Tuesday, August 18, 2009

Colonel Moseley on the Betrayal of Savers

What ho! I think it's about time that someone spoke up for a disgracefully under-represented group in this country.

The people I'm talking about:

  • try hard to save out of their income

  • do not borrow, other than a sensible mortgage on their main residence

  • do not live above their means

  • manage without something, if they cannot afford to pay for it in cash

  • obey the law

  • pay their taxes

  • rely upon their politicians, professional advisers and government to look after their interests and behave with honesty, and,

  • have integrity.

If we look at the last decade or so, everyone has been bombarded by banks with invitations to borrow huge sums regardless of the capacity to pay or the adequacy of security. It is hardly surprising therefore that an large number of new borowers found this debt unsustainable. To compound the problem this junk debt was bundled together and securitised and sold into a market which ultimately was built on worse foundations than just before the Crash of 1929. Inevitably the worst happened causing a global financial crisis which nearly saw the collapse of the banking system of the whole world.

As in 1929 a recession if not depression has ensued with economic downturn, massive unemployment and initial deflation.

Where does that leave everyone?

Well.. the borrowers and bankers who caused the problem appear no worse off. The bankers seem to have returned to a bonus culture remarkably quickly and only time will tell if more prudent lending policies will now prevail.

Existing borrowers never seem to have had it so good with interest rates at pretty much an all time low. Many have had their cake and eaten it: a clever trick.

The worst off seem to be the unemployed who lost their job with the recession and small businesses unable to sustain normal levels of working capital on overdraft from myopic and jittery banks.

Hard hit too are the retired, many of whom have saved all their working lives and abstained from extravagance or borrowing. They have done this to build up a nest egg so that interest will supplement such pensions as they have to give the dignity of self-sufficiency into retirement.

Hardly any consideration seems to have been given to the huge impact of reductions in interest rates upon this class of person who is the very backbone of this country. A small and entirely cosmetic increase in the permitted investment in Isa's is all that seems to have been done to recognise the issue.

As demonstrated by his attacks on private pension provision, Mr Brown seems to have some kind of grudge against the person who works hard, saves, does not take on excess debt, pays taxes, obeys the law and tries not to rely upon hand-outs from the state. The interests of this type of valuable citizen have typically been shamefully ignored.



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