Hmmmf
Our business - a small traditional gift shop in an historic Cotswold town - is closing down at the end of the year to a very significant personal financial loss.
Our sales this year have been less than half of that necessary for it to break even as an ongoing concern - without any kind of income.
Our high streets are changing, for ever. All we're going to have is the chain stores, the multiples.
To me, there is no sign whatsoever of any kind of recovery. Everyone is still drawing their horns in, looking for bargains (ways to profit from other peoples misfortune).
Business rates and VAT are pursued with the same ruthless enthusiasm.
I was amazed when listening to the radio this morning. They were saying in sunny nottingham, a house was on the market for £149k. Offer of £154k put in but was rejected and an offer of £160K was accepted! I was amazed! What is going to happen when interest rates shoot up?!
There is now a whole generation for whom high interest rates are unknown. If my memory serves me correctly mortgage rates hit 15% about 30 years ago. What would that do to mortgage payers today?
increasinglymiffed - I'm surprised.
Whatever happened to the staycation we were peddled all Summer? That should have been your salvation.
My impression is that this recession is in two halves. Those out of work are in big trouble and spending zilch; those in work are saying "recession, what recession" and still spending as much as they can get their hands on.
I expect rising interest rates will be the touchpaper that ignites the whole shebang.
School Fees should be introduced in State Schools on a sliding scale and means-tested thus reducing taxes and making people aware that Education comes with costs and is not a free good.
Children benefits should be capped at two children, thereafter nothing.
Benefits should require a 60 month contribution history.
House of Commons should be reduced to 350-450 MPs working 42 weeks a year
TomTom - I agree withyou, but I'd go further. As every civil servant employed is effectively on benefits - their pension and salary both being provided by the private sector I'd say abolish a good half of the unproductive side. What point are local councils?
Let the Police manage themselves from a central point - the Home office, for example. Push the department of transport out completely. Shut it down. It does nothing except ruin things. Scrap the DFES entirely. It's a malignant tumour on the side of education.
The dept for defence is next - that needs shredding to around a quarter of it's current size. Get rid of 90% of the quangos. Yes welfare will soar but it's already stupidly high, we just call it the wage bill.
Then do something Labour cannot bring themselves to do - ever. Remove most of the laws that make employment difficult - even a temporary "at will" employment system for a year or two. Get people back into jobs. Raise the tax threshold to lift the poorest out of poverty and reduce the minimum wage to £5 an hour.
Remove benefits for anyone under the age of 25. Child benefit for the first child only. Even better, scrap it and provide tax relief to families. Scrap most of the silly schemes to build new air craft carriers and submarines. I know this will cost jobs so why not bid for foreign work, at reduced cost, and allow companies to compete with government grants covering the huge cost difference between our labour and that of China/Russia?
Then - and only then can the government of the day raise taxes. Only when not belt tightening but belly throttling has occured.
My goodness, how do you guys find the will to continue living?
Absolutely devastating reports.
Perhaps it will spark real debate about areas where the government is required and the numerous other areas where government must vacate including (in my opinion) education, health and policing. The unthinkable must be implemented. Short term major cuts in defence with only UK based troops, Royal Navy-gone. The lead has to start at the top with an announcement of a permanent 20% cut in MP's salaries and much reduced expenses.
Who will have the guts to do it?
Fact is we are in a slow motion car crash.
The driver thinks he can control the vehicle and the shift driver thinks he will be able to, but they have not yet realised that the brakes don't work.
We push our banks into buying gilts to improve their liquidity. Most gilts have a fixed interest coupon so, when interest rates go up the face value of gilts goes down. When the face value of the gilts goes down so ultimately do the banks' capital base and their capacity to continue in business.
At the same time our government will find the interest servicing cost of their debt going up.
And whilst all of this is happening the average house-owner will find his mortgage costs going up and the defaults will follow.
And, at the same time companies that have been able to continue in business whilst interest rates are low will start failing and many home-owners and credit card holders will fin themselves out of work.
And who will save us?
Yes, it all sounds awful - but the reality is, it will all carry on working - somehow!
We will find that we will get our accounts signed of by the EU who will take over management of the system, maybe by paying off everything using the pound, inflate it to be worth nothing, and then introducing the Euro as our saviour.
It is human nature to always be too optimistic (as in 2006) and too pessimistic (now) - reality will always be somewhere in the middle!
Everything that is causing us grief now has its history back in the early part of the 20th century. While everyone who needs to know, knows that the country and its financial system is totally worthless in real terms - BUT - and its a big but - (hence the Caps Lock!) - It is in nobody's interest that the truth is laid bare.
For that reason, we will carry on. Eventually, we will find some opportunity which finally brings in some cash - and the holes will be filled in, and everyone will forget the bad times.
