Green and Fiscal Ineptitude
This week on Facebook: The media are full of self-righteous indiction about Sir Philip Green and the BHS scandal, particularly when taking some moral high ground on the issue. Successive governments have always use other people’s money to fund their fiscal profligacy be it financiers or taxpayers, while those in government remain financially immune from their own ineptitude. Their financial consequences are avoided by governments, their financial advisors and bankers placing an ever increasing burden on the taxpayer. Governments run budget deficits that can never be large enough to repay the national debt but large enough to cover interest payments on monies borrowed (at least at the moment — countries do default). This borrowing includes the issue of gilts, the government’s legal Ponzi scheme, where future interest is guaranteed by yet another burden on the taxpayer.
Sir Philip Green has not broken any laws but is hardly the pillar of rectitude to whom Blair gave a knighthood and Cameron a job. The indignation at seeing another tycoon literally sailing off on his luxury yacht at the taxpayer’s expense is fuelled by media reporting and the government’s response to the debacle at BHS. Unable to make a legal case, both have made the case against Green one of morality, meanwhile David Cameron — the former Prime Minister — heaps rewards on his cronies that yet again are taxpayer funded. Morality is a word that seems to roll easy off the tongues of politicians but is rarely found in their behaviour, the criticism of which led to Daniel Defoe being pilloried.
The financial institution of Goldman Sachs is being criticised now for its part in BHS debacle. This is the Goldman Sachs used by the government in the Royal Mail fiasco. Goldman Sachs had previously bankrolled Green’s bids for BHS alongside HBOS, this is the same HBOS that needed a £20.5bn injection from UK taxpayers to prevent it from crashing. Each government fiscal ineptitude piling on an ever increasing list of fiscal ineptitudes and an ever increasing burden on the taxpayer.
Why in 2013 were government appointed regulators still complacent after a long line of financial disasters? In 2001 the Financial Services Authority was directed by the government of the day not to discourage the launch of new financial products, and even now (to a paraphrase Nic Cohen’s conclusion): Governments believe that they can go back to a lost bubble world and its ruinous consequences, which demands that the working and middle classes bail out speculators, who earned more in a year than they will earn in a lifetime.
Monday 1/8/16 The French are dragging Christine Lagarde into court, while we watch Philip Green quite literally sail away in his yacht: Not only will taxpayers like you and me find ourselves subsidising a rather wealthy man, but others could be tempted to offload their obligations likewise. This is where moral hazard comes in. The little people get hit, the big guys sail away, and the government steps in to mitigate the damage.
Tuesday 2/8/16 Lashed by Lasch! Morality is a subject I return to quite often — hoping there is no implication that I may hold some high ground — I don’t. I’m sure that moral indignation is a hypocritical stance held by us all, as Lasch said, “The trouble with modern culture is that we have lost the shared social and legal boundaries that shame once policed”.
Wednesday 3/8/16 Goldman blamed for role in doomed deal leading to BHS failure: A parliamentary report into the affair finds that Goldman’s involvement helped Mr Chappell, a former racing driver with no experience of retail, persuade others of the credibility of his bid. “They enabled their prestigious name to be cited as that of ‘gatekeeper’,” the report said, adding that the bank “did not seek to disabuse” the parties to the deal of their confused understanding of Goldman’s involvement.
Thursday 4/8/16 Goldman Sachs faces further questions from MPs: So the blame game continues with only thing remaining clear being the financial security that elected political representatives place on their own sinecures while burdening working and middle class taxpayers with the consequences of their own fiscal imprudences.
Friday 5/8/16 Passing the pensions parcel: The underlying problem of the clash between declining profits and growing pension needs only comes under the spotlight when a sickly company finally dies.
There was a time when morality plays were a source of entertainment and perhaps the only thing that has changed is the medium in which such tales of morality are presented. I doubt very much if those watching a morality play felt differently from those watching a film with an intended moral message. Morality for the masses has always been a feature of a society attempting to justify its financial and spiritual disparities. Morality plays still abound in the form of film and like a popular morality play a film must foremost entertain the audience — morality is a remedy easy to dispense and difficult to swallow.
A recent film called Waffle Street, is the true story of James Adams and his riches to rags — to what I assume is a comfortably off existence. The story of James Adams is the moralistic tale of someone who turned from making a career out of corporate greed to that of creating a life based on work with honesty and integrity. Thank goodness James Adams chose work in a waffle restaurant — imagine the outcome had he chosen to go into politics forever searching and never finding the Holy Grail of honesty and integrity.
The morality film that I probably enjoy watching the most is that of Larry the Liquidator, of course the film version of Other People’s Money has a different, tacked-on, stereotypical, happy, Hollywood ending—bad endings do not sell films.
Kate (Attorney): Why so uptight? It’s not illegal.
Larry the Liquidator: It’s immoral. A distinction with no relevance to lawyers. But it matters to me.
The use of other peoples money, particularly that of the taxpayer is nothing new. To paraphrase Peter F. Drucker from his book The Practice Of Management¹, it could he said that: ‘The first responsibility of government is to cover the costs for the future. If this social responsibility is not met, no other social responsibility can be met.’
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