 |
||
Telephone: 07725 735255 |
||
Note: Some platforms warn you about “active content” that could access your computer. If you don’t trust me not to give your computer a virus, you can browse this website without allowing the active content. The only difference is that the buttons below would not be highlighted when the cursor moves over them.
Details of my recent economic analysis, including my prediction that Barclays Bank will go bankrupt, are provided later on this page, after material I wrote a while ago about carpet-bagging (that caused the conversion of building societies into banks) and my plans to democratise the Nationwide Building Society.
Carpet-bagging took place by putting token amounts of money in many building society accounts, and voting for them to be converted into banks (run in the interests of shareholders rather than investors and borrowers) and receiving much larger sums of money than those ‘invested’ as ‘compensation’. My former best friend Julian Beard and another friend (who has asked me to use a pseudonym so I refer to as Fraser James) took part in this and indulged in similar carpet-bagging with insurance companies later.
The Nationwide is by far the largest of the few building societies left, due to it protecting itself by making new investors signing a pledge to donate the compensation to charity if it converted to a bank.
I had had my savings and current account (FlexAccount) with the Nationwide since the Midland Bank tried to charge me large fees early in my student life. When I was investigating getting a new mortgage, for my new flat in the Fallowfield area of Manchester, I was tempted by Richard Branson’s ‘Virgin One’ account which combined a mortgage with savings in the same account, avoiding losing out by receiving a lower rate of interest for savings than that paid to borrow money.
Despite the fact that the Nationwide offered no comparable scheme at the time, and the fact that I had a large amount of savings which I didn’t want to commit to reducing the amount of my mortgage, a mortgage advisor who I consulted in Didsbury advised me to get a Nationwide mortgage (supposedly on the basis that having a single account makes it hard to manage your money well). I soon realised the importance of his advice – if I trusted Branson’s firm with my savings, they may steal most of it and falsify their accounts so that I had no way of proving what they had done.
A couple of years or so after getting a Nationwide mortgage, I received a phone call from somebody from the building society, who informed me that I was now able to offset my savings against my mortgage. I then had to inform them in writing when I wanted to transfer such money, wait for a cheque to arrive in the post, and then deposit the cheque in my current account. It later got extremely straightforward, enabling people to do it all over the phone. Finally, a better compromise was achieved whereby you need to fill in and sign a form but don’t need to bother with a cheque – presumably the simple option was recognised to be too open to fraud.
However, the Nationwide is far from perfect; they should be able to offer better rates than the banks but don’t seriously publicise the fact if they do so – I don’t think I have seen a single advertisement on TV promoting such rates ever since the other building societies converted into banks! Some individuals standing for the Board complain about such things in the annual elections (for which only some Board members have to face re-election) but without an organised campaign, any real change is extremely unlikely.
Campaign for Democracy in the UK, so it seems a good idea for me to set up a similar campaign for the Nationwide. I therefore created a ‘nationwide-democracy’ discussion group, and will set up a website at some point in the near future, calling for the building society to be is run democratically by workers, investors and borrowers. We could then start standing slates of candidates for the Board.The HSBC (formerly the Midland Bank) recently announced huge profits as well as a pay freeze for its workers. HSBC workers went on strike on the same day as its shareholders’ AGM. I handed out a Campaign for Nationwide Democracy leaflet on the day of the strike, supporting it and putting forward demands to democratise the Nationwide, which would also suggest how a socialist building society/bank should be organised. [Unfortunately I missed a demonstration outside the Barbican in London where the AGM took place, due to being given false train information, but I leafleted an HSBC branch and outside their Canary Wharf headquarters.] You can read the contents of the leaflet on the
‘nationwide-democracy’ discussion group.Since making steps to initiate this campaign, I have realised that there is a Building Societies Members Association, and realised that it would be better to mobilise alongside or as part of that organisation than go alone. This is one of many projects that I have worked on and plan to continue with, but it is on the back burner for the time being...
My economic analysis and prediction that Barclays Bank will go bankrupt
In early November 2007, I wrote and distributed two documents analysing the problems in the world’s stock markets, caused by “subprime” mortgages sold to people with poor credit records, explaining how left-wing activists can take advantage and perhaps bring the date forward of the financial meltdown that I think is inevitable – to change the world in a positive direction, avoiding the drift towards more authoritarian societies.
The first document, Financial meltdown soon – prepare for revolution, analysed the British economy and the role of different political parties, concentrating on the issue of forcing rich people to pay tax and making proposals about the sort of parties we need.
I discovered that a meltdown of banking shares was already underway after writing the first document, and distributing it widely via the internet undoubtedly exacerbated the situation. Soon after distributing the first document, I discovered that Barclays Bank received two emergency loans from the Bank of England, in the summer before the run on the Northern Rock bank. Taking other information I knew about Barclays into account as well as the effect me publicising the situation would have, I predicted that it would collapse. The second document, Barclays Bank will go bankrupt!, warned people about Barclays’ problems, predicting an international run on that bank, with queues of people outside branches around the world trying to withdraw savings before it goes bust. The latter document also provided information about other banks that may be in difficulty.
On two occasions when I put messages about Barclays on the internet, its share price fell by about 10%, which is quite remarkable for a bank with assets and liabilities of around $1.8 trillion! Its profit in 2006 was about £7 billion, which sounds a lot but is actually just 0.8% of its assets. I misread the assets and liabilities figures, thinking it was pounds not dollars, which I thought meant that it has a global profit margin lower than that of Northern Rock, but it is actually a bit higher.
