France: John Ward back up and fighting

Major UK blogger John Ward has just moved from Devon to south-west France, and is bringing the farmhouse up to scratch. But he still finds time to continue his furious examination of the worlds of finance and politics, which are so interlinked, corrupt and disastrous that he reflects on the survivalist advantages of his new home:

Over the last few days, it has become unnecessary here to have the main log-burner on 24/7, while sporting thermal underwear in bed at night. Today I didn’t actually light the fire at all until 7pm, and even now at 10 pm it is bubbling along without bashing out too much heat. The winters here are fierce, but short. This one has been longer than most, but it is at last releasing its frigid grip: buds are budding, winds are warming, and daffodils are flowering. You never know, it just might be Spring.

I’m still fixing things up. The last and most truculent floodlight has finally given up its resistance to my efforts to make it work, and is as I speak shining a light towards the old pig-sties down at the bottom of the front garden. There was an anxious moment when I had to figure out how to chisel a route through the door-jamb minus available chisels, given I lack a three-foot drill to go through the walls. But a steady hand and a hammer applied to a knackered old screwdriver did the trick. There was an even more stressful moment when – having rewired the obstinate little bastard – just prior to screwing it into the external masonry – it decided not to work. But then the kitchen lights flickered back on again, and I realised we’d had a power cut without me noticing. So all is well.

My neighbour Ange came up yesterday. He’d heard the gossip about Jan and I, so was keen to know what was what. One thing that never ceases to stagger me about apparently rigid old French agrarians is how – when you go through the “sh*t happens” explanation of life – far from offering sour disapproval, they seem keen to sympathise, to help, and to discuss the philosophy of marriage, emotions, or indeed anything else you care to bring up. On a day-to-day basis I have very little in c0mmon with the local French farmers, but beyond tractors and seed costs you can (with perseverance) plug into deeper concerns. Ange’s wife Michelle, for instance, is a keen fan of certain French writers. Once I’d discovered her passion for Georges Simenon and Molière, we never looked back. Five years ago an undiscovered Dumas novel was unearthed, and so it was my great pleasure to give Michelle an internet link to the prose. We have also prepared melons together for charity dinners in aid of Mali, but perhaps I should draw a discreet veil over that.

Tomorrow the replacement dishwasher and the serviced/repaired tractor mower are due to make an appearance. I rather fancy that soon after this point, things will return to something approaching normal. Window boxes will be filled and watered, windfall kindling gathered up, water retainers reinstigated, and guests prodded to confirm arrival dates.

Of course, in the macro boulevards of all those financial centres beyond Slogger’s Roost II, things will continue to be perversely abnormal. The Dow will go up instead of down, Gold will go down instead of up, silver up instead of down, the euro up against Sterling and down against the Dollar, and the US, UK and Eurozone debts up and up and up and up. But to the folks down here, none of it really matters. One of the undeniable things about France is that it has the biggest land area per head of population and highest proportion of cultivable in-use land in the entire EU. So if every currency, bond, bank, and bourse goes tits up, the French will still have more than enough to eat.

Should we feel resentful about this? No of course we shouldn’t: rather, we should feel anger about our own UK élites’ inability to understand such basics. With careful thought, Britain could’ve continued to make things and poured investment into those people who wish to grow things. France still makes cars and exports them very profitably. It still plans crops to produce cheap bread – and produces enough milk, meat, fruit and wine to keep everyone cruising along nicely. It still has the best cheeses in the world.

There are major bits of French culture (for example, pharmacy advice and the tax system) that continue to confuse and worry me. But when it comes to the price of lunch, bread, beer, wine, fresh veg, wonderful tomatoes and magret de canard, down here in the South West it is hard to fault the way they live. The sense of community, the familial glue and the lack of crime all bear witness to an achievement which, let’s face it, Britain cannot even begin to imagine.Will the British ever be true Europeans? Within the confines of the EU, I very much doubt it. We are an island seafaring race obsessed with the idea that we might still have some major global role to play.In the banking sector, we do. But is that a role we should want to embrace? I would emphatically say no: the UK’s future prosperity lies in making high-quality items and then knowing how to market them in an equalising world. My instinct is to stay close to Britain, but my insight tells me that Britain has forgotten how to stay close to itself.

This post originally appeared here and is reproduced with the kind permission of the author. John Ward's current blog is here and the archives of his previous one (Not Born Yesterday) are here. Writing since 2006, John is prolific, sparky and always informative.

All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

Djibouti: When giving is taking

Recently, Emily in Sierra Leone confronted burglars who had been her friends. What made the crowd gasp most was not her overlooking the theft, but her offer to continue the friendship. She comments, "Just goes to show you how they are more relationally minded than money minded."

On the other side of the continent, Rachel Pieh Jones was finding out how quickly money undermines those values:

My language helper…

Before she worked for me:

One day her son fell into the open, coal-burning fire pit and burned his hand. Neighbors heard the screams, ran for help, and within minutes the boy was in a car zooming toward the Djiboutian hospital. Someone paid the entrance fee. Someone else paid the taxi. Someone else brought meals while he healed. Someone else watched the other children. Someone else covered her hours mopping in the Minister for Sports’ office…

After she started working for me:

Her uncle died and the family needed money for the burial. “Get it from your American friend,” her brother said.

That same brother owed money to a Kenyan. “Get it from your American friend,” he said.

Her son fell off a wall at school and needed stitches. “Get the money from your American friend,” her neighbors said.

Read the rest of Rachel's guest post on Jessica Goudeau's website, "Love is what you do".

Both Rachel and Emily think deeply about their actions and don't necessarily expect the world to pat their heads and cheer them on. They are prepared to take risks and lose if need be.

Not just emotionally: at another point in her blog Emily tells us, "I've already researched how to make sure they do NOT send in any Special Forces to rescue me if I decide to be an idiot and stay when things get bad."

