Savers, cash cows for the banks and the government to milk at will

“Until we are in a position where our savings are of value to the banks and deposits are competed for, then savers will simply remain a source of cheap money – cash cows for the banks and the Government to milk at will.” However, that is not going to happen!

It is now clear that the attitude of the new government towards savers is identical to that of the last. They are similarly prepared to exploit the provident to allow the banks to rack-up their profits, and to keep Gilt yield artificially low. Never have there been such large and outrageous margins between what the banks charge borrowers to borrow the funds lent to the banks by savers until now! Banks are paying as little as 0.5% per annum to savers but lending out their money deposited at as much as 20% per annum or even more; that is a margin of 19.5% which is amoral, when savers are losing their saved value. Historically this margin has always been of the order of only 2% or so.

It is thus clear that there will be no change of attitude by the government whatever representations are made to it by SOS or anyone else. Savers thus have to do something either by themselves individually, or collectively via SOS. If SOS do not organise some sort of action soon, then it will surely become a white elephant. There is really only one option now left for UK savers, and that is to move their savings out of the UK to other countries where the central bank rate is much higher (and thus savings rates are much higher) and whose currencies are not at such high risk as Sterling is now going to be, due to the new government's failure to quickly and objectively address the long term severe economic problems, and public debt. All the signs are, and the governor of the BoE has recently stated such, that UK inflation is going to be allowed to rip out of control; this will cause Sterling to fall further. So savers cannot afford to wait any longer, unless they want a large portion of the money they worked so hard to earn and save sequestered by the UK government in the additional stealth tax of inflation.

For any savers with significant deposits, they must clearly limit their risks. That means spreading their funds over several currencies and savings institutions. So I feel that either SOS must actively now begin to organise such a collective action amongst its members and other savers, or savers will have to act individually. SOS will then have lost its collective purpose.

I believe that once SOS took some collective action to research and organise such a process, this in itself would encourage other savers to become active members of SOS, so as to join in the exodus of funds. As long as many savers see SOS doing nothing constructive to help savers in their plight, they have no interest in joining SOS, because they can see that SOS can do nothing to change the situation for savers within the UK.

A new reverse Carry trade for savers is now the only option!

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Sorry that should have been Damiel Giles comment is right (not flag's)… too tired here

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The only way is to remove savings from the banks, but not all savings from all banks, that would be impossible to organise. Somebody somewhere will know which are the most exposed banks, and it should start with those banks. If one bank goes under, then the masses will do the rest by withdrawing their money for fear that their bank will be next. I think the word is Contasion, its a simple idea, but tricky to start.

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Jace, the difficulty is that with keeping savings at home, unless the amount is relatively small, there is a great risk. Even if you have a safe, unless this is well secured in concrete so as to be impossible to steal integrally, there is still significant risk. To have a good and secure safe is very expensive. If you are going to do that it would be best to store gold rather than fiat currency. But there are better and safer ways to extract your money from the banks and prevent them being able to use it to lend out at 20% per annum or more.

Unless we all, and SOS, do something soon saving will become completely purposeless. See http://www.telegraph.co.uk/finance/personalfinance/7943096/Savings-accounts-will-become-obsolete.html”. Who wants to make the sacrifice of saving if their hard-earned money is going to diminish in value after interest and income tax on that interest?

The country needs savers, although the present UK government and the BoE clearly have no understanding of this. A Capitalist economy needs capital for investment in enterprise. Without saving there will be no capital to invest. As this linked article points out, unless something changes we are heading for serious problems. The present erroneous attitude of the BoE and MPC is that if capital is needed then they just print it. Zimbabwe tried that!

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Jace, sorry there is a fault here with comments. the last part of the link is not being posted. The second part after “uk/” should be “/finance/personalfinance/7943096/Savings-accounts-will-become-obsolete.html”

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Hi Bra670: you are just repeating what those you accuse of “bleating” have observed and already concluded. However, your suggestion of a monthly withdrawal day where savers “BACS their money somewhere else”, as you put it, would not be effective. Any action taken must hurt the savings providers and reduce their liquidity signifcantly, otherwise it will not work; any action taken must wake up the BoE and its sleepy governor. Large amounts of money are involved here, and savers cannot just withdraw cash and keep it at home. That would be too risky.

