In Defence of Loan Sharking

Loan Sharking: A Brief Defence
By Sean Gabb

The British Government has announced it will cap the rates of interest on the loans people take out to tide them over till payday. It will amend the current Financial Services Bill to give the planned Financial Conduct Authority the power to limit charges.

Now, some of the interest rates charged do look astonishing. The loan companies that advertise on Channel Five all charge about 2,000 per cent. Others are said to charge as much as 4,000 per cent. The last time I borrowed money, I paid five per cent. I avoid going into debt on my credit cards, because of the 22 per cent charged on them. It may seem heartless to defend the right to charge very high interest rates – especially as these are charged to the very poor, who then have trouble getting out of debt. However, limiting the rate of interest they can be charged is not the way to help the poor. Let me explain.

I will assume a reasonably open market in loans. We do not presently have a completely free market – lenders must be registered under the Consumer Credit Act 1974, and this Act and the common law do not allow complete freedom of contract. Even so, there are many lenders, and there is no evidence of systematic collusion. This being so, the analysis of interest rate formation given in the textbooks does apply fairly well to the actual world.

The demand for loans is determined by a combination of forces. At the commercial end of the market, there are calculations about the marginal productivity of capital. At the consumer end, there is how badly people want the things that loans will buy.

The supply is also determined by more than once force. Most fundamentally, there is what the Victorian economists called the “price” of money, and is nowadays called time preference. Even assuming zero risk, people will tend to give up present use of their money only if they can look forward to a return on it. For example, seen from today, £100 is worth more to me today than a year from today – I might be dead in a year, or the pleasure I can buy next year might seem rather shadowy compared with what I can buy now. If an extra £5 is the minimum that will persuade me to defer use of my £100, then the price of my money is five per cent. There are other considerations. This price of money will be different according to how much present use is being deferred. Also, most people will save something even without a positive return. And, of course, in the absence of a proper gold standard, and often for long periods, the monetary authorities are able to create loanable funds out of thin air. But price, or time preference, is an important underlying determinant.

We must then take account of risk. The reason I can borrow at about five per cent is because I have a known record of paying my debts. And, if I cannot pay them in future, I have assets that can be seized after the appropriate legal action. The reason other people are charged much higher rates is because they have a poor credit history. Or, if they have no history, they fall into one of the categories of people who cannot easily be made to pay their debts. These categories include the young, those without assets, habitual defaulters, those who are able to move about the world or to disappear without trace, and the generally feckless.

Loanable funds are perfectly mobile. A lender can do business with people like me, or with young men without assets who have already been made bankrupt at least once. He will expect to walk away from either class of deal with the same overall return. If lenders can make more overall from this second group, they will compete with each other for business, until the rate of return has fallen to the same as can be earned on loans to the first group. Therefore, someone who is charged 1,000 per cent on a loan is not necessarily being exploited. He is being charged a premium that takes into account his perceived risk of default.

Therefore also, any cap on interest rates to those at high perceived risk of default will result in a drying up of loanable funds. As said, these funds are mobile. They will move out of markets where overall returns are lower than elsewhere. If some people cannot be charged 1,000 per cent on loans, they will not be able to borrow at all.

Or they will be able to borrow – but not from people in suits who try to collect unpaid debts through letters sent in brown envelopes and through the courts. When these people vacate a market, because of legal caps on rates of return, their place will be taken by real loan sharks – the kind of people who collect debts by threats of violence, and who, because of the risk of punishment, and the limitation of competition, will charge more than the lenders they have replaced.

For this reason, limiting interest rates will not help the poor. Indeed, even without the criminality of the loans markets that emerge in the shadow of interest limitations, this kind of law is bad. A loan is an act between consenting adults. It is of exactly the same nature as any other financial or other transaction. Any restriction in one area on freedom of association will, by example, encourage restrictions in others. It will encourage further state socialism or moral authoritarianism.