Extract reproduced with the kind permission of Rachel and Jessica. All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy.

Two great new stories on World Voices!

The smells of New York City, and how a Christian girl confronted Muslim burglars in Sierra Leone.

All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy.

Two great new stories on World Voices!

The smells of New York City, and how a Christian girl confronted Muslim burglars in Sierra Leone.

All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy.

USA: New York Nose Nav

Since moving to New York I have developed a rather odd and disgusting skill of being able to differentiate between the smells of the city. Not the nice ones, like freshly baked bagels or cupcakes, or even hot dogs (I know they are gross, but why do they always smell so good?), but the bad ones. The really gross, I don't even want to know what that is, kind of smells. I can differentiate between dog, cat and horse pooh. I can smell a homeless person a block away and know the difference between the smell of vomit and garbage. Lovely.

Unfortunately, New York is a very smelly city. What with the rubbish being piled high on the streets and most public areas being used at dog toilets (I think it's worst on the Upper West Side and in Chelsea), my new heightened sense of smell had come in useful on occasion. I have managed to avoid (although not always) treading in various sorts of pooh, side-stepped a rather large pile of well-disguised puke and narrowly missed getting on a subway carriage with a homeless guy who last washed in 1987. I also know the stinkiest streets to avoid in my neighbourhood and the best place to stand at my local subway station.

A strong stomach definitely comes in handy when you live here, but I prefer to try an avoid the nasty smells when I can. I have learnt a lot about living in New York over the past 2 1/2 years, but I can safely say that being able to tell the difference between animal pooh isn't something I thought would come in useful!

Reproduced with the kind permission of the author, whose blog is here.

All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy.

Sierra Leone: Forgiveness

Emily heard the religious call while in high school, put herself through medical training and left Oregon to work as a nurse in post civil war Sierra Leone. This is how she reacted to a break-in:

I arrived in Sierra Leone on Jan. 21^st but stayed near Freetown for about a week before I went up to the village where I work. While I was in Freetown I got a curious call from my neighbor, asking when I was coming back up. It seems that some people had broken into my house, stolen some things and were being held at the police station, awaiting my return.

 

When I dug around a little to find out who it was, my heart was a little bit broken. I had been pretty close to three of the boys before they left the village to go to Freetown. When I had girls teaching me to cook, I would call these boys to come help me eat the rice. After we ate we would all have game night. We had a scoreboard on my wall keeping track of how many times each of us lost at Jenga and they were often at my house when the lights were on so they could study. I’d thought we were close. Definitely NOT the first thing I wanted to deal with when I got back!

 

Since I had a couple days before I was going up (and they were still waiting for a couple more boys to be brought from Freetown), I started thinking and praying about how I was going to handle it. The neighbor who called me to inform me of this was devastated!! One of the boys was in his custody. When he called me he so angry he was almost in tears. He said that he was not raising a thief and wanted to take this as far as it could go in the court system. He was mad!

 

I understood. What happened was extremely shameful for him in the eyes of the community. He said that this boy was “trying to spoil my job here” and I later found out that this was because some people thought he should move on because if he hadn’t been there, the boy wouldn’t have been there and this wouldn’t have happened. It was serious!

 

But I wasn’t really sure what I wanted to do. One of my biggest pet peeves here is that it often feels like there aren’t any real consequences when a wrong is done. People show up late for work or don’t show up on time and nothing’s done. Security guards sleep all night….nothing. Policemen are constantly asking for bribes and everyone looks the other way. It’s just constant. And it drives me crazy. I tend to be a pretty black and white person (which can often be to my own detriment….I’m working on the balance) but this kind of thing is a never ending frustration for me.

 

What to do, what to do. Wouldn’t you know that the day after I found out what happened, I ran across this verse : “To have lawsuits at all with one another is already a defeat for you. Why not rather suffer wrong? Why not rather be defrauded?”

I had a few things stolen from my house. The biggest item was a computer. I was an idiot and decided to leave my little netbook computer at the house since I didn’t think I’d need it while I was home. There were also a few missing headlamps, a bag, an internet modem and some notebooks. (These were the things that were recovered….I have no idea if there were other things missing. I’m just that organized).

 

When I was home, I saw Les Miserables for the first time. I didn’t know the story before I entered the theatre and I spent the majority of the movie near convulsions as I was sobbing so hard. It was weird. It was really weird. Even after it was over I was so affected that I couldn’t stop crying. So of course one of the first things I think about is the priest. (Slight spoiler alert if you haven’t seen it!) That beloved old priest who gave food and shelter to a man who later stole all his silver. When the police brought the man back with the stolen silver the priest said, “No. It’s not stolen. I gave him that silver. Here, you forgot these candlesticks. There was no crime here.” The man’s life was changed forever!

 

I don’t know what the right thing to do every time something like this happens. Obviously there have to be consequences when evil occurs. But in this instance, I knew what I wanted to do.

I arrived in the village and the next morning went to the police station with a couple of my friends. My stomach was in knots, knowing I had to confront these boys and not sure how the community was going to accept what I wanted to do. Bleh. I hate confrontation!

When I arrived I asked to speak to the boys. The policemen were a little surprised but agreed to bring them out. As everything here seems to go, there was very little privacy and I had about 20-30 people watching while I talked to them. Oh gosh.

 

As the six boys filed out, the three that I had been close with wouldn’t make eye contact with me. They stood in a line in front of me and I began talking. I was nervous because they wanted me to try and speak Krio and in vulnerable situations like this I always want to speak English!! But I whispered a prayer for help and started muddling my way through.

I started by telling them that when I’d heard that someone had broken in and stolen some things from my house, I’d been angry. I needed those things! I needed them to do my job, to communicate with my family back home, and to help others in the community learn about computers. But when I found out who was involved, I became more sad than angry. I reminded them of the times we’d spent together (imagine little gasps and “shame, shame’s”coming from the peanut gallery). We’d been close.

