| Submit your comments on this article |
| Britain |
| Financial crisis: Somehow we have to break the chain |
| 2008-10-20 |
| Loathed by most of the punditocracy (the folks at Samizdata twitch at the sound of his name), Iain Duncan Smith is, perhaps, the last decent, honorable man left in British politics. The blame game is already under way. Five masters of the universe have already fallen on their swords as part of the price of the taxpayers' unprecedented bail-out of our stricken banks. But the enforced departures of those who ran HBOS and RBS are only the start of the story. As an angry, bewildered public search out the culprits, no one would be too surprised if Threadneedle Street comes to resemble some latter-day Appian Way, lined with crucifixions of the bankers, brokers and traders who brought our economy to its knees. But perhaps we all bear some share of the blame. The banks and finance houses bombarded us with credit cards, personal loans, mortgages and remortgages up to ludicrous multiples of annual income, and elastic overdrafts. No one made us take the money. Many of us were happy to rack up debts comforted by the thought that ever-rising house prices would float us off the rocks of personal bankruptcy. One million home owners resorted to the insane expedient of withdrawing cash on their credit cards to pay their mortgages. You cannot legislate against greed. But ignorance also lies behind our national financial disaster. Almost four million people take time off work because of money worries, while 11 million admit to relationship problems for the same reason. Much of the extraordinary levels of personal debt is unsecured and a result of doorstep-lending to poor people on housing estates. Debt is one of the biggest causes of family breakdown and, with recession upon us, more children will undergo the trauma of seeing their parents part, thereby damaging their chances. Levels of financial literacy are declining among adults, according to research from Abbey Banking. More adults are failing a simple GCSE-level exam in personal finance. The Financial Services Authority found that one student in three is constantly overdrawn. The lesson is clear: in a world dominated by complex financial instruments, young people need to know the difference between a secured and an unsecured loan, an overdraft and a personal loan, a junk bond and junk, as much as they need to know about getting and holding down a job. Personal finance should be part of the school curriculum. The Government agrees but does not want to make it compulsory. Today, Care for the Family, which already helps families look after their children, will launch Quidz In to promote financial literacy among the young. Our children are growing up in a different world from the sweets, singles and cheap fashions of the 1960s and 1970s. They spend more time watching television and playing with computers and are more vulnerable to the pressures to spend money they do not have. A simple phrase for this is pester power: companies want children to recognise logos and brands by the ages of two or three, so making it harder for their parents to keep saying "No". It may be a long way from designer brands in the nursery to obscene bonuses in the City boardroom. But somewhere along the line, we have to break the chain. Iain Duncan Smith is chairman of the Centre for Social Justice And the former leader of the Conservative Party before being ousted by the soon-forgotten Michael Howard. |
| Posted by:mrp |