Royal Mail Union Threatens Strike to Protect Pension Plan

[milly]

This is what I was trying to drive at earlier in this thread.

"The former Conservative pensions minister, Ros Altmann, has launched an extraordinary attack on the Bank of England for making pensions ruinously expensive for employers............QE, where the Bank of England creates money to buy government bonds, has the effect of pushing down the interest rate, or yield on government bonds. It means lower mortgage rates, and lower interest rates on bank deposits. But it also spells hardship for final-salary-based pension funds, as lower interest rates mean investments will not grow as much to meet the bill for paying future pensioners. So employers have to pay more in now to fill the gap..........Royal Mail is typical of companies in the private sector with expensive final-salary-style pension schemes. It faces a battle with its 140,000 workers over plans to slash its employer contribution from 45% of salary to 12%, claiming the cost was “simply unaffordable”."

Altmann said: “Taxpayers fund the enormous employer contributions which have been required to overcome the Bank of England pension scheme deficit, while Bank of England employees do not contribute at all. This may help explain why the Bank of England seems so complacent about the pension problems created by its policies. However, the problems are real for most employers and may undermine the effectiveness of QE itself. These side-effects need to be taken more seriously.”

First time I've agreed with a Tory on anything in a long long time
(OK - ever)

None of this is our fault - and it is not inevitable.

You are correct none of this is our fault but it is inevitable.
If the Bank of England hadn't unleashed QE you would be looking at much higher interest rates which would have crashed the economy due to the high amount of indebtedness in the UK population.
Many people would have lost their homes and house prices would of collapsed.
The question is which scenario do you prefer?

[Tman]

Traditionally the Far Left have welcomed political/financial instability as it both gives them a chance to say "see, we told you the system and capitalism are no good" and to hopefully gather new converts after the usual political swings to the Far Left or Far Right in such circumstances, so Jet, like most other SW readers, would rather QE (nor the 2008 bank bail-outs) hadn't happened.
As ever though, the plight of those at the bottom of the heap ( had these events not happened) is immaterial to the concepts and aims of these dreamers. "Omelettes and eggs" to paraphrase the World's numerically greatest genocidal maniac, Mao.

[jetblack]

If the Bank of England hadn't unleashed QE you would be looking at much higher interest rates...

5.5% before the credit crunch and the ensuing QE. This is also the long term average. DB scheme doing OK at this point.

...which would have crashed the economy

It crashed anyway, bigtime. We are discussing how the Govt. should have responded.

..due to the high amount of indebtedness in the UK population.

So the answer is for the Govt. to create more debt you think, in the form of £435billion QE money ? There's more household debt today than there was in 2008.

Many people would have lost their homes and house prices would of collapsed.

House prices did collapse and many are stuck (still) with negative equity.

You are correct none of this is our fault but it is inevitable.

It was a policy choice. The alternative was to let the free market work - isn't that what capitalism is supposed to be about ? There would have been consequences - but not necessarily ones that would have the same impact upon ordinary people like us ie. public sector "austerity" , pension scheme deficits. Don't you think it odd that Govt. intervention took place to finance an industry based around a ponzi scheme, at the same time that they are telling us that free market liberalisation was desperately needed in the postal sector ?

The question is which scenario do you prefer?

I would have preferred to have let RBS and the rest of them go to the wall, for there to have been a debt amnesty, and for a new publicly owned national bank to have been set up to make sure that any liquidity that was put into the economy (via QE) went to the people who needed it most. Not to create asset bubbles.
I would have preferred interest rates at 5.5% so that I could look forward to the decent retirement I have worked hard for.

[milly]

If the Bank of England hadn't unleashed QE you would be looking at much higher interest rates...

5.5% before the credit crunch and the ensuing QE. This is also the long term average. DB scheme doing OK at this point.

...which would have crashed the economy

It crashed anyway, bigtime. We are discussing how the Govt. should have responded.

..due to the high amount of indebtedness in the UK population.

So the answer is for the Govt. to create more debt you think, in the form of £435billion QE money ? There's more household debt today than there was in 2008.

Many people would have lost their homes and house prices would of collapsed.

House prices did collapse and many are stuck (still) with negative equity.

You are correct none of this is our fault but it is inevitable.

