In Brexit Britain, being a foreigner marks me out as evil

Joris Luyendijk in The Guardian

I realised it only after having done it. On Tuesday I was watching my kids playing with other children in a London park. I was about to call out to them when I intuitively caught myself. Having lived here for most of their life, my children speak flawless English. I, however, have a clear Dutch accent. Yelling to them would suddenly single them out as foreigners to the other children. Only six months ago none of this would have occurred to me. Now I find myself lowering my voice.

Something is rotting in England and the Brexit referendum result seems to have given the rot a boost of oxygen. The problem is not that a majority of English people or their government are racist or xenophobic; they are not. The problem is that those English people who are racist seem to think they have won the Brexit referendum and that now is open season. The government is doing precious little to counter this impression, while the powerful tabloids are feeding it, day in day out.

Yesterday’s Daily Mail splash was a new low. Featuring nine small photos of lorry drivers on their phones, the tabloid claims to have caught “17 foreign truckers using their phones at 50mph”. The key word here of course is “foreign”, establishing an unconscious link in people’s minds between “foreign” and evil. The Daily Mail has been at this for a long time, with my personal “favourite” its front page about “EU killers and rapists we’ve failed to deport”.

Recent research suggests that humans are predisposed to “learn” negative stereotypes. Our brains are more likely to remember negative information than positive information, especially about groups of whom we already hold negative views. Such a harmful cognitive feedback loop would call for extra caution when reporting, making sure ethnicity or religion is included only when relevant to the story. “Foreign lorry drivers using their phones while driving” does not pass that test, unless you believe English drivers never use their phones on the road.

LSE foreign academics told they will not be asked to advise UK on Brexit



“Foreigner”. When I came to live here five years ago that word felt so different from how it does today. Britain was the country that would give the governorship of the Bank of England to a Canadian – try to imagine Germany making a non-German head of the Bundesbank. London’s financial sector, where I had come to do research, was teeming with European immigrants telling me that it was in the City that for the first time ever they no longer felt like a foreigner. “It’s like they don’t see my skin colour,” a French-Algerian, Turkish-German or Surinamese-Dutch banker would say with genuine emotion. “It’s all about what you can do here, not how you look or where you are from.”

Fast forward a few years and a woman of Polish origin goes on BBC Question Time to say she no longer feels welcome in Britain. The audience boos her, proving her point better than she ever could. This is now a country where a minister calls for firms to publish lists with the “foreign” workers they employ, and where another government ministry tells the London School of Economics to no longer put forward any of its “foreign” academics for consultancy work on Brexit. Those two statements were rescinded, but the same is not true of another, made by a minister who described UK-based EU nationals such as me as among Britain’s most valuable bargaining chips in Brussels.

Meanwhile, the Daily Express and the Daily Mail seem to compete for the most outrageous incitement against migrants, refugees, “foreigners”. Indeed, in some quarters of England today, calling somebody “foreign” is enough to win the argument. The European court of justice? The European court of human rights? Well, they are staffed by foreign judges, so case closed.

Liam Fox: EU nationals in UK one of 'main cards' in Brexit negotiations



It is strange how these things get under your skin, when you realise that for millions of tabloid readers you are a “foreigner” rather than a fellow European. It suddenly feels significant that in the English language “foreigner” and “alien” are synonyms. When I have to fill out a form for the NHS, having to choose between “British white” and “Any other white” no longer looks so innocent; the same with schools having to report their pupils’ racial and ethnic backgrounds.

When I now see somebody reading the Daily Mail I can’t help thinking: why would you pay money to read invented horror stories about people like me? I am a supremely privileged middle-class Dutchman who can always return to his homeland – an even more prosperous place than England. But what must it be like for a 13-year-old UK-born girl of Kosovan descent growing up in Sunderland?

