Is the Big Society Bank a small-state bank?

"What we have learned is that the Big Society Bank will operate independently of government...
...As part of Project Merlin, it will receive around £200m of additional capital in the form of some kind of loan or investment from Royal Bank of Scotland, Barclays, HSBC and Lloyds. But apart from the fact that these banks expect to be rewarded for this money at commercial rates, it is not at all clear whether this finance will be in the form of some kind of subordinated debt or equity."

But let me guess, the loans taken from RBS, Barclay et al are underwritten by the taxpayer???

Why exactly is money being borrowed from the big banks, and how can it be justified to charge commercial rates of interest? Is there an actual honest belief that the BSB can make a return sufficient to maintain it's running costs, and pay the loan back (with interest)?

Bizarre.

Another much ado about nothing then. The sums involved are a drop in the ocean and apart from an intention to focus on the area of social enterprise it is difficult to see what this bank will add to the process other than its own overheads and probably a cadre of overpaid managers and executives. It is not even clear that it will not fall foul of the EU's competition ideology and no doubt it will cost a bob or two to persuade them of its case.

So this is one of the achievements of Merlin - that the big banks including those in reach of government control are willing to fund on commercial grounds i.e. a tiny flow of funds to support Cameron's Big Society fantasy!

When politicians get "Big Ideas" they should lie down in a darkened room until it passes. Remember John Major's 'Motorway Cone Hotline'....

I love the way they make a big thing out of banks being 'forced' to lend to charities at commercial rates.

Great! You don't even need to donate anymore. They can just gear themselves up. And if you do feel the need to give, you can die happy because you have supported those worthy institutions, the banks.

A public school education aint wat it used to be guvner.

Reinventing the wheel?

https://www.charitybank.org/

No Blog from NR on Cameron and the Big Society and posters waiting to comment and debate! What is going on?

RE: 'The government's new 66-page strategy document for its Big Society Bank and growing the so-called "social investment market", which has been published today, raises almost as many questions as it answers.'
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They haven't really thought this one out, have they? Making policy on the hoof is not a good idea. Making this sort of policy central to Government is not a good idea. A leader staking all on this policy - as Cameron is doing today - is not a good idea.

Dave, I think, just signed his resignation letter. When the going gets tough in one, two, three years time the party will be considering the 'back me or sack me' question and will choose the latter.

GO will really have to work some big miracles, starting next month, to save Dave.

Im pleased that, after an initial wobble, DC has re confirmed his personal commitment to the big society.

Because if ever there was a more idiotic idea (policy?) i've yet to see it. DC's future demise is a sure thing with this naked attempt to fill the gaps created by his idealogical cuts.

The first big question for a good journo to ask will be:
'Will the Big Society Bank have paid employees. If so, what salary levels will be paid and what bonus structure will be put in place?'
- the next:
'The organisations that the BSB passes funds to - will they have paid employees and, if so, what salary levels will be paid and what bonus structure will be put in place?'
- and the next:
'When these funds are passed out to the actual community groups doing the 'work', will they in total represent 100% of the money put into the BSB or will they be reduced by salary and bonus costs and administration costs and other expenses at each prior level?'

The next big question, if paid positions are to be created in the BSB and the organisations in the next tier down, how will that run (and be thought of) with people who will be expected to give their time for free in actually delivering services to the public?

We already have a number of state banks.
We do not need another one.

Will the workers at these banks be paid huge bonuses?
If not, are we worried that they will "defect" to other banks after we have trained them?

re #3
If you think that was bad, remember his effort to re-moralise the Conservatives just as some of his colleagues were getting up to all sorts of activities?

What's the clawback mechanism for these dormant bank accounts? It is extremely likely that someone will see their savings bond that their parent set up for them when they were a kid, emptied because it was dormant. Can you challenge it? How quickly do you need to?

If I were a cynic, which I probably am, I would say that this Big society bank is nothing more than an attempt to liquidate these "dormant" accounts. This is further shown by the fact that the actual bank will not be losing any money, it will take it out the accounts, lend it, get it back, and then be shut down with the money "returned" to the governments coffers.

The large divergence between the billions of funding cuts charities and local organizations face and the BS Bank as designed will in itself open this policy to great scepticism. The overall spirit of Big Society now is to view the disadvantaged in society as a source of revenue. How noble of the Tory led coalition.

The big society (and its bank) or a tiny ineffective prayer designed to hide the transfer of wealth from the poor and middel class to multinationals and banks-

https://sturdyblog.wordpress.com/2011/02/12/one-sausage-too-many-stealing-from-the-poor-and-giving-to-the-rich/

Every single thing Camerson does he does for the interests of the Conservative aprty and its funders. ALl of the cuts are desinged with two purposes.

The primary purpose of the cuts is to hit labour seats (more deprived areas with greater need) harder than conservative ones (more affluent areas with less need of social investment).

The second pourpose is to create greater umeployment and supress wage demands of the working and middle clases so that multiantional comapies can make gereater profit margins by reducing cots. The cutts also remove the public sector form many areas of economic activity (health provision, education etc) leaving a space for large comapneis to step in and make a profit.

All of these things greatly please Tory backers who gain temendously from them. Unfortunately they are devastating for the rest of us.

