Time to buy a wheelbarrow

Whew - we can all relax now - our economic woes are coming to an end and the country will be awash with money. Soon we'll have more cash than we know what to do with. The nice chappies over at the Bank of England have put their thinking caps on and come up with a simple solution - they're going to print more money. We can all get back to being manic shoppers and forget all this caution and thrift that is making life so dull and boring.

If you're quick, you'll be able to snap up bargains on the car lot and buy cheap flights to Antigua. And if you're really quick and really lucky, while you're there you might spot the elusive Sir Allen Stanford in a helicopter and claim a juicy reward from the SEC. This will add some dollars to your collection of crisp new notes, hot of the printing presses.

Because you'll have more money than you'll know what to do with, you might decide to donate some of these dollars to Meg Whitman's campaign to be elected Governor of California. Who better to sort out the chronic finances of California, after all, than the former boss of eBay? She will be able to teach those silly Californian liberals a thing or two and help them sell their souls to the highest bidders.

I've got it all worked out. I've been down to Staples where I got a great deal on a printer that does scanning too. I'll save Alistair Darling the trouble of getting my wads of cash to me - he's a busy man these days. I'm a bit worried about the silver strip and watermark and stuff they use to stop counterfeiters but I'm guessing that they won't have much time for such niceties once they get printing in earnest - and they won't mind anyway 'cos I'm only saving them the trouble.

I'm working on my shopping list now. I'm not planning to be greedy and I don't see this as an excuse to forget the planet. But there is a small matter of neglected air miles to collect and, after the rubbish summer we had last year, I think it's only sensible to buy some outdoor heaters. And, lest you think I'm throwing caution to the wind, I'm going to invest in a stainless steel, indestructible wheelbarrow. The garden is in need of some TLC and, if the money splurge leads to galloping inflation, I can cart my cash to the shops and beat the price increases.

Throwing good money after bad

On the BBC this morning, Geoff Mulgan accused governments around the world of poring good money after bad, propping up big failing industries including banks and car manufacturers. A former policy adviser to the Blair government and now Director of the Young Foundation, Mulgan's opinions carry a lot of weight. He points out that all initiatives so far are biased towards big business and very little is being channeled into iniatitives that help us prepare for future needs, such as green industries and finding new models for supporting an increasingly aged population.

Mulgan is not alone in questioning the wisdom of bailing out the banks, with eminent economists proposing alternative solutions in bastions of the conservative media, including the Financial Times, the Wall Street Journal and Daily Telegraph. Nobel economist, Joseph Stiglitz says we should let the bad banks fail and set up new good banks instead. Paul Romer, from the Stanford Institute of Economic Policy Research has the same idea. Accepting that we need banks, Romer says "Turning bad banks into good banks is a difficult and risky way to get them. It's simpler and safer to start entirely new banks." Financier and philanthropist, George Soros, stops short of the new bank idea but argues that we should not purchase the toxic assets of bad banks. William Buiter, from the London School of Economics, sees a common logic between these proposals and says that "Bailing out the holders of existing bank debt and other bank creditors would be outrageously unfair: they did the lending and made the investments, they should eat the losses."

Less eminent writers are also tackling the issue on the blogosphere. Irish blogger, Niall Larkin, blogged about a conversation he had with an economist friend about the possibility of dumping bad banks in place of new, good internet banks, perhaps using the Post Office and Credit Union network for on-the-ground activities. The commentary includes a post from a lady in New Zealand who tells us about the Kiwibank that is doing exactly that. And, even the right-wing Daily Telegraph published a blog by Tracy Corrigan where she references Voltaire for reasons "Why executing bankers is good for morale".

I'm not sure that execution is either a humane or practical way to fix things, but the blog sums up the sense of moral outrage people in the UK have been feeling recently. Last week, some of the leading bankers in the country appeared before the Treasury Select Committee to account for themselves. Despite glib apologies, it was abundantly clear that none of them felt any real remorse. One of them gave great offense when he described his income as modest and, on further questioning, we learned that he has been earning an average of £1million per year. This in a country where the minimum hourly wage is under £6.

The committee hearings occured at the same time that we learned that the banks intended to pay themselves their customary enormous bonuses. Despite swallowing up billions of tax payers money, the government said it was necessary to pay the bonuses due to contractual obligations. An online petition was set up to stop the bonus payments and is open for any UK citizen or resident to sign.