It was a policy choice. The alternative was to let the free market work - isn't that what capitalism is supposed to be about ? There would have been consequences - but not necessarily ones that would have the same impact upon ordinary people like us ie. public sector "austerity" , pension scheme deficits. Don't you think it odd that Govt. intervention took place to finance an industry based around a ponzi scheme, at the same time that they are telling us that free market liberalisation was desperately needed in the postal sector ?

The question is which scenario do you prefer?

I would have preferred to have let RBS and the rest of them go to the wall, for there to have been a debt amnesty, and for a new publicly owned national bank to have been set up to make sure that any liquidity that was put into the economy (via QE) went to the people who needed it most. Not to create asset bubbles.
I would have preferred interest rates at 5.5% so that I could look forward to the decent retirement I have worked hard for.

As far as I am aware there has been NO meaningful crash in the stockmarket or the housing market due to QE in fact the FTSE and Dow Jones have hit record highs in the last 18 months,also Halifax and Nationwide housing price indexes do not show any crash in housing.
The only thing the government should have done was safeguard depositors,they should have let the banks fail and let the market sort things out.
The problem is that letting the market do its thing would have put thousands out of work when interest rates spiked.

[jetblack]

I agree with some of that Milly.

But psssst - the free market, its rigged.

I'm a bit confused now though wether you think this whole thing is inevitable or not ?

You think it could have/should have been different, in that it should have all been left to the market in 2008 ? How then is the situation we are in today inevitable ?

You mean, perhaps, that you and I and the DB scheme would have been stuffed either way ?

[milly]

I agree with some of that Milly.

But psssst - the free market, its rigged.

I'm a bit confused now though wether you think this whole thing is inevitable or not ?

You think it could have/should have been different, in that it should have all been left to the market in 2008 ? How then is the situation we are in today inevitable ?

You mean, perhaps, that you and I and the DB scheme would have been stuffed either way ?

We do not have a free market as the Political elite in North America and Europe are beholden to large Corporations.
Large Corporations hate competition and like to pay little if any tax,if we had true Capitalism the working man or women would be much better off.
We should have followed the example of Iceland and let the banks fail,Iceland recovered very quickly after purging the system.
I am not sure how long Governments can keep up this charade as Central Bank's can print unlimited amounts of currency.
Do you think that with record Government and Household debt there can be a positive outcome in the future.

[jetblack]

Do you think that with record Government and Household debt there can be a positive outcome in the future.

Completely agree Milly - we have a debt based economy. Maybe this is the reason that interest rates are so low - to faciltate that debt. The banks produce the debt - and we have an economy disproportionatley reliant upon them/the financial services (now that our manufacturing based has been decimated and farmed out to China). Of course, the logical (and utterly absurd) conclusion to all this is that the more debt that is produced (by the banks) the lower the interest rate has to go, eventually into negative territory. ie. you are actually paying the bank to hold your money. Its already beginning to happen.
Maybe Iceland, whose interest rate is 5.25%, has a more balanced economy - I don't know. But we, as a country, are pandering to the bankers. Bankers who pay me 1% to lend them money - and then charge you 16% to borrow it on your credit card And not only that, for every £10 I lend them they are able to magic into existence another £90 from out of nowhere (fractional reserve banking) and lend that to you also at 16%.
I can't imagine how all this could go tits up

Re. house prices. Seems to me that QE has found its way into house price inflation/the asset bubble I was talking about. But even this is not spread out evenly. Where I live, I don't know what the Nationwide index says, but prices are stagnant and at pre 2008 levels. Many houses are on the market for a long time and quite a lot simply not selling at all. The London and South East are dragging up the national average.
Likewise with the FTSE/Dow - asset bubbles created by lots of money being pumped in from the central banks.

How does this benefit you and I and the Royal Mail Defined Benefit pension scheme ?

We've been had.

The CWU (and TUC) as well as the Labour Party need to lobby the Govt. for a change in interest rate/QE policy so that it might (for once) benefit the 99% ,including those that have saved for their retirement.

[milly]

Do you think that with record Government and Household debt there can be a positive outcome in the future.

