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I will leave aside the issue of living standards, because others will comment on it, and I want to mention a different angle.

Savers. In a traditional downturn / recession, over extended borrowers lost "their" homes, and savers picked up cheap(er) homes, or bought things that the stores and manufacturers were desperate to sell just to have a sale and so money coming in.

Now roll on 2008 onwards. The savers (and pension pots) have had their savings progressively confiscated (or the more accurate term - stolen) by the Labour and now coalition government and Bank of England policy. Indeed, Mervyn King was quite proud to announce that he was taking savers cash. This was all to bail out those feckless who went on a credit spending spree (including the government itself), and took out mortgages using liar loans (self-certification mortgages should NEVER have been allowed to those that were NOT self employed, those that have those liar loans should be on fraud charges).

Now the savers who would normally keep the economy ticking over have less cash because of the deliberately low interest rates, and other methods of stealing their savings. Less money AND nothing to show for it. The borrowers have been protected from their fecklessness with everything thrown at them to not default on still cheap credit.

Large amounts of good money are being used to keep the house prices from the much needed price crash - this is unsustainable. Chancellor George Osborn's recent budget to help buy-to-let scammers is designed to prop up the property market, instead of letting it fail as it should.

With all this going on, why would anyone think the savers would carry on spending, when they have less money to spend? The borrowers are struggling despite unprecidented amounts of good money thrown at them, can't rely on them for spending.

Those savers that can spend are not, and that's BEFORE talking about increases in taxes. So the savers have gone on strike, they are not spending, and the UK economy is sinking as a result.

Savers good money is being turned into bad money.

If you want to start turning around the UK economy, you better stop stealing from the savers. What do borrowers have apart from lots of debt?

These inflation figures seem/feel significantly lower than what I'm experiencing in the real world. I really do wonder if the the ONS are looking at the right things and weighting them all correctly when they calculate these figures every month...

Surely it is time that the government announced that pensions will not be linked to wages until such time that the figures from the ONS can be 'trusted'. I can see the costs of goods rising, or falling, in the shops. I have absolutely no idea about peoples wages. In fact we now know that wages are actually falling, especially when Income Tax, and National Insurance, are taken into account

I am fearful of the future, but then I have been long on pessimism for some time. In fact since 1987. I think that we are fast approaching the Titanic moment for the economy, the ship has hit the iceberg, it is holed above and below the water line, the band keeps playing, but it is now every man for himself.

Just as the banks have abandoned the Cheque Guarantee Scheme with effect from 30th June 2011, we, the consumer, are being abandoned to our fate. We are fast approaching the time when there will be an explosion in the numbers of pensioners, and unless they have made proper allowances for their dramatic fall in income, then the good ship Britannia will start sinking fast, and as the ship gets closer to the bottom then the speed increases, and above the failing ship, the waves of the economy rise and fall, but they get more choppy, ever more uncertain.

Most of the economic instruments which are now so reviled had a real purpose in the past, and they were linked to shipping and farming, the mainstays of any lifestyle before motor vehicles, and aeroplanes. I wish I hadn't contributed now, it is getting ever more depressing, this Great Depression, and we can't be saved by an export led recovery, everybody is in the same lifeboat, and soon some of the living will be thrown overboard, to the sharks.

#2 TGR Worzel
"I really do wonder if the the ONS are looking at the right things"

The ONS are looking at SOME things that are correct, but they are doing whatever with the statistics to make the government of the day look good. There are two points I can think of straight away.

They add in consumer electronics, this distorts the tables because as production ramps up, the items get cheaper, which by happy co-incidence for the government, makes sure all the stuff that goes up in price is negated. They make no allowance for any item that are one-off purchases. Do you buy a iPad every month, or do you buy a loaf of bread a week?

While not the inflation figure, the GDP figure is similarly being cooked. Since Q4 2009, the ONS started to add "government spending" to calculate the GDP figures. This had never been done before, but considering the then Labour (and now coalition) are pouring a tonne of money into the public sector, it makes it look like economic growth where in fact, the public sector cannot ever grown an economy because it generates no money for any country in the entire planet. Only the private sector generates wealth for a country.

