HSBC Bank Closing Notice

View from the Sea Front
May 2019

DO bank managers still exist? I mean, in the old-fashioned sense of the term. You know, like back in the days when you needed to borrow some cash and there was not an instantly approve (or reject) online facility. In ye distant far off times, the protocol was to make contact with your bank, and, invariably, request an interview with the Chief Beak.

Dads Army Bank Manager

Those were of course also in the days when our high streets were festooned with bank branches, as opposed to wall to wall charity shops and – if you are really lucky – a branch or two. The more rural the location, the less likely you are going to find a ‘proper’ bank branch in 2019.

Today, like millions of my fellow citizens, I bank online, and for the most part via the fabulous apps on my mobile telephone. First Direct – which I initially joined in 1991 when it debuted as the UK’s first all singing, all dancing telephone bank, now offers a superb online service, and it is rare indeed for me to have to physically call the bank. Likewise, with my other lender, HSBC – which happens to own First Direct.

On the occasions when I need to pop into my local HSBC branch to discuss my company account, I am ushered into the Business Pod, where my account is dealt with politely and efficiently.

The Old Bank restaurant

Banks have of course taken many knocks over the years. And I don’t just mean the investment arms of the international lending establishments, whose complex intra bank lending were seen by most analysts of the 2008 crash to have been responsible for the near collapse of the UK’s banking system and the overnight annihilation of our economy.

No, the current bad boy image is largely down to the fact that banks are not only closing physical branches in increasing numbers of provincial towns and rural villages – not to mention inner cities – but many fear they are not doing enough to counter the shutting down of ATM machines across the UK.

So, first the bank branches go, and then the cash machines. According to a recent Which? report (March 2019), around 3,000 ATMs were closed in the last six months of 2018. Currently, around 300 machines are being shut every month. It is a worrying trend.

It is partly because people are using cash less, thanks to the rise in popularity of new payment methods such as contactless transactions. My kids – as I am sure other parents of a certain age have discovered – never, ever have any cash.

But it is also because cash machine operators such as Cardtronics and Note Machine, who get a fee from our banks each time we use one, are finding that fewer of their machines are economic to run.

A myriad of reasons then, and it’s fair to say that for those of us who live in major cities, it is not a problem – yet. But for millions of countryside dwellers – many of whom now must rely on driving or using public transport just to access a cash machine – it is a significant issue.

Speaking as one who was perpetually skint through university days, getting hold of cash was mainly an issue as I seldom had any money in my bank account.

Not that this stopped me from going vertiginously overdrawn, seemingly after the first couple of weeks of term time – even though you could get four pints for a quid in my student union bar in the late 1970s.

Essex University Students' Union

In fact, the last time I had a physical, face to face meeting with my old NatWest bank manager (Colchester branch, January 1979) he benignly asked if I had my cheque book and bank card with me.

I do, I said.

Thank you, may I have them please, said the affable boss, whose name has escaped me down the mists of time.

Passing them across the forbidding terrain of a huge teak desk, my then manager calmly relieved me of the offending merchandise, while simultaneously retrieving an enormous pair of scissors from a drawer and expertly snipping my bank card and cheque book into small pieces.

Like confetti, I recall thinking at the time. Chastised, I nodded solemnly as he outlined a repayment plan for me to weigh off the bank. According to the Office for National Statistics’ composite price index, £300 in 1979 is today equivalent to £1,505. So, I get why the senior beak was keen to shred my card and cheque book. I’m not going to sell my vinyl collection, I vowed silently. Or my 1960s golden age Marvel comics (reader, I still have them, praise be the Lord as the collection is today worth a small fortune).

Marvel comics

But I did clear the debt, slowly but surely, and while it probably took a good while to restore my credit rating to anything less than toxic, that audience with an unamused bank manager taught me a few harsh lessons in fiscal balancing 40 years back.

Funny to think, how four decades ago I couldn’t get hold of cash – back then pretty much the only way so many things could be paid for. You try buying a beer on a debit card in the University of Essex student union in 1979.

Student Union Bar

And now today, I am thankfully not short of a bob or two but worry that for many of my fellow citizens – particularly the vulnerable and the elderly – that cash is becoming increasingly harder to come by.

As Shakespeare said, ‘The wheel is come full circle.’


View from the Sea Front
December 2018

All I know is I know Nothing

Life, as someone once said, is a work in progress. An unfinished symphony, perhaps, to extend the metaphor. Time slips past, and as we count down towards the end of the epic negotiations over our future role with Europe, I daresay I am not alone in wondering how much can be done in just a few short weeks.

Franz Schubert, the great Austrian composer, must surely have thought he had a few more decades on God’s earth to crack out reams more beautiful compositions.

Of course, Schubert left behind a vast oeuvre, including more than 600 secular vocal works (mainly Lieder), seven complete symphonies, sacred music, operas, incidental music and a large body of piano and chamber music. Yet while composing the song cycles Die schöne Müllerin (D. 795) and Winterreise (D. 911), Schubert succumbed to a dreadful disease and was gone. He was just 31.

Pound for pound – or Euro for Euro – in the time it took young Franz to write and oversee the production of yet another landmark opera and a couple of major symphonies, hundreds of the (reputedly) finest economic and strategic minds in Europe have singularly failed to agree on key tenets which will decide our collective futures going forward in this life.

Naturally, it was always going to be a case that hundreds of highly privileged British and European agents of the State were never going to be as efficient as one genius with true vision, forging ahead to leave a legacy of great beauty and monumental complexity within the space of a few short years.

While a bona fide vision, a sense of urgency, of time running short, is invariably the cross artistic prodigies such as Schubert were acutely aware had to be borne, politicians – for the most part self-serving, egotistical in the extreme, and more concerned with their own outcomes rather than the legacy they will leave behind – appear to have been unaware that the clock has been ticking very loudly.

EU and UK flahs diverging on pavement

And so here we are. There can be few among us who anticipated such a bun fight, the like of which has not been seen within the peacetime European landscape for 50 or so years.

And the irony of the matter is that, before the spectre of leaving Europe became a reality, the UK was genuinely on a roll. Having spent the best part of eight years hauling ourselves, Sisyphus-like, back up the steepest incline since the Great Depression, we have managed to shoot ourselves spectacularly in both feet.

