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Rotten Borough of Rushmoor loses 2 million

Keith Parkins | 13.10.2008 16:41 | Globalisation | Repression | Social Struggles

The Rotten Borough of Rushmoor has lost 2 million of local taxpayers' money in the Icelandic banking crash.

The Rotten Borough of Rushmoor has lost 2 million in the collapse of Icelandic banks. Small beer compared with what some councils have lost. Kent has lost 50 million, Nottingham 42 million.

 http://cllrclifford.blogspot.com/2008/10/rushmoors-finance-directors-letter-to.html
 http://www.dailymail.co.uk/news/article-1075929/Council-taxes-rise-25-years-collapse-Icelandic-banking--Prescott-blame.html
 http://www.guardian.co.uk/society/2008/oct/09/localgovernment.banks
 http://www.independent.co.uk/news/business/news/councils-trapped-in-1631bn-black-hole-956683.html?startindex=0

The Local Government Association say councils were not imprudent for investing money in Iceland. As the body that represents local councils, well they would say that wouldn't they! Or are they just having a laugh at our expense?

 http://tpa.typepad.com/campaign/2008/10/excuses-excuses.html

If the councils are not at fault, then who is, the local taxpayers who are expected to foot the bill?

It was common knowledge that there was problems in Iceland and this has been known for months. Both the Tories and Lib Dems have said they made warning noises in Parliament about Icelandic banks.

The claim by LGA does not wash, especially when one of their members, Brighton and Hove City Council, decided it would not be prudent to invest in Iceland.

 http://www.brighton-hove.gov.uk/index.cfm?request=b1153364

Councillor Jan Young, Brighton and Hove City Council:

'We have no deposits with Icelandic banks. We suspended transactions with the one we had on our books Kaupthing, Singer & Friedlander about a year ago after picking up concerns in the marketplace about Icelandic banks expanding too quickly.'

'Our watchword is caution. We're very aware of our responsibilities in managing taxpayers' money and are very careful both about who we invest with and how much we invest.'

'Clearly the overall financial situation is changing quickly and in an unpredictable way. In the current climate we will continue to monitor the situation on a daily and indeed hourly basis.'

To reiterate what Jan Young, councillor responsible for finance at Brighton and Hove had to say: 'We have no deposits with Icelandic banks. We suspended transactions with the one we had on our books ... about a year ago after picking up concerns in the marketplace about Icelandic banks expanding too quickly. Our watchword is caution.'

If the watchword at Brighton and Hove was caution, and they picked up concerns a year ago, then the conclusion to be reached is that Rushmoor and other councils were reckless with our money, and contrary to the claims made by the LGA, councils that put taxpayers' money in Iceland did not behave in a prudent manner.

Ben Yearsley, investment manager at financial adviser Hargreaves Lansdown:

'Many in financial circles had no sympathy for the council money men. You have to question the logic of why a local authority like Kent has 50m in an Icelandic bank. Why wasn't money like that deposited with gilts, which are more secure? A Government body or public bodies should not have been taking risks with money on deposit.'

'There have been stories about the vulnerability of Icelandic banks for weeks and you have to consider why they were offering such a high rate. They were offering a high rate because they wanted money to come in.'

Iceland has a population of a few hundred thousand. Where was the money coming from to buy up half the UK High Street, to own pub chains, to buy up West Ham football club, to finance management buy-outs? We now know the answer, it was coming from tin pot councils like Rushmoor who were playing in a Big Boy's Game where they were completely out of their depth, as were a few of the big boys themselves. Like for example speculator and asset stripper Robert Tchenguiz, who has lost an estimated 800 million!

 http://www.guardian.co.uk/business/2008/oct/09/investing.moneyinvestments

LGA are trying to pass the buck. Someone has to pay for this fiasco, and it should not be the local taxpayers, either with reduced services, higher local taxes, or borrowing.

If the money is not recovered from Iceland, as may well be the case as the country is bankrupt, then it has to come from councillors. If needs be, they must be surcharged to recover the money. Maybe then they will learn not to rubber stamp what is put before them.

