Tuesday, 28 October 2008
Losing financial morality; the dangers.
Mr Quango and I had an interesting debate last night. He was telling a story about a young lady he had met who was trying to get her money from Icesave to put into an Indian bank, because they had the best rates. She was very happy that the Government were guaranteeing that she could be gambling with her small savings whilst having no risk. In fact, she was being very economically rational.
Just as the Taiwanese are when saying that they no longer accept ratings by US ratings agencies on various debt products. Why should they trust what may well turn out to be actual crooks? The downside for the US is that if other countries follow this lead (China is making very strong noises today), the the US plan to issue treasuries to get through its debt problems will be busted.
Back to the UK, most people who have paid into private pensions in the past 3 years now would have done better to take their money to the pub. I would be willing to bet that ALL funds from this past year will have lost more less value than was paid in over the past year. Yet public sector workers paid from taxpayers money are 'fully funded' (debate for another day). Cui Bono?
Finally, the Government has announced that Keynesian economics is the are forward and that the busted policies of the 1970's will have different results this time. At a lower level though, it shows me that the Government chooses to live in a way that would bankrupt is citizens. Too much debt due to poor decision and living the high life, just change your own rules and open up another credit card. Suffice to say, I really don't rule out a call to the IMF if the crisis lasts another few months.
Overall, moral (rational!) probity in finance is a very important asset now being squandered by Government actions and regulations. World market swill make us pay for this. It is all very anti-small c conservative. How this will work out is beyond anyone to predict, but many of the measures we are seeing now are sowing bad seeds for the future.
And with that, I am off for a couple of weeks. Don't expect (too) many posts from me. I am sure Mr Quango and Mr Drew can keep you all entertained.