This is not to say that all is for the best in the best of possible worlds. The case made above is general. It applies to any particular state of society. But not every society has to be one in which large numbers of poor people are encouraged to get into debts they cannot pay. In England, we have an established church. Its ministers would do more to justify their privileges if they stopped arguing about woman bishops and canting about racial equality, and began preaching the virtues of thrift and sobriety. In other times and places, the poor have borrowed chiefly to cope with natural disaster or to pay grasping tax collectors and landlords. In modern England, they borrow to buy things they cannot normally afford, or are not willing to buy after saving up for them. So far as they do not spell out the obvious truths of life, the religious and moral leaders of this country – and not only in the Church of England – are failing the poor.

Then there is real action the authorities can take to reduce dependence by the poor on credit. in this country, tax is payable on incomes of just a few thousand pounds. Shelf-stackers in Tesco pay income tax. VAT at 20 per cent raises the price of all taxable goods and services. So do excise duties and tariffs. So called product safety and other regulations generally increase prices, and work in much the same way as a tax.

Worse, there is government rigging of the energy markets, which raise electricity, gas and petrol prices directly, and which – because energy is one of the main costs of bringing goods and services to market – raise virtually all other prices.

According to Christopher Booker, writing, in October 2012, in The Sunday Telegraph:

[O]ver the next eight years, we need to spend £100 billion on building 30,000 useless, unreliable and grotesquely subsidised wind turbines…. [F]urther billions will need to be spent on new gas-fired power stations – not only to fill the gap left by all the coal-fired and nuclear plants that are due to close, but also to provide ever more expensive, “carbon”-emitting back-up for the times when the wind drops and our turbines are scarcely functioning…. [T]he declared purpose of George Osborne’s “carbon tax”… [is to] double our energy bills.

Giving up on the fraudulent claims about man-made climate change would allow millions in this country to lead something like the lives shown in television advertisements without having to go into debt.

Or there are various forms of corporate welfare, and a tax and regulatory system, that effectively prevent millions of people from running little businesses that would lift them out of poverty. For example, no one nowadays can become a – legal – minicab driver without spending thousands up front on licensing fees and regulatory compliance. Again, no one can become a – legal – childminder without OFSTED registration that closes that occupation to everyone without high standards of literacy and administrative skill.

Or there are the effects of state-sponsored mass immigration. In a free society, there would be few border controls, and there would be some movement of people across borders. What we have at the moment is a system in which, since about 1990, upward of twenty million unskilled and often illiterate – and even violent or subversive – aliens have been encouraged to settle among us. If they work, they drive down wages at the bottom end of the employment market. If they live on welfare, they add to an increasingly regressive tax bill. Whether they work or claim, they raise housing costs by the pressure of their additional demand in a market characterised by both natural and state-made inelasticity of supply.

I repeat, it is not a desirable state of affairs in which large numbers of people borrow at very high rates of interest. But caps on interest rates do not even begin to address this problem. We can accuse the politicians behind this plan of stupidity, or of a cynical shifting of blame for a situation they have done most to bring about. Most reasonably, we can accuse them of both.

And, dear me, I did think we had gone to the trouble, back in 2010, of electing a Conservative Government with a better understanding of economics than Gordon Brown and his dismal crew ever had!



  • Sorry, but that’s outright usury. Shame on you.

  • Firstly it is better to call the folly of occupational licensing (a form of guild restriction or unionisation – see Milton Friedman who wrote on these matters for many decades) what it is – the folly of occupational licensing (normally justified on “who protects the consumer” and “who protects the worker”, “health and safety” grounds) rathat than “corporte welfare”, as corporations often have nothing to do with it. But let us get on to the actual matter of “loan sharking”…..

    If the interest rate is known in advance and voluntarily agreed to – it is hard to see any libertarian argument against Sean Gabb’s position,

    Where the problem with “loan sharking” comes is in the use of physical violence by the “loan shark” or the threat of it.

    Partly this is because of the unwillinglyness of courts to enforce “usury” if the interest rate is considered wildy high. A similar problem existed with gambleing debts – courts would not enforce debts to what was considered imoral practices (betting beiing one) hence the term “debt of honour” as there was no legal way to enforce such debts. Hence some book makers (and so on) were tempted to use force to collect their money from those whose honour did not prove strong.

    There is a legitimate role for the state (or anyone else) in saying “you have had all the stuff this person has – you have no right to sell their organs, or to force them to prostitute themselves, in order to pay you”.

    Bankruptucy is not a perfect idea – but it is better than people being sold into slavery for debt (or other such).

