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Dr John Hawkins

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Black Tuesday

Posted on 2008/10/12 10:33:19 (October 2008).

[Tuesday 7th October]
A strong contender for one of the worst days of this year. Guess who had 12,000 of their savings in Icesave, the UK arm of Landsbanki, the Icelandic bank which collapsed today...?

It was quite a shock, let me tell you, although the initial sense of panic quickly moved to one of sheer misery and feeling thoroughly sorry for myself. I had felt really proud of the savings I'd been able to amass through hard work over the past few years, and with the recent drop in house prices we'd started to think we might finally be able to consider buying a house. We even went to see a mortgage advisor a couple of weeks ago, and whilst I still wasn't bowled over by getting massively into debt for several decades for a house that would probably be in a grotty part of a shitty London suburb, at least it was looking like a realistic prospect. The key part being that we had our 10% deposit, in ready cash.

Until today.

I'm writing this post a few days hence (at the end of the week) and there have been all sorts of development since. Currently it looks moderately hopeful that I'll be able to get my money back - the UK government have been very reassuring about that, and whilst I actually was one of the few people who wasn't particularly critical about Gordon Brown before all this happened, I have warmed to him even more now. Similarly Alistair Darling, who I previously had no opinion of whatsoever, I am actually growing to quite like as well. Whilst obviously their main motivation is to keep the UK economy afloat (and 300,000 people losing their savings would be something of a blow to that), I did get at least a bit of a sense that they were really looking out for people like me, and were going to give the Icelandic government a deservedly hard time over this.

Even if Iceland do ultimately refuse to compensate their UK creditors (like me!) the UK government has said the treasury will cover this. Initially I felt a bit guilty at this prospect - why should the average UK tax payer have to cover money that Iceland should really be paying out? So then I worked out how much income tax I'd paid in the last 12 months, and it was double the value of my savings. I compared my income tax bill to that of someone earning the median UK salary, and it transpired I paid the same amount as 6 people on an average salary (based on the non linear nature of tax). So, even if the government effectively refunds me half of the income tax I paid last year, I will still have paid income tax equivalent to 3 average wage earners. I didn't feel so guilty after that.

Still, it's all just talk at the moment, and I won't be fully reassured until the cash is in back in my hands (not even sure this is a metaphor, assuming I do get the money back I have some serious reservations about putting it back in another bank).

In the evening I tried to take my mind off the whole thing, so met up with Chie and went on a mini pub crawl, starting off with a financially appropriate bag of chips for dinner.

We went to the Cask and Glass (apparently frequented by Jools Holland), the Red Lion and the Golden Lion.

All nice pubs, but I just couldn't really take my mind of the overriding sense of economic gloom. Ho, hum.

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