Like Schubert and many another who departed this Earth before their time, I have no facility to see what the future holds. Many worse case scenarios have been posited, not the least by high ranking bankers such as Mark Carney and other highly qualified individuals whose sobering visions of an imperfect future for us all would be foolish to dismiss.

But just as F Scott Fitzgerald embarked upon Tender is the Night, knowing that his health was failing – but presumably not knowing that he was not destined to survive long enough to finish the great work – we will all move forwards into an unknown future. A future where certainties and proven economic and social formulas of yesteryear have necessarily been rendered obsolete.

F Scott Fitzgerald

Because the reality is that there is no economic formula yet written which takes account of an unknown. Physics and mathematics have a certainty of outcome. The unknown does not. We cannot forecast on a model which has never before existed.

And while politicians and indignant economists will insist on making strategic comparisons to Norwegian agreements and Canadian models and the like, this is ultimately a strategy which lacks verisimilitude.

But here, for what it is worth, are some of my predictions for 2019: we are likely to see –

  • Far fewer estate agents – euphemistically known as ‘consolidation’ in the sector; ie, many will go to the wall a la 1989
  • More crippling blows to our High Street retailers. Anticipate many more department stores closing – and attendant job losses

  • Online shopping will – assuming anyone has any money left – continue to threaten the old status quo
  • A severe slow down in the property market – consumers do not like uncertainty. Prices of a greatly over-inflated market will necessarily come down
  • First time buyer activity will increase as a result – and expect more government incentives in this area
  • Further squeeze on the motor sales industry. There will be a raft of ultra-cheap credit deals to stimulate the market – but inevitably big-ticket expenses will suffer
  • The diesel Porsche Panamera will become all but extinct. Look away now if you have just unloaded £80k

  • An upswing in overseas travel bookings – many people will want to jump ship. If only to regain sanity
  • Upturn in the fortunes for the (lower end) of the credit industry as universal credit restrictions bite
  • Continuing low interest rates. The Bank of England will not risk constraining spending
  • A return to a more artisanal retail model – business rates will continue to fall to stimulate High Street – this may well pave the way for the kind of shops that people want

Artisan Gluten Free Bakery

  • A slow down in manufacturing output – leading to lay offs in key sectors. Uncertainty does little to enhance the fortunes of order books

Along with the above – which is not intended to be a litany of bleakness by the way – we may well see a change of government this coming year.

But as Socrates said, all I know is that I know nothing.


To Have and Have Not

I wonder what the legendarily mean J Paul Getty Snr would have made of the Resolution Foundation’s recent (May 2018) recommendation that all young people in the UK should receive a cash gift of £10,000 when they reach their 25th birthday.

J Paul Getty

The payment, described as a “citizen’s inheritance”, is designed to redistribute wealth at a time when young people need it most to find housing, return to education or start a business.

It is also intended to reduce resentment towards the so-called silver surfer generation, baby boomers (born 1946-65) who have typically done better out of the housing market and pensions than any subsequent generation.

Young woman holding money

The idea has emerged from the imperious Resolution Foundation’s intergenerational commission, which has been labouring on the issue for two years and has just published its final report.

I was casually pondering the Getty scenario apropos the Resolution Foundation as I researched JP’s early life. There are connections.

As a 22-year-old in 1914, the young, hugely ambitious JP was handed a gift of $10,000 by his dad, George, who had handily made a fortune by drilling for oil in Oklahoma in the early 1900’s.

At a time when the average American worker was lucky to earn $600 a year, $10,000 was a mind-boggling amount of money for a young man to be handed on a plate.

As a kid in the 1960s – with pocket money of three shillings (30p) a week and a four-hour Saturday milk round securing a further two shillings and sixpence (25p) – I recall being fascinated by the mythology surrounding Getty and his billions of dollars, all ultimately stemming from that $10k ‘gift’.

The notion that one person could accumulate such staggering wealth was hard to get one’s head around. Very, very rich people with more money than they knew what to do with (Getty reckoned that if you could count your money you were not seriously loaded) were few and far between.

More commonly, the crazily rich were more likely to be encountered on the big screen. Fictional nut jobs, like Ernst Stavro Blofeld – or Auric Goldfinger, compellingly played by the generously proportioned Gert Frobe – who drove a solid gold vintage Rolls Royce and would think nothing of building a lethal rocket or two inside a hollowed out South Pacific island while examining ways to plunder the world’s cash reserves.

Bloield

But, as ever, life is stranger than fiction, and Getty was the real ticket, a money fixated workaholic who, according to legend, exhibited miserly ways that were surreally disproportionate to his means.

Of the many stories alluding to the oil tycoon’s parsimony, one of my favourites is the occasion when Getty allegedly invited a group of friends to accompany him to a dog show in London (see Wikipedia), only to have them walk around the block for 10 minutes until the tickets became half-priced at 5 pm, because he didn’t want to pay the full 5 shillings per head (about ₤12/$17 in 2018).

I suspect I know what J Paul Getty’s view would be on the Resolution Foundation’s £10k to all those under 25 idea – despite having been the recipient of an extremely generous gift, albeit from his own family, over 100 years ago.

Inheritance Tax typewritten

If such an idea did get a green light, how would it be funded? Principally by a change to inheritance tax. As inheritance is currently taxed at 40% above a threshold of £1m for many, it is proposed that the current system would be replaced with a new 20% tax on all gifts or inheritances throughout one’s life up to £500,000, and then at 30% above that.

Inheritance tax in the UK clearly needs to be overhauled. As we have seen time and again, crafty and judicious estate planning by the extremely wealthy – such as the late Duke of Westminster, who passed away last year but whose estate has been ring-fenced by clever family trust planning – will always prove divisive and unpopular in the extreme.

But it is also grossly unfair, with many ordinary citizens obliged to pay 40 per cent tax on their estates once beyond the personal allowance – even though they have already for the most part been punitively taxed while earning the money in the first place.

With enormous divisions in the wealth of the country there are bound to be resentments from all quarters regarding the bright idea of gifting £10k to those weighed down with substantial student debt and faced with the prospect of having to save tens of thousands of pounds for a deposit just to get a foot onto the property ladder – assuming they will then be able to jump through endless hoops to secure a mortgage.

Inheritance tax laws in the UK are both archaic and cynical, and there is no real place for them in 2018. Giving money away at the expense of others is also not the answer. But there is a genuine need for the gaping divisions of wealth in our country to be properly examined.

