Archive for the ‘Money’ Category

Financial Generation Gap

tmp_6232-Screenshot_2016-03-07-18-53-49_crop_625x494-320x253-1036700961Today’s Guardian features the results of an investigation into the financial prospects of those born between 1980 and the mid-90s, often known as Generation Y, The investigation found Generation Y is increasingly missing out on the wealth being generated in western societies.

In the 1980s young adults would generally earn more than the national average wage. In many countries they are now earning as much as 20% below the national average. However, pensioners, by comparison, have seen their incomes soar. The first, and inevitable, reaction is one of annoyance and anger that pensioners and those soon to reach retirement age are taking an unfair proportion of the nation’s wealth.

That reaction fails to recognise the reason we are in this situation,  the fact that post war redevelopment and growth were big drivers in wealth generation. There was also a huge change in consumerism, not just in purchasing power but also the range of goods available to buy. The pace of change and growth was never sustainable in the long run and we are going through a period of adjustment which will end and things will probably catch up again.

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Retirement, the Best Job Around.

Screenshot_2016-03-06-12-00-38_crop_714x418I keep seeing articles in the press and magazines about the problems that face men when they retire. It’s suggested we loose money, the structure of our lives, status, and our sense of efficacy. Divorce rates among the retired have increase and dissatisfaction with having to live a non-working life increases rapidly.

Somehow all these problems have passed me by, retirement has meant my wife and I travelling the world, taking over the kitchen, getting more involved in the community and using the skills and knowledge I gained at work to benefit our village school.

Obviously money is a big issue but as we all know retirement is an inevitable event for most of us we need ensure we have a financial plan which will provide security. Fail to plan and you plan to fail. The other important issue is your attitude to work. Too many live for their work instead of working to live. There are so many opportunities for the more mature man today, no one any reason to resent or fear retirement.

We Want Cuts To Public Squandering

BoardroomAlmost 60% of the public want the government to cut public spending so the country’s huge deficit can be reduced, they want benefits cut and the pay of public service staff frozen. One target missing from the BBC news report and probably not on the list of options for reducing government spending are the multitude of Quangos that cost the country over £200 billion a year but often deliver little or no benefit other than providing well paid jobs for the boys.

There are over 1,200 Quangos and include such wonderfully useful bodies as the Yorkshire Cultural Consortium which spends over £1 million a year, the Competition Service which spends over £3 million a year and Visit Britain, which spends over £70 million a year, which is not to be confused with the English Tourist Board that spends over £13 million a year or the Scottish Tourist Board which spends over £25 million a year.

Not all Quangos are a waste of money but many are indicative of the bloated government and public services this country is struggling to support. For many years the NHS was set annual efficiency savings targets which forced the organisation to become leaner and learn to do more with less. Perhaps the government needs to set itself some tough targets for cutting public expenditure starting with the Quangos.

Directing Your Way To A Fortune

bbcThe BBC has published the pay details of its top executives in a move to try and placate the many individuals who complain about the way public money is spent on over inflated salaries. The attempt to be open has shown to be rather pathetic as the pay details of some 300 senior staff have not been published. If they aim to be open and honest they have failed at the first attempt.

Looking down the list of people and their jobs one quickly comes to the conclusion the BBC is living in a world of its own where every minute task needs to be controlled and directed. Thus there are nine directors just to look after all the BBC staff and another to look after audiences. Scanning the list of staff is like watching a gravy train passing by with each carriage full to bursting.

In defending the very high salaries the BBC trots out the well worn argument of the need to pay the going rate to get the best staff. Its an argument used by many organisations, but one they fail to realise is a spiral that can only end in disaster. If everyone is chasing the best the cost will just keep increasing to unsustainable levels. I’m sure there are many capable people who would do these jobs for a lot less. However, that would mean those who appointment them seeing their pay packets drop. Turkeys and Christmas come to mind.

The Financial Iceberg Keeps Growing

iceburgWhereas the NHS was once described as a Tanker that would take a long time to turn around, the finance industry seems to be akin to an iceberg, much of what happens is hidden from public scrutiny but its potential to sink national economies is huge. Having scraped the hulls of many governments the iceberg has continued to grow unchecked and unhindered by the out pouring of disgust of the public and politicians.

Even the banks that have been propped up by public money to keep them afloat are making so much money they can sprinkle it among their staff like confetti at a wedding. ‘We want the best so we pay the best’ is a common retort among the leaders of the financial sector. Er, how come the same people who got us into this mess are now claiming to be the best at getting out of it and being paid huge bonuses?

Unfortunately for us in the UK our economy is more dependent on the finance sector than any other country, therefore we have suffered most and will find the downturn lasting longer than most. Its time for the government to introduce real controls and if necessary taxes targeted at the finance sector. Yes it may well drive some companies to move elsewhere, but in the long term that would not be a bad thing for our economic security.

