egafd.com

Apparently the Co-op Bank is a bit short of dosh. Only about ?1.5 bn. apparently. Small change to most of us.

So can we please organise a taxpayer whip-round as we did in 2007-8? Oops, apparently we aren't doing that this time round.

It looks like bond holders (people/funds that bought investment bonds that pay higher rates than you can get in savings accounts for example) are going to take a "haircut" or "substantial losses" to use plain English.

Why should we care?

1. Apparently this includes pension funds, so if you have a pension.......

2. About 5000 individuals (mainly pensioners, the new hate figures in British politics now Ozzy is running out of ways to kick the unemployed, who can't survive on 2% interest on their savings in "safe" loans).

3. No-one in the FSA seems to have spotted that taking over the Britannia Bank in 2009 was well dodgy given that the Britannia had loads of "optimistic" property loans and commercial loans. Didn't we have a little problem with this in 2007?

4. No-one in the FSA and the Prudential Regulation Authority (Ozzie's replacement) who are supposed to be keeping an eye on this lot, spotted that the Co-op were potless even though they were planning to take over 600 branches from Lloyds Bank until they pulled out in April.

So all the problems are sorted then........

If you have any savings/pension, be careful and afraid

Cash and property......

Cash is safe provided no-one finds your stash under the mattress. However given inflation in past years has been running at 4 or 5% and is currently about 2.7% the real value of your savings is reducing year on year.

With regard to property, the answer is "depends"

1. If you own your own property then downsizing to get some dosh is a realistic one.
2. If it is buy to let, this is only a goer if you are in your 20s to 40's. Any older and you might struggle to get a mortgage and you might have a difficult time realising your cash in a situation where the housing market is very, very slow. Secondly people already have the lesson of millions who are now in negative equity to put them off.

There is no easy answer to this.

The Co-op bank was just that originally, a co-operative, but it turned into just another commercial, capitalist organisation like everything else. Why don't they take every penny in savings and assets held by the person who was in charge at Co-op bank when the decision was made to take over Britannia bank? No he'll get off scot free, will now be relaxing in one of his mansions or sunning himself on his yacht moored off the Bahamas - whilst the ordinary folk, pensioners as you say, take the hit. It's all wrong.

And if you own more than one property, have no debt and live within your means....

Can't disagree, but we are talking about a very small proportion of the population.

It is a bit like saying "If someone is a millionaire they won't have any problems."