Usually a piece like this concludes with a sanctimonious warning of what history tells us xenophobic incitement ultimately leads to. But we are well past that. Jo Cox is dead. Hate crime figures have soared. Some people simply seem to have taken the Daily Mail at its word: our country is flooded by evil foreigners. The politicians are in cahoots with them. Who will speak for England?

Low interest rates revived the economy, but now we're all suffering for it

A 35-year-old needs to invest £125,000 to earn a pension of £35,000 when the interest rate is 5 per cent. If it's 2 per cent, they'll need to save £400,000.

Andreas Whittam Smith in The Independent

I could hardly believe that a politician would blame low interest rates for the success of a far right political party. Least of all that it would be the eminently sensible Wolfgang Schäuble, Germany’s minister of finance, who has held office since 2009. Yet earlier this month he publically blamed the cheap money policy of the European Central Bank (ECB) for contributing to the rise of the country's right-wing anti-immigration party, Alternative for Germany (AfD).

“I told Mario Draghi (president of the ECB),” said Mr. Schäuble, “be very proud: you can attribute 50 per cent of the results of a party that seems to be new and successful in Germany to the design of this policy.”

Founded only in 2013, the AfD has recently gained representation in eight German state parliaments.

In explanation, the transport minister, Alexander Dobrindt, toldDie Welt newspaper: “The ECB is following a very risky course. The disappearance of interest rates creates a gaping hole in citizens’ old age preparations.”

There is the connection. The older generations, who often dislike immigration, have also found that a lifetime of careful saving has brought them little reward. No wonder they make their protest by voting for an anti-immigration party.

Note that Mr. Dobrindt referred to “the disappearance of interest rates”. That hasn’t yet happened here. But it is still a shock, however, to discover how meagre they are. Go into Barclays, for example, and you will find that the bank will give you 0.25 per cent per annum on sums of less than £25,000. So you place £20,000 for a year and you earn – £50 in interest.

At least this is a positive rate. But if you are a citizen of the Eurozone, or of Japan, or of Sweden, or of Switzerland or Denmark, a group of countries that account for one quarter of the world economy, the situation is even worse. There the banks are actually charging customers for the privilege of depositing money with them. In other words, interest rates are negative. You don’t get your £20,000 back, but a mere £19,950.

It isn’t only German politicians who are concerned about low or negative interest rates. This week Larry Fink, the chief executive of the investment managers Blackrock, which looks after more funds than any other firm, revealed his disquiet in an annual letter to shareholders.

Fink said that the adoption of negative interest rates was “particularly worrying”. He commented that investors were being forced to take on more risk in order to obtain higher returns. And this often meant that they had to sacrifice the certainty that they could find buyers when they wanted to sell their assets. Fink rightly calls this ‘a potentially dangerous combination for retirement savers’.

But what about people, for instance, in their thirties and saving up for retirement. Fink gives this chilling calculation. A 35-year-old looking to generate an income of £35,000 per year for a retirement beginning at age 65 would need to invest £125,000 today in a 5 per cent interest rate environment. In a 2 per cent interest rate environment, however, that individual would need to invest £400,000 (3.2 times as much) to achieve the same outcome when he or she stops working.


If the disadvantages of low interest rates are so daunting, what then are the supposed advantages? That is matter that will be debated at the IMF’s annual spring meetings this week in Washington.

Three officials have written a blog that seeks to balance the pros and cons. They “tentatively” conclude that, overall, negative interest rates help deliver additional monetary stimulus and easier financial conditions, which support demand and price stability. But, they add, “there are limits on how far and for how long negative policy rates can go.” I call that lukewarm support.

In fact, taking together the reservations expressed above and the analysis presented by the IMF paper, the drawbacks of low or negative interest rates fall into three groups.

First, savers may prefer physical cash to bank deposits, which is bad for economic activity. The IMF paper discusses using bank vaults or non-bank vaults for holding cash safely. Second, the policy may encourage excessive risk taking both by banks and by individuals. And third, as the IMF comments, if low or negative rates persist they could undermine the viability of life insurance, pensions and other savings vehicles.