Mr Peston

Your blog today sounds like a Nature report : minnows, sprats, whales and a merlin. Many readers of your Blog Sir, I am sure , are bird fans.... the following may be enlightening :

MERLIN

Conservation status: Amber

Latin name
Falco columbarius

Family
Falcons and allies (Falconidae)

The UK's smallest bird of prey, this compact, dashing falcon has a relatively long, square-cut tail and rather broad-based pointed wings, shorter than those of other falcons. Its wingbeat tends to be rapid with occasional glides, wings held close to the body. Its small size enables it to hover and hang in the breeze as it pursues its prey. In winter the UK population increases as most of the Icelandic breeding birds migrate to our warmer climate. Although recovering from a population crash in the late 20th century it is still on the Amber List. [RSPB]

If you are ever around the Sandwich area of East Kent you may well spot the occasional merlin along the salt marshes afore the seashore. This is a remarkable coincidence with other recent events.

As long as this "big society bank" doesn't hire any bankers, we should be OK. But if it does get greedy, stupid, bloated, self-obsessed fatcats on the payroll, then it'll never work in a million years.

What is wrong with people on this site - all they ever do is whine and complain..

If you can't get your head around the fact life is unequal and often unfair then move to Korea or China, where you will find exactly the same conditions of inequality only you can't even complain about them

If I didn't know better, I might think this sounded like an ill considered scheme dreamt up on the back of a fag packet by some public schoolboy who has never had a real job in his life, let alone any experience of running a country.

Hang on a minute....

So David Camoron wants to push ahead with his Big Society - and to achieve this banks, yes including those already supported by the tax payer to the tune of billions will lend money to charities at commercial rates - that's big of them isn't it. Most charities and voluntary groups i am aware of work on very restricted budgets, so the idea of exchanging funding they recieve now for a loan from the banksters. Hmm lets see, so the banks get richer while the voluntary sector gets further sqeezed.

Yet again another example of private school thinking about how the Oiks should be dealt with. David Cameron's agenda is entirely ideologically driven, protect the wealth of a select few while everyone else pays for it.

https://www.youtube.com/watch?v=4Z9WVZddH9w&feature=related

An awful lot of space dedicated to a piffling matter, Robert. £200 million is peanuts, after all interest payments on UK debt stand at £120 million per day and rising for the next 5 years, kind of puts it in perspective. The Big Society is simply a substitute mechanism by which cuts are supposed to be made up for in part by an increase in voluntary activity. Good luck with that. Could also be a sleight of hand for replacing goods and services provided by the public sector with ones supplied by the private sector on a drip feed system. This may have legs as after all there is not, and has never been, a single example of a state monopoly being anything other than bureaucratic and inefficient as it simply steals money (in the form of tax) and workers (in the form of state employees) from a private sector disciplined by market competition.
However, I would still rather that you discussed bigger issues on your blog, starting with how it can be possible to introduce new tax laws that allow banks to earn profits here, ship the money out to Qatar, pay their tax rates and then bring the money back here without having to make the tax chargeable commensurate with UK corporation tax rates? Pretty soon Corporation Tax from banks will equal zero. Who are these faceless and seemingly stateless owners of financial capital that wield such power and control allowing them to get away with such behaviour? What is going on?

A social enterprise bank to protect some of the downside for possible social enterprise (quasi-)angels is a fine idea, and starting with a scale similar to that which already exists is sensible, so, so far so good.

I do have one quibble though. Social enterprises are supposed to be ethical and so I would not like to think that they are knowingly taking a source of funds that has been 'lifted' from dormant bank accounts. This doesn't seem quite appropriate.

What sort of bonus do they pay?

@ 17. At 09:21am on 14th Feb 2011, J wrote:

> What is wrong with people on this site - all they ever do is whine and complain..

And in what way exactly do you differ?

J- we are complaiing because the Conservatives, the banks and multinationals are parking their tanks on our lawn and are intent on enriching themselves at the expense of everybody elses standard of living.... and the small matter that if we carry on this way we will ruin the planet and leave our children as indentured slaves to an an unaccountable global elite.

24. At 09:41am on 14th Feb 2011, Jacques Cartier wrote:
@ 17. At 09:21am on 14th Feb 2011, J wrote:

> What is wrong with people on this site - all they ever do is whine and complain..

And in what way exactly do you differ?


Witty Jacques. And delicate.

The resources available to the Big-Mac Society bank are peanuts relative to the cuts, the liquidity trap following the financial crisis, and the funds which the government plans to lose by tax concessions to the wealthy:

https://www.guardian.co.uk/commentisfree/2011/feb/07/tax-city-heist-of-century

Yet again, after discovering that sound-bites don't easily translate into workable policy, we have a politician getting his undergarments in a twist. "I won't back down" Cameron, in his petulance, is sounding more and more like Tony Blair - except that the arrogance is more irritating with an Etonian accent. (Yes, I know the "poor" man can;t help it.)

I don't know about a big society but all those who keep banging on about bankers' bonuses when the financial sector contributes over 10% of all government tax receipts, even after the credit crisis, sure have small minds.

@ 17. At 09:21am on 14th Feb 2011, J wrote:

> If you can't get your head around the fact life is unequal and often unfair then
> move to blah blah blah

I assume from your truculent demeanour that you are one of those who worship unfairness and inequality. Please move on to another site – there's nothing here for the likes of you.

There is a strange irony in all this.... Many of the social enterprises that have inspired government thinking were developed as a response to the withdrawal of public services in the 1980's by the Thatcher government, combined with the unemployment of clever skilled people capable of setting them up.

The challenge for the growth of the sector has been increasing commercial property values and the need to employ the talent needed. In recent years, a further challenge has come from government interest in the sector, particularly with the idea that social enterprises should be used to sanitize the privatization of public services. This takes it a long way from its roots in the anarchist philosophy of people coming together to improve their own lives.

