It's Not Our Fault

So the Isle of Man depositors compensation scheme that was a waste of space is going to get changed to include other non personal depositors, up to a maximum of £20,000. On top of that the amount the banks will pay in has been reduced (because they didn't like it) and the income tax paying public will chuck in £150,000,000 instead. That is half of the governments reserves. More on that later.

The thing is that this new scheme will only be in place for 12 months. I think it has been worked out to try and do as much damage limitation as is possible for the customers of KSF and to salvage some of the Isle of Man's reputation. Will it work, only time will tell? One thing is for sure though it's certainly not a long term solution or guarantee against deposits in the Isle of Man. The government must be praying that another bank doesn't go under in the mean time because how many £150 millions can we afford, not many! Another bank going under will finish us off in my opinion.

This is what happens when you bank offshore, but it's not our fault. Not so long ago the Isle of Man had booming tourism and fishing industries, I'm not talking about hundreds of years here, just a few decades ago. Boats from other countries pillaged our fish stocks and with the advent of cheap foreign holidays to Spain the tourism industry almost vanished over night. As a country what are you supposed to do? We took the step that any other small country with no viable export/industry would do, we set ourselves up as a finance centre/tax heaven. We tried to attract business by offering them a low tax regime under which to work. It has worked very well, up to now.

The trouble is that with all deposits under management going well over 100 billion we don't have the economy in other areas to support that, it's impossible with an island with only 80,000 inhabitants, only 40,000 of which work and only 30,000 that aren't on the government payroll. There is no way that our economy can support those deposits if things go wrong. Even with all those billions on deposit for so many years we still only have a reserve fund of £300 million. Our government lives almost hand to mouth in terms of income/expenditure in order to provide the best environment for business. Just look at Douglas for example, it's a shit hole! With all the money kept here if the government was really raking it in do you not think that might do something about at least making the place look clean? Instead we borrow big for our big projects and get ripped off left and right by consultants. Our government is run by shop keepers FFS!

When our other industries were taken away the Isle of Man had 2 choices. Mass emigration and die or do whatever it takes to survive. The island took the second option and established one of the most well regulated finance centres in the world. You want to see the shit we have to go through just to open a bank account! BUT, there will always be more risk in depositing money in economies that can't afford to shaw up failing financial institutes, it's just a case of economies of scale. We are totally dependent on the finance sector as a country, if you deposit £2 million here and the bank goes bust then I'm sorry but we can't afford to give you free money, blame the bank for not operating a suitable business plan, and blame yourself for chasing the highest interest rate instead of using any form of caution. Blame anybody but us, because it's not our fault.