mind numbing & confusing very small print without reading it. Why confuse things more than is necessary? To hold on to our money for as long as possible obviously.

Two financial institutions are now in receipt of formal complaints from me - Coventry Building Society & Post Office Savings. Among the many unexpected restrictions I discovered this morning are:-

• Not taking my notification from the first letter / email I sent, but from the second which simply changed the date by a couple of days.
• Putting a stop on any transactions for 5 days from the second letter / email so the transfer can't take place today. 
• Not counting a Saturday as a working day despite the fact that the branches are open.
• Not notifying me of any of these restrictions - nor any penalty I might incur - nor what the final balance would be with interest added.
• Not transferring the money on the same day requested, but by 4.30 on the day after. In the case of this bank holiday this means Tuesday the 27th which is very close to the wire for me to get it to my solicitor. I thought this little trick had been dealt with & banks had been forced to utilise the facilities of electronic transfer & not hang on to someone else's money? Obviously not. 
• Allowing very variable amounts to be transferred in one go. In my experience today from £10,000 - £40,000 with a maximum of £80,000 in a day in some cases.

I am spitting mad. How dare these institutions act in such a cavalier fashion with my money? How can customers be expected to know all the variables of the differing accounts / institutions. How difficult is it for them to talk to each other & agree simple, universal, terms & conditions which are fair to customers? What's the point of a Financial Ombudsman if s/he doesn't enforce fair conditions on the institutions if they aren't capable of doing it themselves?

The financial sector has got away with too much for too long & they simply don't give a toss about ordinary clients. They treat savers with contempt & I for one have had enough. Apparently nothing has been learned over the last 5 years. They are still stealing very effectively.

Cyprus - Legalised theft?

My financial knowledge is limited to housekeeping. I try to manage any spare cash effectively, but that is getting increasingly difficult with the abysmal interest rates which mean that everyone is effectively losing money on savings. Inflation & quantitative easing is eating away at the value all the time.

That is bad enough to my generation, which was used to seeing their savings grow year on year. We have had to get used to the banks changing their terms & reducing interest with very little notice. What has just happened in Cyprus seems to me to move the whole thing into a completely new ball game.

Cyprus was exposed to 22 billion euros of Greek debt. Half of their total bank deposits, (60 billion euros), were from wealthy Russians using Cyprus as a tax haven. Their credit rating went down to junk. Their bonds were not accepted as collateral. They followed Greece, Ireland, Portugal & Spain in the bailout route. Their whole banking system, along with so many others, was about to collapse. Basically they are insolvent & if they were a company they would go into administration

The solution was they closed the banks & stopped people having access to their money. The next good idea was to impose a levy on all depositors money. Unsurprisingly this did not go down well. This is the point where to my mind it becomes theft, and still could happen in any of the countries going through this long drawn out economic crisis.

The majority of ordinary people work for their money. They are taxed on their earnings, taxed when they spend money on daily living, taxed on their savings & taxed when they die. The state gets a substantial amount from most people one way or another. In principle I accept that. I also accept that there may be a need for restricted access to prevent panic & a run on a bank.

What I don't accept is the States right to simply take any sum they decide from investments in a bank to rectify their colossal mismanagement of the economy.

These problems didn't happen overnight. Who was minding the store? Do the people minding the store actually know what they are doing? I don't see any evidence to support the idea that they do.

At best this shambles is mismanagement, at worst it is criminal negligence. Why haven't we seen any heads roll? Instead of filling our prisons with many people who actually need help, it seems to me that quite a few of the senior people who are supposedly in charge should be held to account for the misery they have caused. If not prison, then make them give back a sizeable percentage of their outrageous salaries & bonuses to re - float the economies they have ruined.

Selfishness, Greed & Stupidity or The Naughty Bankers

The news story regarding the current monetary crisis in Cyprus is just the latest bad news in a long list since the start in 2007. If you are sitting comfortably I will begin...

Once upon a time greedy, selfish & stupid bankers thought up a good wheeze to make lots of money, (for themselves). There was a real estate bubble & house prices had risen to unheard of heights. Clever financiers decided that everyone, even those who couldn't afford it, should be given money to buy a house. They called this "Sub Prime" lending. A better title would be "the Emperors New Clothes".

The forclosures resulting from this started the whole "Credit Crunch" and led to mega bank failures & a huge asset decline in value which has affected everyone worldwide. Underlying this was a spectacular failure in financial regulation, which allowed excessive risk & borrowing.

But it wasn't just the naughty bankers. It was us too. We had got used to living on credit cards & spending more than we could afford. We wanted "stuff" & we wanted it now. The nasty banks quite liked that because it meant lots of interest when we couldn't pay off our debts. So in effect the whole culture of the developed world was deeply flawed.

