The decision by Allied Irish Bank to increase the cost of its standard variable rate mortgages by .5 of a percent (50 basis points) plus not pass on the latest quarter point ECB rate cut is financial madness.
In a unique period in Irish history, where more and more families are already under severe financial pressure, the move defies common sense. Consumer sentiment, consumer spending and average household income have all taken a severe beating in recent years resulting is less disposable income for a majority of families. Many households now have less than €100 per month to live on once essential bills are paid.
The AIB decision even goes against the rate making decisions of the ECB, who have been cutting interest rates in order to boost economic activity in the Euro area. The base rate of lending was reduced to below 1% for the first time in ECB history earlier this summer when it was reduced by a further 25 basis points.
Finally, the AIB move will have a negative impact on arrears for the bank. Already, a record number of mortgage holders in Ireland are in arrears (over 90 days late) and more will now find their ability to pay their AIB mortgages under even more pressure as a direct result of the latest move.
This is financial madness.
Vodafone were tripped up on one their own marketing promotions recently when even they could not tell what a Vodafone number means these days.
It all began with a weekend phone call. Vodafone had sent one of its regular SMS marketing messages offering ‘free weekend calls and texts to any Vodafone number’.
An unfortunate customer thought this meant any 087 number…after all, this is the prefix which is granted by Vodafone.
Taking advantage of the offer, the customer made a 30 minute call to later discover that instead of its costing zero, it instead cost a whopping €10.
It turned out that while the other party retained their 087 prefix, they had migrated to another service provider.
It was then the Irish Financial Review was contacted to look into the matter.
Only after a long persistence of asking Vodafone to actually define a Vodafone number did the mobile phone giant admit they could not. The SMS promoting ‘free weekends’ was misleading. Vodafone quickly conceded their error and offered a generous credit in return…a peace offering which was warmly welcomed.
The lesson here: check your credit before and after calls and if you call ‘any Vodafone number’, you could just be calling your way to a nice credit…if you are prepared to fight your case.
When we think of money, most people probably automatically think of the Euro notes and coins that they use on a daily basis.
But the concept of money has been in existence for thousands of years. While some people think that money replaced barter at some point, this is not entirely accurate. Money and currency is defined as that which serves as:
Today, societies all over the world use money as all three and commerce within countries rely on local currency to allow trade in both goods and services to take place.
However, since pre-Christian times, money has evolved as a medium of exchange. In some societies, people used salt, shells and even grain as a means of trade.
4,000 years BC, ancient Egyptians used various metals as a basis for trade, these included Gold as well as Silver.
The first known ruler that used pre-set weights for the use of money was the ruler Pheidon, ruler from Argos, Greece.
Following this, the first known money to carry official stamps originated from ancient Greeece…it is ironic that it is also Greece where the Euro today faces one of its greatest challenges.
Throughout the ages, money continued to evolve with more and more complex versions of it being introduced by Governments and traders.
In the middle ages, Italian traders used a variant of money in the form of trade bills of exchange in place of carrying precious metals with them between towns.
In the 12th Century, the English monarchy issued wooden sticks that came to serve as a form of early currency.
But, it was not until the 1600’s that the development of the modern day currency began to take shape where traders would deposit their gold with London goldsmiths for safe keeping and were issued with a certificate in return. Certificates were issued on the basis that depositors would be repaid their gold on demand…in other words, when they presented their original deposit certificate with the goldsmith.
Money and gold remained linked right up to the middle of the last Century when governments decided that the link could no longer be supported and abandoned the so-called gold standard.
Today, the money you carry in your pocket is based on trust in the Government (or bank) that backs it. In terms of the Euro, we assume that the value of the €20 will buy us €20 worth of goods an services, which it does as any trader is more than happy to accept it as payment for a new CD…or whatever you wish to buy.
So, next time you head out on the town, think of that money in your pocket as part of a long history of world trade.
Written by Frank Conway.