Friday 24 January 2020

Declan Lynch: It's just like old times as banks act the goat

That their latest idea was taken seriously is a mark of the money-men's triumph

Declan Lynch

Declan Lynch

SO the banks are lobbying Michael Noonan to reduce the interest rates on State Savings.

They are claiming that the relatively high rates available to those who put their money in the old Post Office are distorting the market. That the banks, with all their troubles, just can't compete with those rates that An Post is offering.

And so, to be fair, they should be brought down to levels which are closer to the very bad rates that the banks are offering – ideally, I suppose, they should be just as bad, if not actually worse.

And then, things would be grand.

I first heard this story on It Says in The Papers (it was originally reported in The Examiner) and naturally I expected that a day's light entertainment would ensue. That Morning Ireland would be calling Oliver Callan, or whatever satirist was available at that hour, to explore the comic possibilities. Because I mean, you gotta laugh.

And yet, nobody was laughing. Nor indeed were they crying, which was the next best alternative. It is a mark of the triumph of the money-men that this latest brilliant idea of theirs was reported in a regular fashion, as just another constructive suggestion put out there by our friends in the financial services sector, "lobbying" the Government as they do.

Yet it has a profound resonance. Most Irish people had their first financial experience in the post office, and like most virginal outings, while it wasn't spectacular, it was all that could be expected at the time.

You would be given a Post Office savings book, and told that if you put money into it, and left it there, after a while you would get a bit extra added on to it. And that, essentially, was how the world worked.

And when you had grown out of this simple system of savings and investments, they told you that you would graduate from the post office to the bank, where a somewhat smarter and more sophisticated set of arrangements were in place, to cater to your adult needs – that you would grow out of your adolescent gropings, into a range of more exciting and slightly riskier activities, including a form of bondage. As it were.

What they didn't tell you was that the Post Office would eventually start to look like the smart option, while the banks would become temples of mere depravity.

They didn't tell you this, because they did not know it at the time. And when eventually they did know it, even then they resisted that knowledge.

Certainly during the glory days, if anyone declared that they were putting their money in the Post Office, not only would they not be encouraged to take that modest position, they would be mocked. The Post Office was considered to be the domain of the elderly and the eccentric, of unfortunate poor eejits who were oblivious to the magic of the money-men, this roaming army of "financial advisers" telling us that we should be diversifying our portfolios.

And it is true, that the An Post investor would not have a diverse portfolio. They would not have any involvement in complex financial "products" or instruments, and they would have no need to be checking out the Dow, the FTSE or the DAX.

But what they would have, at the end of it all, was money. Indeed they would have a better than even chance of actually having more money than they started with. A miracle!

Yet this miracle was largely unappreciated, even after all the diversified portfolios had diversified their clients' money out of existence. Until quite recently, putting money into the Post Office was still regarded as just slightly more intelligent than burying it in a black sack in a hole in the ground – though again, the black sack option, in retrospect, would have yielded a relatively acceptable return.

Now at last it seems that some of the smart money is going, not into the banks, but into State Savings –

though in truth that is where the smart money was all the time.

And frankly, that money doesn't have to be too smart to realise that the institution which pays a higher rate of interest is the preferred choice over the ones which pay a much lower rate, and which, in passing, have destroyed the world.

They are still destroying Ireland, and apparently they have not quite finished the job yet – this latest idea needs to be seen in the light of all those wonderful ideas which were supposed to "encourage the banks to start lending again".

And in the broader span of history, it may also be useful to see it in the light of Britain in the Seventies, when Thatcher tackled the union barons, with their restrictive practices which were strangling an already sick country.

Yet Thatcher was always a bit in love with the money-men, whose delinquency can now be compared with that of the fat-cat union bosses – there's the same refusal to engage in any meaningful way with the forces of reason, the same power-drunk disdain for anything pertaining to the common good.

But the barons were broken while the banks are still in there, "lobbying", on this occasion seeking to interfere with an institution which actually managed to hold on to its clients' money, and even throw in a few extra quid.

Just like old times.

Irish Independent

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