Scottish Review: “The ratings agencies are behaving like financial terrorists.”

I have  a piece on the Credit Ratings Agencies in today’s Scottish Review.    Given the catastrophic effect these bumbling, incompetent and dishonest financial players have had on sovereign governments and the lives of ordinary people over the last month, I thought it was time to update and develop a piece I blogged last year.

Why anyone believes these flim flam merchants, I’ll never know.

No – I do know.  Some people believe them because they can make a killing out of it.  And we suffer.

Scottish Review: “Why I went on strike last week. And why I’m on a loser.”

A version of “The anger behind the public sector pension strikes” has appeared in today’s Scottish Review under the title, “Why I went on strike last week. And why I’m on a loser.”

 

Find it here:  SCOTTISH REVIEW

The anger behind the public sector pension strikes.

A nice wee joke is doing the rounds on Facebook. A banker, a Daily Mail reader, a Tory MP and a teacher are sitting around a table on which there is a plate with ten biscuits. The banker scoffs nine of the biscuits and the Tory MP leans over and whispers in the ear of the Daily Mail reader “watch out, that teacher is after your biscuit.”

Yes, it’s a joke: but it sums up the appalling way ordinary people in this country are being treated, and why, along with millions of others yesterday, I went on strike. Unfortunately, though, I doubt anyone will listen.

Over the last two weeks, there has been a slew of government announcements and news items that have confirmed my belief that nobody in power gives a damn about people’s distrust of banks, or their sense of unfairness expressed through the summer riots and the Occupy movement, or their deep depression about their future prospects which, for the vast majority of the population, stare over the precipice at increasing relative poverty (in real terms, average Joes will be worse off in 2014 than they were in 2001).

Last week, the government announced a scheme by which they will underwrite part of the mortgages of first time buyers. But what exactly is this “concession”? It is, in fact, a subsidy to the banks. The promise is not that young people can buy their homes, but a promise to banks that they won’t lose out if they lend to those young people. Those buyers who lose their jobs will still lose their homes: unable to pay the mortgage, the fuel bills, the council tax, they will have to sell up anyway.  All the government underwrites is the debt they already incurred to manage a deposit. Tom and Sheila will still be homeless, while HBOS gets a bung and a repossessed property into the bargain.

This does not make homes “affordable”, it does not reduce the cost of owning a home: it actually props up scandalously high house prices which have been driven upwards by bank lending to the point where home ownership largely depends on two incomes (so much for a family values government) and where the average age of the first time buyer is set to rise to 43.

Mucking about with homes was, of course, the original New Right Thatcher spearhead campaign to change our society beyond recognition and beyond repair. By forcing councils to sell their homes to tenants, Thatcher ensured that, in the long term, a whole swathe of people who were happy in secure rented accommodation would become serfs to the banks, and all that public property would become private, not owned by the people living in those homes but, at the top of the food chain, by the mortgage lenders.

The way to reduce house prices is to build social housing to provide a viable market competitor, and to return to a time when living in a council home was an absolutely acceptable alternative to owing tens of thousands to a bank. We talk of the population taking on debt beyond its means, and we usually mean credit and store cards: but the main driver of that debt rise has been the loss of a social housing stock that forces people to buy their own homes and to take out the largest debt they will ever have – a mortgage. Buying a house is the only game in town thanks to the prevalent economic winds since the mid-70s.

This policy of subsidising the failed economic system that has brought us to this crisis is absolutely apparent in other government initiatives. At the beginning of this week, Osborne an co. announced a scheme to improve UK infrastructure by investing £50billion in rail links, broadband networks and roads. Where was this money to come from? Well, it was suggested, UK pension funds could be encouraged to invest.

Excuse me? I’m striking because the conditions of my pension have been changed largely unilaterally by my employers. Why? Well, they say, there isn’t enough in the pension fund to pay for all the demands the retired will make in the future. I need to pay more, accept less and wait longer for it.

And, I am told, I enjoy a much more favourable position than people in the private sector. The real issue is not why public pensions are so generous, but why private pensions are so scandalously miserly. However, that’s not quite the case. The median annual private sector pension, at £5860, is actually a couple of hundred pounds more than a public sector pension. The problem is that very few private employers (12%) pay into any sort of final salary scheme, and that private sector pensions are therefore individual gambles on markets and investments. So private pensions are, once more, a subsidy to the failed economic system, and the government would love to divest itself of any schemes that do what they should – provide a decent standard of living for people in their old age – in favour of pensions that funnel money into the financial services sector for profit, regardless of risk.

I listened to a few commentators on these infrastructure plans, and not one asked the obvious question: if pension funds are inadequate to look after our elderly population, and if people are taking strike action because they are being forced to pay more, accept less and wait longer for a living pension, how on earth can these pension funds then afford to build roads and rail links, enterprises that are notoriously slow at providing a return?

Why, indeed, are those infrastructure improvements not funded through taxation on those who have seen mammoth improvement in their living standards during this halcyon period for financial speculation? We all know the figures: last year, UK CEO pay rose by 32% at a time when pay freezes and cuts were foisted on workers on the basis that the companies those same CEOs lead are performing poorly. CEO pay has risen by 4000% in the last 30 years; we are told pension enitlements which rise at 4% per year are unsustainable, but, apparently, wage rises of 1,333% are just fine. These are, in the glib platitudes of the politicians, the people with the “broadest shoulders”, and yet Osborne’s ambition is to cut the upper tax rate from 50% to 40%. Meanwhile, he tinkers with tax credits and 3p fuel revenues and believes he can pull the wool over everyone’s eyes.

And, in truth, he’ll probably get away with it, just as all previous Chancellors have – including Brown and Darling who had no appetite for the fight – since the sea change of the Thatcher years, when we were convinced that we would all be better off if we believed that the public sector was the enemy.

Perhaps, indeed, the fight is already lost.