It is not just the young who may hope for a £10k bung. The food banks I regularly see sprouting up around my home town of Brighton are by all accounts used most frequently by breadline families where the parents are aged 40 plus and cannot cope. In 2018, at a time when the country is haemorrhaging money on an NHS obesity crisis, this strikes me as an absurd paradox.

Thankfully however this is not Venezuela, where astonishing 400 per cent inflation levels effectively mean that millions of ordinary families currently do not have enough to eat in the face of a horrendous economic crisis triggered by a collapse in the price of oil on which the country is so implicitly dependant.

As is the case in so many parts of the world today, mismanagement of economies by incompetent or avaricious administrations has directly led to a collapse in the living standards of entire populations. This is clearly not evident in the UK, one of the world’s richest and most successful economies.

But give away £10k to all under the age of 25? That’s a big ask.

As Phil Ancell one of my tennis club mates said the other day (in between glaring at me following my superb backhand return of serve) – a move such as this would be seen by many of a certain age as a diabolical liberty.

I daresay J Paul Getty would have a view.


If I have seen further it is by standing on the shoulders of giants

Genius and penury. The two often seem to go together. Skint, broke, destitute, impecunious….but what a great mind/talent. You know the kind of thing.

Why is that, I wonder?

Malcolm Lowry painting

I’m standing at the neglected grave of the great English writer Malcolm Lowry. It is deep, dark winter, in the churchyard of St John the Baptist. The church, its spire rising majestically towards an unforgiving grey sky, sits in Ripe, a lovely village nestling in the bosom of the south downs.

Ripe church

Lowry’s mournful headstone, now badly faded, is battered by an epic, howling wind. The writer’s short, alcohol-soaked life, ended at the age of 47 after a particularly heavy bender. Apparently, Lowry was so broke there was no money to bury him after he went flying down the stairs of his rented cottage and slipped into a coma.

Malcolm Lowry Tombstone

I’m thinking, how can someone in command of a mind which gave us Under the Volcano, one of the magisterial works of 20th century literature, with a narrative of such accomplished complexity it is often compared to Joyce’s Ulysses, have ended up with barely the shirt on his back?

Under the Volcano Book Cover

It’s a familiar tale, one way or another. In Lowry’s case, alcohol addiction clearly played a major role in his downfall. But look at the likes of Mozart, Van Gogh, Mark Rothko, Jackson Pollack, DH Lawrence, George Orwell, Renoir, Caravaggio….any number of the romantic poets, all widely to be considered geniuses within their respected fields, all contemplating their mortality with barely a penny to their name.

Carvaggio painting

Of course, there exists many contrasting kinds of genius. And plenty of greats throughout history invariably described as such have not ended up in pauper’s graves.

Isaac Newton, for example, often referred to as ‘the greatest genius who had ever lived,’ enjoyed a secure, comfortable and long life, following publication of his Philosophiæ Naturalis Principia Mathematica – which singularly changed the way we looked at our world’s position within the universe.

Perhaps it is the nature of genius – artistic vs scientific, for example, which can lend itself to a more reckless lifestyle.

But whatever the reasons, one thing is depressingly clear in our contemporary society – and you don’t have to be a genius to work it out – having money, and an abundance of it, is constantly associated with a ‘genius’ for getting rich.

Donald Trump recently proclaimed himself – not so modestly – to be a ‘very stable genius’ – see Trump tweets passim.

genius
ˈdʒiːnɪəs/
Noun
1.
exceptional intellectual or creative power or other natural ability.
“she was a teacher of genius”

synonyms: brilliance, great intelligence, great intellect, great ability, cleverness, brains, erudition, wisdom, sagacity, fine mind, wit, artistry, flair, creative power, precocity, precociousness

Following The Donald’s claim, even some of his supporters sniggered. The US president is clearly not a genius in any ‘normal’ sense of the word. Rex Tillerson, his own secretary of state, is reputed to have described his boss as a “f***ing moron”, for example.

But Trump has displayed a genius of sorts – the genius that gets a complete and absolute political outsider whose belligerent self-belief has propelled him to the world’s most powerful position.

So, is Trump a genius? Really? I don’t know. But I do know that if I had a tenner for the amount of times I have heard people of (in my view) indisputable mediocrity described as ‘a genius’, I would be laughing all the way to my current account.

Donald Trump Hollywood Walk of Fame

What Trump clearly does possess, is a terrific facility for making money. Considerable amounts of his own greenbacks were invested in his campaign for the US presidency. And as we know, many ordinary, blue collar Americans looked up to him and subsequently voted for him – because he had made an enormous pile of money. And America per se worships at the altar of Mammon.

Naturally it helped that Trump came from a well-established real estate dynasty with vast amounts of cash behind it. Likewise fictional heroes like Gatsby, in F Scott Fitzgerald’s timeless The Great Gatsby.

Great Gatsby Cover

But plenty of other off the scale wealthy people have come up from ordinary beginnings.

George Soros, currently engaging the ire of Brexiteers because of his considerable donations to various anti-Brexit organisations – is considered a genius with money – mainly because he has made so much of it.

And Microsoft founder Bill Gates is often labelled a genius, partly because he was one of the key players in founding technology which unquestionably changed the world, but mainly I suspect because his particular genius – if indeed he does have it – transformed his fortunes and elevated him to being one of the wealthiest men in the world.

Philosophy and mathematics – as evidenced by Newton’s transformative theories – are also evident in Soros’s early money- making ambitions.

A proponent of philosopher Karl Popper’s General Theory of Reflexivity, Soros subsequently harnessed aspects of Popper’s ground-breaking mid-20th century philosophy to capital markets, which (Soros claims) helped him formulate a clear picture of asset bubbles and fundamental/market value of securities, as well as value discrepancies used for shorting and swapping stocks.

Genius carved in plinth

In other words, the ‘genius’ calls Soros has made in currency movements and his hedging has made him one of the richest people ever to have lived.

Money. It dominates our lives and the way we look at the world. That is the nature, not just of capitalism, but of all societies. The peasant labouring in barren fields under a hot sun who manages to sow a little more seed than his neighbour, sell more chickens at market and feed and clothe his children, may well be considered a kind of genius by his envious, less well-off peasant neighbours.

And legendary crime bosses, such as Al Capone and John Goti, displayed one heck of a knack – some might say genius – for amassing huge fortunes, driven by ruthless cruelty and avarice. As they say in the States, if you’ve got it, flaunt it.