Completely agree Milly - we have a debt based economy. Maybe this is the reason that interest rates are so low - to faciltate that debt. The banks produce the debt - and we have an economy disproportionatley reliant upon them/the financial services (now that our manufacturing based has been decimated and farmed out to China). Of course, the logical (and utterly absurd) conclusion to all this is that the more debt that is produced (by the banks) the lower the interest rate has to go, eventually into negative territory. ie. you are actually paying the bank to hold your money. Its already beginning to happen.
Maybe Iceland, whose interest rate is 5.25%, has a more balanced economy - I don't know. But we, as a country, are pandering to the bankers. Bankers who pay me 1% to lend them money - and then charge you 16% to borrow it on your credit card And not only that, for every £10 I lend them they are able to magic into existence another £90 from out of nowhere (fractional reserve banking) and lend that to you also at 16%.
I can't imagine how all this could go tits up

Re. house prices. Seems to me that QE has found its way into house price inflation/the asset bubble I was talking about. But even this is not spread out evenly. Where I live, I don't know what the Nationwide index says, but prices are stagnant and at pre 2008 levels. Many houses are on the market for a long time and quite a lot simply not selling at all. The London and South East are dragging up the national average.
Likewise with the FTSE/Dow - asset bubbles created by lots of money being pumped in from the central banks.

How does this benefit you and I and the Royal Mail Defined Benefit pension scheme ?

We've been had.

The CWU (and TUC) as well as the Labour Party need to lobby the Govt. for a change in interest rate/QE policy so that it might (for once) benefit the 99% ,including those that have saved for their retirement.

A good start would be to abolish the Bank of England and let the market set interest rates.
One size fits all Central planning never works.

[TrueBlueTerrier]

A good start would be to abolish the Bank of England and let the market set interest rates.
One size fits all Central planning never works.

Last time the markets set their own interest rates, it wasn't for the benefit of ordinary people. LIBOR - falsely inflating or deflating their rates so as to profit from trades, or to give the impression that they were more creditworthy than they were.

Just an opinion but we need more rules, not less. Just like we need Corporations to pay their fair rate of tax, it would certainly make a dent in UK national Debt if they did.

[jetblack]

I'm no expert in this but it seems to me that when the central bank sets the interest rate, it is effectively fixing the price of the pound. We have to then trust that the central bank (the Bank of England in our case) is fixing the price at a level that is acting in our interests (by "our", I mean the majority of the UK populous).
At the minute, as is evident from this whole thread, the interest rate is not working in our interests at all.

What we really need is a [currency]system by which we don't have to place a massive amount of trust in a central authority - that amount of trust/power placed in the hands of the few is never going to end well - we need a system whereby the trust is "decentralised", where I don't have to trust any one authority, where the supply of the currency is fixed and not at the whim of central banks to manipulate, and whose price is reached by consensus (not diktat).

Technology, the internet and cryptography has made, for the first time in history, such an alternative possible.

[Tman]

This bloke gets worse every day.
So no Bank of England, but an organisation where "trust is decentralised" whatever that's supposed to mean.
How long before such an organisation becomes the tool of either Big Business or the wealthy few, and people like Jet are then calling for a central non-political bank answerable to the government of the day?
Rather like the dear old BofE?
Specious beyond belief. Stick to Postie-ing.

[jetblack]

OK - the news is today that the Bof E (the MPC) could cut rates to 0.1% before christmas. Reason being a) it wants the pound to be cheap to boost exports (red herring - we don't produce anything anymore to export) and b) "the prospect of still cheaper money has boosted financial markets and it fears a backlash if it fails to deliver [more]"

The DB scheme isn't getting any positive exposure to the financial markets (ie the FTSE) so its of no interest to us one way or the other. We are getting the short end of the QE/interest rate stick, with the pension fund being overexposed to Govt. bonds/gilts.

I dont trust the Bank of England.

They have, BTW, been looking at distributed ledgers (the B of E that is) - they can see the benefit for network resilience and settlement times. But they can only see the benefit when they still have the control over the issuance of the digital cash
They see no benefit at all, presumably, when the "issuance" is outwith their control.

The blockchain genie is out of the bottle Mr. Carney - no putting it back now sir.

[Tman]

(red herring - we don't produce anything anymore to export) .

Just a quick link and read for anyone still taken in by this bloke's guff-


http://atlas.media.mit.edu/en/profile/country/gbr/" onclick="window.open(this.href);return false;

[toomuchcoke]

Bankers who pay me 1% to lend them money - and then charge you 16% to borrow it on your credit card

Interesting personal choices ... I lend my money to banks at 3% & 5% and my credit card is charging me 0%!

[jetblack]

Bankers who pay me 1% to lend them money - and then charge you 16% to borrow it on your credit card

Interesting personal choices ... I lend my money to banks at 3% & 5% and my credit card is charging me 0%!

Its people like you that are ruining this country

You need to advise the pension scheme trustees.