Lack Of Interest Will Cost Many

CashNews that interest rates are likely to remain low for years to come while taxes and other costs will rise is depressing. I do not rely on interest from my savings but it is a nice bonus and with fixed rate savings having topped out at 7% last year the additional was always welcome. Now its hard to find savings rates over 4% and even then you have to be locked in for three or five years, little use if you need to keep the option of accessing your savings quickly.

For people with a small pension income and a large capital sum the future looks bleak, particularly if the only solution they have is to draw on their capital reducing even further their income. The re linking of state pensions and the change in average earnings will be a help but that is still a few years away and wages are not expected to rise much faster than inflation while the economic crisis slowly ends.

Its a common concern that the rich bankers caused the financial problems but its the poor who will pay the price of putting things right. You can bet the low interest rates will not prevent the people in the finance industry from continuing to make huge profits and earn equally huge bonuses. The inequality of financial rewards has been ingrained in our society and our economic from the invention of money, and looks like its going to be around for many more years to come.

Yes We Need New Controls, But Not Those Ones

steinbrueckThe UK is in a very difficult position over the need to implement tighter and more rigorous controls on the banking sector. Over the past 50 years the country has shifted from being a producer nation with a large manufacturing base to one dominated by service and finance industries. We no longer add value to raw materials but make money in the ethereal world by assisting others to make things and through investments.

London is a major player in the finance world and anything that imposes more regulation on this sector risks driving the money men to less restrictive countries. The impact on our country could be very dramatic and leave us as a much poorer nation. As the finance industry is far more important to us than the rest of the European Union we are a lone voice in the move to increase regulation in order to prevent a reoccurance of our current economic woes.

Thus, we have been accused by the German finance minister, Peer Steinbrueck of blocking the introduction of tougher financial rules. It will be interesting to see just how lacking in significance our influence will be on the final outcome. It will be a measure of how the pond has grown in size but our little fish has not grown at a similar pace.

Bailing Out The Banks But What About The Holes

lehman-brothersThe first anniversary of the failure of Lehman Brothers has been accompanied by the views of financiers and commentators on the events of the past year and what happened as the world found its prosperity slipping away. Questions over the failure to save Lehman Brothers are common currency with some claiming the governments who came to the aid of the banking industry should have done more.

What you don’t hear from the leaders of the bank is the failure of their boards and directors to fully disclose the extent of their financial problems. We currently hear the European Central Bank expressing the view the financial crisis for the banks will get a lot worse before its over and their losses may more than double by the end. All very worrying for the rest of us as a secure and profitable banking system is essential to the country’s financial security.

However, we now hear the Institute for Public Policy Research say the rapid return to the City’s bonus culture shows the banking system has not reformed its ways and it could all happen again. Its clear the governments of the world need to act far more quickly to prevent a reoccurrence as all the dithering is doing nothing to bring confidence back to the country, an essential part of our future prosperity.

Predictions, You Couldn’t Make Them Up, Or Could You

allan greenspanWe all know the one thing we don’t know is what the future will bring, no one has found the crystal ball that will give us a glimpse of the world of tomorrow, some have tried, but their predictions tend to be so woolly they will inevitably fit one of several events, particularly if you wait long enough. Occasionally someone will make a prediction that you know will happen because its something that is inevitable.

So we now have Alan Greenspan, the former chief of the US Federal Reserve predicting another financial crisis but one that will be different from the current economic problems. Well those who look upon Greenspan as some type of financial guru will be heeding his words with great interest, I for one will not. Its a prediction of the obvious, economies go in cycles, that’s a fact. We will see a period of economic growth followed by a period of economic turmoil, its happened in the past and it will happen again.

Ah, but next time it will be different our Guru claims, trying to add credence and weight to his prediction. But again that’s also inevitable. The world changes over time, the factors that drive economies change over time and so the nature of each economic crisis also changes. Greenspan’s prediction would have been of greater benefit if he had made it prior to the current events. But then that would be a demonstration of real skill, something that has been missing from our financial markets for some time.

Checkmate For Credit Card Cheques

credit-cardThey are one of most annoying things I get from my credit card company. I don’t ask for them, I don’t want them but they keep coming. They are a huge security risk and are an expensive to use, but the credit card companies just tell me I should be pleased I have the benefit of their forethought. I did once manage to stop the dam things coming by writing to an address that took a considerable effort to find.

Unfortunately, when I was issued with a new card and number as a security measure the credit card cheques started arriving again. ‘Its a different card number Sir’, was the reply when I asked why my instructions were being ignored and the only way to stop them coming was to write again; and no I could not email or ask her to accept the request, it had to be in writing.

When someone is already in debt the idea of using a cheque that seemingly is being offered without any real conditions on its use must be very tempting. It is a blatant attempt by the credit card companies to get us to borrow more so they can make more money. I am very pleased the government is going to ban their use, perhaps they should go further and bring in more stringent controls on these little bit s of plastic that have been a significant problem for many people.