I've spent a lot of time recently with a lady who has just turned 90. She lives in a house rented from a trust. It is in basically the same state that it was in the 1960s. Very little has been done to modernise it, it's a single skin brick Victorian house with single glazing and faces north. It's cold, dark and cheerless.
The occupant was a teacher when she wasn't bringing up her two children. Because she worked part time for many years her pension is a pittance. Her husband, also a teacher - a head - should have left her well-provided for when he died over thirty years ago. He invested his superannuation and at normal interest rates this would have left his wife in a comfortable situation. When I say comfortable, I don't mean foreign holidays or expensive living, I mean comfortable in that she wouldn't have had to worry about where the next penny was coming from. I mean she might occasionally have been able to buy herself new, as opposed to second-hand, clothes.
Along came the banking crisis and the economic slump. Down went interest rates and with them this lady's income. Now her investment income doesn't really cover her living expenses, so she's eating into the capital and has been for some years. The trust, from which she rents the property, put up the rent although it did the minimum to repair the property.
This lady has to paint watercolours in order to earn enough money to pay her rent. She buys second-hand frames and gets the picture framer to cut them down for her. She worries that she's not going to have enough money at the end of the month. She denies herself little treats. She's cut her charitable giving, something she enjoyed doing, to practically nothing. She doesn't partake in events or outings which are going to cost money. She's poor in the extreme.
For many of us we will live long enough to see interest rates rise; I'm sure we will experience a re-balancing and those with savings will to some extent re-establish their wealth. But for this lady there will be no good financial news - she won't live long enough to see that.
So if you're a banker on a very good salary, just doing your job and anticipating a hefty bonus into the bargain, I hope you will stop and think about the consequences of your actions. When your profession acted recklessly and went gambling with our money and got it so terribly wrong, you condemned this little old lady to live in poverty for the rest of her life.
She doesn't sleep well at night; do you?