The truth is that governments no longer have the means to revive economic activity. Gimmicks such as negative interest rates could easily do as much harm as good.

Crime, terrorism and tax evasion: why banks are waging war on cash

Paul Mason in The Guardian

Governments would love to see the end of banknotes. But what would a cashless society mean for freedom?

 

Will contactless payment help usher out cash? Photograph: Bloomberg/Bloomberg via Getty Images



I can remember the moment I realised the era of cash could soon be over.

It was Australia Day on Bondi Beach in 2014. In a busy liquor store, a man wearing only swimming shorts, carrying only a mobile phone and a plastic card, was delaying other people’s transactions while he moved 50 Australian dollars into his current account on his phone so that he could buy beer. The 30-odd youngsters in the queue behind him barely murmured; they’d all been in the same predicament. I doubt there was a banknote or coin between them.

The possibility of a cashless society has come at us with a rush: contactless payment is so new that the little ping the machine makes can still feel magical. But in some shops, especially those that cater for the young, a customer reaching for a banknote already produces an automatic frown.

Among central bankers, that frown has become a scowl. There is a “war on cash” in the offing – but it has nothing to do with boosting our ease of payment or saving trees.

Consider the central banks’ anti-crisis measures so far. The first was to slash interest rates close to zero. Then, since you can’t slash them below zero, the banks turned to printing money to stimulate demand. But with global growth depressed, and a massive overhanging debt, quantitative easing (QE) is running out of steam.

Enter the era of negative interest rates: thanks to the effect of QE, tens of billions held in government bonds already yield interest rates that are effectively below zero. Now, central banks such as Japan and Sweden have begun to impose negative official interest rates.

The effect, for banks or long-term savers, is that by putting your money in a safe place – such as the central bank or a government bond – you automatically lose some of it.

Not surprisingly, these measures have led to the growing popularity of cash for people with any substantial savings. Bank of England research shows demand for cash has grown faster than GDP in many countries. So the central banks face a further challenge: how to impose negative interest rates on cash itself.

Technologically, you can’t. If people hold their savings as physical currency, it keeps its value – and in a period of deflation the spending power of hoarded cash increases, even as share prices and the value of bank deposits fall. Cash, in a situation like this, is king.

But the banks are ahead of us. Last September, the Bank of England’s chief economist, Andy Haldane, openly pondered ways of imposing negative interest rates on cash – ie shrinking its value automatically. You could invalidate random banknotes, using their serial numbers. There are £63bn worth of notes in circulation in the UK: if you wanted to lop 1% off that, you could simply cancel half of all fivers without warning. A second solution would be to establish an exchange rate between paper money and the digital money in our bank accounts. A fiver deposited at the bank might buy you a £4.95 credit in your account.

More radical still would be to outlaw cash. In Norway, two major banks no longer issue cash from branch offices. Last month, the biggest bank, DNB, publicly called for the government to outlaw cash.

Why would a central bank want to eliminate cash? For the same reason as you want to flatten interest rates to zero: to force people to spend or invest their money in the risky activities that revive growth, rather than hoarding it in the safest place.

Calls for the eradication of cash have been bolstered by evidence that high-value notes play a major role in crime, terrorism and tax evasion.

In a study for the Harvard Business School last week, former bank boss Peter Sands called for global elimination of the high-value note. Britain’s “monkey” – the £50 – is low-value compared with its foreign-currency equivalents, and constitutes a small proportion of the cash in circulation. By contrast, Japan’s 10,000-yen note (worth roughly £60) makes up a startling 92% of all cash in circulation; the Swiss 1,000-franc note (worth around £700) likewise. Sands wants an end to these notes plus the $100 bill, and the €500 note – known in underworld circles as the “Bin Laden”.

