It is Obvious

Chris Rick has got altogether too much to say

Archive for September, 2009

The Economy

Posted by chrisrick13 on September 24, 2009

It is obvious.  It has been for some very long time.  The (UK) government has borrowed a lot of money on behalf of the nation, probably for very good reasons, and very soon the population has to pay it back.  The spending has to stop and the repayment start soon.  If it does not then we will be hard pressed to find lenders without paying them very high rates of interest.  The high rates to borrow will be because we, the nation, will be hard pressed to pay the interest let alone pay off the loans.

The current plan is that the economy will grow next year and then, with cuts in public spending, there will be money available to pay off the debt.  It is obvious that the economy will not grow next year, or if it does then not by enough.

This will leave cuts as the only way to generate spare money to pay off debts…provided that government income (tax) does not decrease.  (It will.)  Labour and the Conservatives have been playing a game of ‘deny the cuts’.  What is not obvious is why it has been possible to have this game and the UK population to stand meekly by without howling about the state of the economy.

I have not mentioned two other routes to getting out of the mess.  First is to raise taxes.  Alas this seldom increases revenue and won’t here.  The only people left to tax are the very rich and if that happens they will simply disappear with their money.  Second we could export our way out of trouble.  If only we had something to export and there was someone out there to buy it.

Cuts in public spending will not be as effective as they appear on the numbers.  Cuts mean reducing employment in the public sector.  Taxes on the salaries are effectively a discount on spending.  When they are sacked that discount no longer applies and the newly unemployed will increase public spending by drawing social benefits.

It is obvious that this nation has a lot of pain to come.  This prediction does not even consider any environment problems.  Global warming, however caused is coming.  Oil is running out and the UK has a poor prognosis on its energy provisions.  Also, I have not considered the underfunded forward pension commitments both public and private.

It is obvious.  Starting at the general election pain will flow at a high rate.  Many more unemployed.  Deep cuts in public spending.  Much pain which I don’t have the energy to detail here.  Perhaps the government should increase the spending on the police and army by a factor of 10 and then cut deep: people will be on the streets.

Coming is the guide on what to do to survive.  It is obvious.

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House prices

Posted by chrisrick13 on September 24, 2009

It is obvious: the recent media reports of the large numbers of students leaving full-time education and not getting a job is not true.

A lot of them will get work over the coming months.  My coffee is served to me by a PhD, my groceries rung up by a graduate engineer.  Few of them, coming from school or university, will be allowed to appear on the jobless counts.  If you are employing, and not many seem to be doing that at the moment, then you might well prefer a 20 year veteran at bargain rates to a new graduate or someone just off a training scheme.

I do wonder that an accurate count could be obtained whatever your particular vested interest.  I am sure that a lot of students do not have jobs, and of those that do, many are not doing what they have trained for.  Many more are extending their education in the hope of a better qualification in a few years when the recession is over (sic).  Which of those is truly employed or not unemployed?

What are these extended and newly ex-students doing?  They are living on what the state or a low paid job will give them relying on their parents to support them.  If someone is paying the fixed costs of running a home then the incremental cost of another person staying alive there is very small.  These students can survive and possibly even have a pleasant existence.  I won’t try, at least in this post, to consider what social consequences there will be in a few years.

In normal or, perhaps, previous circumstances what would these ex-students be called in 5 or 6 year’s time?  Young married couples?  Professional couples? Families, even?  All of those perhaps but also: First Time Buyers.  Now, what will they be called?  Already I hear the term: The Lost Generation.

If they are not first time buyers then what becomes of the housing market?  There won’t one or at least not one that we are familiar with, without first time buyers.  Clearly in any market the prices fall to those that buyers are prepared to pay or scarcity drives the price up to where sellers are prepared sell.  I can’t sell my house for £1m but I can sell it for £5.  There has to be a maximum price in that range and though it might be difficult finding it I ought to be able to get close and then decide to sell.  This is not a lesson in the operation of markets that I am, in any event, ill-equipped to give.

With a huge reduction in first time buyers the price of small houses and flats will fall by a large amount.  This will be closely followed by the price of larger houses.  For every family moving in, a family is moving out and they need to find somewhere to live at a price not too removed from the one they got for their house.  This is the simple chain for nearly every sale starting with a first time buyer.

Ignore the lack of new housing.  There are plenty of empty houses out there and plenty of buy-to-let landlords who will have to sell at the first hint of a raised interest rate, and we will have that soon enough.  There will be a an excess of sellers over buyers at just about any price level.

It is obvious: without a ‘W’ shaped recession housing prices will fall over the next few years.  With one they will fall sooner, longer and quicker.

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Speed cameras

Posted by chrisrick13 on September 21, 2009

It is obvious: everyone hates speed cameras.

I’ve not been caught by one yet and my view might change if I am caught.  Yes I speed.  Near where I live I know all the speed cameras.  I also know where the police set up traps.  I look in my rear-view mirror.  If I cared to drive like a loony, and see many that do, then within 10 miles of where I live there is perhaps a total of 500 yards of road where I have to obey the speed limit.  I wonder if that is the problem: the word ‘obey’.  I am prepared to accept that keeping to the speed limit is something I ought to do.  Many people, apparently, can’t.

My current car has a speed limiter.  When I am in strange areas I set it on the limit plus 10% and get on with it.  I have measured my speedo using those roadside display cameras and it is about 5% optimistic.  You will not be prosecuted up to 10% plus 2 miles an hour…I am told.  I am content with the speed and the near guarantee that I won’t get a ticket.  I am also content with the money saving.  The benefit that I am unable to quantify is that I have yet to hit anyone, come off the road or have an accident (except for one low speed shunt on wet leaves where I was doing far less than the speed limit and still did not have my brain in gear).

I had a Landrover with a 0-60 time of about half-an-hour.  For some time I drove around, perhaps trundled would be a better word, at the speed limit.  It was too dangerous.  People took many risks to overtake me including several overtakes on zebra crossings.  I was always driving around at the head of a convoy.  I had to up my speed to make myself more difficult to overtake.  At least I kept people behind me to 40mph in a 30 zone rather than 50+ as they overtook me.  Obeying the speed limit is not that easy.

The complaint I hear is that the police are using the cameras to generate money.  I love it and I hope they are.  I have chosen not to donate money.  People who speed have chosen to donate money.  If they don’t like that it is obvious, all they have to do is obey the law.  Until they do they will be voluntarily contributing to the national debt at a higher rate than they need to:  I therefore can contribute less.

It is obvious that if you break the law you are putting yourself at risk of paying the penalty that the society you live in demands you pay.  I think that penalty points and exclusion from driving should not be used.  It is not a reliable way of stopping offenders from driving and these voluntary contributors should not be prevented from contributing.  Progressively increase what they pay and finally, when they run out of money, take the car away.

It is obvious: you should love speed cameras.

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Hello obvious world

Posted by chrisrick13 on September 17, 2009

I see much obvious stuff and wonder that nobody else is standing up and screaming it out.  I have decided to publish my own view.  Much of this will be about the UK and its economy.  Much of it won’t.  I will try to make the posts exercises in logic and not my views.  Hence the theme.

Start now.

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