Thursday, October 16, 2008

Crime and Robbery

My neighbour’s house got broken into. The thieves took money and jewellery.

The police came. They did a good job: they conducted lots of interviews, filled in many forms, and said that all goes on file. But when asked what the chance of getting the things back is, they admitted that the vast majority of stolen items are never found.

It was not the money that breaks my neighbour’s heart; it’s the sentimental value of some of the jewelleries; some given to her by her mother on her deathbed.

What does it say about us?

Police doesn’t have enough budget for proper investigation (why don’t we throw them a billion or so from the bank bailout?) and a great deal of their taxpayer-paid time is spent on non-productive paperwork.

While non-criminal are often fined for minor ‘offenses’, despite the increased crime (including violent crime) the legal system makes any effort to understand the problem of criminals, rather than the law-abiding victims. So even if my neighbours robbers are caught, they are likely to end up with minimal penalty.

We, those who grew up in a generation where good behaviour was respected and crime was heavily punished, may still believe that crime is bad. But what message does the young generation get? That crime is acceptable and excusable?

We are now blaming the greed culture we created for the latest economic crisis. It’s not long before we will be blaming the crime supporting culture we are now creating for not being able to walk in the streets unarmed.

The crime and gang culture is already here, but we still may have a chance to stop it. Tomorrow may be too late.

Wednesday, October 15, 2008

Gallant Brown saves the day (and lives happily ever after)

Mr. Brown came with a rescue plan – good; because he did not have a choice.

Mr. Brown executed the first step of his plan – good; because this the first time I see Mr. Brown doing anything difficult.

Mr. Brown, arrogantly, told the world that he saved the world’s economy, and that the rest of the world should follow his example – can’t get much worse.

Mr. Brown, you, who helped put us in this mess in the first place, probably did the only things that may give us a chance to escape a total disaster. That what you did, gave us a chance. Your action, although necessary, is dangerous, and can backfire badly. No one knows how it will turn up.

To use an analogy Mr. Brown, when you are forced into a war, you stay humble. You should have learnt it from your mate Mr. Bush, who not only helped you put us where we are today, but also won the Iraqi war long ago – just before it turned messy. If you have not read history, just remember that Nixon won the Vietnam War, Bush won the Iraq war, that is, before they lost them.

So please, Mr. Brown do what you can to and get us out of the mess you put us in, but keep your arrogance aside, to after you have won this war. That is, when the troops come safely home. Because when you send troops out, you never know how nasty things can get.

Mr. Brown, I never really liked you as a prime minister, but I like you as a person less and less. BTW, kissing your wife on the stage to improve your public image is a cheap stunt. Few are blind enough not to think otherwise.

Sunday, October 12, 2008

Iceland, terrorism and the emergence of racism

I got responses to my previous posting, blaming the Icelandic people for the current crisis. As it seems to be common theme, I feel that it warrants a new post.

I agree that it's only natural that you should feel frustrated when someone who owes you money does not give it back. But these ‘Icelandic pirates’, as some call them, did nothing that our own banks, and most other banks around the world did not do.

The Icelandic banks have never pretended to be safer than they really were. It’s not the role of the bank to tell us how safe it is. Banks are regulated by international standards, audited by international auditors, and rated by external rating agencies. All the above practices should be questioned. But as for the Icelandic banks, they followed these practices just like HBOS, Northern Rock or RBS; otherwise they would not have been allowed to operate in the UK.

This is commercial reality; when you lend money, there is always a chance that you will not get it back. The higher the risk, the higher the return, and if you want risk free investment, you get a low risk free rate.

Why do you think the Icelandic banks were so attractive? Because they offered higher rate. Why did they offer higher rate? Because, at the time, they were considered more risky than our own banks. They did not lie; they worked within the international and UK laws imposed on them. They did not even run into bigger troubles than our own banks; only that their government does not have the size of population it can tax to bail them out.

If it’s done illegally, there should be a court case and some may go to jail. If, on the other hand, it is done by the accepted commercial standards (as this is most likely the case now), then you become a creditor and stand in the queue together with all other creditors.

This, of course, is different when money is given by shark loans. Then if you can’t pay back you should expect to end with broken knees and new holes in your body. But is this the reason we created anti-terror laws, so that we can do whatever we want with anyone we do not like or have a dispute with? I surely hope not. I would not like to live in such a country. I don’t think most of us would.

As for the Icelandic people, the situation is devastating to them as much as the financial failure is devastating to the average person here. The crisis was caused by all of us, the governments and institutions of the developed world. The crisis will be felt by all of us, the tax payers of all these countries.

It’s only natural that in times of hardship racism and separatism raise their heads. I surely hope that this time will be different. Sadly, it does not seem so.