Al Capone

Entrepreneurs such as Elon Musk and Richard Branson, have, I believe, a terrific flair not just for amassing stupendous wealth, but for elevating themselves into the central vortex of their own destiny.

Musk’s recent space rocket launch, sending one of his electric hyper cars into orbit with David Bowie’s seminal Space Oddity playing on the soundtrack, was – in my view – a stunt of not inconsiderable genius.

Elon Musk's Tesla Roadster

Call it what you will, a knack, a facility..a penchant, for making money, these guys have it. Respect. In Branson’s case, I recall securing a face to face interview with him 20 years ago. He was due in Manchester to open what was – 20 years back – the UK’s first ever car supermarket. I was the first journalist to be granted an exclusive with the bearded one.

I took one of his then fledgling Virgin trains from London to Manchester. It was a slow journey in old rolling stock. This was in the days before the fleet converted to much sleeker tilting trains.

How was the journey up, Mr Branson beamed. Not great if I’m honest, I said, explaining not very diplomatically that the train was slow and rather dirty. The toilets did not work, and the buffet remained stubbornly closed for the entire journey.

He nodded, sagely. Ok, ok, so, so sorry, he said, flashing a huge smile. We will endeavour to make it up to you. I’ll get my PR people onto it.

It’s fine Richard, I said, it’s always a mission, getting around the UK. How did you get up here by the way? Did you also hop on a train?

No, said one of the world’s wealthiest men, I flew up. In a Spitfire. A mate of mine has just restored one. Great fun. Took just over an hour from London.

Spitfire

Richard Branson. Showman. Billionaire. Genius? Who knows…


Newspaper headlines financial crisis 2008

Ten years after ... how the Masters of the Universe got it wrong

David Andrews’ examined the collapse of financial giant Lehman Brothers in a Reuters blog one year after the global collapse. Have things really got that much better….? The post is reproduced here.

Few will be lifting a glass to toast the first anniversary of the collapse of investment bank Lehman Brothers a year ago this week. With billions of dollars under management and thought to be invincible, the private bank was generally regarded as a potential gateway to the riches of Croessus for the ordained Masters of the Universe who prowled its Jackson Pollock-lined corridors.

Jackson Pollock

But when the bank started to drown in the treacherous quagmire of its collateralized debt obligations (CDOs) – a type of structured asset-backed security whose value and payments are derived from a portfolio of fixed-income underlying assets – America’s Federal Reserve elected not to send in the cavalry.

Lehman Bros RIP

The virtual overnight collapse of Lehman Brothers in September 2008 was the catalyst which brought the world economy to its knees with breathtaking rapidity. The bank was so huge, a massive juggernaut reversing and elbowing its way in so many different markets that when the U.S. government allowed it to go to the wall, it caused a convulsion among its many counter-parties, which in turn caused global credit markets to seize up. “Normal” banking activity virtually ground to a halt.
We were all in dreadful trouble.

Some commentators, notably Warren Buffett and the International Monetary Fund’s former chief economist Raghuram Rajan, sounded many alarms bells about the runaway train that was the growing appetite for CDOs and other highly complex, derivatives-based tools which delivered fabulous wealth to a few but subliminally spread a cancerous, critical risk throughout the global credit system and effectively precipitated the crunch that led to a near collapse in the UK and U.S. banking systems and onto worldwide recession.

Wall Street Occupy Protest

The chill winds of destabilisation were already whipping through the U.S. economy however well in advance of the Lehman collapse, as pigeons came home to roost in the wake of the extraordinary saga of so-called sub-prime mortgage misselling in the States.

As more and more people defaulted on their home loans – typically because their interest rate shot up after an initial honeymoon period, securities backed with subprime mortgages, widely held by financial firms, lost most of their value. The result was a precipitous collapse in the capital of many banks and the tightening credit around the world which signalled the beginning of the recession which has plagued us for the best part of the last 12 months.

Newspaper headlines financial crisis 2008

Back in early 2007, as the rumblings of problems in the U.S. property market were beginning to be felt, I wrote (for a financial publication) “let’s just hope that the credit squeeze in the States which has caused so many problems for world markets is not contagious. Banks over here need to take note. Lending lots of money to poor people who have no hope of being able to repay at inflated rates further down the line is not good economic sense. It is sheer, short term greed, short sighted and likely to sink the lot of us if it continues.”

Looking back at that sentiment now, it is clear that the “banks over here” did not take note. They very nearly took us all down with them.

Northern Rock bank run

It has been a long, long year….but we do, finally, appear to be emerging – albeit tentatively – blinking into a new post recessionary dawn.

While unemployment is still a major concern, both domestically and in the U.S., where it has climbed to around 9 per cent, markets are starting to recover and as I write the FTSE 100 index of blue-chip companies has rallied more than 40 percent since slumping to its low for the year in early March.

The move to 5,000 – a level last touched on October 3 – comes as a new survey from Nationwide Building Society showed that British consumers are feeling more confident than at any point in the past 12 months.

So, consumer confidence up, spending up, export sales up, property sales rising, more mortgage business being written….things are looking promising.

In an upbeat speech the other week, the cautious, invariably dour U.S. Federal Reserve Chairman Ben Bernanke’s reckoned that economic activity in the U.S. and around the world appeared to be “leveling out” and that “the prospects for a return to growth in the near term appear good”.

Let’s hope he is right.

But – and as a natural pessimist I would say this – who knows what is around the corner? Didn’t that wily old sage Mr Greenspan say just the other day that we will reel once again from a global downturn at some point in the future, as it is part of the cyclical nature of advanced capitalism?

War on Wealth bank run poster

As another American who once ducked and dived on the world stage, Donald Rumsfield, might have put it, “as we know, there are known knowns. There are things we know we know. We also know there are known unknowns. That is to say, we know there are some things we do not know. But there are also unknown unknowns – the ones we don’t know we don’t know…”

You get my drift.


debt graffitti

Riding the D Train: brother, it ain’t easy

D for Debt, with a capital D for emphasis. As if those swamped by debt – and there are clearly many – need any further underlining of their plight.

Wherever you look, it’s everywhere. Ubiquitous.

Contemporary Western society has been built on the foundations of debt. From the days of the promise of a sheep or a goat in exchange for a spot of land, advancing through to the monetarisation of modern societies, debt has by turns haunted and plagued those who are mired in it.

chain gang

As debt has evolved, and a necessary demarcation between consumer and corporate or government debt emerged, the term ‘consumer debt’ – a euphemism for the medium through which so many of us regulate our finances from month to month – is rarely far from media headlines.