 

Then I told them about the verses I’d read right after I found out what happened and how this had turned my thoughts to Jesus. Jesus. My Precious One who has forgiven me of so much. How could I not forgive when I’d been forgiven of so much? It was inconceivable. I talked our relationship with God that had been broken until Jesus came to restore it. He showed us, he showed ME mercy and forgiveness when I was his enemy. And that’s Who I love and that’s Who I follow.

 

I pulled out the charger for the computer (that had been with me so they hadn’t taken it) and handed it over to them. I then pulled out the money that remained in order for them to be released from jail and gave it to the chief policeman. And I told them it was finished. They were forgiven. The things they’d stolen were theirs to keep. It wasn’t because I didn’t need them, but it was because I love Jesus and therefore love them and want our relationship to be restored. And as far as I was concerned, it was. We were fine and they were welcome at my house any time (this is where I got the biggest gasp from the crowd. Just goes to show you how they are more relationally minded than money minded).

 

I told them that I recognized that what I was doing was dangerous. There was a chance that they would come back and steal again. There was a chance that others would hear about the grace extended and would also come to my house and break in, believing that there would be no repercussions. But Grace is dangerous. The grace that God extends to us can be (and often is) not accepted, mocked or abused. But I trust that God will be the defender of my rights. If people keep breaking in and taking my things….God, who can do anything He wants, STOP anyone He wants doesn’t think I really need those things. And one day, God will make everything right. Until then, I will trust Him to defend my rights. So that was that.

I’m not really sure how the boys took it. They didn’t say anything. One guy piped up and said, “You see? This is the difference between you Christians and we Muslims. We don’t forgive like this. We would never forgive like this!” Of course that’s not true. I know many Muslims who are very forgiving*. But I was so so SO excited to see that they saw Jesus in this, and not just my white skin! So often the things I do are just attributed to my “being white” than to my “following Jesus”and I had been begging God to let them see Him. I was so glad that some did!

 

So that was that. My little bit of village drama to start off my third year. I was hesitant to share this because….it just feels weird. But I was so excited about Jesus showing up that I couldn’t resist. It’s such an adventure to follow Him!

 

(*Ed: as shown in this incident - and this.)

The above is a slightly shortened and edited version of the original, which is on Emily's blog here. Reproduced with the kind permission of the author.

All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy.

Nick Drew: Politics and future power cuts

Read the next instalment of Nick's disturbing analysis of energy supply threats here on the Energy Page.

All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

Nick Drew: Politics and future power cuts

Read the next instalment of Nick's disturbing analysis of energy supply threats here on the Energy Page.

All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

Securing Energy Supply (2): Politically-Driven Disruptions

In the first part of this series we noted that the provision of oil, gas and particularly electricity, reliably and continuously on demand, is a considerable, if overlooked practical achievement.  We further remarked that the days when this can be taken for granted as regards electricity may be numbered in markets where significant amounts of wind-generated capacity are to be accommodated - and that if anyone doubts this, they are invited to follow developments in Germany as it struggles to maintain feasibility.

However, physical reliability is in the gift of the engineers, market-designers and policy-makers: if the populace wants it (and they really, really do), they can vote for it, pay for it, and it will be delivered.  We know what it takes and it is in our own hands.

What is not within our collective control is the political will of some to see our supply disrupted: and it is to security of supply against political contingencies that we now turn.

This lot like coal

Internal threats to energy security are not necessarily the main focus of macro energy policy, but anyone who lived through the UK miners' strikes of 1972, 1974 and 1984-5 will recall how disruptive they can be.  On this blog, Sackerson has drawn attention to concerns being raised in this connection arising from the Government's planned sale into commercial ownership of its Pipeline and Storage System, which delivers a significant proportion of the UK's aviation fuel direct to airports and military airfields, as well as much gasoline and diesel to various depots. The GPSS is fairly invulnerable to the periodic tanker-driver strikes that have bedevilled the UK - but how secure will it be in private-sector hands?

Nor are labour disputes the end of the matter.  In the period 2008-2010, 'green' protesters laid siege to a power plant site at Kingsnorth in Kent, with the aim of stopping the development of a new high-tech coal-fired power plant, and they can fairly claim to have been a major factor, if not the only one, in the cancellation of that project.  Hostilities resumed again last year, with the week-long occupation of a site in Nottinghamshire, to the end of preventing the commissioning of another new power station - this time a nearly-completed gas-fired plant.  These UK manifestations are nothing compared to the actions of German eco-warriors who regularly wreak havoc on all manner of electricity sector operations.

This lot don't

With an eye on the future, many commentators see great potential vulnerability in the 'smart grid' and 'smart metering' systems that are being planned in the power sectors of most advanced economies.  Designed to facilitate real-time information-flow and control across entire grids down to the level of individual meters, these systems are believed to be inherently vulnerable to malicious hacking for criminal or political purposes.

The kind of political purposes envisioned are generally held to be cyber-warfare waged by hostile nations; and in the same context, countries such as the USA prevent Chinese investors from taking stakes in energy infrastructure (and other deemed 'strategic' facilities).  The UK has a long history of being open to foreign investments in its energy sector: the greater part of UK gas and power supply is in the hands of German, French and Spanish companies, and Far- and Middle-Eastern investors hold many stakes in the energy industry here.  The question of our openness to Chinese and Russian investment is yet to be confronted in a specific case; but given that the government is actively courting Chinese investment (inter alia) in putative new (French-built) nuclear plants in this country, it would seem likely that the answer will be 'welcome'.

We have found ourselves contemplating geo-political concerns under the heading of 'internal threats' to energy supplies, which leads us naturally to external political threats.  We will start at the least apocalyptic end of the spectrum and consider political factors that can disrupt the normal flow of cross-border energy trade.  The UK is a nation long wedded to free trade, and we often fail to realise how much less enthusiastic about it even our close EU neighbours are.