So if this new bank is there to finance outfits to take on government contracts the loans will be as secure as those contracts and as affordable as the margin on the contracts allows. In other words..... This stuff should not be confused with real social enterprises and the cost of money and the returns on investment will in effect reflect government commitment to the policy. On past performance, early investors will do well while the government wants it to look credible, but in the long term expect a rocky ride as government squeezes contractors as it pushes to reduce the cost of services.

Just because Merlin was announced next week doesnt mean we should stop complaining about the banks. I'll start....

Did anyone read Andrew Haldane's speech. Even people at the BoE think banks should be broken up-

https://www.bankofengland.co.uk...

The problem is that the Tories are so deeply funded by these parasites there is a deep conflict of interest between what is right for the British people and what is right for the Conservative party. It will be interesting to see who will win!

This isn't somthing that has been thought up on the hoof, it stands for everything in which the Prime Ministiner and I suspect a decent proportion of the electorate believe.

The Big Society is a political ideology that oppposes state control. It is about allowing decisions to be devolved down to the lowest practicable level. It is about bringing real power to the citizens of this country. Now I realise that the name tag isn't particularly helpful, but people should really stop being so blinkered about the opportunities that the Big Society will bring.

It is high time that community groups, individuals and employees have a say in the way the country is run, and really stood up to be counted rather than hiding behind some faded, synthetic veil of Statism.

29. At 09:45am on 14th Feb 2011, Jacques Cartier wrote:
[About no. 17.]

'I assume from your truculent demeanour that you are one of those who worship unfairness and inequality. Please move on to another site – there's nothing here for the likes of you.'

Would it not be better manners to be more inclusive Jacques ?

To me the whole thing is crazy!!!!!

Scenario 1: Government borrows directly from citizen who are saving and then invests this money in schools, hospitals, roads etc - i.e. social investment - investment that yields a long term return for the country.

BUT HANG ON A BIG STATE IS BAD SO WE MUST NOT DO THIS!!!!


Scenario 2: Government borrows directly from citizen who are saving and then invests this money IN A FUND which then invests it in.....
schools, hospitals, roads etc - i.e. social investment - investment that yields a long term return for the country

THIS IS GREAT AS A FUND MANAGER MAKES MONEY TOO - ALSO IT IS NOT THE BIG STATE IT IS THE BIG SOCIETY
BIG STATE = BAD, BIG SOCIETY = GOOD!


So to sum up we are doing the same thing - except in Scenario 2 those hot shot investors will need a return which is higher than the rate on government debt - ie. they will take a cut from the investment - so there will be less investment overall!!

Its PFI all over again!!!!

I hope that the government is not turning itself into a laughing-stock with this thing.
"Big Society Bank"?
300 million?....the last thing it is is big.
What a silly name....it sounds idealistic and like something that the hippies might have dreamed up.
With the turnover of a local council, it really is world-changing stuff, not.
Or is it just a "white elephant"?.....to try and placate a public that is fed up of being "milked" by those in EC1 and Canary Wharf.
"Big society" might have a lot of people cringing, even though it may have been created with the best intentions.
What "the Big Society Bank" actually sounds like is a hundred layers of beaurocracy, all on a fat salary, with a useless trickle of cash coming out the other end.
Hope I'm wrong.

While all this fuss is going on about National Forests, the Big Society and Project Merlin a real coup d'etat is going on under the radar with the Finance Bill 2011, called by Monbiot "the heist of the century". Read a layman's explanation of it here and PLEASE spread the word:

One Sausage Too Many – stealing from the poor and giving to the rich
https://sturdyblog.wordpress.com/

What we have seen more and more over the last 4 weeks, is that this government has not put the meat on the bones of its policies. Its policymakers are inexperienced and in the case of Osborne talk up initiatives like Project Merlin https://bit.ly/gMZ4DX
in reality they become weak statements. The banks in short were let off the hook.

It sounds like the Big Society Bank has not been thought out and they are still trying to work out how it will work. Yet we are also to believe that David Cameron has been seriously considering the Big Society for years and it is not a cover for the cuts. None of it adds up.

https://extranea.wordpress.com/2011/02/03/is-david-camerons-big-society-in-trouble/

The more I think about this the less sense it makes....

Social investment - THIS IS WHAT GOVERNMENT'S DO!

This is why we have elections!

As you point out at the moment the social investment market is very small - no more than a gimmick - lets hope it stays that way!

33. At 09:56am on 14th Feb 2011, Amused2Death wrote:
Would it not be better manners to be more inclusive Jacques ?


Forgive my intrusion but doesn't that work both ways?

So there is to be a 'social investment market' - doesn't this strongly indicate that our wonderful banks are bust?

If a project makes investment sense then investors will invest. Individuals and corporations with investment potential (money to invest) have to choose, as best they can, viable investments.

If the investment are not viable - that is will not make a return on their capital then no (rational or sane) bank or individual will invest. This of course begs the question - what about persuading the irrational and insane to blow away their savings? But is this really what the state should be about - stealing the money from the poor and financially non-competent to fund activities that society knows it needs but is unprepared to pay for?

First we must see pay cut across the board for all public employees - it happened in the 1930s - a relative started teaching in 1931 to a 12% pay cut. So why not now? I'll tell you why not! We are not in it together - the rich, and their Tory puppets, want to continue to live off of the poor and to make the poor poorer whilst ensuring that they retain their income and wealth - this will not wash! The Big Society Bank is just a successor scam to the National Lottery!

