Queues Outside Northern Rock
Queues of people outside a bank, worried about their money and wanting to withdraw it as soon as possible. It is not a familiar site these days and takes us back to images we have seen of the problems of hyper inflation and bank crashes in Germany in the 1930′s.
This is not history. It’s happening now as I write this and it isn’t happening at a little bank we have never heard of. This is one of the largest mortgage lenders in the uk.
Northern Rock has made announcements that there is no need to be concerned. The banking industry has been telling us there is nothing to worry about and even the Chancellor of the Exchequer has told reporters that people should not worry about the security of their money. So why are people worried?
It’s very simple. We know we cannot trust these people. We don’t believe them when they make their announcements even though it may be in this case things will turn out ok. Like the boy who cried ‘wolf’ too many times, the banking industry has told us they care about customers when all the evidence shows they only care whilst they can make money from you.
Reassurances from companies and politicians are always worded carefully and hide the real story. The finance industry and politicians have been treating their customers and voters with disdain for years. The penalty bank charges issue has demonstrated beyond any doubt that banks care little for their customers and feel they can take advantage of them at every opportunity. So why should we think they care about us? If they see the choice as between their profits and our well being they will put profits first. That may be the nature of business but they should not pretend and lie about caring about customers.
The share price of Northern Rock dropped by over 30% on Friday and it has dropped further today. This is a staggering fall from grace for a company that has even the chancellor of the exchequer talking them up and attempting to reassure the public. Both customers and shareholders are worried and who can blame them. Customers are concerned about their savings as are the shareholders. It may prove to be simple nervous panic and it may turn out that now is a good time to invest in Northern Rock but the simple fact is we don’t know and we are wary of those who have an interest in persuading us all is well.
The international banking crisis has proved that the financial industry is not to be trusted. More concerned with personal bonuses, profits and greed with little regard for the future and, it would seem, a complete lack of common sense or even the ability to work out sums and foresee risks that most ordinary people would be able to see. Greed has clearly obscured both vision and common sense.
We must hope that this is a temporary blip and that things can return to normal soon but normal should not mean people in the city getting huge bonuses just for doing their jobs. Nor should it mean people looking at short term profits with a total disregard of long term effects. The banking industry was famous and, perhaps, derided for it’s old fashioned ideals and business practises. It would seem that ditching those old ideals has been the downfall of the industry. Cautious investment should be the name of the game and that would seem to apply to both the banking industry industry and their customers and investors.
