Tag Archives: banks

Charade

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by Economics, politics • Tags: , , , , , , , ,

My apologies for yet another lacuna in what should be a regular stream of blog posts. Sick again (and this blog now more resembles a series of House than a series of West Wing!) although only flu this time. Which seems to be going around, I caught it on twitter, apparently.

Any way, while suffering from “just the flu”, wrapped in blanket, huddled on the lounge, sneezing and coughing, I watched some DVDs. One, for about the fifth or sixth time in my life, was of that ultimate comfort food movie “Charade”. I originally saw it as a new movie, just out (a staggering 49 years ago. It was made fifty years ago, a fact, like so many fifty-year anniversaries including the Beatles, Rolling Stones and Beach Boys, and my starting university, I find impossible to believe. Why it was only yesterday … But yesterday’s gone, back to the story). It starred of course, Cary Grant and Audrey Hepburn, and some lesser lights, a marvellous pairing. After a silly beginning (I mean, who is going to believe that the husband has really left Hepburn for another woman? Yeah, right) it turns into this terrific kind of murder-crime-mystery-game, where the murder and crime are just kinda cartoony and incidental. Both the hero and villain (yes, ok, Walter Matthau is in the movie too. And George Kennedy. And a young James Coburn) change identities, in opposite directions, as the movie progresses. Grant has 5 different identities, if I didn’t lose count, each one perfectly believable, and the transitions logically explained. Even the glittering prize, the stolen money, is hidden in a quite different identity (no, I won’t spoil it for you if you haven’t seen it). And the wonderful, insanely addictive theme (yes, Mancini of course), also suggests shape-shifting identity in the way that a piece by Bach does. So there you are, if you haven’t seen it, get hold of it, do. Oh, it has the odd clumsy moment that reminds you it was indeed made half a century (gulp) ago, but just drift along in the stream with it and you will be rewarded.

Apart from taking my mind off the viruses, identity changed since the last flu outbreak my immune system adjusted to by the inexorable force of evolution, seeing Charade again made me think of modern politics. Once upon a time, says Old Man Watermelon (just keeps rollin’ along), you knew where you were with politicians, what you saw was what you got. Think of the presidents from Roosevelt right up to and including Bush 1. Agree or disagree with them, allow for their secret activities (especially Nixon of course), but you knew what they were. Take Eisenhower’s mask off and underneath he was Eisenhower. Ditto the others. Same with British and Australian politicians up to about the same time.

But starting with Blair and Clinton we saw the new “Third Way” (Blair) or triangulation. Billed as seeking an intermediate path between left and right extremes, this approach led to even more identity changing than Cary Grant. Both Blair and Clinton tried to be all things to all people, shifting identity depending on the audience, and consequently were nothing to anybody. GW Bush was both a compassionate conservative and a gung ho warrior, Obama was an agent of progressive change and a saviour of the big banks (as are they all, secretly, hiding that identity). In Australia first Rudd and then Gillard followed the same recipe. In Britain Cameron and Clegg seemed to morph into each other, separated only by tie colour, as they sold the most conservative government since Thatcher as being soft and caring. In the current US election year Romney went all the way to the Tea Party and beyond in portraying himself as the worst right wing bastard in the Republican Party (against stiff competition) while pretending he had never been a relatively progressive governor of Massachusetts, and now, having won the nomination, is sliding back again. Obama, one day launching predator drones to kill mostly innocent poor people, the next is talking health care to save other innocent poor people. In Russia, spared by the Russian equivalent of Diebold from having to do much to win elections, Putin and Medvedev don’t bother changing personalities, but actually change personnel as they waltz through the decades taking it in turns at top and second top jobs. At least this is an honest version of what happens elsewhere.

The US, Russia, UK and Australia, just like China and North Korea are not going to change much as President Tweedledums and Prime Minister Tweedledees revolve through the top jobs. But in Europe at least the chance of change, the chance of choice, seems to be at least partly active in the Mediterranean fringe of democracy. The removal of Berlusconi and Sarkozy from their respective countries seems to have had some impact in changing the identities of those countries. Greece recently had an opportunity to make a change but squibbed at the last minute and finished back at the place where they had begun. The danger for all those countries in financial trouble is that they have become places in which there is government of the banks, by the banks and for the banks. In fact it would be easier if the “financial markets” simply allocated banker technocrat leaders to each country. I guess they have been doing that for years anyway.

Hiding it under multiple disguises like the characters in Charade. Hiding the money trail as cleverly as the ex-husband hid the loot. But, in the end the bankers are revealed as the ones in charge in every country these days.

And democracy is the charade.

