Foreign Perspectives

As we edge into the Autumn, it’s the season for receiving reservations made for the sole aim of getting a Schengen visa.

They’re easy to spot. They’re made by South Africans and Chinese, are for 10 to 20 days at a time and don’t reply to our confirmation e-mail that gives information about the region.

A lot of people think that this doesn’t cost us any money. Not so. We had a 20 day booking in July which resulted in us rejecting a number of other bookings yet it was cancelled just a couple of days before they were due to arrive. Net effect was that we lost several hundred euros of bookings.

Since we’re quite small, it doesn’t take a whole lot of such bookings to “fill” us up. In fact, we’d have been virtually full this coming weekend courtesy of three such bookings yet two have already cancelled and we’re not too confident about the third.

So, what we started doing a few weeks back was to offer these people two options: 1) we charge them the full balance immediately and it’s not refundable and 2) we cancel the booking and inform the authorities. The first cancellation has just arrived. She was none too pleased that we’d billed her several hundred euros yet we gave her the option of paying or cancelling nearly three weeks ago and, as expected, received no response. After all, if she let us cancel her booking and inform the authorities she’d not have gotten her visa, would have been tagged as someone who makes fraudulent visa applications and may it may have affected her right of residence in the UK.

The liquidity ratio of a bank is something that doesn’t matter to most people but it’s something that has become rather important following the collapse of the Northern Rock this week.

Oh, sorry, it hasn’t collapsed. It just doesn’t have any money of its own to give out to its customers.

What the liquidity ratio is is the percentage of the assets of the bank that are held in cash ie the amount that they can actually pay out. For the UK, the average liquidity ratio is just 3%. That might seem pretty low but in reality it’s more than enough as there’s obviously a constant flow of deposits and withdrawals.

However, when the flow is all outwards as in the case of the Northern Rock, that 3% isn’t really enough and that’s when they need to pay a visit to the Bank of England to ask for a few quid to keep them afloat.

As we said last week, the Northern Rock is finished. In reality that probably doesn’t matter as it’ll be taken over by one of the banks that were very keen to buy it just a year or two back. Let’s not forget that that they were very highly thought of not so long ago as an excellently run mortgage bank which just goes to show that having an excellent reputation doesn’t mean that a bank is “safe” (the Equitable Life was also very well run, of course).

This all begs the question as to whether the Bank of England should support the Northern Rock. After all, it didn’t support BCCI in 1991. What’s different is that the Northern Rock is a UK owned institution and the BoE want to maintain the image of the UK banking system being a safe place to bank. Something to bear in mind when looking for somewhere to deposit your money as several of the banks paying the top savings rates aren’t UK owned.

Much as Martin Lewis generally has good ideas on his website and puts them across well in interviews, I think that he’s totally wrong on the Northern Rock issue.

His basic premise is that people shouldn’t try to withdraw all their savings from Northern Rock simply because it is only going to cause them problems and besides the bank will probably be taken over by a somewhat more secure one by the end of the week.

Well, no, I don’t believe that is right. The queues outside Northern Rock send a very clear signal to other banking outfits that people will vote with their feet and that in itself is a very important signal.

What’s equally important is that this episode has highlighted the importance of selecting a solid financial institution for your savings and continuing to check that it remains solid. However, seeing as not so long ago Northern Rock was praised as being one of the best run mortgage banks around, it also highlights that you shouldn’t keep all your money in one place unless that one place is genuinely completely secure (and bear in mind that the only place that fits this bill is National Savings). That being the case, clearly it’s perhaps not the best idea to move directly from Northern Rock to ICICI (an Indian bank heavily promoted in the UK for very high interest rates on savings).

Chances are that the bank will be taken over by the end of the week, but I don’t think it’s a wise move to rely on chance when your savings are involved. So, keep queuing and get your money out until the bank is under new ownership.

One of the more peculiar aspects of life here is that we are sick at almost exactly the same time every year.

Why that is, I don’t know but it’s been happening for four years now. Each June, we’re sick within a few days of the same time the year before, likewise each September.

In some ways, we can understand June. They’re spraying the fields at exactly the same time each June so we pretty much take it for granted that something in those sprays is causing it.

September is different though in that it’s in the midst of the grape harvest so there isn’t any spraying going on.

Weird, huh?

In fact they’ll take anyone from age 21 on upwards.

The impact on this policy is quite interesting as you get an amazing spread of ages in many courses. Now, to be fair, for the majority of courses the lower age range is generally around 25 or so but that’s only because most people younger than that will have chosen to go to a normal university.

The effort that many of those over 65 put in is quite staggering. One guy in the French course was 80 if he was a day and put everyone else completely in the shade in terms of his ability to use the language.

We’ve a guest tonight who is plugging away with a history degree “just to keep his mind active”. The OU doesn’t work like that though and many who start courses just to potter along end up much further on than they would ever have expected. After all, I just started the French with a view to being able to speak it properly and find myself six years down the line on the home run (fingers well crossed!) to a Modern Languages degree!

I still remember one member of our little Saturday morning group sitting on the settee and announcing that he only started French so that he could order a cup of coffee and no way was he doing any more French courses. Just over two years later he picked up his French Diploma and is currently working on the Spanish one.