    However, the harm done by “loan sharks” (threats to break people’s legs and so on) is very small compared to something else.

    It is not the loan shark “out for his pound of flesh” that civil society need fear.

    It is the vast organisations lending out “money” that does-was-never-saved that is the problem.

    No loan shark lending out his (or her) own money (their own savings) ever caused a boom-bust cycle and mass unemployment.

    That is exactly what the “respectable” financial establishment do – from the Bank of England on down…. do, with their “low interest policy”, lending out “money” that no one really saved (credit expansion – boom-busts).

    Do not put the “loan shark” in prison – unless he has used or threatened violence against debtors.

    If you must put someone in prison – then put the Governor of the Bank of England (and the other top Central Bankers) in prison – they are the people who cause the real harm.

    As the comming storm will show only too clearly.

  • Pingback: A Defense of Loan Sharking

  • Receive short term bad credit loans for small amounts at with lesser interests and this helps you for an immediate debt relief.

  • Moneylending needs to follow ones simple rule, much the same as the Hippocratic Oath taken by medics.

    A lender should never leave intentionally his clients in a worse financial position through approving the loan.

    Interest rates are a lot like taxes, it’s not so much the rate that’s important as opposed the the ability to afford it without being crippled trough it.

  • Republished here:

  • @andy
    “A lender should never leave intentionally his clients in a worse financial position through approving the loan.”

    I disagree. A loan is a gamble that _you_ won’t be worse off. How can a lender see into the future?

    Remember, that’s your money you are lending. That’s money to pay for your roof, your food and your shoes. You might have all of these now, but sooner or later, you will need a new roof, more food and new shoes. You are gambling that someone will pay for them – with your money.

    Dave works at B&Q. He went bankrupt a few years ago and lives pretty much day to day. He needs £400 for his MOT, or he cannot get to work.

    Quite aside from anything else, you pay to attract Dave’s custom, go through the regulatory bits, employ staff who’ll answer his telephone call, get a website going, train and pay all these staff.

    And he wants £400 from you when you’ve already eaten up a lot of that in overhead. He is a bad risk to boot.

    Now, Dave can come to me, pay me an APR of 1000%, but be back at work, pay his debt, job done.

    Dave might not pay me, which gets expensive and embarrassing for both of us. I lose out and so does he.

    Dave can borrow from someone unofficial, which is cool if he pays it back on time and the rate is lower than mine.

    If he gets his P45 or the car breaks in some other way and he and cannot service the debt, it gets nasty.

    I do not run a finance company, but I invest in one that does. It’s called a bank, and my deposits are, for all I know, being lent to people like Dave. I expect my agent to act in my interest, because I don’t want to have my new roof, my food or my shoes pissed up against the wall at the bookies.

    Our Chancellor is doing a good enough job at that already.

  • Speaking as someone who spent over a decade as a money/debt adviser I have to agree with Sean’s points. The rates might be high,even astronomical and, yes they are directed toward the poor. But low rates of interest would not help people once they’re in a situation where they’e turning to the ‘pay day loan’ types;if it did they would still be getting credit from the high street banks. It’s a risk for poor people to take and in my experience many still won’t pay back the loan in its entirety. You will never stop people from wanting to buy that special present for a child or, a new set of clothes to attend a wedding; a car to start a new job following a long spell of unemployment. The lender knows this and charges high rates to recoup as much as possible as fast as possible.

    However, there is a legally binding contract and, like most contracts it is re-negotiable once the borrower defaults. The re- payments are small but regular and, the debt is kept live. When circumstances change the payments increase. The lender also has some protection through C.C.J.’S. Payments can be taken from earnings;goods can be taken. Sometimes a debt is written off, sometimes it’s paid in full. But this is a risk the lender takes. Both know where they stand which, has got to be better than the criminals adding the noughts as and when they feel like it,with a baseball bat in tow.

  • Thanks, Patricia. For the record, I don’t like situations where people need to borrow at such rates. But, rather than interfere with freedom of contract, and rather than give a subsidy to rather nasty criminals, I prefer cuts in tax and regulation which will allow people to avoid the need or the temptation to go into such debt agreements.

  • IMHO there is a case for limiting interest to around 33% PA.