Counting out his money

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by Economics, Media, politics • Tags: , , , , , , , , , , , , ,

What slogan is above the door of the free marketeer’s think tanks? No, it’s not “Abandon hope all ye who enter here”, you naughty people. It’s “Government small enough to drown in a bathtub”.

These people believe that “government” should leave banks and financial institutions alone, get rid of regulation, has no business in business, as it were, should “get out of the way” of private enterprise, and so on. Any suggestion that the “government” should do something about CEO salaries, risky investments, fees, interest rates, is met with the outrage usually reserved for apostates from a religion. And the outrage in turn is largely met with acquiescence by the media, themselves determined not to be regulated in any way. Faced with the unanimity of “think tanks”, media, and of course the financial institutions themselves, politicians from both “sides” have quickly jumped in to say “oh my goodness gracious me heavens to betsy why no of COURSE we wouldn’t want to regulate banks etc. Reckon we are socialists or something?”

So let’s think about this for a moment. Twenty two million Australians elect several hundred people from among their number to represent their interests. Each one has gained the confidence of tens of thousands (in the case of Senators hundreds of thousands) of people. And yet, these people, combining to form a “government”, are told, by a handful of people with a bizarre ideology, that they must not attempt to have any control over the organisations that not only serve the financial needs of the 22 million, but through their activities fundamentally control the economy of the nation.

That is forget the word “government” as used pejoratively by this little band of reverse Sherwood Foresters, instead say to yourself – these financial bodies are supposed to have no oversight by we, the people of Australia? Really? How did that come to be a thing?

Well it came to be a thing because the banks and the think tanks kept saying it, and a lie repeated often enough becomes the truth for all practical purposes these days.

Look, money isn’t a get out of jail free card. Oh, sorry, yes it is of course. Let’s start again.

Just because your major activity, your role in society, involves money, doesn’t mean you can do what you like. I mean, banks aren’t churches, are they?

In almost all other major kinds of activities in our society we, as a people, through our government, decide how we want those things to work. If you are in medicine, teaching, building roads, serving food, police, flying planes, and all the rest, you work within structures, within limits, for the good of society.

Once upon a time only the church was, as they say, a law unto itself. the reason was obvious, they had you over a barrel, in an explicit, and exquisite form of blackmail – try to rein us in and we will damn your soul to eternal hell, no white robes, harps, bunches of grapes or virgins for you. So they were left alone and for centuries did very nicely thank you. Still do pretty nicely actually with tax exemptions, and ability to make their own laws, and avoidance of laws on discrimination, and largely a freedom from discrimination. Nice work if you can get it and they got it.

And then a second group achieved a similar status floating above and beyond ordinary mortals – the media. Achieved in the same way – hey, try to control us, even look sideways at us, and we will hack our phone, have you on the front page of a fish and chip wrapper; or running the perp walk between serried ranks of cameras and blonds with microphones as weapons, outside your own front door every morning. Wouldn’t like that would you mr politician, we know where you live, and we know where your children go to school, oh, and we have a copy of that ill-advised video you and your wife made on holiday in Bali. Any questions? Right then, piss off and leave us alone.

And now the third of this unholy triumvirate. The blackmailing style the same, the weapons slightly different. Not being poked by imps with red hot pokers for eternity, or junior reporters with red hot microphones, but worse, much worse, blackmailed by the guys, and gals, with the keys to the treasure chest. You want us to do what? Cut CEO salary from $20million to $19million, pass on interest rate savings to home buyers, lend more to small business, reduce fees on breathing while in bank, stop playing risky games with dodgy financial brothers? Right, we’re out of here, got a place to go to in Panama, Liberia, Burma, Zimbabwe, no nonsense about regulation there, few dollars to the country’s president and you can do what you like. See ya.

No wonder solidarity from the media, playing similar games. No wonder support from libertarians who mistake a license to print money for a statement about human freedom. No wonder that other industries, seeing the way these groups have got away with murder as effectively as Al Capone, are adopting the same tactics. MIners, clubs, supermarkets, manufacturers have all been at it, when faced with royalty payments, or regulation of problem gamblers, or food labelling.

So time we the people told our representatives we want the bluff called. Want banks behaving responsibly before we count to ten. Nine, ten, knockout. And the blackmail? To hell with it. Do you really think a rich country with 22 million people can’t develop new community banks if the others pick up their notes and coins and go home? Some genuine competition from groups prepared to work with community for a modest return rather than against it for greed would quickly emerge. Competition, you see, remember that quaint concept? Bit old-fashioned, but then I’m just an old fashioned guy with an old-fashioned idea about millionaires.

And with that victory under the belt the government could then tackle the media, and then, gulp, the church. Let’s move from the 14th to the 21st century in one giant leap. And put the fear of god into these other wannabe blackmailers while we are at it.

