Friday, 25 July 2008

shoplifters looking for a bailout

Earlier this week, I witnessed a crime. I was in my local supermarket when the security alarm suddenly went off. I looked towards the door and saw two security guards confront a young man trying to push his way out into the car park. After a few loud words, the young man reluctantly pulled out from under his tee-shirt a packet of Mr. Kipling cakes.

The cake thief realized that a quick escape was out of the question and he quietly walked back into the shop with the two guards. As he passed the check out, our young man broke away from his escorts and tried queue up. Adding a theatrical touch, he even produced some money indicating his willingness to pay. The guards were having none of it, and a few seconds later, the three of them disappeared into the back of the shop.

I was not bothered by the attempt to steal six globules of high fructose corn syrup masquerading as confectionary. Nor was I shocked by the stupidity of youth. Shoplifting has been around a long time, and dim-witted teenagers perpetrate most of this profitless crime. However, the attempt to pay once he had been caught, that was the thing that disturbed me.

Naturally, I do not condone his theft, but I would have more respect for our cake thief if he had quietly walked with the guards. Instead, shoppers had to witness his pathetic pleading to pay for his crime through the checkout.

This guy wasn’t denying the crime. He didn't question the ownership of the cakes. He wasn't asking for a second chance. He didn't offer an explanation for his crime. He was doing something much worse. He was saying “I tried to steal, got caught and now I want re-write the rules”.

If he had escaped, would he have shared his Mr. Kipling's exceedingly good cakes with the rest of us? No, why should he? He took all the risk when he made a dash for the door. However, once caught, he wanted to queue up with the rest of the honest suckers who as a matter of principle always go through the checkout.

Unfortunately, this cake thief is not alone in pursuing this line of thought. Today, in Britain, the alarm has sounded and caught the banking industry trying the bounce through the door. All that reckless and irresponsible lending has been exposed. Rather than take a walk to the back of the shop and face up to the consequences of their excessive risk-taking, the banks want to re-write the rules and go through the checkout.

The security guards look like bending to this pleading. Already, the Bank of England has set up a special liquidity arrangement to help cash-strapped banks. The BoE has also used its own balance sheet to swap good assets for rubbish held by troubled banks. Earlier this week, the FSA has indicated its willingness to consider a new secret funding arrangement for banks in trouble. Still, the banks are looking for more. They have been quietly pressurizing the Bank of England to extend the special liquidity scheme to prop up mortgage lending.

There is worse to come. The failure of the HBOS and Barclays rights issues means that undercapitalized banks can no longer rely on private sources for additional funding. This lack of capital will be cruelly exposed as the UK economy slows and mortgage arrears begin to rise. The banks will shortly ask the rest of us to pay for the cakes hidden under their sweaty armpits.


MAB said...


Forgiveness without restitution or punishment. Sounds like a free lunch.

It's not just the reckless lenders, the reckless borrowers are at fault too.

Sadly, the prudent minority will share the pain.

Let's hope some positive change comes from this foolishness.

In any event, I still enjoy a good COLD English ale.

Anonymous said...

I think the interesting thing about this story is that the youth had money on him. It wasn't hardship that spurred him to steal. We live in a "dare" culture in which everybody tries to get away with the maximum abuse of the system, from banks to shoplifters--because there are no longer any consequences to fear. The burden of wrongdoing is admitted by no one under any circumstances, ever. Et voila. Life in the UK.


Good analogy.

Nick Drew said...

As Sackers says, an excellent, excellent analogy Alice

moral hazard writ large

we will rue the day it was decided the FSA rulebook was for show only

"light touch" - fffaahh ! only a Chancellor entirely devoid of business experience could countenance such an approach

RenterGirl said...

Great post Alice; good analogy. Bankers pleaded for deregulation, and then look what they went and did. Business without morals is the cause, and a culture of machismo and devil take the hindmost. The bankers won't lose thier houses. They'll just regroup and start again.

Anonymous said...

Your analogy is poetic, right down to the pointlessness of the low-grade yet seductive product...

How can the cost of all this to the public purse be quantified? Will there be a running meter? I wonder what it could be called...

B. in C.

Anonymous said...

To be honest, fuck the banks and financial institutions. Let them pay the price, along with the reckless borrowers.

dearieme said...

I don't mind if we pay to save the banks, as long as we, like the security guards, get to march the culprits into a back room and deal with them as we fancy.

monoi said...

It is a bit simplistic, isn't it?

Reckless lending? Was anyone forced to borrow? I don't recall having to borrow money against my will, nor anyone else.

I think your story illustrates more the borrower's side, as in "Let's blame someone else for my screw ups, and the banks are usually evil anyway". With this kind of thinking, no wonder that knives are blamed instead of the people wielding them.

If the business was there to be made, the banks had a duty to make it. You people would have been the 1st to complain of opportunities lost if you were shareholders.

Who created that situation though?

Now, it is true that the banks have mismanaged their risks and should be made to pay for their mistakes. Unless I am mistaken, they are paying for it and it is hardly their fault that we have scum as politicians. Again, if they get help by asking it, they would be foolish not to do so.

They are not the real culprits.