I recall making the journey up the A1 from London to Stamford – then home to CM magazine – in my battered Alfa Romeo in the spring of 1988.

A young man, headed north for some trial shifts on a magazine which I knew little or nothing about.

My editor in those far off days was Richard Smith. Clever, witty, a 30 a day hack of the old school. And a man who knew a thing or two about debt.

Coming as I did from an arts background, mostly writing about new movie releases, books, theatre and the like, my only real knowledge of debt was the ever-increasing burden of my monthly credit card statements. Plus, the fact that my mortgage, which started out at 7 per cent in 1986, had leaped to just shy of 14 per cent by 1988.

Homeless laid off man

In common with millions of homeowners at the time, I was caught up in the shocking leap in Bank of England base rates, which spiralled ever upwards at a giddying pace.

Many people were effectively ruined by this calamitous rise, keys to no longer affordable properties were regularly posted back to the banks and building societies which had agreed the mortgages. Hundreds of thousands of properties were repossessed. It was a very difficult time.

‘The first thing you should know David,’ said Richard Smith, ushering me to a desk in the corner of a tiny, smoke filled office and deftly switching on the monitor of a vintage Amstrad computer, ‘is that we are all f*&ked.

‘Fine if you’re the Queen or whoever, but if you are Joe Schmoe with a big mortgage, then you’re going to be in deep sh*t. Who can afford a doubling of their home repayments every month,’ he reasoned.

And he was right of course.

The ghosts of the now long-gone Richard Smith, who battled his own demons from that tiny newsroom, with its tranquil views through a haze of Golden Virginia tobacco smoke, and my fellow writer in crime Anthony Levy, who I can picture sitting alongside me, vigorously attacking the keyboard on his Amstrad, haunt me still.

Now, nearly 30 years on, the D word is once again resurgent, as consumers borrow and rack up the loading on their plastic like there is no tomorrow.

All those fancy new vehicles you are surrounded by when crawling interminably on the M25? Nine out of ten are bought on the never never. Personal contract plans, HP deals, lease agreements, whatever. The overwhelming majority are expensive, Bluetooth-optioned examples of creaking, groaning debt.

Although some characteristics of our contemporary macroeconomy look similar to the late 1980s—house price inflation has been rapid and household debt has been rising strongly—others look rather different.

The unemployment rate today is vastly lower than in the late 1980s, and interest rates are also at rock bottom relative to the levels of the past 30 years and are expected to remain so by market forecasters.

That said, according to the Bank of England’s latest forecast (September 2017), British household debt will hit a record high next year (2018), surpassing the pre-financial crisis peak as a surge in credit card borrowing has financed extra spending in recent months.

The average household had unsecured debts amounting to £13,200 at the end of 2016, just below the £13,300 level at the end of 2008, on the eve of the credit crunch, according to recent analysis by the Trades Union Congress (TUC).

That debt is expected to rise to £13,900 by the end of this year, £14,300 next year (2018), and keep on rising to £15,400 by the end of 2021.

One of the biggest culprits in driving people into the red is the steady rise in credit card debt among UK consumers over the past decade.

credit card debt scrabble letters

The outstanding debt on our collective credit cards rocketed in the immediate aftermath of the 2008 financial crisis as households struggled to make ends meet – then stagnated for a few years, only to start climbing again in 2013.

The level of outstanding debt on credit cards has now reached record levels and is concerning the Financial Conduct Authority (FCA) and the Bank of England — debt charities are also deeply concerned.

A recent FCA investigation into credit card lending proposed a host of rules to help people struggling with long-term card debt, including ordering card companies to help consumers “by reducing, waiving or cancelling any interest or charges” for those borrowers struggling to repay their debts.

The regulator is now undertaking a similar review into all high-cost credit. The FCA’s concerns centre on the 3.3m individuals it estimates struggle with so-called ”persistent” credit card debts, which it defines as people who pay more in interest and charges than they do repaying their borrowings over an 18-month period.

According to the UK Cards Association there are about 64m credit cards currently in use. Data from the Bank of England shows families owe a record £68bn on their plastic.

debt graffitti

This Perfect Storm of debt and economic uncertainty has prompted around 600,000 people to contact StepChange, a major debt advice charity.

StepChange estimates 8.8m people have turned to credit to pay for everyday household expenses in the past 12 months.

And it’s not as if these borrowers are walking the streets. More than half of these were in employment with 41 per cent in full-time work.

Lenders of course have been profiting from rising debt, just as they have through time immemorial. Borrowers typically take decades to pay off debt, meaning they pay a lot of interest – all good for lenders.

But if we were to be hit by another recession – unlikely as that may seem now – then lenders will catch the mother of all colds and an already precarious situation could easily escalate into another 2008-like meltdown situation.

The Bank of England estimates total debt to individuals to be around £1.5 trillion, which is an average of £28,000 for everyone over 16 in the UK.

Most of that – about £1.3tn – is made up of mortgages. The rest is for credit cards, overdrafts and loans to buy anything from cars to holidays to the must have latest kitchen fittings.

It’s a lot of money, and whichever way you cut it, it still comes back to the D word.

I can still see Richard Smith pacing nervously up and down the CM newsroom, drawing deeply on the 20th rolled fag of the day, looking at my screen, clocking the latest debt calamity news story and muttering nervously, deeply worried.

‘What you’re saying here, basically, is that we are up to our necks in the brown stuff, running out of the moohlah,’ he would say. ‘You’ve got the big mortgage haven’t you David?’

I grimly nodded my assent.

‘Word to the wise. Make sure you have the F&*k You war-chest in reserve. The walk away wedge. The get you out of trouble, few grand stashed away. You’ll need it…..’


Big Brother 984

'One believes things because one has been conditioned to believe them.'
Aldous Huxley, Brave New World

A UNIQUE sight greeted local officials gathered in polling booths throughout the UK 88 years ago.

On 30th May 1929, a few short months before Western economies teetered on the brink of wholesale collapse in the wake of the meltdown in US stock markets, many of the eligible voters beating a determined path to add their cross to parliamentary forms were, for the first time in our democratic history, women.

