Security Barclaycard Style

Trust is a fragile thing. I count myself as fortunate not to have knowingly been defrauded on the internet, but from all that I hear it is only a matter of time before it is my turn. Extra transactions on my credit card statement, a large transfer out of my current account or a complete identity theft. The spectrum of possibilities makes one edgy to say the least.

I am always aware of the dangers and whenever I do an on-line purchase, I pride myself that I might know enough about the methods of internet fraudsters not to be easily caught out. Today I was making an on-line purchase at work, using my company credit card. The personal risk is somewhat less, I suppose, but this did not make me any less wary. Having entered the card details and clicked the confirm button there was a very brief display saying transaction confirmed, or words to that effect, then the whole browser window was taken up by a "Verified by Visa" page (see below). So now I am being asked to enter my credit card details again, into what looks like a pop-up window. And this is for my own security? How am supposed to know if this is genuine or not? Why would they ask for the credit card details again?

So either this is a scam or, it seems to me that Barclaycard have got it very wrong!

The Darling Buds may not

Alistair Darling is to offer guarantees of up to £600 billion to RBS and Lloyds Banking Group. He is asking them to lend out £40B to re-start the economy. Now let me get this right. UK GDP = £2800B, so that is more than a fifth of our gross domestic product that the Chancellor is gambling on our two biggest banks. To put it another way, that is nearly £10,000 for every man, woman and child in the UK. Hmmmm!

All this to promote the new buds of economic growth.

Welcome Communism

In a mixed economy such as the UK or the USA, there are laws, such as the UK Companies Acts (most recent 2006), which protect shareholders, limiting their liability provided a company is run according to certain rules. This legislation is designed to encourage the investment of capital in businesses so that they will thrive, creating employment, goods and services and wealth for the shareholders. This is the capitalist system. The stability of the system depends on a fine balance between risk and reward. The board of directors is appointed by the shareholders and is responsible for running each company. Shareholders risk their money, based on the information provided by the directors. Directors are responsible for filing company accounts annually and for ensuring that the company is trading legally at all times, usually this means having assets that are equal to or more than liabilities at any one moment in time. Assets include cash, capital investments such as property, stock, machinery. The money for these is raised by selling shares to shareholders or from the profits made by the business. If the business in which they invest does not succeed (i.e. at any time liabilities exceed assets) then shareholders stand to loose their investment, but, under company law they are protected from being pursued by creditors of the business, provided that the company ceases trading the moment it is no longer solvent.

Banking is not an ailing industry for the UK. It has been badly managed recently and it has taken risks beyond what is reasonable (alongside banks the world over). Whilst the banks may deserve to go bankrupt, it is not really in anyone's interest to let this happen. It's not the Government's money being used, of course, but the UK tax payer's money or money being borrowed on our behalf. Actually, the tax payer stands to gain when the banks are sold back to the private sector in a few years time.

Now that we are bailing out other industries, the risks may be higher to the tax payer. Giving the motor industry £2.3B may not save it and certainly won't create a greener motor industry into the bargain. But what is now clear is that the threat that always hung over the shareholder, that he would loose all his money if the business he invested in failed, is no longer a threat. Fail and the government will bail you out.

Does this mean a turning point in the Western capitalist system? The work ethic, the motivation to succeed, may have dried up. The great criticism of communism was that motivation was poor. With no capitalist reward, under communism the state will always struggle to grow an economy, maybe even struggle to provide the basics for it population. Isn't this where we are heading in a system that no longer punishes the investors of a failing business and therefore takes away a sizable part of the motivation?