Afterall, that is what happened last time - circa 1976!
Well, you'd better have a word with the BoE. Apparently, they think we'll be out of the shit early next year.
Long on flying pigs?
...and just to add to the fun... Mervin King's opened his big gob again and booted the Pound back into the crapper.
It's true that Britain's finances are in a dire state. But that's no reason for Britons not to believe the economy is going to get better, or for feeling better about the economy than they have for 18 months.
The first thing to realise is that the statistic is presented relatively. And for the last two years, we've been bombarded with little other than messages of the coming economic armageddon. Now, we pretty much know that while things are awful now, it's as bad as they're going to get.
In other words, relatively, they're better than they have been for a long while.
The second is that recovery is on the way. Obviously, it's not going to affect the parlous state of our finances, but the Parallax Brief -- while accepting that Labour deserves to be eviscerated for its shepherding of the treasury -- doesn't share Tyler's view that the apocalypse.
First, tax revenues will increase naturally as the economy recovers, while social security spending will fall. Second, some of the debt will be amortized by a growing economy. Remember it's the debt to gdp ratio, rather than absolute debt, that's more important for setting bond yields.
Finally, some inflation won't do any harm. Not talking about huge levels, but somewhere between 4 and 6 percent, annualised, would do a great deal to ease debt over the space of two parliaments.
The Parallax Brief expects a slow, painful recovery as families and businesses deleverage and save more, and banks don't provide credit as they recycle cash to repair their balance sheets. But smart tax increases and intelligent, dynamic cuts in spending, plus a decade of growth at 2.5% and at 5% could go some way to righting the ship.
Lots of good stuff again today.
Parallax Brief tells us that it is all OK - but then admits it is going to take a long time, which is what I thought we were all saying in the first place. Parallel Brief perhaps?
Mervin's little reminder today is surely for the markets and not for us - he has to sound fairly close to the IMF's thoughts - or has no credibilty. We still need to raise a lot of money yet.
Nice how a few people here advocate further means testing to stave off tax increases- they are the same thing people. Yes let's burden the middle class a bit more, after all they are paying for everything already. Real unemployment probably tops 5 possibly 6 million (with a load of them on permanent benefits). 20- 25% of households are now on housing benefit. The middle class, which is just about all the rest of us, are paying for their own properties and keeping the rest in housing as well.
It don't add up and it can't go on - even some of the Fabian fools have started to realise it.
Cascadian - "nobody" is the answer to your question.
RM - yes the demand is high in some areas for the small number of properties that are actually out there. BUT talk of a general recovery is very premature. They are loping £10K - £15K off £75K (already down from £90K) properties in parts of the north and east and still not selling them. In many ways we don't want a recovery to the silly level that caused the whole problem in the first place.
For those that missed it. I thought you might like Jeremy Clarkson's take on the things in The Times mirrored here. It would be very funny if it wasn't so true.
http://bastardoldholborn.blogspo...y-
clarkson.html
Take care - keep smiling
Retired Dave said:
"Parallax Brief tells us that it is all OK - but then admits it is going to take a long time, which is what I thought we were all saying in the first place. Parallel Brief perhaps?"
Not sure why you thought the post was contradictory. First, the original article said Britain was not on the road to recovery and the path ahead was dire. The Parallax Brief suggests we are on the road to recovery, but that road will be slow and tough, because of the fiscal mess we're in.
There's nothing contradictory there.
One thing that would be certain to make the whole thing longer, or even bring on a double dip recession, though, is if Dave comes in and immediately starts slashing spending to the bone.
"The Parallax Brief suggests we are on the road to recovery"...... Parallax brief needs to talk to increasinglymiffed I'd say, then that "suggestion" could be disabused.
In the absence of any reality-based commentary, might I suggest that Parallax brief contact gordon, he has some Kool-Aid waiting for you, don't keep him waiting.
Cascadian, you do understand, don't you, that when one talks of being on "the road to" somewhere suggests that one hasn't arrived at the destination? And that GDP not unemployment, is generally what people are talking about when they discuss "the economy".
The Parallax Brief outlines his full view in more detail here:
http://www.thinkpolitics.co.uk/b...y-unemployment/
Parallax Brief
Parallax is all about looking at something from the wrong angle!!
So a government spends a decade gradually taking another 10% of our earnings and then pouring at least 25% of that down a grid. In real terms NULab are taking £200 billion pa extra than when they came in - and that would be a disaster if Dave and Georgie reversed the process????
On your arguement - they should just keep taking even more. If you believe that you must be a closet NuLab supporter.
Put money back in to peoples pockets and things will eventually recover. Keep sucking money from the 30% who are actually contributing and you will have the disaster that Wat and others describe. It will be hard to reverse the lunacy and even painful in the first years BUT it will have to be done.
