A letter to Douglas Carswell MP

Monday, 02 May 2011

Douglas Carswell MP
The House of Commons
London
SW1A 0AA


Dear Sir

Financial Services (Regulation of Deposits and Lending) Bill 2010-11

Congratulations on your speech introducing the above Bill, which I have just seen on YouTube. May I offer some counter-arguments so that you can rebut them when others raise them?

• Were your Bill to become law, the banks might simply offer no interest on “storage bank accounts” and a sufficient differential on “investment accounts” to draw money away from the former, even from cautious savers (but still not enough in the latter case to match inflation). In fact something like this is already happening with people investing in stocks who shouldn’t.

• British business might be at a disadvantage if we have this rule but other countries don’t. Look what the US has already bought from us with “candyfloss money” – the old Cadbury Quakers must be spinning in their graves.

• Savings need to be safe in terms not only of the return of capital, but the return of its real value. NS&I Index-Linked Savings Certificates fitted that bill, and were withdrawn in 2010 for the first time in 35 years. This is an indication of the Government’s priorities, surely. But even when available, money had to be locked up in those Certificates for years. And when first introduced, they were only available to pensioners.

• If you really want sound money for the protection of ordinary savers, then we should have index-linked (and linked to a properly fair index of consumer price inflation), instant-access (or short-notice access) cash ISAs, so that deferred consumption is at least not penalised, if not positively rewarded.

Very best wishes to you and for your Bill,

Rolf Norfolk

INVESTMENT DISCLOSURE: None. Still in cash, and missing all those day-trading opportunities.
DISCLAIMER: 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.

Sir Fred Goodwin

Owing to a "super-injunction" still in force, I am unable to say any more than that Sir Fred Goodwin is a *anker and has been a prominent *anker for years.

In the news: Gerry Adams and Libya

In the Daily Mail, Petronella Wyatt recalls how, aged 12, she was threatened by the IRA on account of her father's journalism; she describes Gerry Adams' smile as reminding her of "the glint of coffin handles".

Elsewhere in the news: one of Colonel Gaddafi's sons (and three grandchildren) reportedly killed by a missile on account of Western interests' quarrel with his father. This is not authorised by UN Resolution 1973 and the assassination of political leaders is against inernational law; when the inevitable reaction occurs, the Libyan ambassador is ordered to leave the UK.

It is said that at the Battle of Waterloo, Napoleon rode momentarily within range of a British musket, but Wellington forbade the shot.

In praise of rotten boroughs

Democracy is inconvenient and there are moves to tidy it away, one of them being to reduce the number of MPs from 650 t0 585, with the following result (using size of electorate as at 1 December 2010):


Imagine that the constituency in which you live is a vast coach, and the MP your driver. What chance is there that you will go to the destination of your choice? Especially when the front rows are filled with lobbyists, Whips and others with much louder voices than yours.

Whereas in the General Election of 1831, 152 out of 406 MPs were chosen by fewer than 100 voters. Gatton (Surrey) and Old Sarum (Wiltshire) each had only 7 electors and each sent 2 members to the House of Commons. At least you'd have got a drink out of them once every few years.

AV means the driver might just hear a little chorus from the back, above the commercial and cliquey hubbub roaring just behind him.

Andrew Marr comes clean

About time. I touched on this in 2008 and discussed his inconsistency in 2009. Yes, our interest is prurient - "we know-what-you've-been dooo-ing" - but he suddenly refused to be paid in his own coin. Now he should be in a stronger position to deal with oblique threats from deranged Campbell types.

Why didn't Ian Hislop blow the gaffe before? For all his moral judginess, Hislop was reportedly chosen as a safe pair of hands by those who had got to the age where they needed Private Eye to be their pension fund. In his heyday, Ingrams would have gone for the story and blow the consequences. By the way, how many people were interviewed for the PE editorship when Ingrams stood down? Can't wait for an in-depth on that story.

Still, prudence is the better part of valour. The former editor of Spiked magazine met with a fatal accident in Cyprus shortly after an edition of his publication that included explosive allegations about a then Tory cabinet minister's private activities in a North African hotel.

Mind how you go.

Banks still under pressure?

The banks are supposed to get lending again, and simultaneously rebuild their cash reserves. But Bank of England statistics show that reserves are actually falling, instead.

Figures for last month show that year-on-year, notes and coins in circulation increased by nearly 4%, but reserves held in bank accounts dropped by over 11%.

I reproduce the BoE's table below (interesting that they present it in a bashful pale grey on white - the visual equivalent of the civil servant's polite, embarrassed cough?) - click to enlarge.

INVESTMENT DISCLOSURE: None. Still in cash, and missing all those day-trading opportunities.

DISCLAIMER: 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.

In a nutshell

You can get a headache thinking about inflation and deflation - but either way you stand to end up broke. Either you'll be rolling in worthless money or you won't have any money.

James Kunstler