"Some will see it as a tool to help the government in its aim of dismantling the centralised state"

In the longer term I see it as a way of taking debt off-balance sheet - but in fact costing the taxpayer money in the long term.

PFI is an example where an investor got a return and the government didn't have to borrow yet the payments to the investor far exceeded what the interest payments would have been.

Another example is council/social housing. Rather than borrowing money and building council housing the govt now relies on private investor to build housing - it then picks up the tab in the form of housing benefit.

This means govt borrowing is lower yet costs are increasing

Housing benefit is now over £16bn a year - this would service over £400bn of government debt meaning that we could have borrowed the money and built the housing as a country and in the long term saved money and owned an asset!

RANT OVER!!!!

Sorry for boring you but I really believe a lot of this is driven by fear of government debt - in reality we are just pushing these debts off balance sheet...

whether it be students having to borrow more for Uni or Housing Associations borrowing to build housing whose rent will be paid by the government etc

33. At 09:56am on 14th Feb 2011, Amused2Death wrote:

>> JC - 'I assume from your truculent demeanour that you are one of those
>> who worship unfairness and inequality. Please move on to another site –
>> there's nothing here for the likes of you.'

> Would it not be better manners to be more inclusive Jacques ?

I'm just testing him out, to see if he's the "Captain Mainwaring" type - i.e. the spluttering
bank clerk who can't understand why everyone laughs at him. Let's see how he
copes, eh?

39. At 10:10am on 14th Feb 2011, EconomicsStudent wrote:
33. At 09:56am on 14th Feb 2011, Amused2Death wrote:
Would it not be better manners to be more inclusive Jacques ?


Forgive my intrusion but doesn't that work both ways?

I don't think you are being intrusive in the least. J in no.17 was making a general observation ; perhaps not 'kindly' put.

Whereas Jacques was being directly and unnecessarily short with a newish ( I suppose) blogger.

28. At 09:45am on 14th Feb 2011, sandy winder wrote:
I don't know about a big society but all those who keep banging on about bankers' bonuses when the financial sector contributes over 10% of all government tax receipts, even after the credit crisis, sure have small minds.

You my son are peddling the "they pay loads of tax and contribute to the UK economy" line without any knowledge of the numbers. The UK's financial services industry does pay *some* tax, although it would prefer to dodge the lot, of course. However, not that much.

It pays about £60bn each year, which is about 12% of the govt's total tax take (from PWC report for the City of London - see below). Now, this has to be looked at more closely of course. This is the financial sector with 1 million workers etc etc, so we are talking about all the banks in all the high streets, the insurance agents, Direct Line and all the rest. That £60bn is not just the 40,000 bankers in the city with second homes in (insert name of fashionable location here).

So, let's say those 40,000 from 1 million are swinging three times their weight pro rata, that would mean they account for £7.2bn or 1.5% of the governments total tax take. Not so important now, are they?

Which would you prefer? Reform the banking sector so it is actually a competitive business without cartel and monopoly practices, without government support and thus able only to support a 5 to 10% profit margin and therefore not able to pay such bonuses, or not?

On the one hand some of them *might* leave and we might lose *some* of that 1.5% tax contribution, on the other hand, they will screw it up again, the economy shrinks by 5% and the government is forced to make eye watering cuts in public services (I say 'forced', but I think they are probably enjoying themselves actually).

Of course the former, unless you are a banker. In which case, like any chancer you are going to grab what you can while you can.

Reference: https://www.cityoflondon.gov.uk/NR/rdonlyres/EA028832-F883-4305-9E4C-DB4AE7FC9A6C/0/BC_RS_TotalTaxContributionfortheCityofLondonCorp11Feb.pdf

My mind reels. But that is nothing new for it reels easily. You seem to understand the thing and so do many of the bloggers, and all I can do is wonder if it was taken from a script of "Yes Minister." Is the British nation clutching at straws?

P.S.

We already have a BIG SOCIETY BANK its called...

NATIONAL SAVINGS AND INVESTMENTS

https://www.nsandi.com/

I think Dave forgot to tell George though - he pulled the NS&I inflation linked bond as it was too popular and the banks were complaining they needed the cash!

https://www.bbc.co.uk/news/business-10683409

Robert, more questions to answer regarding the smoke and mirrors surrounding Project Merlin, the bank levy, etc.

https://www.neweconomics.org/press-releases/are-british-banks-getting-billions-in-hidden-subsidies-asks-nef

Pax Jacques.

Seems to me that this idea has sown the seeds for a whole lot more blogs from financial journalists.

32. At 09:48am on 14th Feb 2011, js05327z wrote:
The Big Society is a political ideology that oppposes state control. It is about allowing decisions to be devolved down to the lowest practicable level. It is about bringing real power to the citizens of this country. Now I realise that the name tag isn't particularly helpful, but people should really stop being so blinkered about the opportunities that the Big Society will bring.

It is high time that community groups, individuals and employees have a say in the way the country is run, and really stood up to be counted rather than hiding behind some faded, synthetic veil of Statism.
======================================

The problem is that Tories do not seem understand why the state has become all pervailing at all. In the past there was no need for a lot of the public services that we rely on today. That was because people knew their neighbours, families lived closed together and there was such a thing as community. So what changed?