Women support labour poster

The general election of May 1929 – often referred to as the ‘flapper election’, after the 1920s popular dancers – was the first in which all British women over the age of 21 could vote. The move came in the wake of the Representation of the People (Equal Franchise) Act 1928. It was the final stage in a long parliamentary and gallant struggle for women’s suffrage.

An article published in the Times back in March 1929 estimated that the electoral reforms had added approximately 5 million new women voters. Venerable Times leader writers of the day observed that parliamentary candidates would need more money for printing leaflets, and polling stations might need to be expanded to cope with extra numbers.

Political parties moved up through the gears, and craftily designed more posters aimed at young women. The Times for example reported how politician Sir Samuel Hoare was organising a party to connect with new voters in his Chelsea constituency.

liberal poster 1929

Many of these prospective voters were, as was the dominant employment for younger women back in those days, housemaids – so the old blusterer’s wife prepared for the event by asking their mistresses to allow them an evening off. Clever, eh?

Unsurprisingly, The Daily Mail in 1929 loathed the idea of women having the vote. Absolutely hated it, dismissing the vote for women as a socialist plot.

Big business was equally alarmed, as if the prospect of millions of women previously denied a view on who should be in power would somehow undermine the very fabric of society.

The UK in between the two great wars was in a perpetual state of political and economic nervousness. Unemployment was sky high, there was constant industrial action in the fall out following the Great Strike of 1926, and business and government alike suspected revolutionary comrades were out to depose them at every available opportunity.

General strike poster

My, how things have changed. We have had government led by a woman, with another woman in the key Home Secretary role. Major positions in industry and education are also held by women, not just in the UK of course, but in several other advanced Western societies.

Just as the Tory, Liberal and Labour parties under the old tripartite system all pledged ‘strong and solid’ leadership in their 1929 campaigns, this is also a familiar rhetoric with our government today.

And just as those administrations before us faced the grave threat of Fascism, which threatened to not just destabilise but bring down its enemies completely, government and business also face unparalleled threats in contemporary times.

Cable Street Mural

Terrorism is the grinning imp on the shoulder of all advanced Western societies, and for capitalist-based economies to run smoothly, business needs to be confident that the incumbent administration will be doing its utmost to ensure the work force is protected and that trade channels remain open.

Whichever form of government is with us for the next half-decade, combative rhetoric of defiance has never been more vital or scrutinised.

London Brexit Protest

Brexit and its attendant issue will also dominate the political agenda in the coming years – and let us not forget that our economy is still far from out of the woods in the wake of the collapse of the subprime-mortgage market a full ten years back.

The subsequent bail out of the banking sector created a sense of anger towards the financial elite on the part of the many, which turned into a wider frustration with the corporate world.

The crisis triggered a plunge in tax revenues and a sharp rise in budget deficits, prompting governments to pursue austerity programmes that imposed tax increases on many middle-class people and cut the benefits of the less well-off.

Monemvassia Greek Coast

Look at Greece. The anger there is palpable. The economies of Spain and Portugal have also been desperately sluggish, and both of these southern European nations have toxic levels of unemployment.

Look also at our own economy, where cuts in public services have created deep apartheid between the private and public sector economies. On the plus side, the UK is currently enjoying unprecedented levels of high employment, and the Conservative administration now finds the economy considerably more stable than when it took over the reins in 2010 in the epicentre of the financial crisis.

Many readers will recall that, on leaving his position as Chief Secretary to the Treasury following the change of government in May 2010, Liam Byrne left a note to his successor David Laws saying “Dear Chief Secretary, I’m afraid there is no money. Kind regards – and good luck! Liam.”

The note echoed Chancellor Reginald Maudling’s infamous “Good luck, old cock … Sorry to leave it in such a mess” note for his Labour successor, following the Conservatives’ shock defeat at the 1964 election.

Reggie Maudling private eye cover

Many years down the line, there is little room for humour. The business of government, in the face of spreading terror and the unknowns of an unforgiving world outside of the bosom of the EU, is a serious affair.

The world will be watching how the millions of us who comprise this ‘sceptred isle’, – we few, we happy few, we band of brothers (and sisters…) – do not go forward into that long good night without one hell of a fight.

For we have faced dark challenges before, and we have overcome. As we always will.


And lo, there did appear a great plague of locusts

Revelation 9:7

The appearance of the locusts was like horses prepared for battle; and on their heads appeared to be crowns like gold, and their faces were like the faces of men.


The ten year anniversary of the most devastating financial crisis to hit the UK since the Great Depression of the 1930s is rapidly approaching.

Northern Rock first went cap in hand to the Bank of England on 14 September 2007. On that momentous day the once wildly successful lender sought and received a liquidity support facility from the Bank of England, when it realised it was badly exposed in global credit markets.

‘Badly exposed,’ some may feel, is something of an understatement. The reality was that, following a reckless decade or so of throwing money it did not have after all manner of unsuitable borrowers and dubious investment projects, the Bank had, calamitously, come perilously close a wholesale collapse.

We all remember the queues of worried savers snaking down our high streets, looking to withdraw deposits from a lender once thought to be invincible, such was its stellar rise. Can it really be ten years ago, I suspect you are asking yourself?

Now, most people will perhaps be thinking, hang on, surely the financial crisis was in 2008, when the big American investment banks – Lehmans et al – began their spectacular collapse? To be clear. Yes, 2008 was when the really big boys started to go under, but the seeds were sown at least a year before, with the build-up of toxic borrowing pre-dating that by some margin.

Back in 1999 I had a front page splash in my then newspaper, warning that lending by Northern Rock was at worrying levels. This was an era of frenzied lending powered by insatiable banks such as Northern Rock, as the second major housing bubble in a decade (readers with longer memories will recall the horrors of the 1989 recession, when millions lost their homes as mortgage interest payments rocketed to 15 per cent) gathered momentum.

Fools, as they say, are soon parted from their money. And Northern Rock proved no different. My news story 18 years ago focused on the fact that the bank was extending not just 100 per cent mortgages – but 130 per cent home loans. Even those with the most rudimentary grasp of basic economics could probably work out that this was a high risk strategy. And so it proved.

With the dawn of 2007, the pigeons were coming home to roost. As soon as the Northern Rock queues started to beam into our livings rooms, the fall out understandably put the frighteners on and consumer spending and borrowing – then at record levels – abruptly began to tail off. This was the Phoney War, the elongated death rattle of upstart lenders such as Northern Rock, fuelled by a belief that the hard landing tomorrow would never come. But of course it did.