 In particular, when it comes to energy, most other European countries will ban exports at the drop of a hat if they deem their own supplies are 'at risk' which, in the case of France, can mean simply that gas storage facilities are not completely full.  Of course, banning exports makes a mockery of economic notions that cross-border interconnections and price-following free trade maximises the efficient allocation of a scarce resource.  But other nations just don't believe in that, when push comes to shove.  Thus, in winter 2004 when a short cold-weather snap hit and the price of UK spot gas rose to a much higher level than French prices, ordinarily one would have expected increased flows from France to the UK, until either the pipeline capacity was full, or prices equalised.  In fact, the French regulator instructed French gas companies to pay whatever price was needed to top up already almost-full French storage.  As a consequence, French prices leapfrogged those of the UK and gas was exported from short-of-gas Britain to plentifully-supplied France.

Needless to say, there are two strongly-held sides to the doctrinal argument here, and for now we simply record the issue.  France is not the only country that has behaved in this way: for many years Germany has imported almost as much gas from the Netherlands and Norway as from Russia.  Traditionally, if you were to ask a German gas company which of their main supplier-nations was the least reliable, they would say the Dutch who, when they have production problems, prioritise their local customer-base at the expense of exports.  (The Russians, of course, with perennial needs for hard currency, would cheerfully cut off their local customers to maintain exports - at least until the spring of 2012 when Putin was facing an election, and for the first time cut exports to maintain local supplies.)   

The politically-based disruptions to energy supplies we have considered here - strikes, green protests, protectionism in times of shortage - can be bad enough.  But they are a mere inconvenience as compared to the prospect of large-scale, systematic withholding or blockading of energy deliveries for strategic geopolitical ends.  We have seen it before; and we fear it happening again.  It is to this we turn next.

[ Continues to Part 3 ]


All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

Fighting the Government for savers and against inflation (1)

I am going to return to the fight on National Savings Index-Linked Certificates. As background, I give below the text of some of the relevant emails between myself and my Member of Parliament, Mr John Hemming (Liberal Democrat member for Birmingham Yardley):

 

11 June 2012:

 

Dear Mr Hemming

As one of your constituents, I should be grateful if you would ask questions in Parliament re the Government's intentions in respect of preserving our life savings against the ravages of inflation. This is especially a matter of concern because of continuing enormous financial support for the banking system, here and in other countries (latterly Spain) that seems destined to burst out as high inflation at some future point.

I note that Mr Cameron's private secretary has written recently to all members of the Cabinet saying, among other things:

 

"The Prime Minister wants to ensure that the Government as a whole is giving the highest priority to addressing the cost of living."

 

(http://www.dailymail.co.uk/debate/article-2157018/Cameron-summits-quads-secrets-save-EU.html)

 

If this is so, why did National Savings & Investments withdraw Index-Linked Savings Certificates from sale on 19 July 2010, when they had previously been continuously available since 1975, a year in which RPI was 24.2%? Is this an indication that the Government expects RPI to be even worse than that figure in the intermediate future?

 

And why were these Certificates, somewhat grudgingly reintroduced (5-year term only) on 12 May 2011, withdrawn again on 7 September? Why are they not available now?

 

It is also worrying that the Government's 2011 Budget Plan (as given in Red Book Annexe B, page 90 - http://www.direct.gov.uk/prod_consum_dg/groups/dg_digitalassets/@dg/documents/digitalasset/dg_196165.pdf) says "National Savings and Investments (NS&I) is expected to make a contribution to net finance of £2 billion."

 

Is this a sign that the Government is purely concerned about targets for government borrowing and not at all exercised about the protection of HMG's subjects' money savings, which in many cases have been built up slowly and with difficulty over many years. Why should simple savers have to accept risks to the real value of their deferred spending, as though they were speculators?

 

Is the Prime Minister's leaked pronouncement a misleading dog-whistle to the electorate, or is he really willing to put our money where his mouth is?

 

Yours faithfully

 

Answer (same day):

I will write to the chancellor about this.

2 July 2012:

Dear Mr Hemming

May I ask whether the Chancellor has responded on this matter, and if not, when and in what terms did you write to him? Surely he cannot disregard the issue?

 

Answer (same day):

 

I will chase for a response.

22 July 2012:

Dear Mr Hemming

As you have now asked the Chancellor twice for a response on inflation-protected savings, without success, may I respectfully request that you table a Parliamentary question to be asked at the first available opportunity?

Yours faithfully

 

Answer (same day):

No problem. The first opportunity will be in September. I will ask my researcher to work on drafting that with you.

I was not contacted by Mr Hemming or his researcher re tabling a Parliamentary question. But Mr Hemming had wriiten on 2 July to the Chancellor, George Osborne, and on 4 August I received a copy of a letter (dated 25 July 2012) to Mr Hemming from the Commercial Secretary to the Treasury, Lord Sassoon.

Cover letter from Mr Hemming to me (2 August 2012): (click to enlarge)

Main text of the above:

 

Re: JAMH21291 Protection of Savings

 

This is a short letter to confirm that we have received the enclosed response to the above enquiry from to the [sic] Her Majesty's Treasury.

 

The treasury has set out the reasons Savings Certificates were withdran from sale, owing, it seems, to them being over subscribed, and has set out other methods in which it is supporting savers.

 

It is also worth noting that the economic situation has improved, with Inflation currently running at 2.4%, much closer to target than a year ago.

 

I trust this information is useful to you, but if you have any further concerns please do not hesitate to contact me again.

 

Letter from Lord Sassoon to Mr John Hemming MP, 25 July 2012:

 

Main text of the above:

 

Dear Mr Hemming

 

Thank you for your letter of 2 July to George Osborne regarding correspondence from your constituent [...] about National Savings and Investments (NS&I). I am replying as Minister responsible for this policy area.