  • The real answer is to engage in a massive house building programme and create a high wage economy.

    The housing programme could be part public funded – what would your rather see quantitative easing money spent on, building banks reserves or houses – and part private by imposing penalties on private building companies holding land with planning permission but not building. Housing costs are a great deal of the poison in our current economy.

    We have a low wage economy because immigrants – several million in the past decade alone – are depressing wage levels for low skilled and unskilled jobs, by far the largest source of employment still despite the ceaseless propaganda about the need for “upskilling”. (Think of the jobs which require little skill or new training: retailing, cleaning, driving anything less and an HGV etc… ).

    Anyone who doubts we have a low-wage economy should ask why so many people in employment draw tax credits and housing benefit. You could say remove tax credits and housing benefit from the .employed but that would simply drive many either onto the streets because of the cost of housing or into unemployment because that way their housing costs would be met.

    You might argue that employers would have to raise their wages in such circumstances, but that is not so while we have effectively an open door immigration policy. Employers will simply employ immigrants who will still be willing to work because it offers a better deal than they can get in their own countries.

    There would also be a considerable rise in working and drawing, ie, illegally receiving benefits whislt working.

    What happens in a high wage economy? Labour is used more efficiently, there is more automation. If low-skilled or unskilled jobs become more expensive then people up the employment scale may start to make them part of their work, for example, in places like Norway hotels are often cleaned not by paid cleaners but the regular staff including the management.

  • A money lender who bankrupts his customer, denies himself a customer in future.

    That is why (for example) in the “olden days” (only a couple of decades ago) bank and building society branch managers uses to “deny a mortgage” (i.e.refuse to lend money) to people they believed could not pay it back.

    “Come back to me when you are in a more secure fianncial position – when your income is higher and you have enough savings to make a proper deposit”.

    Then came the age of endless monetary expansion from the Central Banks (the Bank of England, the Federal Reserve, the …..) the “cheap money” policy.

    Any branch manager (or other such) who tried to keep to the old customs was dismissed – after all lending was no longer from real savings, it was just funny money that appeared by magic. And was used according to mathematical manipulations – that rather resemble magic spells.

    Money from nothing. And business practice determined by magic spells.

    With such a solid foundation, what could possibly go wrong?

  • Mr Henderson – there are a lot important people who agree with you.

    For example the CBI would strongly support what you say – as would many other business and financial experts.

    I am a nobody – but I will register a disagreement.

    If building more houses makes sense then it would be happening – right now.

    I can tell you that (contrary to Mr Cameron and Mr Clegg) “planning permission” is not the problem – the land has already been given planning permission (years ago), private developers are mostly just not risking their money.

    “That is why there should be public funding”.

    Errr the public fianances (and the City of London that they, in various hidden ways. support) are already de facto bankrupt.

    It may not look that way – with the shoppers rushing of to do their Christmas shopping. But I assure you that things are de facto bankrupt – and it will become increasingly obvious over the comming months.

    Not a time for grand schemes.

  • intersting comments on loan sharks, although personally I don’t agree with
    legislation and over regulation, the fact is these disgusting people prey
    on the poor, many on benefits not knowing what to do, we are detached
    to how the poor are being forced to live, doing a real life course in sociology
    some people in britain are living in hell, have you seen the mortailty rates
    in certain parts of britain, having the wrong postcode can get you a quick
    appointment with the undertaker. Of course it may look if the country is
    de facto, but let me assure you, the capital has just been transfered somewhere else to the advantage of a minority, Take Tony Blair now
    worth over 29 million, as claimed by some journalists, surely somehere
    along the long a few people must have gone bankrupt along the way, perhaps the poor shop owner in Iraq who got a bomb droped through
    his roof, de facto is a funny thing, it’s like stamping in a puddle the water
    just goes somewhere else, this is common knowledge, when the water
    displaces to a detirmental region, you have less water and a totally different
    sitiuation, far to much aid has been given to foriegn powers by this government, the amount of benefits being paid into foriegn accounts does
    not help the situation, many are retiring from britain to sunny climbs taking
    their pensions with them, this does nothing for the ecomony in terms of
    increasing spending.