Even if the money is recovered, those who got us into this mess must resign or be fired.

Many councils took advice from a wholly-owned subsidiary of Crapita!

Do these councils have any more of our money invested overseas? If yes, then it must be repatriated as soon as possible. If invested locally, it will create or help support local jobs.

Some towns are still lucky enough to have local shops left. Sadly there are few left in either Farnborough or Aldershot thanks to the the Rotten Borough of Rushmoor doing its best to destroy local businesses. Too many towns are clones towns with the same High Street names and out-of-town supermarkets. Maybe, if we are lucky, with many of them in debt to failed Icelandic banks, they will go bust. Where local shops do still exist, the council could create and underwrite a local currency (cf Totnes and Lewes), redeemable in local shops and business.

 http://www.indymedia.org.uk/en/2008/10/410292.html
 http://www.climatespace.org/?p=1081

It is important to keep money flows within the local economy. If we look at the developments the Rotten Borough of Rushmoor has pushed, such as the destruction of Farnborough town centre or the edge-of town retail development earmarked for Aldershot, it destroys local businesses, bleeds money out of the local economy. Yet again failing the local taxpayers and local community.

 http://www.indymedia.org.uk/en/2008/06/401765.html?c=on
 http://www.indymedia.org.uk/en/2008/07/402534.html
 http://www.indymedia.org.uk/en/2008/09/408508.html
 http://www.indymedia.org.uk/en/2008/06/401983.html
 http://www.indymedia.org.uk/en/2008/08/405354.html

How many local councils have borrowed money to speculate?

 http://www.indymedia.org.uk/en/2008/10/410350.html
 http://www.indymedia.org.uk/en/2008/10/410316.html

In the US, the FBI is mounting criminal investigations into the banking crisis. The same should be happening here. The Serious Fraud Squad should be investigating the Rotten Borough of Rushmoor for playing footloose with our money, and at the very least, an inquiry by the Audit Commission. After all, this will not be the first time Rushmoor has behaved unlawfully.

The street parking in North Camp area of Farnborough is unlawful. It is unlawful for Rushmoor to obtain money on an unlawful scheme, and yet that is exactly what they are doing. Leeds is under criminal investigation for similar activities. Worst still, traders are suffering. The last thing they need as we head into a recession.

 http://www.indymedia.org.uk/en/2008/07/404310.html?c=on
 http://www.indymedia.org.uk/en/2008/07/404836.html

High, if not obscene, salaries and bonuses were justified on the grounds that everyone was getting rich. With the taxpayer picking up the bill, we now know it was not true.

If you pay peanuts you get monkeys. At Rushmoor they got gold-plated monkeys with gilt-edged, inflation proof salaries.

Richard Fuld, former boss of the now bankrupt Lehman Brothers, has a $14 million ocean-front home in Florida, his wife has an art collection of million dollar paintings. Reputed to have made $500 million out of the failed Lehman Brothers, Fuld says it was closer to $310!

In contrast, many old age pensioners and others on low income and state benefits, wonder how they will get through the winter.

 http://www.indymedia.org.uk/en/2008/09/408783.html?c=on

As always, socialism for the rich, neo-liberalism for the poor.

In the UK, sub-prime lenders were deliberately targeting those they knew could not afford the debt, people on benefits, people in mortgage arrears, people with County Court Judgments against them for debt. These individuals did not apply to take out a loan or mortgage, they received cold calls, home visits and hard sell. All that mattered was that they had some equity in their property to cover the loan. The loans were packaged up and sold on. No one knew what they were buying, but if the price went up, it must be good. The Economics of the Greater Fool. Eventually the world ran out of fools. Those who could not afford the debt and were now in danger of losing their homes, were offered debt management services by the very same companies that pressurised them into taking out the loan.

 http://www.businesspundit.com/sub-prime/

The banking crisis and Rushmoor's part in it is as nothing to what is about to come. We are about to hit the limit of the earth's natural resources. What we are seeing is a small taste of things to come.

 http://www.indymedia.org.uk/en/2008/10/410337.html
 http://news.bbc.co.uk/1/hi/sci/tech/7662565.stm