I also belatedly discovered information on the internet that the emergency loans to Barclays were using just an overnight facility at the Bank of England, and presumably were paid back the next day, rather than the longer term “lender of last resort” facility used for Northern Rock. I was not the only commentator to confuse the two facilities; a fair number of the newspaper articles I came across on the internet commenting on the loans did likewise.
A strange thing happened after confessing my errors on the internet and suggesting that Barclays would only collapse as part of a financial meltdown – its shares have fallen even further! There has no been a sudden dramatic collapse in Barclays shares, but they have been in a steady freefall and fell to their lowest point for ten years. I have also noticed that my Barclays Bank will go bankrupt! document has once again been one of the most accessed pages on my website, presumably as a consequence of the real problems that bank is now in.
An article by Jon Mainwaring in the business section of the Independent on Sunday on the 20th of January 2008 contains the following paragraph:
Last week saw the governments of Japan, Kuwait, Singapore and South Korea provide $21bn (£11bn) in cash lifelines to the sub-prime debt-ridden investment banks Citigroup and Merrill Lynch. In the UK, where the financial industry forms a core part of the overall economy, Barclays has been able to attract funding from China Development Bank and Singapore’s Temasek Holdings.
Articles have appeared in newspapers suggesting that Citi and Merrill Lynch would have gone bankrupt if they hadn’t been bailed out by sovereign wealth funds (in the Far East and Middle East). If it is true for them, it is probably true for Barclays too! The singling out of Barclays in this article suggests that it is in a bigger mess than any other UK-based bank (with the obvious exception of Northern Rock).
So what is the obvious conclusion? There is already an international run on Barclays, amongst depositors as well as shareholders, that I have helped trigger. Even if the bank was not in particularly dire straits in the summer of 2007, when it received the emergency loans from the Bank of England, it is now. The rational conclusion for remaining depositors and investors is for them to get their money out as soon as possible. A chain reaction leading to the collapse of Barclays could now be inevitable!
Central banks and governments in the West have been desperately intervening in recent months to try to avert disasters such as a major bank going bankrupt. Barclays would not have resorted to funding from the Far East if these measures had been sufficient. Are representatives of unethical capitalism around the world putting off its inevitable collapse?
However, there is a catch! Not all players in stock markets are completely driven by financial considerations, simply trying to maximise profits. The sudden intervention by the sovereign wealth funds has alarmed some commentators on the basis that they are partly driven by political motives rather than just economic considerations. I would argue that that was always the case for many investors, but foreign dictatorships affecting the markets is understandably alarming. I cannot rule out the possibility of Barclays being kept afloat by such funds against their financial interests due to the political repercussions of the collapse of a bank with such an unethical reputation (particularly their role propping up the apartheid regime in South Africa) and they may even take into account my role in forecasting that it will go bankrupt (with the boost that my prediction coming true would have for revolutionary socialism).
The £3.7 billion lost by the French bank Societé Générale (SocGen) as a result of gambling by the rogue trader Jérôme Kerviel has highlighted the role that the free will of individuals can play in affecting stock markets and economic prospects generally, with much speculation that it influenced the 0.75% cut in interest rates by the US Federal Reserve. Although I am not a trader, I seem to have affected Barclays share prices significantly with my interventions on the internet, and additionally two large crashes of the entire US and UK stock markets in 2007 (on the 26th of July and the 10th of August) coincided with important events in my life. Those controlling the sovereign wealth funds generally have bad (unethical) motives, and I have now launched a
Good Intentions Network to unite ethical people around the world in the struggle for a better society; some of our actions will impact on stock markets in unpredictable ways.Economists, of both capitalist and Marxist varieties, are incapable of accurately predicting what will happen to our economies because their models cannot take political considerations and the free will of individuals into account. The cosy consensus that there will just be a slowdown in growth in the UK in 2008, or perhaps a recession but not a very severe one, is just guesswork. As well as the subprime fiasco, the huge amount of borrowing by Western governments – that will be over £40 billion in the UK in the 2007/8 financial year, excluding the financing of Northern Rock and PFI/PPP commitments – in a time of boom, when there is normally a surplus to pay off national debts, would suggest a massive financial crisis is on the cards. I suggest that the collapse of a major bank could cause a massive stock market panic leading to a financial meltdown that could only be stopped by closing the world’s stock markets!
The announcement of £7 billion profits appeared to show that Barclays had whethered the storm, but its shares have fallen again since the announcement so investors clearly don’t believe the figures (and HSBC have announced £17 billion losses due to the credit crunch).
Food prices are rising rapidly, particularly for the staple diets relied on in poor countries. They soared 40% from June 2007 to February 2008, and then a further 20% in just three weeks, according to the World Food Programme (WFP), the United Nations agency responsible for distributing aid donated by governments around the world, which is demanding extra money from governments to avoid rationing aid. This has triggered demonstrations and riots in many contries, and a strike wave in China. The New Labour government in the UK is trying to restrict public sector pay rises to about 2% (the supposed level of inflation though real inflation is much higher), and is trying to get three year pay deals since it knows inflation is rising rapidly, and it will be necessary for workers here and in other Western countries to maintain living standards. Banks and building societies are increasing interest rates to borrowers so we pay for their crisis and to discourage us from paying more. In the USA, most mortgages are fixed rate for their entire term, so big rises in inflation will cause a massive crisis for banks, and the problem is far worse than just with “subprime” mortgages sold to people with poor credit records. Read my document The food crisis and financial meltdown, an edited version of which was published on the letters page of The Herald (one of the two Scottish broadsheet newspapers), for my analysis of these crises and suggestions of what can be done about them (such as strike action before or at the time of the next G8 summit).
For discussion of the economic crisis, including further analysis from me and important newspaper articles, visit the Economics bulletin board on my Revolutionary Platform Network forum.