In the 1970s and 80s there was an influx of new legislation that made employment and tenancy aggreements a whole lot more flexible. No longer was there a job for life, if a job at all. No longer could a family be assured of a secure long-term rental, the social housing stock was sold off. The resulting increased demand for buying your own home and deregulation of financial services led in part to increases in property values such that both family memebers had to become earners. Flexibility of the workplace and the "on-your-bike" mentality often led to families moving around the country or splitting up to find work. Divorce rates increased greatly. Community spirit began to diminish. Greater inequality led to increases in crime. The natural rate of employment led to the creation of an underclass.

Thatcherites believed the social cost of the destruction of communities to be a price worth paying if it turned around the economic stagnation of this country in the 1970s. When Blair-Brown were elected in 1997, they were elected on the mandate that some of the dividends of the post-thatcherite boom in financial services would be spent on fixing the community issues that were caused by the new flexibility laws, but would not repeal them.

To me it looks like the post-thatcherite boom was a chimera. The breaking of labour combined with cheap imports from the east led to a deflation that was masked by the oversupply of credit by the financial service industry, which duly became a behemoth. The price to pay was an export of skilled as well as the previous unskilled jobs and the believe that wealth was accruing in one's house price rather than one's wage packet. Now that veil has been removed we are left with a lack of competitiveness, high debts and the same flexibility in labour and tenancy laws. The cost of providing services to the communities damaged most by the current economic system is now deemed to be too high.

As for the BS, so long as there is no sense of community, so long as mom-and-pop are both working 50 hours a week to pay the mortgage with no long-term job security, there will not be the time, money or goodwill for it until the tenets of Thatcherism are reversed.

@ 12. Will
> What's the clawback mechanism for these dormant bank accounts? It is
> extremely likely that someone will see their savings bond that their parent set up > for them when they were a kid, emptied because it was dormant. Can you
> challenge it? How quickly do you need to?

> If I were a cynic, which I probably am, I would say that this Big society bank is
> nothing more than an attempt to liquidate these "dormant" accounts. This is
> further shown by the fact that the actual bank will not be losing any money, it
> will take it out the accounts, lend it, get it back, and then be shut down with the > money "returned" to the governments coffers.

I suspect the move to take money out of 'dormant' accounts is targeting accounts with a very small amount of money in - ones that cost more in administration to keep than the value of the account. This will then save the bank money in administration costs, perhaps leading to lay offs, but that's okay, because we need more volunteers. These newly laid off workers will then have plenty of time to volunteer whilst on unemployment benefit, that is when they are not being forced to volunteer for their unemployment money. The important thing is that the banks save money, are able to cut down on staff, and make a profit on their return to the 'big society' bank. Behind closed doors Cameron and co must be killing themselves with laughter over this one.

This comment was removed because the moderators found it broke the house rules. Explain.

A Silly idea.
Give grants to charity from the Gov't or don't.
Do not play around with silly Loans.

Silly Loans and greedy Investment Bankers (at home and abroad) caused too much pain and grief already.

Its a decent idea, but its so far underfunded. And the name is wrong. It should be called 'Small State Bank.'

For those that are banging on about financial intermediaries providing 10% of tax revenue. This is presumably for all fiance activity inclding normalr etail banking and insurance and pension adminsitration etc?

Also of relvance- the 10% tax take doesnt really pay for the bailouts...The Office for National Statistics has only recently published its estimate of the size of the bailout.

www.statistics.gov.uk/pdfdir/psf0111.pdf


The non-bank debt caused by the recession was £889bn – still below the Maastricht treaty limit of 60% of GDP. But the debt incurred by the bailouts is a staggering £1,434bn, close to 100% of GDP. This is equivalent to £25,000 for every person in Britain. Reassurances that a sale of the nationalised banks will eventually yield a profit ring hollow – their share prices remain well below the government's purchase price.


And it certainly doesnt cover the cost of unemployment, business failures and destruction to the public infrastructures from the Governments cuts.

# 50 Reticent_Trader

Great post - I agree absolutely - your last para sums it up perfectly.

"As for the BS, so long as there is no sense of community, so long as mom-and-pop are both working 50 hours a week to pay the mortgage with no long-term job security, there will not be the time, money or goodwill for it until the tenets of Thatcherism are reversed."

This 'Great Society' is a mechanism for transferring control of social institutions from democratic control to the local great and good or, worse, local zealots of any stripe. There will be no way in which entitlement is protected and we are back to the early years of the last century when local worthies decided whether you are 'deserving' or not.

Emporer Honorius said to Britannia in 410AD "Look unto yourselves for your defence", one thousand years of decline followed. Not quite the Roman Empire these days but Honorious was doing it for pretty much the same reasons, Rome could no longer afford to manage and provide social infrastructure for parts of the empire that weren't considered an asset to the greater good.

So we funded the Banks to the tune of £115bn (£76bn to buy RBS and Lloyds BG shares and £40bn to bailout Bradford and Bingley).

Those shares will, eventually be worth more than we paid for them so why not use this money to fund a new Big Society Bank to compete with the high street banks by offering savings rates at a rate which 'blows away' the meagre returns currently offered (backed by the 'spoils' of investing in the banks - ironic eh?).

The new bank could then use this money to lend to needy causes (including small businesses/new start-ups) at a 'competetive' rate (say a point above the savings rate offered) and effectively bypass the greedy bankers.

All the above secured by the 'bailout' money.

Well! Please call me Mr Confused

Hi! Mr Confused, I hear you shout.

If there is something I do not understand; I read up! I also get a feeling from reading the Blog replies but this time I still cannot get my head around the last couple of weeks.

All I can see is an objective of moving money around. But not from one place to another but from like to like with no advantage except for GDP? And an ability to utilise static funds?

Surely it is not all about GDP is it – Mr Confused needs it explaining to him!

