Life under Capitalism

When Personal Finance Is Political

Corruption, Gordon Brown, Life under Capitalism
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Better off Labour NZ 1957
Better off Labour NZ 1957

Oh, so that’s why my bank charges are so high…

…it is still a matter of pride that, in Britain, one is never required to discuss one’s political beliefs. Unless, that is, you want to do a certain type of business with the state-controlled Royal Bank of Scotland.

Damn it, there it was a lovely clear blue morning and the warm spring day spread out before me. Then I read this by Fraser Nash in the Spectator,and the grey blanket of clouds over Noord-Holland redescended.

It’s bad enough for some of us RBS customers, what with the trillion pound RBS Labour-licensed theft from the taxpayers and sterling’s virtual parity (93p today)with the euro, which is affecting anyone on a fixed income who lives abroad pretty drastically.

Now it appears that the great clunking fist is using his shares in the bank to meddle politically in people’s intimate financial affairs – and he, via RBS, may also be giving enhanced bank services to his political friends and fellow travellers.

Geoff Robbins, a Cheshire-based computer consultant, recently approached RBS to ask for a credit-card processing facility for his business. After the usual bankers’ inquisition, he was asked a question that knocked him for six: did he have any political affiliation? Did he know any MPs, councillors or mayors? It was a new question, the lady explained to him, which had been introduced soon after the government took control of RBS. She said, in his paraphrase, that ‘political influences may be used for corrupt purposes’.

Might’n’t they just.

NB: this is the Spectator and Nelson so consider the source. But I’m inclined to believe every word; as Nelson himself says:

When I first heard Mr Robbins’s story, it seemed hard to believe. But the more I considered the context of this government’s apparently irrepressible desire to pry into every aspect of out lives, the more it had the awful ring of truth. I decided to investigate further and called RBS, who issued an outright denial. ‘We would never ask such a question, nor would we dream of doing so,’ said its spokeswoman. So Mr Robbins had concocted his story? Unconvinced, I called RBS Streamline, posing as an employee for my mother-in-law’s (real) company and asking for the same service.

Sure enough, the chilling question came at the end: ‘Is she a member of any political party?’ I asked why this was relevant. ‘I presume we ask because there is a high volume of fraud in that sector. Because people who are of that sort of [party political] nature, maybe, are inclined to commit fraud.’ The question, I was told, is ‘thrust upon us by the Financial Services Authority’. The FSA says this is untrue. Banks can check clients’ backgrounds, but no one is required to talk politics.

More…

That the bank is being so open about its political intimidation is what’ss truly scary; it’s yet another in-your-face move by Labour to douse potential opposition and is all of a piece with ACPO’s shrill warning of a ‘summer of rage’ and recent clampdowns on peaceful protest.

But what can you do? Unfortunately I’m in the same invidious position as so many other RBS customers: disgusted and scared but unable to move because we need banking services. Try changing banks in the current financial climate, particularly if your income is low or fixed and your credit history not all it might be.

The personal is indeed political, but expressing political disgust? Not affordable.

PFI: the next bailout

Economy, Life under Capitalism, UK politics
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Various Private Finance Initiatives (projects in which government infrastructure is built through private capital which is then paid back with exorbitant profits) are having trouble attracting funding, hence the government should put more money in them. That’s right, the state should provide the money to private investors so that they can then rake in the profits later:

But Tim Pearson, director of private equity firm Innisfree and spokesman for the PPP Forum, said private firms might need state help for funding that should have come from commercial loans.

“Because we are having problems raising the funding, what we are now looking at is alternative funding structures,” Mr Pearson told BBC Radio 4’s World This Weekend.

We need to be very careful about the taxpayer taking all the risks and the private partners taking all the benefits

Even with possible European Investment Bank funding and increased equity investment, there could still be a funding gap of up to 40%, he said.

“This is where the problem is, because although there is debt available, there is not much of it and the terms are much too expensive,” said Mr Pearson.

“This is where we are looking to talk with the government and say we can go ahead with this business, but it is more expensive.”

He said state funding would be “to some extent against the principle” of PFI, but added it was not fundamentally a problem.

Liberal Democrat Treasury spokesman Vince Cable, a long-time sceptic about PFI, said the government should go back to more traditional public financing structures rather than use taxpayers’ money to prop up the public-private model.

Meanwhile the banks the government has already partially or whiolly nationalised own a big chunk of the PFI market; wouldn’t it make sense to take away these projects completely, as part payment for the rescue of these banks? It’s more than a bit stupid to let one arm of government keep on paying another arm of government rather than actually invest it in much needed services. the banks would only use the money to pay bonuses with anyway.

