Thinking allowed — 13 July 2012

I’m not looking forward to the day I have to have a man-to-man, you see I will have to explain a few things to my grandson.

At six weeks old he is already looking at me with questioning eyes.

In a few years I’m going to have to explain why grandad cannot spend much on treats because the insurance company where he saved for his pension was operating a scheme promising inflated returns to new investors and using this new money to pay existing members when they retired.

When the Government’s promised compensation for the maladministration that the Financial Services Authority had overlooked his grandad received little over £1,000 for the loss of much of his savings.

And when his grandad went to buy an annuity with what remained of his savings quantitative easing had decimated the rates by 50 per cent.

At that young age all this will probably go over his head, but later, when he wants to go to university somehow I will have to try to explain how my generation only had to pay for their beer money throughout their education while he will have to borrow well over a year’s salary just to finance his education.

But the hardest thing to explain away is why when grandad was young Britain was the 2nd largest economic powerhouse in the world and by the time he hopes to get a job we will be languishing near the bottom ten.

He will be right to question why we allowed the banks to lend money to prospective homeowners whose salaries didn’t match the loan which in turn inflated the price of property to the extent that his generation will be lucky to afford a roof over their heads, except if they rent from private landlords as all community housing has been sold off.

And my generation had put in power politicians who just looked the other way as bankers in pursuit of bonuses loaned money to people who couldn’t afford it to buy things they didn’t need.

This on our watch was so endemic that these loans rose to such a level they potentially could have brought down our biggest banks.

He no doubt will have an incredulious look when I try to explain that all those worthless investments have been taken off the banks’ books in the form of quantitative easing to stop the banks folding and that he will have to explain to his grandchildren why they are still having to pay back trillions of pounds for these useless debts.

All this is going to be very embarassing for an old man speaking to a younger generation. His father has the easy part, he has just to explain about sex.

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