Gordon Brown has been willing to toss 500 billion, a third of our national economic output, at failing banks. All to no avail. George W Bush has pumped nearly a trillion dollars into the US banking system, and still bank shares go into free fall.

 http://www.indymedia.org.uk/en/2008/10/410345.html
 http://www.schnews.org.uk/archive/news650.htm
 http://www.schnews.org.uk/archive/news647.htm
 http://www.schnews.org.uk/archive/news649.htm

This morning Gordon Brown injected 37 billion into three banks, 20 billion into Royal Bank of Scotland giving the taxpayer a 60% stake and 17 billion into HBOS and Lloyds TSB giving the taxpayer a 40% stake. Nationalisation in all but name. Strings have been attached. Lending has to to be made to small businesses, which is good news as that is where jobs are created. But mortgages to be brought back to the levels of a year ago is sheer insanity, as that is what caused the property bubble, a major cause of our current woes, that and High Street consumerism, all supported by a mountain of debt.

 http://news.bbc.co.uk/1/hi/business/7668020.stm

Germany is to spend 500 billion euros to prop up its ailing banking sector.

Iceland is effectively bankrupt.

Speaking with an economist in the Czech Republic, she said they had no banking crisis.

A couple of years ago I was at a meeting with Treasury officials. It was an open secret that we were staring into the abyss. We were where we were before the Wall Street Crash and the Great Depression. The problem was debt: personal debt, government debt and national debt. No one knew what to do, no one dared voice their concerns for fear it would precipitate a loss of confidence and cause markets to crash.

In the past banks invested in companies that produced added value. The economy grew. Now we have consumerism, zombies in the shopping malls buying the latest tat from China, and soaring house prices. All fueled by cheap oil and floating on a mountain of debt.

What got us out of the Great Depression was World War II and Keynesian economics. John Maynard Keynes has had short thrift of late. Eclipsed by Lawrence Freedman and the Chicago School and their failed experiments in Latin America.

Franklin D Roosevelt brought in the New Deal to drag the US economy up by its bootstraps out of the Great Depression that followed the Wall Street Crash.

We are at that same epoch in history. We have to move forward with a Green New Deal. A Marshall Plan for the 21st Century. We have to grasp the opportunity to construct a fairer society. It cannot be business as usual, only this time propped up by the taxpayer.

 http://www.neweconomics.org/gen/greennewdealneededforuk210708.aspx

websites

 http://www.neweconomics.org/
 http://www.taxpayersalliance.com/
 http://www.heureka.clara.net/gaia/

reference and further reading

Stephen Bates, Rebellious town of Tom Paine and bonfire revels prints own banknotes, The Guardian, 10 September 2008

John Bingham, Town launches its own currency as rival to the pound, Telegraph, 9 September 2008
 http://www.telegraph.co.uk/news/uknews/2710865/Town-launches-its-own-currency-as-rival-to-the-pound.html

Lester R Brown, Plan B 2.0, Norton, 2006
 http://www.earth-policy.org/Books/PB2/Contents.htm

Noam Chomsky, Failed States, Metropolitan Books, 2006

Crash! Bank! Wallop!, In the City, Private Eye, 3-6 October 2008

Jared Diamond, Collapse: How Societies Choose to Fail or Succeed, Penguin, 2005

John Kenneth Galbraith, The Great Crash 1929, Penguin, 1961

John Kenneth Galbraith, The Affluent Society, Penguin, 1970

John Kenneth Galbraith, Money, Penguin, 1976

John Kenneth Galbraith, The Age of Uncertainty, BBC, 1977

Julie Hyland, Brown’s National Economic Council consolidates government by the super-rich, Indymedia UK, 13 October 2008
 http://www.indymedia.org.uk/en/2008/10/410681.html

Internet buyers snap up currency, BBC news on-line, 15 September 2008
 http://news.bbc.co.uk/1/hi/england/sussex/7617637.stm