 

I appreciate that your constituent is concerned about savings in the current climate of relatively high inflation and low interest rates and is disappointed that Savings Certificates are no longer on sale. It is important, though, to recognise that inflation has come down from 5.2 per cent in September 2011 to 2.4 per cent in June 2012. The Government continues to give priority to reducing the impact of rising prices on families and businesses including through the recently announced deferral of fuel duty increases, which means that petrol prices will be 10p per litre lower than they would have been under the previous Government's plans.

 

NS&I provide cost-effective retail debt finance to Government. The money invested in their products contributes to the Government's overall debt financing remit. In doing this, NS&I follow a policy of balancing the interest of savers and the taxpayer with the stability of the financial services market. While doing so they aim to meet the financing objective set each year by HM Treasury.

 

It might be helpful if I explain the reasons why NS&I withdrew their Savings Certificates.

 

In July 2010, the popularity of both their index-linked and Fixed-interest Savings Certificates reached unprecedented levels and sales volumes far exceeded those either anticipated or required by NS&I to meet their financing target set by HM Treasury. Because of this, they took the difficult decision to take Certificates off sale on 18 July 2010. This change however did not affect existing customers.

 

The March 2011 budget confirmed NS&I's Net Financing target for 2011-12 as £2 billion with a range of £0-4 billion. To achieve this, they needed inflows of some £14 billion from sales and reinvestments during the year which gave them the ability to reintroduce one 5-year term of Savings Certificates on 12 May 2011. Their aim was to keep them on sale for a sustained period of time to enable as many savers as possible to invest.

 

As they expected, the Savings Certificates proved very popular and in just under four months they had received over 500,000 transactions. In order to stay within the Net Financing target range for the year, at this point they had to withdraw the certificates from sale.

 

Existing NS&I Savings Certificates customers can, on maturity, keep their investment for another term of the same length. Alternatively, they can reinvest into any of the other Savings Certificates terms and issues on offer to existing customers.

 

In more general terms, the Government wants a saving system based on freedom, fairness and responsibility, which is both affordable and effective.

 

To support and encourage savers the Government has:

 

• ensured the amount that people can save tax-free is not eroded by inflation by indexing the amount that can be paid into ISAs each year. This means that the Government has increased ISA limits by £600 this year, including an extra £300 for cash ISAs;
• announced at Budget 2012 that Government will work with industry to improve competitiveness and transparency in the ISA market, particularly by encouraging the industry to work towards faster ISA transfers;
• introduced Junior ISAs, offering parent a clear, simple and tax-free way to save for their child's future;
• confirmed that employees will have a new duty to automatically enrol qualifying employees into a pension scheme from October 2012. This has the potantial to encourage 5 to 8 million more people to start saving or save more into a workplace pension scheme. The Government is also establishing the National Employment Savings Trust (NEST) to provide a low-cost, high-quality pension scheme for individuals not currently served by the market;
• set up the Money Advice Service to offer free and impartial information and advice on all money matters available online at www.moneyadviceservice.org.uk , face-to-face, or by calling its helpline on 0300 500 5000. The Money Advice Service also launched a financial health check to help people proactively manage their money. It also publishes comparative tables of savings accounts and the interest rates offered; and
• given individuals more choice over the use of their pension savings to provide a retirement income by removing the effective requirement to purchase an annuity by age 75.

 

Please pass on my thanks to Mr Norfolk for taking the trouble to make us aware of these concerns.

 

Yours sincerely

 

James Sassoon

 

LORD SASSOON

 

Email from me to Mr John Hemming MP, 05 August 2012:

 

 Dear Mr Hemming

 

Thank you for forwarding Lord Sassoon's letter, which arrived here yesterday. It is not at all up to the standard that I would expect from a Treasury mind; in fact, it is little short of a disgrace.

The first page confirms what I suspected, that the present Government is concerned only with its own funding needs and not at all with what should be its commitment to savers, not to say the currency (which according to the BoE's own website has lost 99% of its value since 1900). As you know, National Savings Index-Linked Certificates were introduced in 1975, a year in which RPI inflation was, as I said to you before, 24.2%. If the government of the day could bring in this product at such a time of crisis and galloping inflation, I cannot see any justification for the present hiatus.

The point about the present level of inflation is useless. Savers need to know for sure that their money retains its spending power over the chosen period, not to be informed from time to time that RPI may have temporarily dipped.

The second page slides further downhill into irrelevant party political nonsense. To be specific about its failures to address the subject, I will take each of Lord Sassoon's points in order:

• The cash ISA limit has nothing whatever to do with maintaining the purchasing power of cash.
• ISA transfers, ditto.
• Junior ISAs, ditto.
• The NEST pension scheme is not a savings vehicle but an investment vehicle, a distinction that surely cannot have escaped someone with Lord Sassoon's background in the financial services industry. The nearest to cash within pension funds is either money market funds (which have a big fat question mark over them at the moment, I can tell you as an IFA) or bank/building society cash funds that (a) usually offer a significantly lower rate than cash ISAs and (b) are (except perhaps for SIPPs) not covered by the FSCS in the way that individually held accounts are (see the Pensions Advisory Service's article here).
• The Money Advice Service is also irrelevant to the purchasing power of cash savings.
• Changes to the requirement to purchase an annuity at age 75, ditto.

Sir, you have established something of a reputation as an MP who is prepared to ask awkward questions in Parliament, irrespective of party political aspects. This question is inconvenient to the present administration, but crucial to the financial wellbeing of many people throughout the country. I do not think it is ethical for the government to take the view that the man in the street must be forced to accept investment risk, merely when he decides to set aside some money for tomorrow instead of spending it today. His prudence should not be seen as an opportunity to shear his fleece with inflation.

May I respectfully request that you take this further to PMQs or Questions to Ministers, and make a proper fuss?

Yours faithfully

 

Answer (same day):
Parliament is not sitting at the moment.