  • I am not ignorant from how poor people live. I have been poor all my adult life – and my situation is only going to get worse.

    Borrowing money is not going to help – any more than getting drunk or turning to drugs would.

    Alas, for most people a lot of waffle about “micro business” is not going to help either.

    What we need is a better economy – where business mostly small (but not “micro”) but also large, can take on more employees.

    But how to get a better economy – that is the question.

    And things are going to get a lot worse before they get better – if they get better at all.

  • Yes paul, you’re right, just as I predicted, today’s buget proved everything,
    we’re now told 2018 before any real improvement on the economy, the
    new economy created by labour has drained all resources, government
    got to big to sustain, the bucket is nearly empty. This new economy relied
    on money already in circulation, without the benefit of secure industiral
    wealth creation to pay for it, suddenly a big “Black Hole” a result of the
    short sighted government making the wrong moves, now the creation of homelessness, criminalisation of the poor, everybody getting into more
    debt they can’t pay .It is important not to understimate how serious things
    have become, not looking to forward next year, many of the small companies
    and small businesses are on the verge of collaspe they are certainly not
    going to save the economy in the short or long term. Of course should we be
    angry, yes, we may have to spend the last years on a , planet on a bread
    and cheese existance, while they who have caused the problems retire
    in bliss at our expense, things will get very bad, bad to the point where I
    think we will see very serious civil unrest, the black holes of the civil
    service pensions have yet to be filled, and simply there is no money.
    We may not see any change in our life time, but we’re certainly seeing
    something I thought i would not witness in my life time, It is indeed serious
    the hospital just did another audit, there are twice the deficit they orginally
    predicted. Scary stuff Indeed………………………………………………………….

  • The statement by Mr Osbourne put some taxes up, but put others down. Put some spending up, but some spending down.

    Overall it was indeed as predicted – very complicated, frantic action, real thrashing about. That left the basic picture …… exactly as it was before.

    Stil that is better than the Irish Republic budget (yes I am the one ubernerd on the planet who listened to it).

    Vast tax increases – especially on things like the top rate of income tax and capital gains tax (basically the budget appeared to be deliberatly designed to destroy investment and any hope of economic recovery).

    Yet RTE (Irish radio) has spent the last two days talking about “the cuts”.

    “Techncailly the health budget is going up – but when you take into account such things as an ageing population….”

    And on and on.

    • Paul – This is perhaps your most irrelevant comment on the LA Blog. Yesterday’s Financial Statement has nothing to do with the subject of this thread.

      In future, if you wish to make an original comment, please submit it to David Davis, the Blog Master. If he approves, it will be posted as a new thread.

      And, if you do wish your content to be posted, please also check the spelling before you submit.

  • As usual Sean Gabb’s response is silly.

    I am not interested in spelling – and I was simply replying to Mr Fenn’s comment.

    However, I did make a mistake – the top rate of income tax was not increased in the Irish Republic, they introduced new taxes that are not called “income tax”.

    I apologise for my error of memory.

  • It may have been listening to an Irish government minister saying (as if it was a good thing) that the Republic now had “the most Progressive tax system in the E.U.” that led my chain of thought into error – but I still apologise. One can resist being led into error – if one makes an effort.

    As for “loan sharking”.

    What interest rate people agree to is their own business, when I lend people money (as I did yesterday) I do not charge interest at all. Nor do I really expect to be paid back (if I am it is nice).

    Other people do expect to paid back and do charge interest – it is their business.

    “Micro business”, or issues of corporate law, have bugger all to do with these matters. There are few restrictions or taxes on people being cleaners, or cutting back trees. or ….. And what restricticions or taxes there are are ignored anyway.

    What most people really need is for business enterprises (mostly corporations) to take on more employees – and they will only do that if the economy improves (hence taxes and government spending levels are important).

    And regulations are relevant also.

    For example, the State of Michigan just passed as “Right To Work” statute forbidding people being forced to join unions.

    Union thugs (such as the ones who tried to break down the doors of the State Capital building) act like “Loan Sharks” – demanding money from people (accept these people have not agreed to give them this money).

    This will not be forbidden.

    Hopefully unemployment in Michigan will now explode slightly less than it would otherwise have done – although with the economic collapse of 2013 it will still greatly increase.

