Tales From a Pandemic

Another blog post from DU Member, Digital Business Coach.

I wonder what future historians will write about when reflecting on this year 2020, a year which started off so brightly but which has spluttered into a divisive scrum caused entirely – in my opinion – by the media.

In the month when we marked 75 years of [largely] peace in Europe thanks to the incredible sacrifice of our armed forces [no weekly clap for them] our nation once again is divided over the pandemic or rather the media’s view and subsequent reporting of it. At the risk of upsetting some I will mention Dominic Cummings; regardless of your political preferences surely this man does not deserve the harassment he continues to suffer. No man does. Not in our so-called civilised society.

Rather than report the positive news of reducing infection and death rates, the media prefer to dedicate every hour to tormenting this man. Would it have been different if he was Sir Kier Starmer’s chief adviser? Is it really the left leaning pro EU media finally being able to vent after their total humiliation last December 12th?

My parents – sadly departed now – often spoke of the war and the spirit of the people, spurred on by positive media and politicians united in the common cause. The polar opposite exists today.

The real news continues to be ignored by the media and it begs the question. Is this deliberate? Is this a form of censorship?

Last time I mentioned 20 of our billionaires using the Government’s furlough scheme to pay their employees wages. Unlawful? No. Immoral?

The Guardian [21 May] reported that the top 1% of British earners receive 17% of our nation’s income. Capital gains tax is payable when you sell an asset for more than you paid for it. Official data showed that in 2017-18 over £55 billion of taxable capital gains were recorded – this figure twice that of five years earlier. The majority of these capital gains – £34 billion – were received by 9,000 individuals, each making gains of £1 million or more. How many of these are using Government support to pay their employees?

The Chartered Institute of Personnel and Development [CIPD] reports that around 22% of UK employers are planning for redundancies in the next 3 months. Polling by the CIPD reveals were it not for the Government furlough scheme employers would have made 35% of their employees redundant.

The Institute for Fiscal Studies told Sky News that mothers in paid work before lockdown are 47% more likely than fathers to have permanently lost their jobs or quit.

A record rise in unemployment led to the Chancellor warning a parliamentary committee of a severe recession “the likes of which we haven’t seen“.

Turning now to the banks; I previously reported that German banks were offering negative interest rate accounts. The Bank of England has now signalled that it may take the cost of borrowing here to below zero. It is unthinkable that savers, which outnumber borrowers by 4:1 would be penalised further. But that is what is likely.

Why would anyone pay the bank to hold money? Inflation is down to 0.8%. If it continues to fall employers will factor this in to pay reviews. This will then further dampen consumer confidence and spending.

In Sweden the base rate is 0%, in Japan -0.1%, in EuroZone -0.5%, in Denmark -0.6% and in Switzerland -0.75%.

The average interest rate for UK savers is +0.45% before tax. How many savers would choose to store cash at home, in a vault, if things got even worse?

What about borrowers? Danish Bank Jyske pays borrowers 0.5% a year to take a 10 year loan. Most UK borrowers have a “collar” on rate within their terms and conditions, though few will ever have read these in full.

The IMF – in its most recent “Global Financial Stability Report” predicts that banks will struggle to generate profits for at least 5 years, pointing out that many were struggling before the pandemic.

Negative rates are bad for bank profits. Some good news at last. They squeeze the gap between the money they make on loans and what they pay to savers.

Building Societies will come under increased pressure as, unlike the banks, they must raise half of their funding from individual savers.

On May 20 it was reported that a Government Bond was sold with a negative yield for the first time. In essence this means investors having to pay to lend money to fund the Government’s COVID-19 response. When the Bond matures in 2023 the investor is guaranteed to get back less!

The President of the World Bank expects up to 60 million people to be pushed into extreme poverty with global economic growth shrinking by 5%. In other words, it’s the poorest who will suffer the most. As usual.

So what’s to be done?

You might be interested to know that many of the world’s Governments are turning to digital currency to shore up their economies. A growing number of countries are making progress in launching their own digital currencies, some advocating this as a replacement for fiat. The Bank of France, Bank of England, South Korea’s central bank and more recently the Dutch Central Bank – all launching pilot schemes. The Peoples Bank of our favourite country China is launching its own digital currency as it fears for the strength of the renminbi following sizeable capital outflows.

My point is, if this is good enough for Central Banks then it is certainly good enough for us, the people.

The Banks plans are for centralised – or controlled digital currencies whereas I would point you towards fully decentralised crypto currencies.

The future is uncertain but it will be very challenging. Economists predict UK unemployment rates of over 10 million which will be felt most by those who truly cannot afford to be without a wage. Now is the time to learn about an insurance policy which can protect your money. While you still have some.

Time is running out.

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