Two Worlds, Bankers and Services

The impression of a yawning gulf between two worlds was hammered home today.

On the one side we have reckless gamblers, known as bankers, again raking in cash and handsomely rewarding themselves, on the other there is a threat of extremely severe cuts in local services.

Add that to the high levels of unemployment and the collapsing infrastructure of the nation and I can only repeat again that we are in serious danger of becoming the new serfs to the new feudal lords.

This morning’s Financial Times carries a long report (Do-it-yourself warning as state cuts back) of forecasts by the most senior Local Authority professionals. So serious is the matter that we have a joint report from the Society of Local Authority Chief Executives, and the Chartered Institute for Public Finance and Accounting.

 They expect a cut in local services by one third over the three years 2011, 12 and 13. With Alistair Darling forecasting government cuts of over an eighth one might wonder how George Osborne is going to ensure ‘we are all in this together’! If he becomes Chancellor…

 The idea of bankers paying their fair share – any share – of the ‘fine mess they’ve gotten us into’ recedes more every day. They complain that they would not be able to hold onto the best staff otherwise. To which the question must be ‘Best for what?’.

 “But there is undoubtedly going to be a need for individuals and families and communities to do more for themselves, along with the voluntary sector, rather than looking to the state as the provider of first resort,” comment our doughty professionals.

 Bankers, of course, faced no such restrictions to save their bonuses. And, to make that possible,  we are seeing the price we will have to pay for a very long time. Who says ‘the prices is worth it?’ Not those doing the paying.

 For me this raises a very important question. Who is all this for?

 We are dazzled with figures about how we must trade, we must find the cheapest labour, we must become efficient. But must we?

 It certainly makes company balance sheets look better. But who is that for? Not for you and me. Does it matter how cheaply goods are imported if we are out of work and unable to buy them? If just having our refuse collected costs an arm and a leg – or if it is not going to be collected at all?

 It raises many questions about how we organise our world; and many questions about what is important to us as people. Over the coming years those questions will be major discussion points.

 We are offered figures which show green shoots of hope. Today’s double whammy from national and local government leave me feeling distinctly in depression.

Joseph Harris – Debt Control Man
 http://controlyourdebtcrisis.co.uk
 Control Your Debt Crisis on Your Own Terms

What is microfinance about?

Tim Harford writes in the Financial Times Weekend Magazine about Microfinance. He is the author of Dear Undercover Economist.

This is a neat little survey of the field, but left me distinctly disturbed. Now I understood the origins of Microfinance to be affordable small loans to help the underprivileged in poor countries to start the process of lifting themselves, and so contributing to their nation.

Affordable to me describes the whole package. Small sums that are enough to purchase stock for the initial trading of a small business, or loans to households to supply needs. The repayments would be small and might not start for a while. And the interest rate would be very low.

In the UK this is not a new idea and was operated by the Midlands Tallymen, who loaned the money to buy clothing and domestic cottons and linens from sometime in the C19. They would lend about £10 at a time and seek repayments of about ten shillings (half a pound) a week for 21 weeks.

That is dear enough at 5% on a twenty week loan, an APR of about 12.5%, certainly not cheap for the time in question. But it dwarfs and pales beside the figure quoted by Harford from a study of a South African project with charges equivalent to 200%.

No wonder he says that the value of the system is questionable.

In Kenya a savings accunt paid no interest and charged ‘hefty’ fees for withdrawal. That just seems an activity run by sharks.

That is a killer charge; it makes no sense to me if its purpose is to help the less fortunate. But in my research over the banks across the world, and the profit seekers who treat no one with sympathy it is all too familar.

In analysing the new Lending Code I find that Microfinance has become a word for the banking community. But they define a micro-enterprise as a business employing fewer than 10 people and with a turnover or asset total approaching £2million.

That certainly seems small, but Micro?

Actually it is a European Union definition! This suggests some confusion of understanding about the idea, though the effect that the smallest businesses should be treated with more care and responsibility than the bigger ones is a positive approach to the learning curves faced by those developing them.

I wouldn’t want to discourage any of this, but I am sorry to see so much opportunism creeping in.

Perhaps it needs a while longer to settle down into a sound international system.

