From The Daily Mail:
The Governor of the Bank of England Sir Mervyn King has suggested that interest rates would not rise until it was certain the economy was growing and there had been a drop in unemployment... (1)
Sir Mervyn also indicated yesterday that a large cash injection directly into the economy to boost asset prices(2) and spending (3) was possible.
1) That's clearly not a major concern, they could achieve this by scrapping regulations and National Minimum Wage, leaving EU, reducing taxes on output (i.e. VAT), employment (Employer's NIC) and profits. They just increased all those taxes and they keep piling on new regulations.
3) This government is keeping up levels of government spending, but six months ago it increased the rate of VAT to 20%, which has resulted in a corresponding number of retailers going bust. The rule of thumb that 1% on VAT = 100,000 more unemployed still appears to apply. So 'boosting spending' is clearly not on their list of priorities.
So that leaves...
2) 'Asset prices'. I doubt they care too much about the gold price; I suspect they'd prefer it if oil and food prices went down, so that leaves quoted shares and housing - two asset classes where price rises are seen as A Good Thing.
And who loses out from higher share or house prices (unless that is merely a reflection of higher profits or higher rental values)? Young people who end up vastly overpaying for somewhere to live, or who get far worse value for money when their pension fund buys shares.
Even more bizarrely, unemployment hits younger people hardest and this lot intend to increase the taxes on those who've been to University via these higher tuition fees which are clawed back out of their future earnings. So it's a downward spiral.
Even worse, you can't assume that the winners from all this must be Baby Boomers or pensioners generally (as they also need somewhere to live); although they make some gains, most of the extra goes into the pockets of bankers, middlemen, pensions industry, people in 'the City' and so on.
I really don't understand why young people stand for it, to be honest. And older people are jsut being bribed with a slightly larger slice of a much smaller pie.
No wonder he's never around
39 minutes ago
13 comments:
They "stand for it" because they fear losing the tenuous hold they have on their jobs, their savings (if any), their homes (not houses).
What do you expect them to do?
more importantly, what are YOU going to do?
Anon, young people (35 or under) are most likely to be or become unemployed (so why aren't they up in arms about NIC and VAT hikes?), least likely to have savings (most likely to have unsecured debts) and least likely to own a house.
I expect them to see the light and go Georgist (LVT is a young man's tax, if truth be told). What am I going to do? Do you have any bright suggestions?
I put myself up for every Parish, District, Town, Borough, County and general election. I leaflet 'til my feet start to hurt, I write to local and national newspapers but apart from that I don't blame the young for doing nothing. BTW to be officially classed as a young person the age to slide under is 25not 35.
I'm anonymous because I haven't got a google account and have no clue as to what "OpenID" and "Name/URL" means.
I am leaving my job "in the City" to go travelling for 18 months. I don't expect anything to be better when I return, but I think the reason the majority "put up with it" is that they are likely to be in a slightly better position aged 35 than those that have not been working hard / on the ladder. You can't get back into a profession after an 8 year gap as you haven't played the game properly.
There is also the issue of comfort. Most people will not uproot themselves from their friends and family unless very uncomfortable.
The temptation to just "Go John Galt" grows stronger.
Anon, keep up the good work.
EKTWP, I wasn't suggesting for a minute that every young person packs in their job or goes abroad, I was thinking more along "refusing to buy an over priced house, campaigning for less Home-Owner-Ist and other repressive social policies" etc.
AC1, those Faux Libs can piss off as well, frankly.
It's not like you have a choice! You can either afford to buy a house or you can't. As you yourself say about politics, it's all Indian Bicycle Marketing.
"It's not like you have a choice! You can either afford to buy a house or you can't"
Er no, the choice is (assuming you can afford to buy a house, admittedly) buying or renting. Not everyone who rents does so because they can't afford to buy somewhere. Some people actually prefer to rent.
If there was an evil genius somewhere controlling things in order to bring down the UK's economy, things wouldn't really be any different from what we have now. What did you say Peter Mandelson was doing again?
EKTWP: "You can either afford to buy a house or you can't."
Only about one-in-a-hundred young people can afford to buy a house - that's why they invented mortgages :-)
B, the Blue Wing of the HO Party is continuing the fine work of the Red Wing.
Could n't agree more about your main point.It is amazing that young people riot in the street about having to pay an unnecessary
£27,000 in student fees but have no qualms about paying a purely inflationary £100,000 for land underneath a house somewhere there's work.
Perhaps those who work and save and hope to buy a home don't protest because they are too busy working, saving and hoping to buy a home.
If they have any sense they will realise that a protest will achieve nothing while the House of Commons is full of people too scared to say houses are overpriced by 30% or more for fear of losing votes.
I've said it before and I'll say it again, John Major got it right by letting the market determine interest rates and the price of everything, including houses. The pretend wealth bubble was eliminated and within very few years (some say two, some say five) things were stable, sustainable and moving forward again.
At present we are locked into increasing national debt because the capital losses inherent in the current structure (most of which are losses of bubble gains) are not being crystallised, instead they are being sustained from tax revenue. And that means young people are being priced out of housing simply because bubble values are supported by the government (and the opposition).
TFB, good summary.
Major was top man, getting out of ERM seems to have helped as well.
But it is precisely because he allowed house prices to fall that the Tories were so unpopular for so long - partly with the little people who "lost their homes" but mainly with the HO elite (banks etc) who seem to run the show. The Tories will not make that (political mistake) again in a hurry.
And people like me who bought houses and flats cheap, during or shortly after John Major period just don't show any gratitude* - we are taught to look at those windfall gains as down to our own enterprise and initiative, while the losses are down to 'somebody else'.
* I do to Major personally, yes, but not to the Tories generally.
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