It is Obvious

Chris Rick has got altogether too much to say

Archive for the ‘media’ Category

Owwww – that hurts

Posted by chrisrick13 on January 28, 2011

It is obvious: a lot of the obvious stuff isn’t

There seems to be two ‘truths’ about the economy at the moment that nobody questions.  The first is that increasing interest rates will be harmful to the UK economy and the second is that we can manage without the cuts/tax increases.  I wonder that the coalition has not done more to bring these ‘truths’ out into the open for a full examination.

I ground my teeth listening to the BBC, yet again, asking the man in the street rather than someone with deep knowledge.  They were asking about petrol prices.  The instant expert said that the government ought to cut the taxes on petrol.  I agree.  Not only do I drive a lot of miles but many of the goods and services that I use travel a long way, not least food.  The next question they didn’t ask our instant expert was that as the government is spending more than it gets, any taxes not gathered in from petrol have to be gathered in from somewhere else.  Where was he proposing that the income should come from?  Maybe close every second hospital?  Perhaps stop Motability for disabled people?  Kick half the prison poulation back out on the streets?  Not bother with police?  These bleats taken in isolation are really people saying that they don’t care how the government deals with the deficit as long as it does not affect them.  The coalition will cut and tax, on the whole, even handedly.  But there will be a bias towards the people who voted for them.  In a long term play for a lengthy period in power the Labour party has abandoned its voters.

The scenario is very simple.  The government has to cut the deficit.  The deficit is the overspending that is increasing the national debt.  If it gets too big then UK will default on its debt and a bunch of accountants at the IMF will be running the country.  If that happens the proposed cuts will look
like mild grazes compared to the slashing that the IMF will do.

Why would we want to increase interest rates?  This is how inflation is conquered.  What is wrong with a good dose of inflation?  For a start it makes our debts to the rest of the world disappear as if by magic.  The problem is that the rest of the world and in particular those that lent us money are not stupid and have long memories.  The other problem is that I am a net saver.  In common with all net savers, inflation makes my prudence a waste of time and rewards the profligate.  In common with all net savers I have a long memory and intend to  be around voting for some time to come.  But why will it hurt the economy?  Why will it ‘de-rail the fragile recovery’?  What recovery?

Suppose that interest rates were moved up with a clear intent from the MPC that they are on an upward trend.  The pound will rise and imports will get cheaper.  This will help inflation and balance of payments – foreign stuff gets cheaper.  It will handicap our exports…what exports?  Our cost of production is already so high that foreigners are only buying our stuff because there is no alternative.  Our exports are not sensitive to the value of the pound.

What else happens.  Borrowers have less money to spend in the economy.  But at the same time savers have more.  Rate increases will dampen the economy, but not much.  What happens to the extra interest payments?  they either trickle through to the people who lend money or they go to the banks as extra profit.  Where has the UK government ‘invested’ more money than a year’s GDP…the banks.  Maybe these investments will come closer to profitable liquidation?

What else?  A lot of people will default on their mortgages.  I cannot apply logic and work my way through that scenario.  There are too many branches of possibility.  A few things are predictable.  House prices will fall.  But if they do then perhaps a lot of people unable to afford houses now will be able to.  Maybe a proper market will develop as the prices reach the long term ration of wages to price?  One group of people will be kicked out their houses and suffer and another group will move in.  The banks will possibly be at the stage where the mortgagees have sufficient equity in their houses that on repossession they will make only small losses.

There lies the problem.  Between here and an economy that has few debts and is growing at sustainable rates with a manageable balance of payments, there is a period of pain, but that pain will not be evenly distributed.  The government has to create the pain, manage those who suffer and hope they can keep the country stable until the pain abates.

It is obvious: a lot of the obvious stuff isn’t, but it is inevitable.


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Quick, find a feather

Posted by chrisrick13 on January 18, 2011

It is obvious: my licence fee provides for quality tv

The government is about to introduce minimum charges for alcohol as a way of combating binge drinking.  I think I agree with the sentiment.  Make people pay full measure for the things they want to do that are in some way detrimental to society and the well-being of others and themselves.  I don’t know if that is effective.  I drank a lot as a student.  After a(long)  while I realised that there was  much more fun in being sober than recovering from being drunk.  Those that didn’t come to that realisation kept drinking.  However after time most made the realisation or their body persuaded them to stop.

I have often complained that the tv companies turn to the man in the street for a view on news events.  One or two or two hundred is not a good sample and I had hoped that my licence fee brought experts to the studio for some knowledgeable comment.  I can find plenty of idiots for a biased uninformed view on anything without paying a licence fee.

So to my amazement on 24 hour news the reporter found a couple of drunks to interview!  There was a good minute of incoherent babble before they went to another item.  I sat there in shock.  All was well though, I was able to test my sanity as they repeat themselves endlessly on the 24hr news programs.  Sure enough an hour later we had the two drunks back on tv.

I am still in shock.

It is obvious: my licence fee provides for quality tv…poor quality.

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