In reality the developed world is now insolvent. The debt liability is beyond comprehension. In order that we simple folk won't really understand what is actually happening, a whole new vocabulary has been invented by these clever financiers. "Quantitative Easing" just means printing lots more money we haven't really got.
http://en.wikipedia.org/wiki/Causes_of_the_2007%E2%80%932012_global_financial_crisis Wikipedia, as always, gives  more detail.

Where do we go from here? I don't know, but I'm not optimistic. Who can we really trust to give us the real facts? Not bankers, or politicians, or even the media. We have reached a stage of complexity in the developed world where I fear we are set on a course it will be almost impossible to recover from.

This isn't a fairy story - there is no happy ending.

http://sorisomail.com/email/238743/o-politico-que-representa-realmente-a-populacao.html A friend sent me this - thank god I'm not alone.

Tipping - Point?

I do have a problem with tipping. I feel uncomfortable about it & I'm not at all sure I agree with doing it. In my working life I got paid a salary from my employer for doing the job I chose to do. I worked quite hard to get to the top of my profession & as far as I can remember I have never received or expected a tip. (That might not be completely accurate because I did several holiday jobs to get me through college).

If we tip people for services we are already paying for, such as taxi drivers, waiters etc, are we perpetuating a system which doesn't pay them a reasonable rate for the work they do? I think the answer is yes. If I go to a restaurant or get in a taxi I expect the employer to base his / her charges on an accurate knowledge of the costs of the service, including paying a reasonable living wage, which reflects the skills & experience of the employee.

If I am expected to tip in addition to paying the charge, I am actually condoning the employers inability to manage his business effectively or efficiently. There is also the issue of the "minimum wage" and the "living wage". Employers need to be actively encouraged to pay the higher of the two - the "living wage".

My only reason for tipping, in most circumstances, would be that the employee has been particulary helpful or has gone out of his / her way to do something specifically for me.

All of this becomes much more complex when I go abroad to countries which don't have the long history of fair employment and union protection that we do in the UK. In many countries low paid workers have to rely on tips to exist. The same observations above do apply, but in developing countries there is no mechanism to protect the worker. So I tip, but worry about the system.

In these circumstances the tourist or business person needs to be very aware of the basic economics of the country, because they can inadvertantly skew the system out of all proportion. Visitors from the developed world have a responsibility not to overtip & create an imbalance for everyone else. I have been in countries where the tips which are expected nowadays bear no resemblance to the average monthly income of low paid workers. I feel it's better to tip more people a little, than tip a few people a lot.

What is just as important is to spend your money in local shops & businesses, so it gets down to grass roots level. So many tourists & business people just spend their dollars or sterling in the hotel which is already making a relatively high income & is often owned by a multinational chain. So, for example, take your dirty linen to the laundry round the corner - don't give it to room service. Buy your meals, snacks & drinks in local bars & restaurants. Visit local shops.

We really do need to be more aware of the impact of our money & spending power - both for good & ill.

Tax doesn't have to be Taxing - 2

Apparently HMCR takes their ad' strap line literally! They only want the money of ordinary mortals like me, and are happy to make rules which allow big multi national corporations pay little or no tax on their vast profits.

In the usual complicated & euphemistic jargon used to confound normal people it's called "income shifting" or "tax transfer pricing". If you Google, (one of the worst offenders), the big tax companies like Ernst & Young or Price Waterhouse Coopers you will find they actively market their skills at doing this. It's not illegal - just completely immoral.

It seems to have started with Irish tax law, (how appropriate), & is a way of shuffling profits into & out of subsidiaries so they end up in tax havens where the corporations pay little or no tax.

The average corporate rate of tax is 20%. However in the USA it's 35% & in the UK it's 28%. The big corporations seem to be paying as little as 2.4%. This means the USA loses 1.4trillion $ and the Eurozone loses 868 billion euros.

It isn't just the developed world who are losing out to the corporations. It significantly affects the developing world too. That seems even more reprehensible to me - "Fat Cats" doesn't even begin to cover it.

Having said all of that, the real problem is the complete mess the tax system is in after years of add ons to a system which isn't basically "fit for purpose". What sort of supposedly professional Tax experts do we have? We have a group of overworked, probably underpaid, people, trying their best to make this stupid system work. The really good people probably go to work for E & Y or P W C for much bigger salaries & help the corporations squirm out of their obligations.

Tax Doesn't Have to be Taxing.

It's a lie - in my experience it does. For the first time in my very average life I've had to pay an accountant & do self assessment. I contacted HMRC & said I thought I may owe them some money since my husband died. I did - a lot - Well a lot in my terms. I'm not sorry I did it, I'd rather pay my share & I am better off than many. I believe in the distribution of wealth & helping the less well off.