Paul Krugman, The Great Unravelling, Allen Lane, 2005

Jerry Mander & Edward Goldsmith (eds), The Case Against the Global Economy, Sierra Club Books, 1996

Susan Meeker-Lowry, Community Money [in Jerry Mander & Edward Goldsmith, The Case Against the Global Economy, Sierra Club Books, 1996]

George Osborne, The job needs doing - but this bail-out is no triumph, Evening Standard, 13 October 2008
 http://www.thisislondon.co.uk/standard/article-23571855-details/The+job+needs+doing++-++but+this+bail-out+is+no+triumph/article.do

Keith Parkins, Localisation: A Move Away From Globalisation, November 2000
 http://www.heureka.clara.net/gaia/local.htm

Keith Parkins, A sense of the masses - a manifesto for the new revolution, October 2003
 http://www.heureka.clara.net/gaia/democracy.htm

Keith Parkins, Curitiba Designing a sustainable city, April 2006
 http://www.heureka.clara.net/gaia/curitiba.htm

Keith Parkins, Transitions towns, Indymedia UK, 9 October 2008
 http://www.indymedia.org.uk/en/2008/10/410292.html?c=on

Keith Parkins, Beyond sustainability, to be published
 http://www.heureka.clara.net/gaia/

Keith Parkins, Sustainable living, to be published
 http://www.heureka.clara.net/gaia/

George Soros, The Crisis of Global Capitalism, Little, Brown and Company, 1998

Rob Sharp, They don't just shop local in Totnes - they have their very own currency, The Independent, 1 May 2008
 http://www.independent.co.uk/news/uk/this-britain/they-dont-just-shop-local-in-totnes--they-have-their-very-own-currency-818586.html

Michael H Shuman, Going Local: Creating Self-Reliant Communities in a Global Age, The Free Press, 1990

Joseph Stiglitz, Globalization and its Discontents, Allen Lane, 2002

Towns banking their own currency, BBC news on-line, 2 April 2008
 http://news.bbc.co.uk/1/hi/wales/south_west/7326212.stm

UK needs Green New Deal to tackle triple crunch of credit, oil price and climate crises, New Economics Foundation, 21 July 2008
 http://www.neweconomics.org/gen/greennewdealneededforuk210708.aspx

Keith Parkins
- Homepage: http://www.heureka.clara.net/gaia/

Comments

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Rushmoor's missing millions

15.10.2008 15:34

Rushmoor's missing millions

Tucked away on page three of the local rag is coverage of the millions lost by local authorities in the Icelandic banking collapse. Millions of pounds of local taxpayers' money lost due to town hall incompetence does not it seem merit front page coverage. [Millions invested in Iceland Banks, Farnborough Mail, 14 October 2008]

In total, councils in the local area have between them lost £32 million. Plenty of excuses, but not a single chief executive offers an apology, not a single one admits to any wrong doing, not a single one does the honourable thing and offers to resign.

Rushmoor had £2 million invested in Glitnir. In a statement to the local rag Rushmoor chief executive Andrew Lloyd states: '[Rushmoor] only invested in Glitnir because it was an A-rated bank.'

This statement is simply not true. Glitnir had been downgraded by the credit rating agencies.

In January, Moody's Investors Service warned that it was planning to cut ratings on the main Icelandic banks. A month later it downgraded the biggest, Glitnir, Kaupthing and Landsbanki, from C to C-minus. In April, Standard & Poor's raised concerns about Glitnir, downgrading it from A-minus to BBB-plus, at the time the lowest rating of any western European bank.

In a statement to councillors, Rushmoor Finance Director Peter Gardner said:

'I have been closely monitoring with the finance team the recent turbulence on the London and international money markets.'

This begs the question what were they closely monitoring? It clearly was not the credit ratings or the warnings about Icelandic banks. Nor were they apparently heeding the warning signs.

Brighton and Hove pulled their money out of Iceland a year ago, because the signs were not good.

 http://www.brighton-hove.gov.uk/index.cfm?request=b1153364

Arlingclose, had been warning their public sector clients for the last two years of the dangers of investing in Iceland. According to Mark Horsfield, director of Arlingclose: 'These banks have been getting steadily worse for quite a long time.'