Oh, and that sound you hear? Tents being folded in the night as the freemarket think-tankers, no longer a job to do blocking regulation here and no money to be earned from doing so, head for Zimbabwe and freedom.

Bean there, done that

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by Economics • Tags: , , ,

The other day I was in a bank that brought back memories of my youth. There was old wood panelling everywhere, high ceilings, windows, and an old sign in painted lettering on a wood panel advising where the “savings accounts” were to be found. On the wall were pictures of a stud merino ram (reminder of the original basis of wealth on the sheep’s back) and of staff who had gone away to fight (and in half the cases not come back) in the “Great War”. Memories of good service in the relaxed and pleasant staff too.

Have you come across those spare tyres they now put in new cars? Well, when I say tyres they are things about half the width of normal tyres with instructions in big letters telling you not to drive over 80kph with it on and to drive no further than round the corner to get the real tyre fixed. Not terribly practical in the wide open spaces of Australia you’d think would be obvious, but it seems not. I can imagine the finance people in a car company saying -”What do you mean we provide 5 proper tyres with each car? That’s unnecessary. Give them four and a half instead and we can save $20 on each car and add it to our profits”.

When I discovered this new symbol of the modern age I was tempted to start yelling. Did start yelling. Not just at this particular mindless cost-cutting in itself, but as a symbol of all the other mindless cost-cutting. The food packaging that maintains the same size while providing only two thirds the volume of food. The cutting of front counter staff in just about every government agency and private business. The paying for services that used to be part of, well, the service (food, entertainment, baggage on planes – apparently actual seats to go soon). The call centres that redirect your call unerringly to someone who will have no idea of where you live or what you are talking about.

Once upon a time, says this grumpy old man, firms used to increase profits by improving services and quality of goods to attract more customers. Now they increase profits by cutting services and value in order to reduce costs. The customer has gone from being always right to being always dissatisfied. Or is that just me?

Look I know we probably can’t reinstate wood panelling everywhere, and the sheep’s back is no longer quite as roomy, but 100 years ago, before the first world war, cars came with a proper spare tyre, and every shop and agency knew the idea that service came with a smile and good value.

So come on finance people, if you are going to count beans put a few back into the jar instead of always taking more out. You will be amazed at how profitable it can be to have happy customers instead of grumpy columnists.

Funny money

by Economics • Tags: , , ,

The other day, responding to criticism of the banks and their enormous profits, the CEO of one of the Big Four lashed out – banks are doing a good job, he said, “performing well ” so why are they being criticised? “Australia should be proud of them,” he thought. Others have played the “misunderstood” card, suggesting that we just don’t know what a jungle it is out there in the world of finance, and the poor banks are struggling to make a crust in the face of rising price for money. Both responses suggest people totally out of touch with their fellow citizens, the 22 million or so that are not a CEO of one of the Big Four.

To take the second excuse first. I am a compassionate man, and if the CEOs of banks and their major shareholders are doing it tough then my tears will be copious and genuine. But there has been some debate about whether costs really have risen, I know, mean-spirited, but what can you do, it’s a cynical old world, so we do need a little more information from the CEOs. Once upon a time “Trust me I’m from a major bank and I’m here to help” would be enough to silence any critic, but not any more I’m afraid. So a few figures from the $16 million a year man at the helm – here are the costs incurred by the bank over, say, the last 5 years, and here are the bank profits over the same period. See, one goes up at the same rate, a billion here, a billion there, as the other comes down, and before you know where you are, bankruptcy looms. Say what? The bank profits have been rising every year reaching new records year after year? Really? So, tell me about those costs again.

And the other suggestion, that we should be proud of them for “doing well”, a little surge of Aussie patriotism as the CEO mansions get bigger and bigger? Just one tiny problem. Once banks provided a service. You wanted money looked after they put it in a big safe for you, and paid you for the privilege of having it there, because they could lend it out to other people doing productive things (building a house, running a business), and charge them a fee for the use of the money. Bit of a margin between the two rates to cover the costs of buying safes and paying staff to keep track of the money and to give the banks a healthy profit like any other business.

Not any more, now you get charged massive fees to have them look after your money, while they use it to play all sorts of clever unproductive financial games around the world. As a result their profits reach astronomical levels while their services decline. And the games they play with funny money make Monopoly look like serious finance. And when these games result in crashes, crises, people losing their homes and businesses, the banks ask for government support, because they are “too big to fail”, and then use it to push their profit levels, and executive salaries, ever higher.

That’s why the banks, once admired and trusted institutions, are hated, and no amount of phony flag waving or crocodile tears will change that. Going back to providing a service to the public for a reasonable profit might shift perceptions, but that doesn’t look likely.

And that’s not funny.