When Lehman Brothers collapsed in September 2008, the reverberations almost brought down the world’s financial system. It took huge taxpayer-financed bail-outs to shore up the industry. Even so, the ensuing credit crunch turned what was already a nasty downturn into the worst recession in 80 years. Massive monetary and fiscal stimulus narrowly prevented a return to full scale Depression, but ten years on, GDP is still below its pre-crisis peak in many rich countries, especially in Europe, where the financial crisis has evolved into the Euro crisis. Despite The Trump Effect, the honeymoon period looks to be drawing to a close, and the extraordinary effects of that crash a decade ago are still rippling through the world economy…

Corporate raiders and sleek suited financiers were guilty of taking terrible risks with other people’s money. They claimed to have found a way to effectively banish risk when in reality they had simply lost track of it. The legions of central bankers and other regulators also must answer mea culpa, for it was they who tolerated this financial idiocy. Let’s not forget the macroeconomic backdrop which framed those times of low inflation and stable growth— which ultimately triggered the wild risk-taking. Many European banks were guilty of leeching in American money markets before the crisis, using the funds to buy dodgy securities.

But the crisis of course had its roots in the “subprime” US market, where borrowers with poor credit histories struggled to repay the loans, when interest rates mushroomed, typically a year or so into the debt cycle. These risky mortgages were passed on to the financial geniuses at the big banks, who then turned them into supposedly low-risk securities by putting large numbers of them together in pools.

As the award winning movie The Big Short colourfully enacted, those pooled mortgages were used to back securities known as collateralised debt obligations (CDOs), which were duly sliced into tranches by degree of exposure to default.

Why did investors then buy the safer tranches? Because they were labelled with triple-A credit ratings by the likes of Moody’s and Standard & Poor’s.

Mistake!! Because these credit ratings’ agencies were in the pockets of the banks – they were paid by the banks which had created those very CDOs. And they were not about to bite the hand which fed them.

Today we are in a period of ultra-low base rates and rising inflation, the former an ongoing necessity designed to counter the ongoing fallout from the decade old financial crisis, the latter an inevitable consequence of Sterling’s falling out against the Euro, caught in the slipstream of our Brexit destiny.

Where will this all lead, you may wonder? How is the world likely to look another ten years down the road? By then the so-called millennial generation will be multi-tasking, dealing with the crippling expense of parenting and juggling a mortgage with the uncertainties of employment created by our post-Brexit universe. We are already feeling the chill blast of these momentous world events, and do not appear to have learned the lessons history is clearly telling us. I fear a gathering darkness.


Vont les fantômes de Verdun mon Seigneur?

‘And then, looking out in deep sorrow across and beyond the killing fields of Verdun, the mud stained with the blood of thousands of young men who fell for their country, I thought of Strasbourg. And I thought of peace and beauty…I thought of life. And of love.’

Extract from a letter home to Strasbourg from an unknown French army officer, November, 1917

Soldats français à l'assaut sortent de leur tranchée pendant la bataille de Verdun, 1916.


AS I strike out east on the long drive from Dieppe to Strasbourg, the early morning sun already starting to intensify on the horizon, I set myself the first of my usual French driving challenges. Do not, under any circumstances, David, react to the maddening French motorists who stubbornly stick to my rear bumper at 130 kph. Calm, David, calm. I’m trying. It’s not easy.

I absorb the featureless, gently undulating greens and greys of the Pas de Calais flanking the autoroute, the recently anointed Nobel Laureate Bob Dylan playing above the drone of the car, and I think about a collection of journalism set in France by a former Nobel Prize for Literature winner, Ernest Hemingway, penned over 90 years ago.

ernest_hemingway_at_the_finca_vigia_cuba_1946

Back in 1922, Hemingway and his wife also headed out to Strasbourg, flying from Paris in those pioneering days of commercial flight. Here is the great man, filing a story for the Toronto Daily Star, published on September 9, 1922

‘We headed almost straight east of Paris, rising in the air as though we were sitting inside a boat that was being lifted by some giant, and the ground began to flatten out beneath us.’

It looked out into brown squares, yellow squares, green squares and big flat blotches of green where there was a forest. I began to understand Cubist painting.’

It’s a beautiful description, harnessing a well-disguised simplicity of language and purity of tone, and already bearing the stylistic hallmarks of the great work yet to come.

tmof_boeing_model_80a-1_grand_central

Hemingway’s flight took around 2.5 hours from the capital. My drive from Dieppe was nearer to seven hours, taking in the killing fields of Verdun and the great city of Reims.

It’s a long way, but at least, I thought, there were no hold ups. Just fast driving, paying to use roads which are well maintained and for the most part clear of any meaningful congestion.

citroen-7-cv

Ah, the joys of European motoring – but for how much longer will we be able to enjoy this relatively seamless passage – and where better to sample the thoughts of our French neighbor on our impending departure from the EU cocoon than Strasbourg, imperial seat of Alsace power and wielder of limpet-like bureaucratic control?

Despite battles raging in and around the city down the centuries, Strasbourg is as impeccably preserved as a jar of Swiss pickles.

strasbourg

A reassuringly bourgeois ambience pervades the spotless boulevards. Designer boutiques bustling with the chic and the moneyed, restaurants and packed bars gently competing for the high-roller business funded by diplomatic corp salaries.

Strasbourg’s old town, site of one of Europe’s greatest cathedrals (and incidentally where my daughter now resides while attending the nearby music conservatoire) resonates with profoundly lovely medieval architecture, which, extraordinarily, has escaped the ravages of both time and the ferocious attempts of the Third Reich to obliterate it from the face of the earth.

maison-kammerzell-strasbourg

And if the city does not quite cut it, there is always Germany a short hop and a jump away. Just as I do today, Hemingway found it a breeze to pop across to war-scarred Deutschland all those years back. A quick flash of the passport and you are in.

And as French troops discovered back in 1918, cycling into Germany is a pretty efficient way to travel. You’ll be speaking in German, rather than French of course, but apart from the language and the labels on the beers, the immediate border country is virtually indistinguishable. Think of it like crossing from England into Wales, just with more sunshine.

Yet ease of passage through these border zones may soon become a distant memory for Brits, as the process of disentangling the UK from the European Union begins in earnest.

Then again, maybe it will not be quite so hard to do business – in France at least – as some have made out.

