Why have a crash if we don’t learn the lessons? Part 1 – Muddled messages

What you may be asking can a journalist – someone with all the popularity of an MP but without the expenses to compensate – have to tell savers about the financial crisis?

If we are so clever, you may wonder, why didn’t we predict the crash of 2007?

Well the simple answer is that we did and the crash of 2006, and 2005. The Press is so bearish we have forecast five out of the last three recessions. We had to be right sometime.

Short-selling could have been invented for the media – if only we knew how to do it.

Actually, journalists might be better informed if they were active investors. Relying for advice on wealth from financial writers who have no wealth of their own is like asking people to read a motoring column written by someone who cannot drive or a wine page penned by a teetotaller.

But yes, the press is naturally gloomy. Having witnessed one crash, the lesson we learned was to keep warning our readers to expect another – a double dip, a bear market, a fall in house prices or simply higher borrowings costs. Show us a silver lining, we’ll find a black cloud for it to go round. … Continue Reading

Reply to the Government’s petition response

In January of this year Save Our Savers submitted a petition on the Downing Street web site. It read:

We the undersigned petition the Prime Minister to take identifiable and specific measures which will benefit savers and pension funds, thereby encouraging a culture of saving rather than borrowing in the UK

The Government has just responded. The response however totally, and some might suspect, deliberately misses the point.

Yes, they say, we know people haven’t saved; we know that the level of debt has made the UK particularly vulnerable to financial instability. We agree we need to “encourage people to save and invest”. We intend to “foster a culture of personal responsibility” with “better financial planning”. We will even provide a free annual financial health check.

Well, if we hadn’t exercised personal responsibility and successfully planned our finances we wouldn’t be losing out now. The reality is that no amount of financial planning can overcome a Government that puts its need for low interest rates and inflation before returns on peoples’ savings. Savers do not need an annual financial health check we need a return on our savings. … Continue Reading

Government response to Save Our Savers petition

Shortly after our launch in January this year, we published the petition below on the No 10 web site;

We the undersigned petition the Prime Minister to take identifiable and specific measures which will benefit savers and pension funds, thereby encouraging a culture of saving rather than borrowing in the UK.

Despite the clear economic and social benefits of a thriving savings culture, savers have been persistently ignored in their efforts to provide for the future and the UK now faces a worsening savings crisis. The frenzy of spending and borrowing that was a major factor in the collapse of UK banking has hit prudent savers hardest and there is an urgent need to create policies that support saving in the UK.

With the announcement of the election the site was closed to all new petitions and all current ones were immediately put on hold, but in that time we collected 3,110 signatures. … Continue Reading

Do you have faith in the Government to reward you for saving?

By choosing to put money aside to spend later rather than sooner, savers are not only sacrificing what they could have now; they are taking a risk. They are gambling that their savings will be worth at least as much in the future as when they first put them aside.

Of course it is every saver’s responsibility to invest their money wisely and get the best return they can.  But this is only part of the answer. The highest paying accounts cannot accommodate everybody’s savings and as any prospectus will tell you, the value of your investments can go down as well as up. In short there will always be winners and losers and as long as there is a level playing field, there are no legitimate grounds for complaint. However, all this operates within and is dependent upon the economy as a whole and there’s the rub.

Ultimately by saving you are putting your faith in the Government. Will it support savers or not? Will it, through its tax and welfare policies penalise people for having saved? Will it enable savers to at least maintain the value of their savings in line with inflation?

Promoting greater personal financial responsibility while devaluing savings is dishonest … Continue Reading

Interview on Radio Oxford regarding proposed £7Billion loan to Ireland

The UK tax payers – the majority of which are savers – are underwriting the loan to Ireland but the Government, which has also rescued reckless bankers and kept interest rates low to help imprudent borrowers, is doing nothing to help savers.

… Continue Reading

The Government will back Ireland but not its own savers

The money markets and speculators are circling Ireland’s already severely injured economy and closing in for the kill. George Osborne, the Chancellor, has taken the position that we must support the Irish because of the collateral damage that would be inflicted on our own economy if we didn’t.

Hence the UK Government is preparing to lend billions to keep the money market wolves from the Irish door. In effect the UK will be using what is left of our own credit worthiness to borrow £7 billion, at say 3% interest, from the same international money markets that are refusing to lend to Ireland, and then we will lend it on to the Irish ourselves, at say 5%.

Supporting Ireland is the right thing to do for our political and economic interests. But why should UK taxpayers provide secure investments to the money markets and speculators which are causing all the turmoil?  Why not cut them out?  The Government should come straight to the UK savers who, as taxpayers, are underwriting the loan anyway, and who would welcome the opportunity to receive 5% interest in the current climate. … Continue Reading

How annuities are funded and why the current rates are so low

Most people will buy an annuity when they come to retire but how do they work and why are annuity rates currently so poor?

An annuity is like a mortgage in reverse. An insurance company assessing the risk of underwriting an  annuity for a 65 year old man, will assume he will live for around another 18 years to 83 age (the average life expectancy for a male in normal health).

Billy Burrows of William Burrows Annuities says: “Once an insurer has decided on your likely life expectancy, it will then calculate how much capital and interest it needs to provide the annuity, with the yield being based on a long-dated bond.”

Annuity rates are influenced by four factors: life expectancy, the yield (or return) an insurance company can obtain by investing the annuity money in gilts and corporate bonds, the insurer’s internal operating expenses and the cost of meeting EU reserving requirements, known as Solvency II. … Continue Reading

Update on Europe wide call for a mass withdrawal of funds on 7th December

For those that have been following the story;

A second UK Facebook site has been created to rally support.

Also here is a video of the footballer Eric Cantona giving the movement his blessing….

Click here for our original report.

A lifeline for savers

The key incentive underpinning Iain Duncan Smith’s shake up of the benefit system is that “work should always pay and that you should be better off in work than out of work”. This embodies concepts of social justice, personal responsibility and fairness. It suggests a world where those who make the effort to improve their lives are supported and rewarded for doing so.

But savers who have tried to help themselves through financial prudence and long term planning have found that this Government and its predecessors have generally followed an alternative approach.

Rather than ensuring that saving always pays and that you are better off by saving than not saving, Governments have instead reduced or removed incentives to save and even, at times, effectively helped themselves to these savings. … Continue Reading

Are savers being hung out to dry?

What was it that Donald Rumsfeld said? “We know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns the ones we don’t know we don’t know.”

In the recent press conference for the release of the Bank of England’s Quarterly Inflation report, Mervyn King showed a close empathy with Mr Rumsfeld. He very clearly explained what facts that he and the Monetary Policy Committee (MPC) did know and what they didn’t know, as well as what they couldn’t possibly know. The point of this was to stress the uncertainty of factors that the MPC must weigh up in coming to their decision. … Continue Reading