I will look at the letter later next week (I am at a funeral on Monday) and come back to you on this. The sovereign debt issue is a very serious issue, however

Email from me to Mr John Hemming MP, today (03 March 2013):

Dear Mr Hemming

Thank you for your reply to my previous email.

Now that:

•  the British Government creditworthiness has been downgraded by Moody's,and
• the pound has dropped, and
• inflation looks set to rise further, especially for imports;

- may I ask you to pursue my query vigorously in Parliament?

May I also draw your attention to two passages in Hansard from 1975 that make it perfectly clear that Government recognises the moral obligation to protect the value of savers' money?

____________________________________________________________

Hansard record of House of Commons debate, 10 July 1975:

Mr. Neubert

Does the Minister accept that the opportunity to invest in inflation-proof schemes is an act of belated social justice to millions of people who have seen their savings irreversibly damaged during the recent rapid rise in the rate of inflation? Will he make recompense to many of them by easing up on his vindictive attacks on the principle of savings embodied in the capital transfer tax and the wealth tax?

§Mr. Barnett

The hon. Gentleman has put his supplementary question at the wrong time, because National Savings are rising very well at present. I am sure he will be delighted to hear that. As to what he called "belated social justice", I am sure he will pay due attention to the fact that the scheme was introduced by a Labour Government and not by a Conservative Government.

Mr. Nott

Is the Chief Secretary confident that a further extension of index-linked schemes—which are welcome to savers—will not cause a diversion of funds away from deposits with building societies, leading to a rise in the mortgage interest rate?

§Mr. Barnett

We are, indeed, aware of those problems. That is precisely why we introduced the scheme in this limited way.

Hansard record of House of Lords debate, 4 November 1975:

Lord LEE of NEWTON

My Lords, does my noble friend agree that while the index-linked schemes are extremely good value for money, it would be a good idea—as inflation has been rather rampant—to increase the maximum amount that can be invested in them?

§Lord JACQUES

My Lords, the Government have two conflicting obligations. One is an obligation to the taxpayer to buy goods and services as economically as possible, and secondly there are certain social obligations. The Government believe that by the action they have taken they have got the right balance.

_____________________________________________________

On 22 July last year, you offered to allow me to work with your researcher to draft a Parliamentary question on this subject. May I ask whether that offer is still open?

Yours sincerely

Fighting the Government for savers and against inflation (1)

I am going to return to the fight on National Savings Index-Linked Certificates. As background, I give below the text of some of the relevant emails between myself and my Member of Parliament, Mr John Hemming (Liberal Democrat member for Birmingham Yardley):

 

11 June 2012:

 

Dear Mr Hemming
 

As one of your constituents, I should be grateful if you would ask questions in Parliament re the Government's intentions in respect of preserving our life savings against the ravages of inflation. This is especially a matter of concern because of continuing enormous financial support for the banking system, here and in other countries (latterly Spain) that seems destined to burst out as high inflation at some future point.

I note that Mr Cameron's private secretary has written recently to all members of the Cabinet saying, among other things:

 

"The Prime Minister wants to ensure that the Government as a whole is giving the highest priority to addressing the cost of living."

 

(http://www.dailymail.co.uk/debate/article-2157018/Cameron-summits-quads-secrets-save-EU.html)

 

If this is so, why did National Savings & Investments withdraw Index-Linked Savings Certificates from sale on 19 July 2010, when they had previously been continuously available since 1975, a year in which RPI was 24.2%? Is this an indication that the Government expects RPI to be even worse than that figure in the intermediate future?

 

And why were these Certificates, somewhat grudgingly reintroduced (5-year term only) on 12 May 2011, withdrawn again on 7 September? Why are they not available now?

 

It is also worrying that the Government's 2011 Budget Plan (as given in Red Book Annexe B, page 90 - http://www.direct.gov.uk/prod_consum_dg/groups/dg_digitalassets/@dg/documents/digitalasset/dg_196165.pdf) says "National Savings and Investments (NS&I) is expected to make a contribution to net finance of £2 billion."

 

Is this a sign that the Government is purely concerned about targets for government borrowing and not at all exercised about the protection of HMG's subjects' money savings, which in many cases have been built up slowly and with difficulty over many years. Why should simple savers have to accept risks to the real value of their deferred spending, as though they were speculators?

 

Is the Prime Minister's leaked pronouncement a misleading dog-whistle to the electorate, or is he really willing to put our money where his mouth is?

 

Yours faithfully

 

Answer (same day):

I will write to the chancellor about this.

2 July 2012:

Dear Mr Hemming

May I ask whether the Chancellor has responded on this matter, and if not, when and in what terms did you write to him? Surely he cannot disregard the issue?

 

Answer (same day):

 

I will chase for a response.

22 July 2012:

Dear Mr Hemming

As you have now asked the Chancellor twice for a response on inflation-protected savings, without success, may I respectfully request that you table a Parliamentary question to be asked at the first available opportunity?

Yours faithfully

 

Answer (same day):

No problem. The first opportunity will be in September. I will ask my researcher to work on drafting that with you.

I was not contacted by Mr Hemming or his researcher re tabling a Parliamentary question. But Mr Hemming had wriiten on 2 July to the Chancellor, George Osborne, and on 4 August I received a copy of a letter (dated 25 July 2012) to Mr Hemming from the Commercial Secretary to the Treasury, Lord Sassoon.

Cover letter from Mr Hemming to me (2 August 2012): (click to enlarge)

Main text of the above:

 

Re: JAMH21291 Protection of Savings

 

This is a short letter to confirm that we have received the enclosed response to the above enquiry from to the [sic] Her Majesty's Treasury.

 

The treasury has set out the reasons Savings Certificates were withdran from sale, owing, it seems, to them being over subscribed, and has set out other methods in which it is supporting savers.

 

It is also worth noting that the economic situation has improved, with Inflation currently running at 2.4%, much closer to target than a year ago.