    The stuggle against compulsory unionism is a vital libertarian struggle.

    Both because of unemployment and because of bankruptcy.

    For example, the city of Detriot has three million (million – not billion) Dollars left.

    The “loan shark” banks want nothing more to do with Detriot – which is, under current conditions, a hopeless case.

    The unions (government sector union and private, compulsory, unions) have done their work in Detriot.

    Other people may think it is a good thing (on “social justice” grounds?) for there to be mass unemployment and bankruptcy, caused by what W.H. Hutt called “The Strike Threat System” (in its compulsory form – backed by government regulations).

    I do not.

    I do not believe that even “loan sharks” benefit, in the end, from this.

    As there is simply no way of paying them.

    • Of course I agree with your comments on interest charges, but the point
      remains in the U.K. loan sharks prey on desperate people, many who find
      themselves in alien and desperate circumstances, many suffer from very
      serious depression, I am not, and remain unsure as to wheather these
      people really know what they are getting into, they end up in a revolving
      door or debt, interest and human misery, next year in britain we will
      witness one of the worst years on record since the last recession of the
      1930’s, further predicted job losses, more wealfare cuts, hospitals who
      through mismanagement, now realise after independent audits, the
      deficits they faced are twice as bad as initially thought, the champagne
      roller coaster is now about to go down the hill, and reality has started to
      set in for them, now, we really are all in it together. Of course we all know
      government has got to big, but the buget again failed to address the
      issue, no cuts on the quang’os, more and more laws, more and more,
      and more prisons, rediculous driving regulations, making the DVL one
      of the biggest transport departments in the world per head of population,
      with the continued exspansion predicted to cost billions long term, leaving
      the UK with the strictest driving laws in the world, you don’t need to be
      brain surgeon to see how this will play it’s part in the further destruction
      of this black holed economy, the government has become “Top Heavy”
      in every sense of the word, of course paul, you are right about the
      bloody unions, the new role they play, is acting as blackmails for the
      public servants, extracting pay rises and pensions, that in reality are
      simply none sustainable, the unions have segregated from the masses
      and remain only interested in their public service finanaces, they are
      quite happy to pay the unions to steal more than the lions share for them,
      now they are definately not all in it together, what we see hear is a recipe
      for economic ruine, and the manifestation of a new underclass system
      due to the out of control greed of government workers, which has brought
      forth the fuel to bring it into fruitition, we must just wait and watch, this new
      chapter of history unfold and the dire disaster that awaits. I of course
      note your comments sean towards paul, but he might just be like me, we
      are still capable of producing long documents, without the aid of a spell
      checker, no doubt the best man in the world will make the odd mistake
      when using his brain power without all the modern spell check gadgets!

  • Karl.

    I agree that loan sharks tend to be vile people – like drug dealers they target human weakness and folly.

    However, (and here I agree with Sean Gabb) only if they use or threaten violence, should the state (or private individuals and organisations) get involved in a forceful way.

    One problem is how “atomised” people now are.

    Once, if someone was uncertain what compound interest was (or whatever), they would seek the adivice of their priest of minister or (if not religous) the seniour members of the “Friendly Society” of which they were a member (the Oddfellows, Foresters, whatever….).

    These days people do not tend to be member of any church – and they do not tend to be members of secular societies either.

    It is the Jacabin ideal.

    Individuals and the state – and nothing much else.

    And it does not work.

  • Yes, paul vile is the correct word to use to describe these creatures, of course many do not use vilonece they may use pyschological intimidation against people in vunerable postions, we don’t have access to much advice here, there’s a lot of unregulated areas in britain, although, they are described as regulated in reality in some areas like, lawyers or justice, or banking, the regulation is very limited and unjustly restricted to the detriment of the victim, 0bviusly, any economy running on the basis of debt is not a good thing, it’s doomed to failure simple mathmatics tells you this, that why we see so many people in court going bankrupt these day’s, the british ecomony worked iin the 50’s 60’s and 70.s, we produced things and sold them, and made a positive balance on the books, those day’s are long behind us, the european food mountains no longer exist, things have changed,that is the new reality of the situation. t

  • Paul, I have to say you’e right about the church, it’s dying out, to many power
    struggles go on, putting people off the CE, they constantly argue about
    sexual issues, woman priests, this has put people off, they see religion as a
    new area of polictical debate and control, worshipers don’t like it, they have
    abandoned it once and for all. They get fed up with the debates and the
    changes taking place within it, it’s become a “Punch and “Judy show.