On the Baseline Scenario, blogger James Kwak, suggests excessive bonuses be paid in the form of toxic assets from the institution. "That would get the assets off the bank’s balance sheet, and into the hands of the people responsible for putting them there - at the value that they insist they are worth."

Irish economist and writer, David McWilliams has also given thought to how we can turn crisis into opportunity. Describing public service cuts as "social vandalism", McWilliams turns his focus on the social consequences of mounting unemployment. He suggests following the course taken by Argentina during economic crisis, where they matched middle-aged, out-of-work experts with young, innovative but inexperienced entrepreneurs. The process led to to the establishment of many successful businesses and helped turn around the economic decline.

This blog describes just a handful of the ideas and suggestions that are out there. But, for all the great ideas, it will take political will to make a difference. We won't stop propping up the old order until we make it clear to our rulers that nothing less is acceptable. In these desperate times it is not enough to talk about things and expect somebody else to do them for us. We are all responsible for our future.

References
http://short.ie/mulgan

http://short.ie/corrigan

http://short.ie/stiglitz

http://short.ie/romer

http://short.ie/soros

http://short.ie/buiter

http://short.ie/larkin

http://www.kiwibank.co.nz/

http://petitions.number10.gov.uk/bank-greed/

http://short.ie/baseline

http://short.ie/mcwilliams

Did Dick Turpin apologise?

Yesterday, some of the leading bankers in the UK appeared before the House of Commons Treasury Committee to explain themselves in light of the near collapse of our economy due to their collective greed. Although quick to apologise, none showed any real remorse for their actions. At least two of them made fulsome apologies to their shareholders but I heard no apologises to the English taxpayers that will be paying for their greed and stupidity for generations.

Outside an RBS branch in Scotland, the BBC sought public opinion on these shallow apologies and one wag summed it up with "Dick Turpin probably apologised too". Dick Turpin was a thief, murderer and highwayman who was hanged in 1739 in York for horse-rustling. His legend is more glamorous, depicting him as a dashing champion of the poor, more in the tradition of Robin Hood.

The bankers who were questioned yesterday were a motley crew, elevated (?) to nobility (?) by the Blair/Brown government, earning obscene amounts of money and without a banking qualification between them. Rewarding themselves with monthly salaries that most people don't make in a year, these are only small change compared to the annual bonuses they earn.

The Treasury Committee investigation happens against the backdrop of announcements that these banks intend to pay bonuses as usual this year. In the case of the RBS, this amounts to bonus payments of over £1 billion being paid to the staff of a business that recently reported approx £8 billion losses for last year (the biggest corporate loss in UK commercial history), and which has been bailed-out by the government to the tune of £20 billion. When questioned how this can be allowed to happen, our government tells us that the banks have contractual agreements that must be honoured. Excuse me - did I hear that right? We, the tax payers, own 68% of the RBS - does that not give us any say in arrangements?

Since when did a bonus become a right, not a reward? Who wrote these contracts and what court would uphold them? You can write all the contracts you want but if they are illegal, based on bad law, then they won't stand up. And what on earth are our elected representatives up to, giving £20 billion of our money to an organisation without any provisos such as "you won't steal from us anymore" and "you won't get any more big salaries or pay rises until you pay back every single penny you borrowed from us"?

At the same time we hear that the FSA (Financial Services Authority) that oversaw this fiasco plan to reward themselves with £13 million in bonuses. We could be forgiven for thinking that this is all one big conspiracy of the powerful and the wealthy and that our government is as complicit as the rest of them.

As the country heads into the worst recession for a hundred years, according to Ed Balls, close confidante of the Prime Minister, jobs are rapidly disappearing as small and large businesses go to the wall. The High Streets are becoming ghost towns and local government is cutting back. It won't be long before children are going to school hungry and going to sleep cold. What is the future for them, saddled with a debt that will last for generations, supporting an increasingly aged population and a national debt the scale of which we can't even comprehend.

We can't undo the damage done by immoral shysters in suits, drinking gold champagne and storing their ill-gotten gains offshore, beyond the reach of the taxman. We can, however, insist that the rot stops now. You can start by signing a petition to stop the banking bonuses at http://petitions.number10.gov.uk/bank-greed/ and you can email your MP and councillors and ask for an explanation.

There are other things we can do, such as think about new economic and banking models where we stop throwing good money after bad and take control into our hands. More on this soon.