So I'm really p..... off to find that huge corporations who operate in the UK & make big profits here have paid little or no tax. My email is Google. I buy quite a lot from Amazon. Its personal. If I know what my tax responsibilities are I'm dammed sure they do too with all their corporate lawyers & accountants. Its a question of fairness, yet  again. There is no morality in the rich avoiding their tax responsibilities when the less well off have no choice. Most of us do PAYE and any savings we have are taxed at source.

However, the whole system of tax in the UK is not fit for purpose. The system is so complex even the people who work for HMRC don't neccesarily understand all the intricacies. I am really tired of the lame excuse that gets trotted out that clever professionals can always find loopholes in the system. Why? Why can't the system be simplified? Why can't it be reasonably proof agains immoral avoidance manipulation?

I'm glad the companies have been named and shamed. I hope more come under the same scrutiny. But when they are exposed lets not accept a "generous" donation from them. It doesn't put things right. Lets firstly sort the whole system out & secondly clobber them for all the years they have avoided tax. Enough is enough.

Bank - A new 4 letter word!

I am really p..... off with banks. Not content with having my savings & paying a piddling interest rate which doesn't even keep the value of the investment, they also operate a "closed shop," which makes it really difficult to move my money around. So having had 3 savings accounts which matured this month I discovered that:-

• One of the new accounts I opened will not accept cheque deposits.
• Despite the new legislation, two others will not transfer money to a different bank without charging me a ridiculous amount of money for a transaction which takes a couple of minutes.
• One put the interest into a different account & didn't send me any information about how much interest there was or where it was.

How do they get away with it? How dare they advertise themselves as customer friendly? Savers have been getting a very raw deal on interest rates for years now due to the complete mismanagement of banks after de-regulation of the separation between investment banking & high street banking. We still have to wait a ridiculous amount of time for cheques to clear, losing interest while we wait.

Nothing has changed. No lessons have been learned. The arrogance & bonus culture continues. We, the people should rise up & force them to operate in our interests. I have no objection to profit so long as I get some of it too. The politicians & the bankers are in cahoots - interestingly that's one of my banks.

Money (Mis)Management

I am a "bear of very little brain" when it comes to finances. My current account always takes me ages to reconcile with my statement. (The bank is always right!) However I do "get" some simple rules which seem to be beyond the financial movers and shakers of the world. I only buy things that I can afford to buy, (and need). I pay off my credit card every month so I am never in debt. I don't waste money or resources. I think about the impact my spending has on the world & try to make informed choices.

So why am I paying the price for the obviously ridiculously profligate decisions made by bankers & city slickers?

• Why does anyone still think that perpetual growth is sustainable, or the way to get us out of the mess they got us into? Simply put, if we don't make anything to sell to someone else, or have marketable skills, we can't grow. Everything else is all smoke & mirrors.
• Why do they think that we can spend them out of trouble, when we have a huge amount of personal debt to pay off? Relying on rampant consumerism was never going to be anything other that short-termist.
• Why has no one been held accountable for the patently negligent decisions made by the banks & financial institutions. I can't think of any other comparable situation, fraud doesn't seem to hash a term to me, where someone wouldn't have ended up in court.
• Why do we continue to pay huge salaries & bonuses to people who obviously simply don't understand the financial con tricks they devised.
• Why do we tolerate a situation where banks are announcing billions of profit, but not even keeping pace with inflation in the interest they pay savers like me? 

I despair.

My parents were "working class". I don't feel I ever went short, but there wasn't much spare cash & we had to have lodgers throughout my teens to pay for me going to Grammar school, staying on in the 6th form & then going to college. Books came from libraries. Most of my clothes were made by my mother. My father had an allotment to make the housekeeping go further. We travelled by bus. Holidays were cheap B&Bs or camping. All meals were cooked from scratch. I worked at the weekends in shops as soon as I was able & worked all through college holidays to pay my way. 

I married as soon as I left college & had a child after a year & a half teaching. I can remember having to have egg & chips on consecutive nights when the housekeeping ran out. Child Allowance kept us going. We moved from council housing when we had saved up enough deposit for a mortgage when my daughter was a toddler. Gradually we both got promotions & moved to better houses. I went back to teaching as soon as my daughter could go to nursery to help financially.

None of this is a sob story. I actually think I am very fortunate in having parents who were willing to make sacrifices for me to get an education. That education made me middle class, with a lifelong profession, & relatively "comfortable" in my middle age. All my life I have worked hard for what I have and it hasn't always been easy.

What seems to me to be missing now is the whole ethic which I grew up with. Everthing is greed, self, rights without responsibilities, short termist, power oriented. "I want it & I want it now, whether I have earned it or can afford it & never mind the impact it has on people less fortunate than me".

It will come back to haunt us if we don't stop & think & change our ways. This is just the beginning. Worse is yet to come. Much worse.