I read your post at the link - you seem to be one of those who hasn't spotted that we are on a tightrope not a plateau. as they used to say - I wouldn't start from here if I wanted to go Edinburgh.
Retired Dave,
The Labour Party has certainly made a mess of public finances over its time in office. It's actually possible to make an argument that given the position they were in entering the crisis that they dealt with it well; but that position they were in prior to entering the crisis was one of their own making.
In the peak years, when the economy was flying, they should have been running a surplus, using it to pay down government debt, giving us plenty of fiscal room to blast this recession out of the water. But instead, we were already approaching the limits of what we could borrow, which meant, cash-for-clunkers aside, fiscal stimulus was restricted to keeping what we already had in the face of dwindling tax receipts.
But none of this has an impact on the question of whether we're on the road to recovery now, and the Parallax Brief believes that process has just started -- although the road is long, if that doesn't sound hopelessly cliched.
Parallax Brief
Wouldn't disagree with much of that - but you can't divide the borrowing from the flying economy. If we (government and personally) hadn't been borrowing at ridiculous levels - the crisis wouldn't be so painful now and in fact you couldn't have had the flying economy to the same extent.
Rock and hard place don't do it justice. We need to save more but if we do the economy will falter. "Please keep spending (and therefore borrowing) at 2007 levels" was the government cry. Many mortgages are only affordable because money is cheap - even cheaper than the conditions that caused the problem. The full effect of massive credit card debt has yet to surface. Remember that close to 50% of all such debt in the EU is in the UK.
Even Mervin obviously realises that the current mini-upward trend is brittle. Property is still too expensive and only affordable on the cheap money. If - probably when, interest rates rise. some will find the strain very painful.
We may be just about on a slow return to recovery - we may see another crisis within a year, whatever we do.
The question arises - what do you mean by recovery? If you mean back to the good old days of 2006/7, then for me, you can keep it. ZaNuLiebour have driven the UK to a very smelly place, and complacency over the future is not an option. The level of Tax, Spend and Waste is lunacy. An extra 1M public sector employees, the £200 billion extra taxes, a huge increase in the numbers contributing nothing to the whole, just holding their hand out (I am not talking about hard-working people who need temporary benefits).
Will Dave and Georgie do a good job if elected? Who knows - but we can't go on as we are, with too many hangers on and too few contributing. A government that constantly looks for some new way of screwing money out of us, including paying for things that were previously provided by the state.
I hope you are right about the recovery - but I am not holding my breath.
Retired Dave, there is much to be said for your points. It's going to be long and painful and whoever wins the next election will be stuck between the Scylla or reigning in the deficit and eventually paying down debt and the Charybdis of maintaining what is likely to be a fragile recovery.
Certainly, whatever happens, the budget will need rebalancing and that will be painful.
The Parallax Brief just doesn't think it will be quite as apocalyptic as some.
Meantime, on unemployment, Brown is clearly finding things difficult, but he's doing better than Major and Thatcher during lighter recessions.
http://www.thinkpolitics.co.uk/b...nomy-recession/
That's not to make a partisan point, but merely to point out that while things are bad, they're not as bad as they might be.
If property's too expensive to afford, then the price will have to come down. Statistics on long term trends suggest that property prices might still have some way to go, despite the drop.
Hopefully, when Dave gets elected he'll hold off on cuts until employment figures look stronger, and then cut with a scalpel, intelligently, rather than a cleaver.
There are some cleaver cuts that need to be made, though. The Parallax Brief would love, for instance, to see Burning our Money write about MoD procurement and the 180,000 civil servants working there -- more than the airforce and navy combined.
Parallax
If they hadn't proped up employment with £billions we haven't got - then things would look like they really are. Also the figures are not comparable between Major/Thatcher and the current shower because the accounting for people not working has been massaged to say the least.
Most of what you hear at the moment is just SPIN.
Another outcome of the Law of Unintentioned Consequencies coming home to roost at the moment. The government decided nearly 10 years ago to make pay in some parts of the Civil Service dependant on performance. So instead of having a rise each year - you only got it if you performed at the required standard (most did, a few didn't). If you performed at a much higher standard then you could get a bigger increase. They also decided that a bonus would be payable to those departments that met or exceeded their targets (easy to define in some departments, bloody impossible in others).
All this sounds like extra money - but in full compliance with NuLab smoke & mirrors, there was no extra money. They took the higher salary awards, and the bonuses, out of the pay bill. So you got a lower rise and a bonus. The many who performed OK got a slightly lower rise to pay for the ones who got more. The whole exercise was just shuffling the money around. It now looks crass and unjustified.
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