 

I trust this information is useful to you, but if you have any further concerns please do not hesitate to contact me again.

 

Letter from Lord Sassoon to Mr John Hemming MP, 25 July 2012:

 

Main text of the above:

 

Dear Mr Hemming

 

Thank you for your letter of 2 July to George Osborne regarding correspondence from your constituent [...] about National Savings and Investments (NS&I). I am replying as Minister responsible for this policy area.

 

I appreciate that your constituent is concerned about savings in the current climate of relatively high inflation and low interest rates and is disappointed that Savings Certificates are no longer on sale. It is important, though, to recognise that inflation has come down from 5.2 per cent in September 2011 to 2.4 per cent in June 2012. The Government continues to give priority to reducing the impact of rising prices on families and businesses including through the recently announced deferral of fuel duty increases, which means that petrol prices will be 10p per litre lower than they would have been under the previous Government's plans.

 

NS&I provide cost-effective retail debt finance to Government. The money invested in their products contributes to the Government's overall debt financing remit. In doing this, NS&I follow a policy of balancing the interest of savers and the taxpayer with the stability of the financial services market. While doing so they aim to meet the financing objective set each year by HM Treasury.

 

It might be helpful if I explain the reasons why NS&I withdrew their Savings Certificates.

 

In July 2010, the popularity of both their index-linked and Fixed-interest Savings Certificates reached unprecedented levels and sales volumes far exceeded those either anticipated or required by NS&I to meet their financing target set by HM Treasury. Because of this, they took the difficult decision to take Certificates off sale on 18 July 2010. This change however did not affect existing customers.

 

The March 2011 budget confirmed NS&I's Net Financing target for 2011-12 as £2 billion with a range of £0-4 billion. To achieve this, they needed inflows of some £14 billion from sales and reinvestments during the year which gave them the ability to reintroduce one 5-year term of Savings Certificates on 12 May 2011. Their aim was to keep them on sale for a sustained period of time to enable as many savers as possible to invest.

 

As they expected, the Savings Certificates proved very popular and in just under four months they had received over 500,000 transactions. In order to stay within the Net Financing target range for the year, at this point they had to withdraw the certificates from sale.

 

Existing NS&I Savings Certificates customers can, on maturity, keep their investment for another term of the same length. Alternatively, they can reinvest into any of the other Savings Certificates terms and issues on offer to existing customers.

 

In more general terms, the Government wants a saving system based on freedom, fairness and responsibility, which is both affordable and effective.

 

To support and encourage savers the Government has:

 

• ensured the amount that people can save tax-free is not eroded by inflation by indexing the amount that can be paid into ISAs each year. This means that the Government has increased ISA limits by £600 this year, including an extra £300 for cash ISAs;
• announced at Budget 2012 that Government will work with industry to improve competitiveness and transparency in the ISA market, particularly by encouraging the industry to work towards faster ISA transfers;
• introduced Junior ISAs, offering parent a clear, simple and tax-free way to save for their child's future;
• confirmed that employees will have a new duty to automatically enrol qualifying employees into a pension scheme from October 2012. This has the potantial to encourage 5 to 8 million more people to start saving or save more into a workplace pension scheme. The Government is also establishing the National Employment Savings Trust (NEST) to provide a low-cost, high-quality pension scheme for individuals not currently served by the market;
• set up the Money Advice Service to offer free and impartial information and advice on all money matters available online at www.moneyadviceservice.org.uk , face-to-face, or by calling its helpline on 0300 500 5000. The Money Advice Service also launched a financial health check to help people proactively manage their money. It also publishes comparative tables of savings accounts and the interest rates offered; and
• given individuals more choice over the use of their pension savings to provide a retirement income by removing the effective requirement to purchase an annuity by age 75.

 

Please pass on my thanks to Mr Norfolk for taking the trouble to make us aware of these concerns.

 

Yours sincerely

 

James Sassoon

 

LORD SASSOON

 

Email from me to Mr John Hemming MP, 05 August 2012:

 

 Dear Mr Hemming

 

Thank you for forwarding Lord Sassoon's letter, which arrived here yesterday. It is not at all up to the standard that I would expect from a Treasury mind; in fact, it is little short of a disgrace.

The first page confirms what I suspected, that the present Government is concerned only with its own funding needs and not at all with what should be its commitment to savers, not to say the currency (which according to the BoE's own website has lost 99% of its value since 1900). As you know, National Savings Index-Linked Certificates were introduced in 1975, a year in which RPI inflation was, as I said to you before, 24.2%. If the government of the day could bring in this product at such a time of crisis and galloping inflation, I cannot see any justification for the present hiatus.

The point about the present level of inflation is useless. Savers need to know for sure that their money retains its spending power over the chosen period, not to be informed from time to time that RPI may have temporarily dipped.

The second page slides further downhill into irrelevant party political nonsense. To be specific about its failures to address the subject, I will take each of Lord Sassoon's points in order:

• The cash ISA limit has nothing whatever to do with maintaining the purchasing power of cash.
• ISA transfers, ditto.
• Junior ISAs, ditto.
• The NEST pension scheme is not a savings vehicle but an investment vehicle, a distinction that surely cannot have escaped someone with Lord Sassoon's background in the financial services industry. The nearest to cash within pension funds is either money market funds (which have a big fat question mark over them at the moment, I can tell you as an IFA) or bank/building society cash funds that (a) usually offer a significantly lower rate than cash ISAs and (b) are (except perhaps for SIPPs) not covered by the FSCS in the way that individually held accounts are (see the Pensions Advisory Service's article here).
• The Money Advice Service is also irrelevant to the purchasing power of cash savings.
• Changes to the requirement to purchase an annuity at age 75, ditto.

