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Wednesday, January 28, 2009

The world according to me

One of the things that bothers me about the "credit crunch" is people's reaction to it.

The natural reaction is to blame "greedy" bankers, but is this right?

I heard someone ask if "they" cared about the results of their actions. ie ordinary families losing their jobs and homes and the impact on the economy.

Now many of these people don't inhabit the world that you and I do, I heard one woman who had lost her job discuss how she spent her money "well I refused to spend a £1000 a night on a hotel for a long weekend in Prague...." I mean come on! I suspect many of those who lost well paid jobs are no better off than you and I when the axe falls. £250k per year is a lot of money but if you live the lifestyle when the axe falls it's just as painful.

But what if you are one of the real big earners? You've been earning a high 6 figure some and you lose your job? Well if that person has 4 or 5 million in the bank does it matter to them that a steel worker at Rotherham has lost his job?

Before you say it should (and they should), think about it for a mo. Do you care about someone starving in Africa? Nope you don't. No honestly you don't, not really. We in the west GENERALLY live a lifestyle well beyond what we "need". "Oh dahling did you see comic relief, I'll dress up in stupid clothes and get people to sponsor me won't that me good of me. Oh pass me a glass of that very nice Chateau....."

And I suspect that is what happens in the city. If you employ someone to maximise profits and stick them on hefty short term bonuses what are they going to do? Personally I'd rack the money up, why? because the paternalist system we had whereby if you worked hard you were protected has gone. Its all about today. The capitalist system needs to have checks and balances. One can hope that the current cock up will convince governments of all colours that the city is important but they are not gods.

But bear in mind the guilt goes beyond the city. People who borrowed against the equity of their houses are guilty, those who believe its their right to have an overdraft are guilty (out of interest, do you have for an agreed overdraft? I've NEVER had one, my Mum and Dad taught me the rules of Mr Micawber well, they've never heard of him but they understand him). We need to go back to proper credit that people can expect to afford, we have to be responsible, I am so fed up of adults who blame banks for lending them cheap money. FFS you are adults not 5 year olds. "It's his fault he MADE me do it".

Of course those of you who are socialists will go on and on about fairness and how we should all get the same for doing the same job. CRAP!! Honestly crap. We are not all equal. Why should someone who busts his guts out get paid the same as the bloke next to him who goes through the motions?

When we come out of this mess we have to get a system that rewards people who work hard and those who take reasonable risks. We need to reward those, ESPECIALLY those on modest incomes who try to better themselves and want to avoid reliance on the state. We need to take responsibility for our own actions.

For my own part I have immense sympathy for those losing their jobs. I've been made redundant twice and it is not nice.

I'd like to stress that the finance industry does bear a lot / the majority of the blame for what goes on. I just think we should look at ourselves and how we run our lives.


Kate said...

Actually, I do care about people starving in Africa (or anywhere else on the planet), it's something I feel very strongly about. But that's just me, you might be right about everyone else. I hope not.

"Why should someone who busts his gut get paid as the bloke next to him who goes through the motions? "

But, that's not what's at stake here. We are talking about people who lined their own pockets by inventing imaginary money to trade in imaginary goods and who feel absolutely no guilt about the fact that their actions have led the world into the worst recession for decades. They are amoral, and if they worked in any other industry they would be facing prosecution for fraud.

Pete said...

Kate - I would suggest there is a difference being concerned and caring just enough to do something on comic relief night. We could easily wipe out world poverty but how many of us will give up a new car, or a holiday or..... you get my point?

I think you miss my point on pay. I am not talking about the well heeled blokes in the city. Lets say you are work in a department and one of your colleagues turns up and does his job. Does it ok but doesn't bust a gut and then gets the same pay rise as you who have been putting in unpaid overtime to meet a deadline just because "we have to treat everyone FAIRLY".

To be fair many of those affected weren't lining there own profits. They were tasked with maximising profits. That's their job.

What I would question is those that set sales targets and then ignored the risk. I don't play the poor bank work in a branch of RBS who is being pushed to sell.

The exec's of banks needed to understand what they were doing. they looked at numbers and lets be honest took a short term approach.

Bit like politics. As Sir Digby Jones said our system is designed around short term events called elections.

The Mehrdorfs of this world are a different kettle of fish.

Liz said...

I agree with you in terms of people being stupid enough to take out massive mortgages, loans and such.

But I do think some of it is the fault of the banks actually giving these people these mortgages/loans when they clearly couldn't afford it.

What's the point in giving this money when it's almost 100% certain you'll never get it back because they can't afford it??

All this had to happen because house prices are stupid and no where near in-line which wages people are earning. The reality is that a high percentage of the population, certainly younger people will never manage to afford a house in their life time. I consider myself one of the lucky few that managed it - mainly thanks to money from my Uncle's estate as the deposit!

Whether I'll ever manage to move out of this house is a whole other issue. Hopefully I will, I'm already itching to move. No chance right now.

st said...

Pete- you are young (not you personally)and never heard the one about the 17% interest rate. The rate is 4%

You go to a bank for a
mortgage.Give them all your details.They include your overtime and bonus payments in there calculations.
The bank says you can have 5 or more times (we printed 8x on a wage of 30,000, single)your annual earnings.
Sell you protection in case of redundancy/illness, etc.
Your covered,sound advice, from a qualified and certified expert.

The house market slumps, work puts you on short time. No bonus or overtime. OH SHIT.

Yes, there are plenty of people out there, who want to, and stay ahead of " the joneses". and if they are struggling, it's their fault.
But the banks, etc. Have put a lot of people in trouble, through their actions/greed.
When people are given bonuses, on how much of a 'mortgage book'.They have delivered, they are not thinking about there clients or giving impartial advice.

1929-crash was built on credit.

The current crash was built on the american interest rate of 1% and people selling mortgages to people who could not afford a 1% rise.
A George w Bush legislation led to this.Forcing banks to lend to the sub prime market.
the banks then sold this on, but this was also credit.

And just for the record. If you can make millions for whoever, you deserve a slice of it.
Unless it's my lottery ticket seller.

Pete said...

st - i DO agree that the banks must take some/majority of the blame.

what annoys me is people who moan about the nanny state and won't take responsibility for their actions.

Your youngster should do some research. Why I am surprised they don't I don't know. I well aware people spend hours looking at the latest telly but ask them about money......

Dad and I have been saying for a few years this can't go on. Wages hae not kept pace with prop prices.

I hope my rant doesn't sound too strident. Its just that I believe that many of our problems start at home. literally. with how parents bring up kids - NO don't get me started.