The advantages of a digital-only payment system to the user are clear: you can emerge from the surf in only your bathing shorts and proceed to buy beer, food, or even a small car, providing your balance is positive. The advantages to banks are also clear. Not only can all transactions be charged a fee, but bank runs are eliminated. There can be no repeat of the queues outside Northern Rock, nor of the Greek fiasco last summer, because there will be no ATMs, only a computer spreadsheet moving digital money around. The advantages to governments are also clear: all transactions can be taxed. Capital controls are implicit within the system.

But there are drawbacks, even for governments that would like to take absolute control of money transactions. First, resilience. If a cyber-attack or computer malfunction took down a digital-only payment system, there would be no cash reserves in households and businesses to fall back on. The second is more fundamental and concerns freedom. In most countries, the ability to take your cash out of the bank and to spend it anonymously is associated with many pleasurable activities – not all of which are illegal but which exist on the margins of society. How tens of thousands of club-goers would pay for their drugs each Saturday night is a non-trivial issue.

Nevertheless, the arrival of negative interest rates for banks, together with new rules allowing governments to bail-in – ie confiscate – deposits above a protected minimum, are certain to increase savers’ awareness of the value of cash, and will prompt calls in earnest for its abolition.

If it happens, it would be the ultimate demonstration of the power of finance over people. As for resistance? Go ahead and try. It may be the Queen’s head on a £50 note but the “promise to pay” is made above the signature of a Bank of England bureaucrat.

Unlimited Liability for Speculative Bankers

Bankers must be made to bear the cost of their reckless risk-taking

Separating retail and investment banking is not enough. Speculative banking needs to have unlimited liability

• 
• • Prem Sikka
  • guardian.co.uk, Sunday 4 November 2012 13.10 GMT

Lehman Brothers employees leaving the Canary Wharf building in London, carrying their possessions in boxes, aftert the bank collapsed in 2008. Photograph: Graeme Robertson

 

Hot on the heels of the Libor scandal and money-laundering at HSBC and Standard Chartered Bank comes the allegation that Barclays Bank attempted to manipulate the US energy markets to make profits. Of course, Barclays has no direct interest in buying or selling oil, gas or electricity. Its aim is to make profits by betting on the price changes, a process that often drives up the price of the underlying commodity and forces ordinary people to pay sky-high prices.

This speculative activity is facilitated by complex financial instruments known as derivatives, described by investment guru Warren Buffett as "financial weapons of mass destruction". Behind the technical jargon lies a giant gambling machine, which bets on anything that can be priced. The hard cash needed to settle the outcome of the bets is always highly uncertain until the contracts mature, which could be 10 to 15 years in the future. And, like other bets, derivatives don't always pay off – as the cases of Nick Leeson at Barings and more recently Jérôme Kerviel at Société Générale exemplify.
The UK government claims that speculation will be curbed by a separation of investment banking from the retail side. This, it is claimed, will protect savers and taxpayers from the toxic effects of risky positions adopted by bankers. This policy will not work. Even after separation, investment banks will continue to use funds from retail banks, pension funds and insurance companies for their speculative activities. The speculators will continue to shelter behind limited liability and dump losses on to innocent bystanders. Unless the benefit of limited liability is removed from investment banks, their losses and reckless risks will inevitably be transferred to other sectors. The separation between retail and speculative operations needs to be accompanied by unlimited liability for investment banking, ensuring that those who take excessive risks are 100% liable for their mistakes.

Derivatives are central to the current economic crisis. In 2008, Lehman Brothers collapsed with 1.2 million derivatives contracts, which had a face value of nearly $39 trillion, though the economic exposure was considerably less. For nearly six years before its demise, almost all of the pre-tax profits at Bear Stearns came from speculative activities. It could not continue to pick winners indefinitely, and collapsed in 2008. It had shareholder funds of $11.8bn, debts of $384bn and a derivatives portfolio with a face value of $13.4 trillion. The derivatives gambles also brought down American International Group (AIG) – the world's largest insurer – and Washington Mutual. Then in October 2011, MF Global, a US brokerage firm that specialised in delivering trading and hedging solutions, filed for bankruptcy. It had nearly 3 million derivatives contracts with a notional value of more than $100bn.