Joseph Harris – Debt Control Man

 http://www.controlyourdebtcrisis.co.uk

Control Your Debt Crisis on Your Own Terms

Tremble: The Power Shoulder Cometh

Dallas and Dynasty, old tv soap operas, competed in dramatising the worlds of the rich. Perhaps the biggest icon of them was Joan Collins in dresses [sorry gowns] with shoulder pads that almost defied parody.

It seems the shoulder pad is back. But not just the shoulder pad, but the Joan Collins knock-you-down version. Apparently pads are being stacked vertically or horizontally.

Extreme shoulders, I am told, take four in each shoulder. Such is the sudden take of the new look that one major store reports a sell out in all its stores!

The objective is to give confidence in the boardroom, or other workplace.

This ties in neatly with a report on women as entrepreneurs, and this is done by the Financial Times http://www.ft.com/cms/s/0/fcaaab2c-c7e2-11de-8ba8-00144feab49a.html in an article which refers to them as lipstick entrepreneurs.

I thought this might be disparaging, until I saw it was a co-production between Avon and the Federation of Small Business.

The report suggests the number of enterprises run by women could double in 10 years, to a total of 2 million. This includes the one person business to larger ones.

Increases in women on company boards and women millionaires are both forecast, as is the end of the glass ceiling. Almost as a redundancy the report points out the obvious that “…the workplace will become more female-friendly…”

Talking of redundancy this is also part of the switch of breadwinner. As more and more men are finding themselves first in the job-loss line, it rests with the lady of the house to start a business to keep that roof over their heads.

Unfortunately I cannot find a link to the report, nor find the name of the report – not even in the FT news story. Tut, tut. When I was a journalist…

Joseph Harris

Twenty Thoughts for Debtors

In an entertaining but astute article in , The Financial Times Weekend Magazine, David Gaffney offers a trawl through some dos and don’ts and a couple of misconceptions.

He has written a novel Never Never based on this, and as you would therefore expect, he has a keen ‘eye’.

First he cautions against the ‘all the eggs in one basket’ approach to controlling spiralling debt. And warns not to borrow one’s way out of trouble. Perhaps he should have a word with Dear Gordon?

When you owe a lot, some arrangements can involve very tiny paybacks, and ‘geological’ payback periods. Gaffney says the first time he explained this to a client it was not well received! His bedside manner has improved.

Bailiffs seem a tricky area, but the main rule is not to let them in! Though of course the court-appointed bailiff is a different matter. Once in they are entitled to take inventory and return for collection of those goods.

He points out that creditors are keen to move as much of your money to them as they can possibly argue you should, while your task must be to hold on to all the money you need to live decently. And that – as a debt counsellor – he had no principles about his attitude to them. they will survive, and so must you, the debtor!

While he has some understanding of borrowing from one card to pay off others he says it is hard work and maybe it is a lot easier to stop. Strangely he found most multiple debtors were jolly, not my understanding at all. While bankruptcy costs.

He has several warnings about ways to avoid debt, such as being careful who you buy Christmas hampers from and ways of saving money on electricity.

Let me say he is a very witty writer and his explanation of the way judge’s are sympathetic to debtors is a good example, including that it might not be a good idea to wear clothes which are part of the original debts before the court.

He points out that credit companies want you to owe them money, which is their business after all. It is the paying back bit that can get complicated. And hire purchase goods cannot be taken back! Let me add that it is not a good idea to do this deliberately.

Among his clients have obviously been some ‘professional debtors’ since he suggests never being available to creditors or their agents since if they are unable to contact you for six years the debt lapses. Though the rule is not absolute, and would apply only to non-priority debts. (there are very few priority debts which include revenue taxes, council tax, rent, mortgage and utility services payments, and not much else)

But if you own your house his no 16 is ‘You can lose your house if you don’t pay’. Be warned! As I always emphasise being honest is the best approach.

One thing is very important. One that I have seen rarely mentioned. ‘Beware,’ he says clearly, ‘those creditors who sent measured and polite threats.’ Because they probably mean it.

It is possible to end up with someone else’s debts, so don’t accept delivery of something you don’t know about. It may carry a big burden of someone else’s unpaid debts.

He ends on a note of grim faced humour…

’20 Life is beyond some people’s means

‘A debtor is someone who hasn’t got enough money for the lifestyle he or she chooses. Most frequently this is a lifestyle most people call normal life – like having a phone, a telly, some clothes, heating the house and running the water. What should we do, kill them all?’

Joseph Harris
Debt Control Man