The signs were there, but apparently not seen by Gardner and his financial team, even though they were 'closely monitoring the recent turbulence on the London and international money markets.'

In his statement to the local rag, Andrew Lloyd goes on to say: 'it is likely that we will receive some of, or possibly all of, the deposit back.'

Is this wishful thinking? Icelanders believe in elves. Does Lloyd believe in faeries? What part of the word bankrupt does he not understand?

Maybe Lloyd would care to elaborate on how he intends to recover the money he has lost.

Even in the highly unlikely event of the elves and faeries returning all or part of our missing millions, those who have played footloose with our money should be fired or forced to resign – chief executive, finance director, leader and deputy leader of the council.

Keith


It gets worse!

16.10.2008 14:47

Were no lessons learnt from the crash of BCCI in 1991?

Apparently not.

Rushmoor finance director Peter Gardner assured councillors he and his team were closely monitoring the financial situation. Was this his idea of a joke?

How was this done, by reading tea leaves perhaps?

He seems to have missed the warning in the Sunday Telegraph way back at the beginning of the year. A bit hard to miss when the headline read: 'Is Iceland heading for meltdown? A Northern Rock-style crisis is threatening its entire banking system'.

Maybe that was a little too subtle for a town hall jobsworth to comprehend.

In February, both the Sunday Telegraph and the Sunday Times more than hinted at a meltdown in Iceland.

Early this year the signs were not good. Did Gardner not notice that the Icelandic Kronor was falling, or that there were no assets in Iceland? Did it never occur how a remote Arctic country could possibly be underwriting the massive expansion of its banks?

I assume Gardner also missed the warning by Professor Richard Porter, an expert on Iceland, when he told the Financial Times in March: 'The question arises whether the banks are not just too big to fail, but too big to rescue.'

Where else does Rushmoor have our money invested? Banks in Cyprus, Ireland, India, Nigeria, all of which like Iceland, that have been offering rates that are too good to be true, and as we have learnt with Iceland, were too good to be true. Or maybe Dubai, another hot favourite, with no real assets.

What other investments has Gardner succumbed too? Maybe RBS or HBOS. Or perhaps a little overseas flutter, AIG or Lehman Brothers maybe?

Westminster, in addition to losing £17 million in Iceland, has also lost £6 million invested in Lehman Brothers, AIG and HBOS.

Gerrymandering and losing money in failed banks is nothing new to Westminster. Westminster lost £1.5 million in BCCI under the watchful eye of Dame Shirley Porter. She also kicked council tenants out of their homes to rig local elections.

Not unlike Rushmoor giving the go-ahead for Pavilion to kick out its tenants at Firgrove Court in order that their favourite developer KPI/St Modwen could go ahead and trash Farnborough town centre. Three Rushmoor councillors, board members of Pavilion, also sat on the planning committee that gave the green light. Three councillors subsequently found guilty by the Standards Board for England of a very serious offence.

Any Rushmoor councillor who thinks they are beyond the law, may care to have a chat with Dame Shirley holed up in Israel, unable to return to UK because of pending criminal charges.

Mayor Boris may wish to think twice. His appointed deputy Sir Simon Milton is a former Porter protégé and until appointed as Deputy Mayor of London, former leader of Westminster.

We need a full list of where Rushmoor has stashed our money, including terms.

Why is Rushmoor sitting on such a large pile of our money? According to chief executive Andrew Lloyd in a recent statement to the local rag: 'At any one time we have £45 million in deposits in banks. This is capital money not revenue.'

A contingency fund is one thing, but this far exceeds any contingency fund.

The role of a finance director is to safeguard public assets, not use them for speculation. Gardner has spectacularly failed to discharge his responsibilities, and for that reason he must go.

We can no longer rely upon the Audit Commission to investigate as they have joined the growing list of public bodies to have lost money in Iceland.

 http://news.bbc.co.uk/1/hi/uk_politics/7673248.stm

Keith
- Homepage: http://www.heureka.clara.net/surrey-hants/


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