Despite these high-profile casualties, risk-hungry investment bankers remain undeterred. The face value of the global derivatives trade is about $1,200 trillion (£749 trillion). With a global GDP of $65-70 trillion, the world economy is not in a position to absorb even 0.1% ($1.2 trillion) of losses.
The UK's GDP is about £1.5 trillion. Just three UK banks – Barclays, HSBC and Royal Bank of Scotland (RBS) – alone have a derivatives portfolio, with a face value totalling nearly £100 trillion. Barclays leads the way with £43 trillion. It has recently reported a third-quarter loss of £47 million, but its balance sheet points to a more serious position. Barclays' last full-year accounts show assets of £1.56 trillion and capital of only £65bn, meaning that its gross leverage is nearly 24 times its capital base. A decline of just 4% in asset values would wipe out its entire capital. Barclays' balance sheet shows gross exposure to derivatives of £539bn, though the bank could argue that this is offset by hedges of £528bn, leaving a net exposure of £11bn. The difficulty is that the hedges, as Lehman Brothers, Bear Stearns and Northern Rock have learnt, do not necessarily work in the desired way and always depend on the position of the counter parties in a highly unpredictable environment.

Merely separating retail and investment banking will neither choke off nor contain the effects of toxic gambles, because speculative activities will affect other sectors of the economy. For any possibility of containing the crisis, speculative banking needs to have unlimited liability. Thus, if the bets go bad, bankers will personally need to bear the negative consequences. One of the tasks of the banking regulator should be to ensure that the size of the bets bears a reasonable relationship to the assets of the gamblers, so that cavalier bankers are not able to gamble more than they can lose. No retail bank, pension fund, insurance company or pension fund should be able to provide money to any investment bank without specific approval from its stakeholders.

The above reforms will help to reduce speculative activity and quarantine the negative effects of reckless gambling. They will also remind neoliberals that the freedom to speculate needs to be accompanied by responsibilities.

' Nice Guys Finish Last'

I didn't get where I am today by being nice...

Richard Hall

Monday, 05 December 2011

It is a phrase that millions of good-natured people around the world will consider so obvious that it hardly deserves to be questioned. Nonetheless, a team of business experts claims to have proved the pessimistic notion that "nice guys finish last" – at least where money is concerned.

A study has found that a person's "agreeableness" has a negative effect on their earnings. "Niceness", according to the research published in the Journal of Personality and Social Psychology, does not appear to pay.
"This issue isn't really about whether people are nasty or nice," said Richard Newton, business author and consultant. "A better way of putting it might be a willingness to fight your corner."

While agreeable traits such as compliance, modesty and altruism may seem conducive to a good working atmosphere, the study found that managers are more likely to fast-track for promotion and pay rises "disagreeable" people – those more likely to "aggressively advocate for their position".

The study, by Beth A Livingston of Cornell University, Timothy A Judge of the University of Notre Dame and Charlice Hurst of the University of Western Ontario, interviewed 9,000 people who entered the labour force in the past decade about their career, and gave personality tests which were then measured against income data.

The findings are bad news for nice guys, but worse still for women of all temperaments. They show that, regardless of their levels of agreeableness, women earned nearly 14 per cent less than men. Agreeable men earned an average of $7,000 (£4,490) less than their disagreeable peers.

"Nice guys do not necessarily finish last, but they do finish a distant second in terms of earnings," the study noted. "Our research provides strong evidence that men earn a substantial premium for being disagreeable while the same behaviour has little effect on women's income." Reasons offered for the difference include a better success rate for disagreeable types when negotiating pay rises, suggesting stubbornness is a key for success.