Opportunity to be Lost?

The Government is doing all that it can to re-finance the banks in order to get them lending more and to help this along the Bank of England is steadily lowering interest rates which are heading towards zero. Other governments around the world are taking similar actions and Obama expected to announce a massive cash injection into the US economy.

In order for the banks to lend, someone must borrow which is pretty self evident. People and business borrow in order buy something, again pretty self evident. The more people buy and the more that they borrow in order to buy more then the faster industry works and the economy, national and global, expands . Again, it is self evident that this cannot go on indefinitely. Economic growth must hit the buffers sometime. OK I know this is Marxist theory but it is also commonsense. The global economy has hit the buffers and the political engineers are now doing all that they can to move the buffers further down the track, build up a credit based head of steam once more in order to hurtle down the same track heading for the same result at an indeterminate date in the future.

The housing market is used by many as a yardstick for the health of the economy but it’s the same story here. House prices cannot increase above inflation ad infinitum but while they do rise to dizzying heights their buyers are saddling themselves with huge debt, meaning that they have to work longer and harder and often put off having children just so they can pay the mortgage. Is this the life that we want for ourselves and for our children, if we manage to have some? Some mortgages are already crossing over to the next generation.

We have an opportunity with the current crisis to pause and take stock of what is best for our health, mental, physical and spiritual. Houses are losing their value and easing to a more sane level but have a way to go yet. Good! If government could but grasp the nettle and decree a return to mortgages being granted on the basis of 2.5 times the annual earnings of the highest earner in a partnership, life would be far more pleasant for those making the purchase. State investment in social housing would keep the building industry active and aid recovery too.

The fat cats would squeal in anguish of course but I don’t think I would lose any sleep.

Economic Boost

Well, it’s coming up to Christmas so let’s have a little bit of cheer amidst all the gloom and economic despondency.

The Pound has fallen in value to almost equal the Euro and in the current recession this is a definite advantage. Our exports will be cheaper for the buyers thereby creating more work for us or at the very least, preventing the closure of some companies. Holidays abroad will be considerably more expensive and so encourage many of us to holiday in the UK and so keep the money within our own economy. Additionally, a holiday in the UK will be very attractive to foreigners and provide yet another boost.

Of course, as the global downturn turns up in a year or so, we will be at a slight disadvantage to start with but let’s not worry about that for now, it’ll spoil this little bit of cheer.

VAT Cut?

We only have to wait until tomorrow (Monday) to see how the Government will introduce measures in an attempt to boost the economy and help to take the edge off the recession. There is speculation that Alistair Darling will cut VAT from its current 17.5% to 15%. Now I am not an economist, I’m just a simple soul looking at the proposal in a simple sort of way. If I was thinking of buying an article currently costing £100 + VAT that’s £117.50 it would actually cost me. If I was thinking to myself that I couldn’t really afford it or perhaps I aught to wait a bit to see how things go, would making that price £2.50 cheaper persuade me? I think not!

I do think that this Government has handled the crisis rather well so far, although they should have seen it coming and prepared for it. However if what seems likely to be a VAT decrease in tomorrow’s statement, this will be a waste of of money in the order of £12bn doing little to stimulate our economy and if anything will benefit mainly foreign industry.

Roll on Republic

While the economy crashes, bankruptcies rise faster than the morning sun, peoples homes are being repossessed, energy costs condemming elderly and the poor to potential hypothermia and while unemployment increases, Downing Street finds the time to re-write the law so that female Royals or Royals of any faith, can inherit the Throne and so keep within the law of human rights. Incredible but true.

Photo Rex features

What ‘human right’ allows an unelected, undemocratic person to inherit the position of head of State, with unbridled power and influence along with vast estates, palaces and castles paid for by taxpayers who can exercise no control over them. Time to change the law regarding Royals indeed, time to abolish this feudal anachronism for good.

Oh! Reports out today also suggest that the monarchy is demanding even more money from taxpayers; so around £150million per year isn’t enough then! That’s around ten times the cost of an average European President.