Tuesday, 29 May 2012

No Change of Circumstance

US president, Ronald Reagan once said, “Governments view of the economy could be summed up in a few short phrases: If it moves tax it. If it keeps moving regulate it. And if it stops moving subsidise it” however, if this is indeed the economic philosophy of our politicians it is clear there is great deal of latitude in its interpretation. While in the UK recent “Pasty” tax u-turns have put to bed George Osborne’s theory, if it’s warm and it moves it should be taxed, when it comes to the banks “If it keeps moving regulate it” barely seems to have registered on the To Do list while Reagan’s “if it stops moving subsidise it” theory is not only alive and well but also firmly secured on the shoulders of the general public.
Despite tax payer funded bailouts and recession related job losses resulting in a constant stream of repossessions, for some, the economic crisis has delivered an exceptionally good few years.  Recent reports indicate a 3% decline in wages (in real terms) is the norm for most of us while, in contrast, the banking elite have enjoyed a very respectable 37% increase in their remuneration packages. Furthermore Ferdinand Mounts “ New Few”  have been basking in an exceedingly comfortable 49% increase on 2010 earnings which amounts to more than 900 times that of an average wage packet. 

Although David Cameron may wish us to believe we are all “in this together”, good sense dictates we are most definitely not. Not only has Obama’s “settlement” to rescue homeowners with underwater mortgages fallen foul of state governors discretionary powers to use these funds to prop up their deficits, in the UK, despite a government directive stately RBS must treat its distressed customers fairly, our honourable leaders quickly sold on shortfall debt arising from RBS repossessions to replenish the coffers depleted by bank bailouts.

As the gap widens between the rich and the poor and irresponsible banking continues to go unpunished and unregulated, it is only the Icelandic government who appear to have addressed the distress of the individual.  Debt forgiveness of residential mortgages over 110% of their 2008 valuations has not only played a huge part in rescuing their economy but it has saved a large proportion of their householders too. In the UK, however, oligarchs continue to rule our politicians and reports of banking fraud regularly surfaces from within both HBOS and Lloyds and those with Bank of Scotland created mortgage shortfalls can only look forward to endless years of persecution born out regulatory lethargy.

Ferdinand Mount says, “Britain will begin to heal its divisions only when oligarchs and their opposite, the poor, are reconnected to the rest of the society, so that the first are no longer seen as uncontrollable and the second as irredeemable” but unfortunately, for the less than affluent individual, I cannot see this ever becoming a government directive because, if my own HBOS experience is anything to go by, the government along with our errant bankers have one fundamental view in common.

As far as the individual is concerned, they simply do not care.


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