Monday 9 May 2011

Sucking out money

We are facing a tough financial time. One of the trends which receives very little attention, because it is better to hide it, is the widespread sucking of money out of people, society and our lives. Just to play with the money in gambling style casino financial structures.

Let's look for examples.

Mortgages: the lending of huge amounts of money to people who cannot afford, in reality, to pay it back. They are trapped. We call it "getting on the property ladder" as though it was a good thing. but its not, its a trap. Banks lone you a bunch of money, in reality this means they own your house, you rent it for the cost of the loan. If you default they take the house. All looks good if the housing prices keep rising - boom - you think you are onto a good thing, some even think they are saving for old age, but when prices start falling you can owe the bank back much more than the house is now worth in the market. You are stuck. You take all the risk of this asset devaluing, but have no ownership of it. The bank still demands full payment back of the loan, but takes no hit due to the fall in its asset value. Its pure deception.

Credit cards: at huge APR rates anywhere up to 30%!!!, where people are offered cards with little or no regard as to whether they are able to manage the responsibility or sustain repayments. They are bombarded in every supermarket and high street store to sign up for a card, giving them inducements to spend money they don't have, and this is seen as 'good business'. Its pure immorality.

Pensions: no one doubts that pensions have collapsed and are increasingly becoming worth much less than expected when we stated paying for them. Government pensions, based on the possible flawed idea of pay now to meet today's liabilities, instead of building up resilient finds to offer inflation proof old age pensions, is just one example. Insurance companies make money, but some of that is because of inflation devaluing their eventual liabilities. They keep the money they gain, they don't share it back to the insured. Its pure greed.

And on we go with lots of financial so-called 'products' that we are sold. ISA's, leveraged buyouts, hedge funds, to a certain extent shares. All carefully designed to suck money out of our lives leaving us with the need to work, work, work just to stay with our heads above water, rather than for the pleasure and happiness work should offer. Its slavery.

Then there is the student fees issue. This is disgusting. We are burdening our children with debt even before they have any chance of starting out in life. Image you are a student, you get a good degree at a reasonable university, and it has cost you £25000 + living expenses. You have this debt. Now go to a building society or a bank and ask for a mortgage, "How much debt do you currently have?", they will ask and for sure they will take into account your loss of income due to the repayments you have to make. So you will have greater difficulty in getting loans, credit and mortgages. That's a noose round every students neck. It starts them off in life with debt. And it is wrong. It is, what is worse, our own elected government that is inflicting this debt on the children. This is wrong, economically and morally.

SO PERSONAL DEBT

The result is HUGE personal debt, probably much worse than the public debt we have - but then politicians can say, "that debt is up to you, you got yourself into it, you should have known what you were doing..." But its a trap, its sucking real value out of our lives, and needs urgent moral and legislative attention. People have to be educated, informed and plainly just protected and helped.

PFI: the government too is in the trap. Their use of the secretive PFI way of financing projects, which end up costing many times the actual cost due to repayments of interest or rent to the actual builders, is widespread. It is seen, or was seen by New Labour, as a way to both butter up to the financial markets and as a way to spread social services without first asking the fundamental question, can society afford this?

WHERE HAS OUR MONEY GONE?

Frankly the problem is simple: money has all got in the wrong hands. Hands that only see it as stuff to be 'invested' or 'gambled' to make more, mainly for themselves. Ordinary people are severely worse off, trapped in debt and heading for poverty.

But surely money is created by the state we all vote for. What is the Bank of England for if not to print, circulate and value our money so that it is a reasonable way to exchange goods and services. The very purpose of money is being undermined. Money, which started off as something rare like gold and trended to paper and later to electronic bits in machines, has been totally undermined.

Who let it get this far? How can we reverse the trend and get our real value money back?

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