Sir, you have established something of a reputation as an MP who is prepared to ask awkward questions in Parliament, irrespective of party political aspects. This question is inconvenient to the present administration, but crucial to the financial wellbeing of many people throughout the country. I do not think it is ethical for the government to take the view that the man in the street must be forced to accept investment risk, merely when he decides to set aside some money for tomorrow instead of spending it today. His prudence should not be seen as an opportunity to shear his fleece with inflation.

May I respectfully request that you take this further to PMQs or Questions to Ministers, and make a proper fuss?

Yours faithfully

 

Answer (same day):
Parliament is not sitting at the moment.

I will look at the letter later next week (I am at a funeral on Monday) and come back to you on this. The sovereign debt issue is a very serious issue, however

Email from me to Mr John Hemming MP, today (03 March 2013):

Dear Mr Hemming

Thank you for your reply to my previous email.

Now that:

•  the British Government creditworthiness has been downgraded by Moody's,and
• the pound has dropped, and
• inflation looks set to rise further, especially for imports;

- may I ask you to pursue my query vigorously in Parliament?

May I also draw your attention to two passages in Hansard from 1975 that make it perfectly clear that Government recognises the moral obligation to protect the value of savers' money?

__________________________________________________

Hansard record of House of Commons debate, 10 July 1975:

Mr. Neubert

Does the Minister accept that the opportunity to invest in inflation-proof schemes is an act of belated social justice to millions of people who have seen their savings irreversibly damaged during the recent rapid rise in the rate of inflation? Will he make recompense to many of them by easing up on his vindictive attacks on the principle of savings embodied in the capital transfer tax and the wealth tax?

§Mr. Barnett

The hon. Gentleman has put his supplementary question at the wrong time, because National Savings are rising very well at present. I am sure he will be delighted to hear that. As to what he called "belated social justice", I am sure he will pay due attention to the fact that the scheme was introduced by a Labour Government and not by a Conservative Government.

Mr. Nott

Is the Chief Secretary confident that a further extension of index-linked schemes—which are welcome to savers—will not cause a diversion of funds away from deposits with building societies, leading to a rise in the mortgage interest rate?

§Mr. Barnett

We are, indeed, aware of those problems. That is precisely why we introduced the scheme in this limited way.

Hansard record of House of Lords debate, 4 November 1975:

Lord LEE of NEWTON

My Lords, does my noble friend agree that while the index-linked schemes are extremely good value for money, it would be a good idea—as inflation has been rather rampant—to increase the maximum amount that can be invested in them?

§Lord JACQUES

My Lords, the Government have two conflicting obligations. One is an obligation to the taxpayer to buy goods and services as economically as possible, and secondly there are certain social obligations. The Government believe that by the action they have taken they have got the right balance.

________________________________________________

On 22 July last year, you offered to allow me to work with your researcher to draft a Parliamentary question on this subject. May I ask whether that offer is still open?

Yours sincerely

Vigilantes in Iceland

Are the ancient ways coming back? Read Katharina Hauptmann's article on World Voices here.

All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy.

Iceland: Rise of the vigilantes

Over the past years I’ve come to notice a worrying trend here in Iceland. A trend that some people probably won’t dare to talk about publicly. I’m talking about vigilantism, something one certainly wouldn’t connect with Iceland.

On multiple occasions I’ve experienced that people here take the law into their own hands. It seems that many people don’t consider the measures or punishment executed by police and law as satisfactory.

And by vigilantism I’m talking about having certain people beaten up or threatened. If you piss off the wrong people, they will call somebody who will teach you a lesson.

I had one of my first experiences with this practice a few years ago, when my former boss and owner of the bar I worked at went bankrupt, cheated a lot of employees of their money and ended up owing a lot of people a lot of money. This shady guy “fell down the stairs.”

Another incident happened at another bar I used to work. Some drugged-up maniac went crazy attacking a few guests. So a few calls were made to ensure he wouldn’t ever come back. I can only imagine what that means.

And these cases are not exceptions.

If you become victim of any kind of injustice, it is not so difficult to find the culprit as Reykjavík (and anywhere else in Iceland) is a rather small and tight-knit community.

Somebody is harassing you, you call somebody to teach the thug a lesson. Somebody owes you money or stole your car? No matter if you need a debt paid or just revenge, all you need to do is make that call.

In public this vigilante practice is of course not accepted, but behind closed doors some people seek this form of extrajudicial punishment.

I argued about this with some Icelandic friends of mine as I am still shocked and appalled by this frontier justice every time I come across it. To me, taking the law into one’s own hands is just inappropriate, a relic of the Wild West, and I don’t find it acceptable for an advanced Western country like Iceland in the 21st century.

One should leave punishment up to the legal authorities.

My friends disagreed with me because the authorities never take the appropriate measures, according to them. “The police don’t do anything. They won’t help you” is an argument I’ve heard very often in the almost seven years that I’ve lived here.

It seems that many Icelanders don’t have any trust in their police or the legal system and therefore just “solve” their issues among themselves.

Granted, from my personal experience I can say that I do not have much faith in the Icelandic police either as they seem to be infuriatingly passive when it matters.

And talking about insufficient punishment—a few court decisions of late have caused public outcry such as the more than pathetic verdict by the Supreme Court in a case of sexual assault. Reading this article by Iceland Review guest contributor Herdís Helga Schopka shows perfectly why people feel let down by the legal system and why they feel like they need to take matters into their own hands.

I can really understand the wish for revenge (as petty as it may be) and the need for real justice.

But hiring a bunch of thugs to physically hurt somebody else cannot be the answer. I mean, this is Iceland (Iceland, the world’s most peaceful country with a very low crime rate) in 2013, for crying out loud, not some mafia infested, gun-slinging place.

I guess those vigilante methods are an inheritance of the Icelandic Viking ancestors.

Does the end justify the means?

By Katharina Hauptmann. This article first appeared in Icelandic Review here (htp: Nourishing Obscurity).

Reproduced with the kind permission of the author. All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy.