Economcially Speaking

In the news today, a rogue trader has lost an extraordinary amount of money in the City. What precisely is an extraordinary amount of money these days? Nick Lesson only lost Baring’s Bank £800,000,000 – small feed apparently these days. Today’s little loss is not quite as much as the ‘mistake’ from the French rogue trader three years ago who lost his bank, Societe Generale, a small 4.9 billion euros. In fact Kweku Adoboli only lost about half of that – at £1.3 billion.

It all happened on the third anniversary of the Lehman Brothers bankruptcy submission. And there was us thinking that nothing like this could happen again. Surely the bankers had learned their lessons.

Ever heard of addiction, greed, dishonesty, thieving? It’s not just those in the dumps of society that go in for this nasty behaviour. With those who already ‘have’, it seems to me far more despicable.

I make that statement because the quiet one, Iain Duncan Smith, stated that the recent riots were a wake-up call to the middle classes. He stated that the riots showed a “distorted morality that has permeated our whole society, right to the very top”. The middle classes, according to IDS, have shielded their eyes for far too long – “for years now, too many people have remained unaware of the true nature of life on some of our estates”, he said. “This was because we had ghettoised many of these problems, keeping them out of sight of the middle class majority”.

Interesting language.

He stated that the banking crisis, the phone-hacking scandal and the MP’s expenses debacle showed that this moral decline was happening at all levels “right to the very top”. I am assuming that he meant that politicians, bankers and Mr Murdoch et al are the “top” whereas the folk rioting from our run-down estates in Tottenham, Hackney, Lewisham and the likes are the bottom. Oh how good it is to have such differentiation – really helps to break down the barriers of inequality.

I wonder how it would feel to be seen as the opposite of the top all the time? I wonder how it makes one person or a group of people feel to constantly have it suggested that they are the lowest in society, as though the lack of money automatically makes them degenerates.

There is a time and a place for some pecking orders – this is not one.

The corruption of the bankers is far more degenerate and corrupt to me than children and young people who are bombarded by adverts, enticed to want the very items that they are never going to be able to afford, trotting off and grabbing a few goods for themselves. At least one makes sense. At least you can see the reason why someone would want a new television or a decent pair of trainers; they’ve been brainwashed into thinking that this is something to which they should aspire.

How can anyone want to keep on making the ludicrous amounts of money that occur in the Square Mile just for the buzz? It is quite incredible to me. It is quite the most revolting scenario.

And where does this money go? Nobody seems to explain what happens next? Surely there has to be someone somewhere making a healthy profit on UBS’s loss. Someone is having a party right now that they have been the winner in this particular gambling game. Tomorrow they may be the losers.

Winners and losers – I know it is divisive language but it is where we are. This is the way things work in society. Top and bottom, first and second, higher and lower, and whilst I applaud IDS for making such a statement, he isn’t exactly looking at this holistically is he? It is his government that is perpetuating the polarisation. It is his government that is trashing the local services that these people in society do not even know that they need, especially with regard to preventative services which don’t tick target boxes but are so integral to future change.

What else have we had this week? Unemployment has reached dizzier heights than the month before. More public sector cuts are predicted. On the positive side there have been something like 40,000 new jobs created in the public sector but that is set against an increase of 119,000 lost in the public sector. EDF and British gas have announced a 15% rise in gas prices that they are going to have to pass onto their customers. A further 4 or 5% increase is expected in electricity. London transport announced, on average, a 7% rise in fares at the beginning of 2012. And today, there was the announcement that the average rent now stands at £713 a month. Look at that figure again, £713 a month.

Now as I have professed on many occasions, I am not particularly adept at mathematics but even I can work out that a freeze on public sector pay, mirrored in the private sector means that everyone is going to be paying out more than they are receiving. Figures such as 15% are going to be felt by people. The immediacy of travel cost increases are going to be very apparent to those who were on an extremely tight budget and could not possibly have forecast such a rise, especially when it is added onto an increase of the same amount the year before.

