As the Credit Crunch grinds on various organisations and individuals worldwide are expressing their outrage with bankers and financiers by targeting them for direct action. I suppose that I should condemn such actions but I can hardly express surprise. We have tolerated these 21st century robber barons for far too long yet, even as the whole financial system struggles for survival, it seems that the highly paid gamblers will insist on hanging on to every last penny of their remuneration packages and bonus payments. It is a fantasy to think that they will - with but a few exceptions - give up their bonuses voluntarily. Ordinary citizens whose money is being used to bail out the banks are mad as hell and they become even madder when they see huge chunks of their money being used to pay out bonuses to senior managers and traders at these bankrupt banks and insurers. With millions losing their jobs and homes no one can be surprised that there are those who will express their objections and their frustrations via physical attacks on the people concerned or on their property.
In expressing concern at the recent attack and vandalising of Fred Goodwin's house and car, most newspapers said that Fred Goodwin was only taking money paid to him under his contract and as a man who had paid his taxes he was entitled to be fully protected. I will agree that he should be "fully protected." But, what is "fully protected"? The police responded very quickly to reports of the vandalising attack - probably far quicker than any ordinary citizen could have expected. And did Sir Fred Goodwin pay all his taxes? He may well have done, but if he did, he would have been one of the few highly paid individuals who did. It has been revealed more than once that the very rich only pay tax voluntarily. I regard those who earn more than $500,000 per annum in pay and bonuses as probably among the very rich. They may not be billionaires but they earn enough to make tax evasion and avoidance an important part of their personal financial management. We can take it that money will be paid via various off-shore trusts and tax havens and via complex deals that exist for no other purpose than to avoid taxation. Indeed, more than one organisation has been chased by HM Customs & Revenue trying to collect the true taxes of the very rich. It is my impression, and I can say no more than that, that they have only limited success.
It seems that RBS is losing senior traders from its commodities trading subsidiary because they are not ready to reign in their pay and bonuses and are moving to companies not controlled by government and where, presumably, they feel confident that they can carry on collecting buckets of money. This has got to stop. Apart from governments indulging in short-term bouts of money printing it is not possible for these traders or anyone else to make vast amounts of money from nothing. It either comes out of the pockets of ordinary people or it is created by a system of circulating debts and over-valued bonds round and round the system in the hope that they will somehow develop an inflated value all their own. They will not. The system will go crunch all over again.
Next week we have the G20 meeting in London. Gordon Brown is hoping it will give a flip to his popularity with the electorate. I think he will struggle to improve his electoral prospects with rioting in the streets. No doubt we will conjure up a vast police presence and we will see attempts to force protesters into cul-de-sacs away from the public eye. But, at the end of some days of turmoil, the delegates will probably agree on nothing and will come out with a platitudinous communique that says nothing of substance about anything. I hope that I am wrong but I have history on my side.
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