"Big Society"? It's a tax, let's be clear about that. Reasonable and caring people will put their hands in their pockets to keep things going, albeit not to the same level as "Government". The problem is there will be an element of "pushy" people who will take over from the meeker and gentler folk that do a lot of the work that is currently centrally funded. This is like de-regulation; look where that got us!

50. At 10:35am on 14th Feb 2011, Reticent_Trader:

I doff my hat (again) to you.

"It expects to receive up to £100m in its first year of money from dormant bank accounts at UK banks and building societies, rising to £400m over some unspecified period (this is money that the likes of you and I have deposited at banks and have completely forgotten about)."

So this big idea STARTS by indicating that if we see someone else's property unattended, we should just help ourselves? You couldn't make this stuff up!

Big Society = Big Con. Does anyone really thing that £200m is going to go anywhere in the face of the current cuts?

We do not need any other banks. The whole financial Services sector is so defined by "style over substance" or "greed over competence" - take your pick that the idea is morally bankrupt.

It reminds me of some well known Anglo saxon word that have B and S as a shorthand!! If this is what the Governments big idea is we are really in deep trouble.

"What we do know is that the £200m from the four banks will not be free. Which in turn means that the Big Society Bank will have to make some kind of meaningful return on the money it invests, in order to meet its aim of covering costs."

----------------------------------------------------------------------------------

Big Society plc

What a lot of silly contortions to avoid doing anything which could be described as "collective" in any way. What an abject lack of pragmatism. I'd better stop before I sound like Ken Dodd.

This has all the hallmarks of going the same as the Commonwealth Development Corporation which channelled money to good works around the world, then 'New' Labour sold it off to its managers who turned into a profit driven hedge fund (CDC/Actis) investing only in revenue generating enterprises, somewhat removed from its original concept. This 'bank' starts off on a commercial footing so it's half way there already. I bet a fight is underway as to who gets to run it, what's one of the quickest ways to become a millionaire? Become a hedgefund partner, and that is the ultimate destination of this 'bank'.
Regards, etc.

43. At 10:24am on 14th Feb 2011, Amused2Death wrote:

> Whereas Jacques was being directly and unnecessarily short with a
> newish ( I suppose) blogger.

I am a direct person - that's my mojo. But enough about me. There is more to life than money, and anyone can give a short, sharp shock to J, even if he's loaded. It makes no odds to me - if he's hubristic, then he's grist for my mill.

"Also it won't have that much capital to play with, at least not initially. It expects to receive up to £100m in its first year of money from dormant bank accounts at UK banks and building societies, rising to £400m over some unspecified period (this is money that the likes of you and I have deposited at banks and have completely forgotten about)."

= = = = = = = = = =

They THINK we might have forgotten!

Even if we have it's still our money -
and taking it with the intent to deprive us (individually) of it permanently is legally defined as theft, isn't it?

So I hope we get it back.

wkdtroll-

Reassurances that a sale of the nationalised banks will eventually yield a profit ring hollow – their share prices remain well below the government's purchase price.

No doubt the Big Society Bank will be run by wealthy bankers who will insist on their cut for doing us a favour. Mr Cameron and his cohorts could do us a real favour and stop living in cloud cuckoo land. Just how far do they think 200m will go - not very far in today's world.

We cant allow the private sector into the voluntary sector. They will have an in-built economic incentive to not improve society. To "fix" social problems will lead to a drop in their profits so they will act in ways that sustain sociatal problems.

The big society is the Emperors New Clothes and just about as useful. DC is trying to rebrand the Tories and overcoming the big gaff of Maggie and her "no such thing as society" is central to the rebrand. He doesnt really care if people take it seriously or not - he can go on wittering about how much it will help people; even though we are not convinced he slips in under our noses the notion that the Tories care about Society - job done - unless we, the electorate, are cleverer than he gives us credit for. Personally I dont trust the tories with anything to do with Society as they are totally driven by one central tenet - hanging on to as much of their filthy money as they can by lowering taxes regardless of what pain and hardship that causes to the less well off. Now he is dismantling the middle classes so there can be a clear distinction - we are all in it together but they have never had it so good.

There are lots of so-called dormant bank accounts that are owned by living individuals. What the government is doing is to steal those funds and use other people's money as a wholesale Bank for funding bank loans to charities.
Quite apart from the expropriation of other people's money, this will (if parliament is foolish enough to agree) create an wholesale operation rather like small versions of the US Federal Mortgage Banks known as 'Fannie Mae' and 'Fannie Mac'. Those Federal owned banks created a layer of unaccountable and debt strewn bureaucracy that the Obama administration is trying to close down.
As the retail lenders go bust or fail to make cheap enough loans, we won't know who to blame. Which is maybe what Cameron really wants.

This comment was removed because the moderators found it broke the house rules. Explain.

BIG SOCIETY & VOTING WYSIWYG

"One Race One Vote"
"Integrate the Segregated"

Racial Democracy redefined as "VOTING WYSIWYG" with "Race Codes" by the Race Equality Inspectorate could provide the credibility needed to make "BIG SOCIETY BANK" projects work.


Do you think BIG SOCIETY BANKING needs RACIAL DEMOCRACY?

# 70 Payguy is a little premature. Because the nationalised banks have no plans to pay any dividends, the usual institutional buyers of Bank shares don't want to hold those shares until they do. As it is, their current market discount to issue price is quite narrow and suggests they will rise sharply the moment dividends become a prospect.

