Three Thousand Versts of Loneliness

Last week, Shadow Sectretary of State, Owen Paterson, conducted an exchange with Paul Goggins, the NIO’s Minister of State, about the fate of PMS savers. The transcript can be read here . To digress briefly, apart from Paterson’s questions, you can also sample the horrendous, obsequious attitude of Sylvia Hermon to Goggins and his superior, Shaun Woodward. “Excellent ministers for Northern Ireland”! On what planet does this woman live? Thoroughly inaccurate and cringe-making, at the same time! One of the controversies these ‘excellent ministers’ have presided over is the failure to reimburse Presbyterian Mutual investors, rendering them, thus far, the only British savers who have lost out, because of the banking crisis. Paterson promises a Conservative secretary of state will “stand up for the people of Northern Ireland” as regards this issue. I hope he is right. One group which has suggested a possible solution to the PMS situation is the Cobden Centre . In today’s Belfast Tel...

A quick further mention of the Cobden Centre's scheme to reimburse Presybterian Mutual investors. The discussion has continued apace over at the organisation's blog. Toby Baxendale, who outlined the plan initially, explains in detail the reasons why the measure would not create inflation. the loans will recover £200m to £250m according to the Administrators. At the moment the demand deposits of £300m still exist in the UK money supply M4 definition which is not only money, but money and other near money substitutes. With our definition of Actual Money Supply, this is still the same. Once the PMS has been wound down and all loans collected, there will be a shrink of the money supply to the exact tune of this loss. So anywhere between £50m and £100m. This is deflationary and will happen in some years time. We could let this happen and the creditors will take a hair cut in the normal way we have become accustomed to. Or we could print £300m of cash now and give to the demand de...

On the Cobden Centre website Toby Baxendale explains a piece of high economics which he claims offers a pain free method to refund Presbyterian Mutual customers. The society’s investors are considered the only private savers in the UK to have lost deposits due to the banking crisis. The article forms a wider critique of institutions which invest savers’ money. By a process of financial alchemy banks, building societies and other organisations, conjure credit from the ether, which increases the money supply and leaves the depositor reliant on an illusion that his / her money is being kept safe until he / she needs it. Baxendale wants to see legislation which provides savers with the tools to dictate how much risk a bank or building society can take with their money. It is a scheme grounded in conservative principles of sound money and it offers a useful corrective to the idea that conservative economics are in thrall to financial wizardry, or the banking system. Savers, and pol...