Wednesday, 24 December 2014

'Tis the season to be in London...a Master of the Universe

London, at Christmas 2014.
People throng at the heart of the city’s West End.
Consuming their way along Oxford Street.
Scurrying through Westfield’s giant White City and Stratford malls.
Many trying to buy that special gift for a loved one.
Others seek a sense of well-being at the bottom of a designer shopping bag.
Forget cricket and football.
You’ll be forgiven for thinking shopping and sales are the national sports.
'Tis a season of good wallets to all mall kind.
A merry footfall, as chain retailers cheerily say.

Yet behind the tinsel and ubiquitous Christmas pap muzak in shops, London festers increasingly divided and conflicted.
A city where the stronger, more affluent and powerful – bloated by privilege, and motivated often by greed and lust – do what they can.
And where the weaker, poorer and powerless can only suffer what they must.

For instance, City of London investment bankers rank amongst the strongest and most powerful of Her Majesty the Queen’s subjects.
These guys – and they are mainly men - reportedly enjoyed one of their best years since the financial meltdown of 2008.
Tagged ‘Masters of the Universe’ by London’s mainstream media, they amassed £54 billion in investment banking fees from floats, new share issues, and multi-billion corporate merger and acquisition deals amongst healthcare, telecoms, e-commerce and consumer giants.

‘Universe Masters’ at JP Morgan, Goldman Sachs, Bank of America Merrill Lynch, Morgan Stanley and Citi are enjoying a ‘bumper bonus season’ as a result of this 2014 revival in global finance.
And, lower down inside City of London finance institutions, salaries are also increasing to an average of just under £100,000, according to a survey by recruitment firm Astbury Marsden.
That’s some £76,000 higher than the average annual salary earned by the bulk of the UK’s population.

London’s mainstream media – especially publications dependent on real estate advertisement revenues – welcome inflated finance sector bonuses and salaries as a ‘shot in the arm for London’s property market’.
And, like a shot in the arm, property remains London’s drug of choice for the City of London’s wealthy and powerful.
“In December, we’ve seen an 18% increase in new applicants working at investment banks registering to buy apartments in the City and W11 postcodes between £2 million and £5 million,” says Giles Hannah, a senior vice-president of Christie’s International Real Estate.
“They’re expecting higher bonuses compared to last year and who see London as a place to invest.”
And, City of London firms are reportedly already seeking loopholes in new European Union laws that cap and limit bonuses at the start of 2015.

Property investment addicts create real social problems for the rest of London’s subjects who see London, not as a place to invest, but as a place to live.
Indeed, where their families have lived for generations.
Rising bonuses and salaries also foments resentment against bankers.
After all, bankers and their pals in central and local government and in Parliament caused the financial meltdown in their first place.
But this income inflation for a few also pushes property prices and rents way beyond the means of Londoners earning closer to the average income.

Hence, many Londoners on the city’s Christmas streets have seen better times.
For instance, locked out of home ownership, increasing numbers of private tenants face further hiked rents, as well as raised living costs and regressive taxes.
In London, the average monthly rent is estimated to be £1,167.
Over 40 per cent of surveyed tenants struggle to pay their rent, according to the National Housing Federation, a body representing England’s housing associations.
Over 25% say they cut back on grocery shopping and on heating.
“We have too many renters just keeping their heads above water, who are being kept awake at night and suffering from stress over the worry of paying their next rent bill,” says NHF chief executive David Orr.

Politicians in London's local 'market states' continue to serve powerful private interests rather than local people.
Only an estimated 43,000 so-called ‘affordable homes’ were built across England during 2013-14, according to the Department for Communities and Local Government.
That’s nowhere near enough – with an estimated 1.4 million people waiting for public housing and with 85,000 children languishing in temporary accommodation.
To make matters worse, more and more homes are being offered as ‘affordable rented housing’ – meaning tenants are asked to pay rents up to 80% of already over-heated market rates.

Faced with this matrix, many Londoners on average incomes and less face a stark choice in 2015.
Do they try to cling on and stay in a prohibitively expensive city?
Or do they break traditional family ties and friendships – and let London become a financial playground for overseas property investors and those Masters of the Universe?
For now, at least for a few days, Londoners try to forget their future and enjoy Christmas.

© Paul Coleman, London Intelligence, December 2014

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