Goldman Sachs: 6.5 billion in bonuses Burger King workers: nada

Economy, Life under Capitalism
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Here’s a Wall Street whopper for you. Goldman Sachs, where former Treasury Secretary Hank Paulson was once CEO, switched from an investment bank to a bank holding company last year so it could qualify for $10 billion in bailout funds. They then spent $6.5 billion on bonuses for their financial staff. Goldman’s recklessness is one of several scandalous stories of Wall Street giants abusing the bailout at the expense of taxpayers and the economy. But in this case, Goldman’s excessive spending has had an immediate and profound impact on the American work force.

Goldman Sachs is one of the largest owners of Burger King, which employees about 360,000 workers nationwide. The average Burger King salary is $14,000 a year–three grand less than the federal poverty line. According to the SEIU and a new campaign from Brave New Films, had Goldman used the $6.5 billion blown on bonuses to help Burger King’s woefully underpaid employees, each BK worker would have received an extra $18,000 last year

Meanwhile, in the UK the bad news of workers at the BMW mini plant losing their jobs, of Woolworths closing down is supposed to be balanced by the “good” news that KFC is expanding. As if trading in your (reasonably) highly paid job doing skilled work for frying chicken nuggets is a good thing.

Doug Henwood on the American recession

Economy, Life under Capitalism
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Steve Perry interviews Doug Henwood about the American recession and its causes:

We’ve seen for the last 30 years or so that debt was used by a lot of people to compensate for very weak income growth. The real value of the hourly wage in the US peaked in 1973, declined into the mid-90s, picked up a bit in the late ‘90s, and now has been flat to declining ever since. In the face of stagnant incomes, people worked harder. More people from families went to work. They worked longer hours. But they also borrowed very aggressively. So one reason we saw this tremendous growth in debt over the last couple of decades was to compensate for those deficiencies in the real economy–the weakness of real wages for most people.

What are we going to do about that? We can work off all the debt we want, and the banks can do all the write-offs they want, but if we still have very weak income growth–and, as we’ve seen through the 2001-2007 expansion, very weak employment growth (the weakest labor market income growth we’ve ever seen in a post-WWII expansion)–then you still have a fundamental problem. And I don’t think going through this financial exercise of restructuring the banks is going to do anything to solve that underlying fundamental problem.

In other words, the roots of the current crisis go back decades and have their origin in the succesful push back of capital against America’s workers. Since 1973 real wages have steadily decreased for the majority of American workers, but this trend has been masked first by the increase of double income households, then by families eating into their capital by drawing credit on the value of their house. Through boom and bust this trend has hold steady, with the only real exception being during Clinton’s second term, thanks to some lingering Democratic concern for the working classes.

It’s no wonder then that Doug Henwood is pessimistic about a quick resolution of the current depression, as long as this underlying reality isn’t addressed and the chances of that aren’t great, even with Barack Obama in the White House. What we’ve seen with the crisis so far is that governments worldwide are hellbent on saving capital, but not so much in safeguarding jobs. The danger is that when the crisis will be declared over in a year or two, the economy will be picking up again but with only the stockbrokers and shareholders profiting and the working classes, which is most of us, still in the hole.

America 2008 = Argentine 2003

Activism, creative direct action, Economy, Life under Capitalism
Published on 1 Comment on America 2008 = Argentine 2003

Workers occupy factory after the factory’s bank refuses credit to pay them:

[…]about 250 workers have occupied their employer’s factory after the company shut its doors without any notice. They intend to stay there until severance and vacation pay due them is guaranteed.

The company is Republic Windows and Doors, and a spokesman for the company told the AP that the precipitous closure was necessary because its creditor, Charlotte, N.C.-based Bank of America, won’t let them pay their employees, which is rather interesting because BofA recently received $25 billion from the feds as part of that massive bailout Bernanke, Paulson, and Bush convinced Reid and Pelosi was necessary or the sky would fall and the American Way of Life would end.

For an eye witness view of the occupation, there are of course Youtube videos:

As the title says, it reminds me of what happened in Argentine at the start of the decade, when their economy collapsed. That country had opened up and “liberated” their economy, atteacting investors looking for low risk, high profit investments. When the economic miracle turned out to be not so miracleous after all, they were gone in a flash leaving a broken country behind. Like the workers at Republic Windows and Doors the people of Argentine took their fate in their own hands and occupied and re-opened hundreds if not thousands of empty factories, shops and other workplaces. I wonder if Naomi Klein ever thought the scenes she reported on five years ago would be replicated in her own country?