Gone are the days when the trade unions went into 10 or 11 Downing Street and had beer and sandwiches. In the 21st Century it's
coffee and sandwiches and the union bosses have been replaced by bankers.
What is worse is that these bankers and their banks are now, quite clearly, being controlled by the Government. The Bank of England reduces it base rate by 1.5% and, as many will know, some of the banks refuses to pass the rate cut on to their customers.
There is absolutely nothing wrong with that at a time when liquidity in the banking sector is weak, inter-bank lending is not healthy, and the banks have massive liabilities that they would like to reduce.
However, now they have been leaned on by the Chancellor with blackmail threats of reducing their guarantees and no more help until they pass on the BoE cut to customers. Now please, someone tell me, how is that the supposed "arms length" approach and not an attack on the "commercial autonomy" of a bank which the Government said it would not do?
Now some might say that because the taxpayer has a stake in these banks it is within it's rights to demand change in rates etc. However, given the financial state of some of these institutions, cutting rates means cutting the return of monies they have already lent, or the money they are about to lend.
The obvious endgame for the banks therefore is to make it even harder to lend to new customer and up their requirements on the drastically cut rates. Obviously the Chancellor's approach is based on the belief that cheaper rates means more people will be able to afford to take out mortgages and will stimulate activity.
However, the banks initially refused to cut their rates, and did the whole withdrawal of mortgage and reintroduction the next day not to fill their pockets but to keep themselves stable and ensure that their business didn't go the way it had been going for the last few years.
Then along comes an interfering politician who essentially orders them to change their policy and reduce rates after there was "outcry" reflected in every paper across the political spectrum that painted the banks initial decisions as all about "fat cats".
According to the
Times it is understood that the Chancellor "told the banks that they had mishandled their reaction" to the rate cut. Wrong. It is the Chancellor, egged on by the media, that has misunderstood their reaction to the rate cut, and this has now led to them being forced into reducing their rates at a time when many of them would rather not.
I'll eat my hat if the success rate of mortgage applications does not now stay static as the banks raise the bar for lending to people at the lower rate. Lower rates in a stable market will work, lower rates in a market where every bank is edgy and concerned they may be on the brink of collapse will just make them ever more cautious.
Meanwhile, according to the
Daily Mail, "[t]he move will be cheered by more than a million homeowners whose monthly bills will drop by around £135 on an average £150,000 loan". Err hang on a second, lets look at this claim, for a start, anyone already on a so-called tracker would have benefited anyway.
The banks were not refusing to pass on the rate cut to those who already had a mortgage with them that tracked the BoE base rate. Anyone on fixed mortgage would not benefit either (which is what I am on until 2011 and it's way above the base rate but I made that choice two years ago because I had a feeling instability was on it's way).
It is only those who are on variable rates
10% of all mortgages that this has an impact on and frankly, if you have a variable rate then what exactly do you expect? You signed a mortgage agreement that put you at the will and whim of the bank not the Government.
Some might say that I'm being harsh and unfair, but it's worth pointing out that my repayments aren't moving at all and are significantly higher than they ought to be if I was on a tracker mortgage. I;m not complaining though, and quite rightly so, I took out a fixed rate for five years, that was my decision. Likewise if you have a variable rate mortgage that's your own fault.
Likewise, if you're on a tracker mortgage with a so-called "collar clause" which means if the bBoE base rate goes below a certain level you won't see the cut passed on in your repayments, then tough, you signed a contract. Live with it.
If Government wants and must "get involved" then perhaps, instead of interfering with banks commercial decisions, how about cutting tax. The same was true in petrol prices, the Government could slash the price of petrol if it really wanted to help. Instead of borrowing, cut income tax and people will have more of their own money in the first place.
Interesting, the toryparty.net website that I posted about yesterday - which saw former Downing Street Aide, Adrian McMenamin say there was no secret and that advertising for the site had been removed because of "spammers" hacking him - has been taken down and repointed to transpero.net.
Apparently, the list of people who will have access to this database is growing ever larger, now anyone who works within the Police force will be able to search it, from officers down to civilian duty officers.
I can reveal that this site has indeed been set-up by someone heavily linked with Derek Draper. Adrian McMenamin, a former Downing Street advisor and the man that headed up Labour's rapid rebuttal Excalibur system prior to 1997 appears to be behind the site. What's more, his attempts to hide it were not quite good enough.
Nice try, but they got caught out. I do wonder if those bloggers on the Left who are obsessed and outraged by fake anonymous sites will pass comment on this. Here's the bottom line though, it has been well reported that Derek Draper is heading up some kind of online rebuttal strategy for Brown.
There is a rather large section called Agenda too which I'm sure many will be pouring over to see what actualy direction the "Yes We Can" man will be going in.