If you strip out "government spending" from the GDP figures, you would see that for much longer than the official figures showed, the UK has been in recession. But the figures were changed so the then Labour government could claim the UK was coming out of recession just before the general election, when it wasn't. The coalition do not want to change these rigged figures, and did not bother to challenge them during the general election campaign.

Likewise, the ONS have no intention of changing the addition of items that naturally go down in the inflation figures.

So you could say the saying that "There are lies, damn lies, and there's statistics" is true. You can make of figures whatever you like, and they mostly suit the government of the day's objectives.

It is about time the ONS was disbanded and a truly independent body was set up, the ONS take cues from the government of the day, and they oblige to rig the stats. They cannot be trusted, and neither can their figures be trusted. Problem is, the press DO trust them, investigative journalism is dead, just print a press release as fact.

Phew, I was wondering if 'Not available for service' was some kind of swansong.

As one ages and faces a more and more uncertain future, all I can say is the mindset does tend to err even less on expenditure, despite then less than stellar incentives there have been to encourage saving.

Mixed messages on self-help vs. national economy 'support', and poor use of taxes when entrusted with funds for the next years does not inspire confidence.

Historically, interest rates have been used in part to curb excessive spending. But those elements which are currently contributing to inflation are not influenced by consumers, but by external factors. And consumers aren't spending anyway so no curbs are necessary. In any event, it is hard to see how a rise in interest rates will actually have any effect. Perhaps someone can explain.

You'd think, when hearing comments from 'poor' savers, that mortgage holders and savers were two separate groups. Very often they are one and the same.

You'd have to have a sizeable amount on deposit to benefit from, say, a 1% rise in rates. If you have, and you're elderly, dipping into your capital seems like a sensible idea if you're really suffering. But there seems to be some holy grail about passing on wealth to children. Live a little. You're no worse off than those who've not seen any pay rises, and will probably not see any rises for a while yet.

As an interest only mortgage holder, a 1% rise in interest rates would cost me an additional £1,600 p.a. A saver with £100,000 on deposit would benefit to the tune of £500 p.a.

Reducing capital by the same amount therefore means you've got 200 years before it runs out!

1#

I'm not disagreeing with the broad thrust, but I take exception to the liar loans... Yes, they were abused, but at the time, it was the only route open to me to get a mortgage. I had been an IT contractor for just under three years and because the assignments I took had been of two years duration or less, the regular mortgage crowd werent interested at the time. Even though I had started my own Limited Company, the self cert route was the only realistic one open to me and a lot of others like me.

Now, since then, I have met every single payment, not dropped a single one, it was affordable then and its affordable now.

So, I should be up on fraud charges should I? I mean, c'mon, we all need a good rant every now and again, but not all self-cert's were deliberate frauds.

the 'inflation' is just the yearly oligarch tax collected by making artificial bubbles in commodities. There is no shortage of oil [or anything else] but it went up to the 1.25. Bread is £1.50 a loaf and domestic energy keeps rising even thought the market falls.

The energy regulator is not on the side of the public. They are are part of the problem loading the bills with hidden taxes for their ambitious projects that profit the inner empire. [e.g the monarchy owns all the foreshore and where are the windmills being built? Why did they choose the most expensive option?]

if you want to see how the tax is collected just watch the Goldman commodity forecasts.[the tax has been collected for this year so commodities will now fall]

if you wonder who the tax collectors are notice the booming hedge fund sector have had a bumper spring of 'profit'.

mervy is watching employment not the oligarch tax that transfers wealth from the many to the few.

#8 Fubar_Saunders

I would not classify you are a person that played the system by getting a self-cert mortgage. Your status changing into a Ltd company is a mere accounting technicality which is done to avoid losing your shirt. This is VASTLY different to people who were employed by someone, but were NOT self-employed, and still took out a liar loan. THESE people are the ones that should be chased.

I have every sympathy for the self employed, and micro-businesses, you'll not get the same sympathy from government or banks that's for sure. Been there.