"Or to put it another way, it will not put money directly into social enterprises, or businesses with some kind of social purpose, but will invest in funds and operations that in turn make the direct investments.
"

Another skimming mechanism?

This article in the Wall Street Journal summarises why the NHS should not be privaitised and why we should not allow any private sector involvment into the volunatary sector:-

https://online.wsj.com/article/0,,SB112190164023291519,00.html

In summary, investors with brain damage that prevents empathy make more profit than normal people. It explains a lot.

> 42. At 10:22am on 14th Feb 2011, Jacques Cartier wrote:
> 33. At 09:56am on 14th Feb 2011, Amused2Death wrote:
>
>>> JC - 'I assume from your truculent demeanour that you are one of those
>>> who worship unfairness and inequality. Please move on to another site –
>>> there's nothing here for the likes of you.'
>
>> Would it not be better manners to be more inclusive Jacques ?
>
>I'm just testing him out, to see if he's the "Captain Mainwaring" type - i.e. the >spluttering
>bank clerk who can't understand why everyone laughs at him. Let's see how he
>copes, eh?

No, you're being intemperate and uncivil, and you only represent yourself.

I doubt I am the only one tired of the monotonous banker bashing posted in response to every one of Robert's blog entries. It's not about being right or wrong, it's just boring. It's a shame because there are useful insights (on both side of the argument) if you willing to wade through all the dogma.

I would support an "editors picks" section with the repetitive stuff sifted out.

how long will it be before the big society bank needs a bail out??

I'm still confused about how this works.
Will the dormant bank accounts balance be reduced to zero? This would mean the money which belongs to someone else is being transfered into BS Bank. This will not encourage long term saving, and is like saying it is OK to steal because the owner has left something unattended to long, or doesn't appear to be using something. The next time DC goes on holiday, I'll make use of his dormant Jag for social purposes.
If the dormant bank accounts are not reduced to zero, then simply we are creating new money to some arbitrary defined value. I'm sure these dormant bank accounts have not been doing nothing. Even those who believe banks lend other peoples money would think it is more sense to lend out dormant money then active demand deposit money!

Also, the big four banks will be lending the BS Bank a load of money. We've created a bank dependent on wholesale money! Nice one Dave.

Alchemy by another name! It's only a matter of time afore its brand of poison takes effect on UK tax pounds! I've just realised that I had an old account with the BOS, I'll be hot footing to the nearest branch, think I had 3 quid 15 years ago...I'll be claiming it PDQ...........

The leftie vitriol on hear is incredible.

Instead of letting the banks make more profit by leaving money in accounts gathering dust, the government proposes to put it to a social use. And yet the lefties complain. So, seemingly they would prefer that the banks use it to make more profit instead.

Or they complain that the banks are making too much profit and not paying enough in tax - yet Gordon Brown set up the current massively complex tax system and in 13 years of power never got round to increasing the tax on the banks, mega rich and non-doms. So why berate the coalition for not doing it now after only 9 months in power?

Finally they complain that this scheme will just cover up for the "idiological" cuts to public services. This implies we must carry on spending £700 billion per year, even though the country only earns £550 billion a year. And where does this £170 billion of borrowed money come from?

-Yes, it’s from the banking system that the lefties hate so much!

Plus the interest we pay on this debt, when added to the £1 to £3 trillion of debt New Labour racked up, also helps the bankers make more profits and bigger bonuses.

No wonder the country is in such a mess after 13 years of these idiots in charge.

When someone says 'Big Society' I hear 'Small government' and it is clear that this mechanism exists to ease the quasi-privatisation of various government functions. It will be an administrative nightmare, departments hiving off to get access to this funding stream but in practice doing exactly what they were doing before. They'll be getting their funding by selling a service to the council (or NHS or whoever), who in turn rent them the offices they were always using (or if they are smart dip their fingers in the honey pot and sell them a 10 year lease on that property for say... 10 million which they raise by borrowing from this fund, their asset is 10 year lease and their 5 year contract to provide services - bingo your council just gained access to another ten million government funding and all you had to do was a bit of administration, which is your whole reason for existing).

They will appear to be off the books, it will appear to be a reduction in the size of government but really it will be an accounting exercise, the government managers buying these quasi-private services will make prior agreements about every detail (and rightly so, it isn't as if anyone else would be able to provide the services, it isn't a market).

Even so 100 million is not going to be enough to set up more than a few hived off council departments or NHS drop in centres or whatever.

aaaand another thing...
I know a lot of people who got very excited about Big Society, I work for a non profit housing organisation and we borrowed half a million to upgrade the fabric with a carbon reduction priority. People I know thought that Big Society was going to make that sort of thing available organisations with fewer assets against which to borrow. 100 million would have hardly covered our borough in schemes that could have been run, it isn't as if Big Society is a bad idea or that it cannot work or that there are not a lot of people very enthusiastic to make it work - the problem is that the government have zero interest in putting government loans into democratic grass roots control. Big Society is not about giving people the tools to build a better society it is a rhetorical flourish to hide its exact opposite, it is New Speak: wealth is poverty.

I find that if you assume we are living in Orwell's 1984, view everything everyone says from that perspective then the world starts to make a lot more sense.

80. At 12:11pm on 14th Feb 2011, Zanzare wrote:

I doubt I am the only one tired of the monotonous banker bashing posted in response to every one of Robert's blog entries. It's not about being right or wrong, it's just boring. It's a shame because there are useful insights (on both side of the argument) if you willing to wade through all the dogma.

