JOHN BATTLE MP
LAST week in Bramley Ward in my constituency of Leeds West we had a public meeting to explore support for setting up a credit union.
It's much needed. Unemployment is currently at 16 per cent as a result of the decline of manufacturing. In us place has come part-time, low paid work. It's been estimated that people in Brumley together pay out £480,000 a year to get access to money. Each adult is paying an average of £30 to cover interest rates, loans, and repayments to credit and catalogue companies. In other words, 050,000 goes out of the Bromley community every year not to buy goods and services but to access the finance to buy goods and services.
No wonder credit unions with fixed low rates of interest are increasingly attractive and not just as a means of cutting out the classic "loan sharks" who prowl around with a fixed smile offering families desperate for basics a quick but expensive way out.
Notably it's the poor borrowers who are always in "debt"the rich tend to be described as "getting credit". Yet it may involve exactly the same sum of money. Access to the finance system now is the
Whoever set the time-zone pattern based on the Greenwich Meridian strikes me as knowing what they were doing in ensuring Britain had a pivotal world role in economic affairs. It just so happens that the time zones ensure that the working hours of the London Stock Exchange fall neatly between those of Wall Street and the Nikkei in Japan. Between these three centres, capital (via the information technology revolution) can be rapidly moved around the globe on a 24 hour basis.
Coupled with the removal of any exchange controls throughout the major industrial nations, capital movement has transformed not only foreign exchange markets but some basic economic principles upon which the world used to be run. As Nigel Lawson, the former Chancellor of the Exchequer pointed out in his recent speech to the Chartered Association of Certified Accountants: "In the past movement of currency across the exchanges was largely associated with trade flows, and the external value of currencies was largely determined by the state of the balance of payments on current account. Today the vast bulk of the flow of capital across the exchanges has nothing whatever to do with trade flows. And exchange movements are dominated by capital flows often of a speculative nature."
In other words the great international capital movement has reduced to secondary consideration the account payments balance in terms of national economic policies.
The UK balance of trade deficit is not seen as the key economic indicator any more. Keeping the capital moving round even with currency instability is regarded as the key. Speculative financial transfers as money attempts to make money is now regarded as the prime economic mover. The indirect effect of the abolition of exchange controls is that direct national controls on credit, if attempted, would now prove ineffective lending moves off-shore. Credit based on financial speculation is the financial instrument.
Into this world of high finance "casino economics" have stepped a group a financial specialists and theologians from the Centre for Theology and Public Issues at Edinburgh University. Their study Capital A Moral Instrument has been published.
As the centre puts it "at a time when the Economist has described investors as mere punters, the church must voice its concern about practices and structures which discourage responsible deployment of people's capital," The book challenges whether users of the market "should be accorded the rights of ownership if they are unwilling to accept its responsibilities". Warning that "with money rushing around the world in seconds" as dealers rapidly move in and out of shares on their computer screens, there is a real danger that "the lowest common denomination will prevail" "excessive greed, aggression, acquisitiveness, and a lack of concern for those affected seem to be characteristics increasingly in evidence in financial dealings".
A focus of business ethics on "money" and "finance" is long overdue. In the meantime, exploring setting up credit unions in our local communities is a positive practical alternative.