Unless SOS can organise some collective action which savers can take which will cause pain to Banks and Building Societies then nothing will change. The new government has now indicated that it intends to treat savers in the same way as the previous government – with total contempt! The only options thus now open to savers to take action in ways which are safe and would be effective are these:

1) Convert some of your savings to antique jewelery and keep it in a safe or a safe deposit box at a bank.

2) Withdraw large sums in cash and place the cash in a safe deposit box at a bank. (Money stored in cash like this is withdrawn from the banking system and cannot be used by the banks. It thus damages their liquidity position.)

3) Purchase gold, silver or platinum as metal form, and deposit it in a bank safe deposit box. (Do not be tempted to purchase “paper” form gold, since it is now evident that there is scam underway, and much “paper” form gold is not backed by real gold, and will never be able to deliver real gold, since the true present amount of the finite gold metal supply is less than the present total of gold metal plus “paper” gold form. Thus an increasing amount of “paper” gold is not backed by real gold, and is thus fraudulent.)

4) Move some of your savings into stable foreign currencies having a much higher base rate than Sterling. Don't forget that interest will still be taxable. A number of currencies such as the Australian dollar have savings accounts which are protected in the event of an institutional failure (similar to the FSCS).

Since so far SOS is not organising any of these methods collectively, So if you want to enact any of them you are on your own. That is a pity, since there could be significant advantages for individual savers if some of these were organised on a collective basis.

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Hi Jason,

I understand your point, and clearly the number of members or the number of savers who would support any co-ordinated action is the crucial factor. However, without meaning to be critical, it seems that SOS has not had any identifiable specific policies as to how it would achieve its objectives, nor perhaps any clear idea of what those objectives were from the start of its formation? If SOS is to succeed it must firstly make its objectives crystal clear, both to members, to Financial Institutions, the government and the public in general. It must also take the lead in whatever is seen as being the policies to achieve its objective. That does not mean that it should not seek the views of savers as to what would be most effective, but it must show a clear lead.

I do not feel that SOS has done these things clearly and covertly, and it seems that is partly why savers are not joining the cause as vigorously as they otherwise might. In any case there does not seem to be a formal basis for savers to become specifically identified “members”. I think there is a difference between vague supporters posting on the website and savers who would be prepared to sign up in a specific way for membership. For example, SOS should have an agreement for members to sign up to, so that they agree to join joint action to achieve the objectives, and agree to a certain level of participation.

So, I feel that until these things are done there will not be any true momentum. I believe that once these issues were addressed and it became clearer how SOS was going to make any difference to the present unacceptable situation, more savers would sign up to participate.

Certain things can be ruled out pretty quickly, since they are now established.

1) There is no point in any contact with the BoE or MPC since they have proven their contempt for savers over the longer term, and perhaps do not even understand the importance of saving in a healthy economy.

2) There is no point in any contact with the present government or ministers, since they also now have proven their similar contempt for savers.

3) Thus we have to look at the only options left. The only way to achieve anything is going to be to hit the government and the BoE where it hurts. That is by moving large amounts of money out of UK savings accounts. Particularly by next year as the BoE support for Banks runs down, they will be more in need of our money. If it is taken out of their use then they will have to turn to the markets for funding to make up the difference. They will have to pay much more for that money. The problem with taking money out of savings accounts is what to do with it, but still keep it safe and out of the use of UK Banks and Financial Institutions. A number of ways of achieving this have already been suggested by some members. It now needs SOS to organise one or more of these methods and get enough savers to cause concern by the BoE and government.

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Hi Jason,
Thanks for your reply. There is an error in my comment of course which crept into the first line of the second paragraph. That is that a stray “c” is at the beginning of the word “overt” changing the meaning to the opposite of what I intended. (My typing is not too good!)

So, my point was meant to be that I do not feel that so far SOS has publicly expressed in a specific manner what its key objectives are nor how it intends to achieve those key objectives. For example one key objective might be expressed as “To co-ordinate effective collective actions of savers to achieve a fair ROI in savings, relative to inflation and after any taxation levied on the interest earned.” Its policies might be expressed as “These objectives will be achieved by organizing the collective, synchronous withdrawal of savers’ deposits from UK Financial Institutions and depositing this value in other countries and other value forms.”

These are meant to be examples only, and I am not suggesting necessarily that they are specific examples in any way.

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