===========================================================

your not the only one but those who are willing to stand up against the constant barrage of abuse from some of the "regulars" are few and far between. if you even say anything which goes against the view of the "louder bloggers" then you are accused of being a "communist/fascist/capitalist/marxist/ and anything else with ist in it" and this is from both sides.

your right that maybe a editors choice section would be good but then there would be complaints of a lack of free speech if their comments were left out.

80. At 12:11pm on 14th Feb 2011, Zanzare wrote:

>> JC: I'm just testing him out, to see if he's the "Captain Mainwaring" type - i.e. the
>> spluttering bank clerk who can't understand why everyone laughs at him. Let's see
>> how he copes, eh?

> ... you're being intemperate and uncivil ...

Yes, Captain Mainwaring!

Dear Robert,

Will the Big Society Bank have the power to create credit (money) under the principle of fractional reserve banking? If not then why not?

The BSB should be on a level playing field with the banks in order for the BSB to be self sustaining and also to provide much needed competition to the UK banks.

Have a read of this paper by Professor Richard Werner on fractional reserve banking and his views on extending frational reserve banking to the civil sector.

https://www.management.soton.ac.uk/research/CBFSD%20DP2-2009%20Credit%20Unions.pdf

I would welcome views on this subject.

Having never met you Jacques, your assumptions re my personal finances plus your statement that I am arrogant; and as a consequence worthy of one line 'put downs' and scorn, says far more about your own character than anything else.

My comment was relatively simplistic; granted, being the observation that whatever the coalition government propose doing in the current economic crisis; and however this is reported by Mr Peston, we are left with the same detractors making the same comments, almost all of which are negative.

I personally find some of the sums paid to 'sports people' ludicrous, however I would not wish any of them personal ill-will due to their fortunate position and certainly wouldn't correlate that opinion to how they are actually funded, be it money from Russia, the Middle-East or some poor chap who can't really afford the ticket he has paid £50 for.

80. At 12:11pm on 14th Feb 2011, Zanzare wrote:
> 42. At 10:22am on 14th Feb 2011, Jacques Cartier wrote:
> 33. At 09:56am on 14th Feb 2011, Amused2Death wrote:
>

I doubt I am the only one tired of the monotonous banker bashing posted in response to every one of Robert's blog entries. It's not about being right or wrong, it's just boring. It's a shame because there are useful insights (on both side of the argument) if you willing to wade through all the dogma.

I would support an "editors picks" section with the repetitive stuff sifted out.
=============================================================

Speak for yourself and away with your censorship proposal.

The day the banks stop getting bashed is that day we stop being bashed by them. A very long time in the future.

What a shame our political elite and their City puppetmasters who between them have bankrupted the country and mortgaged our future and that of subsequent generations have such apologists in thinking people.

Start from the factual position that the senior banking oligarchs got things wrong and so did the political (all of them) and media elite.
80% tax on all banking profits and 100% tax on all banker's bonuses above 200k per annum. These are only in existence because of the tax payer.

Why do we need a new bank that is chock full of BS, when we already have R.B.S?

Isn't it Ironic that Cameron's Hero Thatcher said there was no such thing as Society.
Surely the Big Society is a Socialist ideology and what Cameron is trying to do is to privatise even that idea. To think we have got another 4 years left of his crackpot ideas.

80. At 12:11pm on 14th Feb 2011, Zanzare

The banker bashing is essential and must continue until a cure is found.
Lest we forget and all that.
Sorry if it bores you

Big Society Experiment (BSE). Obviously the bank should be called PRION, after the other BSE infectious agent we know so well.

All this user's posts have been removed.Why?

If we stopped the flow of funds from this country to the tax avoidance havens we could have a bank each.....

Gordon Brown set up the current massively complex tax system and in 13 years of power never got round to increasing the tax on the banks, mega rich and non-doms. So why berate the coalition for not doing it now after only 9 months in power?

==============================================================

Indeed Brown turend out to be very good "Tory" Chancellor - short sighted, unable to see a car crash coming with light touch regulation. Obfuscation of real debt has been happening for at least 40 years.

I remember such Tory inspired car crashes in the early 80's and early 90's.

Or are you one of the many Condems who are too deluded to think there is any real difference in the political elite? There isn't - the very last punt went when Judas Clegg caved in on a personal pledge and told his party to do the same and sold out the future education of the country which will be felt in the decades to come.

The Tory party are the political wing of the banking industry

"What we have learned is that the Big Society Bank will operate independently of government."

Of course, Robert, you will be aware of the CDC and its subsequent "privatisation" (for want of a better description) and renaming to Actis. Out went any third-world development, in came market speculation and instead of developing a necessary infrastructure in poorer countries, they built shopping malls. Trebles all round!

This video shows what is wrong and how we can fix things-

https://www.youtube.com/watch?v=4Z9WVZddH9w&feature=related

This is the Official Online (Youtube) Release of "Zeitgeist: Moving Forward" by Peter Joseph.

On Jan. 15th, 2011, "Zeitgeist: Moving Forward" was released theatrically to sold out crowds in 60 countries; 31 languages; 295 cities and 341 Venues. It has been noted as the largest non-profit independent film release in history.

This is a non-commercial work and is available online for free viewing and no restrictions apply to uploading/download/posting/linking - as long as no money is exchanged.

A Free DVD Torrent of the full 2 hr and 42 min film in 30 languages is also made available through the main website [below], with instructions on how one can download and burn the movie to DVD themselves. His other films are also freely available in this format.

Website:
https://www.zeitgeistmovingforward.com
https://www.zeitgeistmovie.com