While Strasbourg is (currently) undeniably the city du jour for political decision-making in the heart of Europe, it could be that Paris, for so long a magnet for global tourism, is also set to become home to the UK’s upper strata of investment bankers and the crème de la crème of our business decision makers.

The French government recently pledged to make its tax regime for expatriates the most favourable in Europe, in a grab for London-centric banking business displaced by our decision to quit the European Union.

la_defense_remote_view_from_eiffel_tower

“We want to build the financial capital of the future,” stated the prime minister, Manuel Valls, sabre rattling in a recent gung-ho address, presumably designed to reassure alarmed voters as well as a direct appeal to the banking and financial decision makers. “In a word, now is the time to come to France.”

Mais oui. Bien sur. But is it really?

France’s general disdain for big business is well documented. The Republic’s ideals, built on the foundations of radical ideologies underpinned by Robespierre and his followers, created a universal socialism of sorts, which permeates contemporary French society.

And while the French – as evidenced by the well-heeled denizens of urban fortresses such as Strasbourg – invariably demonstrate a clear appetite for the finer things in la vie, business, and the overt successes which are inevitably inculcated within major blue blood brands, are all too often dismissed as vulgar and plebian.

So as I drift through the polished cobblestones of Strasbourg, absorbing the timeless beauty of buildings designed and constructed by determined men and women centuries before, avoiding the pleading eyes of the beggars and the destitute ironically staring hungrily from under ragged hoodies, I wonder how the domestic and international landscape will look a few years’ down the line from now.

The great European frontiers, which Hemingway and his bohemian entourage traversed so easily almost 100 years ago will become more forbidding, less inclined to the friendly wave.

Some, Greece, perhaps, Austria and other countries exasperated with political and economic refugee influxes may extend a frosty unwelcome to UK travelers also, erecting the Closed sign and effectively terminating decades of post-war goodwill.

We shall find out soon enough.

Plus ça change, as the French would have it. Things change…but they don’t change. Hemingway might have had different ideas.


Long Day's Journey to the End of the Pier

AS one of the target destinations for stag and hen weekends, the sight of large groups of visitors dressed in garish outfits and (often) swaying unsteadily are familiar sights to Brighton denizens.

Rounding a corner the other day in the centre of town, I encountered one such group, not swaying unsteadily but certainly decked out in loud purple numbers, and collaring passers-by.

Brighton Hen Party

But hang on, this is no stag or hen bash, I realised, but a NatWest travelling entourage spear-heading the excellent ‘StartUp Britain’ drive to encourage more people to tap into their entrepreneurial spirit and get their own businesses off the ground.

Old fashioned upholsterer

While banks of course are keen to win new business in this potentially lucrative end of the market, it is commendable that NatWest – which has not covered itself in glory of late – is actively promoting services via roadshows such as these.

Parts of the UK where there are fewer opportunities to work for major corporations – and Brighton & Hove certainly sits within this bracket, relying heavily as it does on the tourism and arts & crafts sectors – need in part to create their own luck. And that requires support from lenders. So, Kiss me Quick hats off to NatWest. Ps – how about raising the rates paid on business accounts?

With one or two exceptions, mostly from the so-called ‘Challenger’ banks, business accounts pay precisely nothing, zero, nada, on credit balances. With the corrosive effect of inflation, that means it is costing our small businesses money every year just for the privilege of having somewhere to park the business capital.

IF you are moaning about the fact that our train drivers/conductors are on strike. Or our university lecturers. Or bin men. Then spare a thought for the French. It’s more of a question of when are they not on strike.

Planning a trip to Strasbourg recently, I weighed up my options for getting out there. Drive? Fly? With wildcat strikes ripping through all levels of France’s workforce, from refinery workers, to pilots, Metro drivers and ancillary staff, baggage handlers, TGV workers, mobile phone company employees – and that’s before you drill down to the rank and file civil servants who are regularly downing tools and walking out en masse – planning a trip across the Channel can be a hazardous business.

Strasbourg tramway de la ligne 6 sur le pont du Corbeau

Frankly, it was easier to get around in Hannibal’s day. But elephants are in short supply on le Continent. Which makes one think, maybe I will just join the stay-cationers and stick around at home. But then, I have served my time in rain sodden fields and damp cottages, listening to torrential rain hammering on a leaking roof in mid-August. So I will take my chances avec our French cousins. Assuming I can get through border control. The passport police are apparently about to walk out any day now. Vive le France!!

East Side Gallery Berlin

WHILE on the subject of Europe, I was in Berlin and Paris the other day on back to back assignments, and could not but help notice the abject differences in vibe between the two. Paris, still clearly nowhere near back on its feet in the wake of last year’s atrocities appears to be a shadow of its former self. There is a muted, gigantic Gallic shrug hanging over the once vibrant city, as if it has taken so many kickings that it does not have anything left to give. Whereas Berlin on the other hand was buzzing and fizzing with energy, derived in large part admittedly from its startlingly youthful demographic.

Gendarmerie Paris
On June 23rd I voted to stay within the bosom of the EU. Now we know the result, that we are going to leave the EU. That is democracy at work in its purest form.

As much as I dislike the kow-towing to the whims of the gold-plated pension merchants, secure in their Brussels-based jobs for life and fiddling, as Nero would have it, while Rome burns, we are now looking at a very different future.

Around 17 million people voted to get out, and so we are to cast off the ropes for the last time. There is a great deal of sadness out there in the Remain camp, not the least from younger voters who are appalled at the prospect of out withdrawing from the EU at some point down the line.

And the hundreds of thousands of expats who were bleating on our airwaves for the many interminable weeks of the campaign, dreading time being called on their days of tapping into the excellent public healthcare provided by Spain and France etc will now be wondering whether they should be applying for permanent residency abroad – which could have an adverse effect on their pension funds – or upping sticks and leaving.

We are only just – and I do mean just – starting to emerge from the bleakest recession since the 1930s. The one that was started by the greed of the banks and associated City lending houses.

The last thing we need in the UK is to slide back into negative territory. Things are slowly, very gradually improving, but the maddening slowdown in everything from the property market to investment and development projects in the UK while our self-interested politicians bickered over our relationship with Europe will doubtless take time to settle down

But the world has not ended. The UK’s infrastructure has not collapsed overnight. Our banks remain strong. The outlook, as Conrad once put it, is unsure, but then again, who can ever be certain of certainty?

Joseph Conrad