Recently, I was talking to a couple of friends about the cost of housing. One was in her mid twenties, the other a little older. Both are currently renting. The first friend knows that she cannot afford a house of her own. She also knows that at the current rate of earning, she may never do so. What bothers her is that she cannot even afford to rent a place of her own. She can only afford a house share with people that she does not know. It is a risk to her wellbeing, as far as she is concerned. The other is paying over a £1000 in rent. This friend has done some homework and realised that if she had a deposit for a mortgage, she could reduce the monthly outgoings by nearly 50%. Even if she could get a 100% mortgage with no down payment, she could reduce her outgoings but who is going to give her a mortgage for a £250,000 house when her income implies that she would never be able to pay this off?

What are we going to do about the cost of housing? The capitalist owners of properties are in a prime position to monopolise on this situation. Those who can never have a mortgage have no alternative than to abide by the inflationary grabbing prices that the landlords pour down upon them. It is immoral.

It is also a sad indictment and a huge irony that a mortgage suddenly appears to be the cheapest option, if only one could persuade a borrower, a banker that it is a worthwhile use of money. But there we are, back to the bankers, the gamblers, the ones who are prepared to lose billions of pounds in a split second of excitement whilst hard-working people who are not demanding the world are struggling to even put decent food on the table for their children.

And talking of bankers, our very own Mr. Osborne this week has finally told them that they have to separate their game-playing from the business of looking after our money. They cannot gamble our futures by using our money to play the markets – only this is not going to happen until 2019. By that time, with the increase in costs of services and utilities, we may not have any money to put in their precious banks. What will happen then? Will the chancellor back track and allow them to gamble as the only viable way of making any money?

Obviously, I do not know enough about how this works but it worries me, considerably.

It’s not been a good week. I am worried about my younger friends and their future. I am concerned about my children too. I am not suggesting that having the noose of a mortgage around their necks is a viable proposition but you can understand their frustration at knowing that such a deal would, in the short term, be a cheaper option for them.

If only there was an increase in a half-way house; like housing associations who work with people to enable them to feel secure in a home whilst starting to invest in it. The most awful thing about renting is the ability for a landlord to simply get rid of his or her tenants at the drop of a hat. It hardly makes for people to feel secure or to add their creativity and personality into the very place where they spend the majority of their time. Who would want to borrow a favourite pair of trousers knowing that within the whim of another, they could be whipped off your body as and when a fancy took?

Today, what with student loans and mortgages, we are teaching our young people to be borrowers rather than savers, whilst persisting with this opposing ideal of getting them to save and live within their means. They can’t. They are being frugal and still cannot make ends meet. This week’s inflationary figures together with the announcement that one well-to-do has lost a couple of billion must really shatter these people at the lower rung of IDS’s ladder.

And as a final thought, there are four miners stuck in the middle of a mine in the middle of a valley in the middle of south west Wales. News has just come in to say that at least one of them is dead. There seems little hope, at present, that the others are alive since nobody has heard a sound from them – not exactly the joy that was experienced when the Chilean miners were rescued.

A friend of one of the miners was quoted in the newspaper as saying that the man was merely trying to provide for his family. He said, “people don’t go mining for fun”.

Indeed they don’t. People go mining because there is no alternative. People go mining in this part of the world because there are not other jobs available for them. Long gone are the times when people went down the mines because it was a trade passed down through the generations. This particular mine is hardly the sort of major colliery that once stood proudly in this area of the world. Someone put paid to that in the 1980s, and come to think of it, she too didn’t give a toss about the consequences either.

Inronically, Melvyn Bragg’s Reel TV last week showed a film of some miner’s being rescued. It all seemed so ancient, so “of another age”.

Perhaps it is about time for us to fully address who is at the top and who is at the bottom and what we can all do to make life a little more equal. Policies on housing needs to change - now. Policies on banking cannot wait until 2019. Policy on education is a fundamental preventative measure to increased polarisation of society, if it is looked at in a progressive way (today’s announcement on phonics testing will really help the future miners of this world, because although literacy can help to “raise people out of the quagmire”, there are still people who will be needed to do the more dangerous work of the world).

 And as for the costs of utilities, well, if I remember rightly, the government used to own such services. Perhaps if they hadn’t sold them off there could be some control on these too.

But I was always a stupid idealist.