  • It is not only religious organisations – it is secular ones also.

    Without voluntary associations people are reduced to isolated indivduals – subject to mental illness (and victims of loan sharks and other such).

    As for the economy.

    British industrial production (actually making things) falls – and the stock market goes up (up).

    “Because of good news from the United States”,

    The “good news” turns out to be more people employed – in government jobs.

    Of course the City people are not really this stupid.

    They are involved in a vast credit money bubble con.

    And the idea of an ethical responsiblity for their investment advice would just make them laugh.

    At the risk of sounding like a Kingon…..

    “They have no honour”.

    And a people without honour can not long stand.

    • Of course paul one point that is relevent to this concerns the comments
      of David Milliband in which he stated, the government must create jobs for the middle classes, that comming from a man who entered the UK as
      an immigrant, job creation cannot be a preserve simply for the middle classes, it must encapsulate everyone, the problem with the new middle classes “is” they are a creation of the tax payer, an example, of this concerns the way classes change through the century, whilst one’s ancestors may have been millioniares, this does not guarantee later generations to prosperity or right to employment, the class structures
      have of late undergone radical changes to a new group that have taken
      control of the former traditional economic trends, due to the new economy
      created by the labour govenment in part, Millibands, comments conclude
      this continued trend..

    • Robert, I would not agree with your comments regarding a massive house
      building programe, look what has happened in britain, a massivie influx of
      immigrant workers causing hosuing shortages, they are all on low wages
      paying no tax and claiming housing benefit and rate rebate we are now one
      of the most overpopulated countries in europe per square mile, more houses
      means more immigration, it only works if they have hig paid jobs when they
      arrive and can pay for their houses, rent and rates, in england this has
      backfired because many are working on such low wages they need to claim
      benefits, they effectively take more out than they put in, it would be an
      even bigger mess than the one we have now, and just how do you pay
      for it? where is the money the money comming from!

  • I think the issue relating to the stock markets are not much concern to those on the ground they are never a true guide to what is actually going on at econmic ground routes, the market is easy to “Buck” the stock exchange must never be used as a micrometer to guage the overall economic situation, there is simply no comparison it’s a bit like man on the moon, saying what’s going on the earth today, there is no reliable link between the two, it must not be presumed stock markets are a reliable prediction to the state of an economy, government jobs are not really a reliable picture of the economy, they remain effectively a creation if higher and higher taxes, this in it’s self is not good for the economy, many people hold the veiw in some areas these are not reals jobs and can be created simply for political reasons to boast unemployment figures.

  • Sorry, sean I made a few mistakes myself tonight, like paul, I am only
    human, but waht have learned from this, don’t eat a sandwich and try and
    reply to blog with one hand, and if you do, always proof read before you
    press send!

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  • In some respects, I agree with the position on was is called, for short, pay day loans.

    The defence often offered—that the interest it at least siomilar, if not lower,. than an unauthorised overdrafy has some validity.

    However, in my view you, and the critics of pay day loans, are missing the point about the real danger of these loans.

    To cive an example, a few years ago, I found myself with a cash-flow problem at the end of one month and took out such a loan, after calculating what I could economise on in the following month to pay it back. Within days of taking the loan out, I was offered another month to pay—which would have double the interest payment. Within days of paying it back, I was informed that I had been pre-approved for a loan of at least five times the original loan. I am still getting emails informing me that I can borrow huige amounts.

    The problem with pay-day loans is not the original loan, but that people are sucked into a spiral of loan—repay—run out of money before payday—new loan and so on. The best reform of the system would be to prohibit contact or new loans for 6-12 month after the original loan, and, perhaps a cap on the interest payment in the case of non-payment after the first month.

  • The flaw in your article is the assumption,
    “I will assume a reasonably open market in loans.”

    When the various rates that loan sharks charge get quoted daily in the FT, then I will be able to assume along with you.

    • The rates are always quoted in the Channel Five adverts.

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