Saturday, October 11, 2008

A Letter to Mr Brown

Dear Mr. Brown,

For a man who started his PM role as a self-proclaimed financial prodigy, you seem to have little understanding of financial matters. And by this I am not referring to the financial turmoil itself. It was not your fault.

But in the same way, it was neither the fault of those you blame: the greedy bankers, the immoral short-sellers and the Icelandic government. It’s the blaming and threatening like a simple bully that makes me doubt your financial credentials. Prove me wrong!

Let me tell you why those you blame are not at fault. For decades now, governments all over the world encouraged greed. They loved quick earnings and the spiralling property value. It gave them the spending power they wanted.

In our culture, quick money has become the measure of success; insurance has become a way to make money rather than a way to protect those who suffered damages; fines have been used as a source of income for governments and councils rather than a way to deter crime and anti-social behaviours. So how can you blame us for greed? This is the way the government, you, and most of us, wanted it, choosing to ignore a basic universal principle – things do change.

Some call it Yin and Yang, and you don’t have to be religious to appreciate the wisdom behind the biblical story of Joseph who become second to king Pharaoh because he’d realised that bad years come after good ones, and that they needed to save resources during the good years to be used when things turned bad. In financial terms it’s called reduction of volatility. It’s also called the economic cycle. But if we kept increasing our debt – private and national – during the best of times, what did we think would happen when things turned bad? Did we really think it would never happen? My grandmother knew better, you should have learnt from her, and she wasn’t a financial genius.

You see Mr. Brown, there is no one to blame. You, together with us, preferred to ride the wave of mediocrity and the path of least resistance. Now we are reaping what we sowed.

One more question if you don’t mind Mr. PM; how did you reach the £500 billion bailout figure in only a couple of days? It can only be a very rough estimated, and if it is, I have some suggestions for you:

First, why don’t you use only £460B for the bailout, and keep the extra 40 to fix the education, and legal systems. After all, it was only money that stopped you from doing that earlier, and now you seem to have resolved the problem of raising money.

Second, can you please stop blaming the poor Icelandic government? Professionals at the government and councils put the money there because they got better rates. As professionals they must have known that higher rates meant higher risk. Did you really believe that a 300,000 fishermen country could guarantee UK savings? And besides, if you already raise £500B, why don’t you simply raise 501B and leave the poor Icelandic people alone. Neither you nor anyone else would even notice the difference. On the other hand, if you abuse terror laws, we will all notice.

And one last suggestion Mr. Brown, we all know that now, when we have less money, you are going to increase the taxes to pay for the bailout. I well understand that you have no other viable choice. But why don’t you start immediately by raising the tax on alcohol and tobacco instead of blaming supermarkets for selling it so cheap, and hence encouraging anti-social behaviour. Price of alcohol is not their moral responsibility, it’s yours, and you are given the opportunity to kill two pigs in one bullet.

Remember, it’s just too easy to find scapegoats. But they may only work in the short term. In the long term you reap what you have sown. The challenges you are facing are greater than any post-war prime minister had to face. So please stop finding blame, stop making empty phrases and gestures, and stop being hypocrite. Show us what a prodigy can do. This is your chance. There is nothing more anyone can ask of you.

Our beloved chancellor

In reference to the American multi-Billion dollar bank bailout, Mr. Darling reassured us that we will learn from the American mistakes as: “Nothing is worse than coming forward with a plan that isn’t sufficiently developed.” Words of wisdom Mr. Chancellor, but can you please explain why only last week, you had begged the Americans to pass this bailout?

He continued and said that “when WE take action, we take it quickly. Then it works.” I don't follow. Are you saying that the American action was not quick enough? Or else, how are you going to develop a plan sufficiently if you were to do it quickly. Or do you mean that if and when you decide to take an action, you will take as much time as you want and then do it quickly?

BTW, just in case you have not been following the markets; a day after this statement, the UK came up with a nearly identical bailout plan. So far, it has had the same degree of success – none at all.

Friday, October 10, 2008

Trust the news

An Afghan family with seven children receives benefits worth £170,000 a year, said the paper. Naturally, if the paper says so it might be true. But for a moment – just for fun – lets assume it is really the case. So, as benefits are tax free, this equates to £280,000 before tax.


As if it was not yesterday that Mr. Brown blamed the bankers for making too much money and not sharing OUR values. I wonder if it’s the fact that they worked for their money (if we call it work) that did not match our values and angered Mr. Brown.

Sunday, October 5, 2008

The English Irish War

‘Saver can forget about 100% deposit guarantee’, said Brown, who at the same time blamed the Irish government, which offers guarantee, for pulling depositors money out of the UK.

As an ex-financial genius, Mr. Brown should know that it is still a free-trade, capitalist markets. When people don’t like what you offer, they go somewhere else. For years the UK has been doing just that. it was in our favour, after all. Now we feel the other side of the stick. No foreign government is to be blamed; we would have done the same. Again.