#9

Interestiung that you should mention Goldmans. There was a very interesting conversation on the Today programme at about 8:45 with a former employee of Goldmans. He was saying that they massively shorted on the mortgage market, just as Poulson had. Only they went big.

Now what shorting involves is selling something which you haven't got, to some body who thinks that the price will rise, rather than fall. Now in order to short you have to deliver something to the purchaser to show that they are the new beneficial owner, a piece of paper. So, the short seller must have borrowed the 'paper' from somebody else, to make delivery to the purchaser. It is no wonder that the mortgage market in America failed, as did AIG, who of course sponsored Manchester United.

Now the point is that once the price starts to fall then the original holder has probably lent some money to somebody else, or borrowed against their original holding, so they would have used the original piece of paper as collateral, but the short seller keeps driving the porice down, because now there are forced sellers, they need to raise money, the shorter keeps selling, driving the price down, and the buyers who thought that the prices would keep rising now begin to get nervous, look at their investment returns are falling, and that they are having to set more and more aside for contingency, and the market smells forced sellers, so they short as well. The vicious circle continues, just as it did with the banking shares in our market.

The problem is the same with inflation and interest rates, on government bonds. They have been buying in older issues with high interest rates and issuing new bonds with lower yields, which they banks have had to purchase, and now the vice is about to close. Higher yields mean falling prices, and the banks balance sheets will look worse, and so they will have to cash in the bonds, unless they treat them as cash. However, the prices will continue to fall, and as Goldman are now saying that the bull market is due to collapse, then there will be another wall of money hitting the market in something else.

Let us not hope that the media are not part of another big game, where Goldman short the market in commodities, and that they now need sellers so that the prices fall, so that they can again make a killing on the market. They would not have shorted now, they would have shorted some time ago, and now, snap. The vice closes, we are all in the grip of misery, and destitution is just around

#3

Interesting that the figures for wages in the economy prove my earlier point, real wages are falling, so why on earth link pensions to wages. I don't know, there will no doubt be some experts saying this that and the other. The only trouble is Andrew that they persist in saying they did not see this coming, only the evidence from the Goldman Sachs interview would show that some people do see these things, that they have their clients, they they take their positions, and that it is the mugs, the people, who end up paying.

This is no conspiracy theory, its called free market economics, and the governments make matters worse because they do bale out their friends, we have not had free market economics, not when the governments use taxpayers money to help industry, or save friends. Just never forget, Alastair Darling may not have been the only one to have had a mortgage with Northern Rock, the bank 'we' saved by nationalisation. The same with Equitable Life, and the MPs pension funds.

#12 Catch22.

I agree with all of what you wrote, except for Equitable Life. A Sunday Times article at the time of collapse stated that the MPs were quietly given preferential terms to leave Equitable to a new pension provider. They were not charged draconian exit fees, and the fees that a normal person would pay to start a pension in a company were 100% covered by taxpayers. In other words, the politicians lost NOTHING.

Most people in Equitable were NOT high earning professionals, they were ordinary people who saved with them because they were seen as the safest of safest pension providers.

Shortly after the MPs left, the society introduced massive exit fees, which stopped many from leaving. I know a few people who could not move out because of the fees. Between Gordon Brown's raid on the private pension system, and companies like Equitable reneging on promises (breaking contracts), they have lost 70% of their pension. The coalition are offering a pittance as compensation.

If you want to talk about Equitable, you have to ask why the politicians were given such a great deal, paid for by taxpayers.

#13

I agree with you about the MPs and Equitable Life. You might not have read earlier posts I have made that the Trustees of the MPs Pension Funds moved assets out of Equitable Life a matter of weeks before the High Court judgement on the guarantees. My point would be surely it is truly fortunate that such a judicious decion was made which prevented the assets from the same effects suffered by many policy holders. However, I make absolutely no claims that there was any inside information being circulated, nor that there was any improprietary by anybody, it was just a matter of good luck. The same sort of good fortune which enabled Alastair Darling to be part of the process of nationalising Northern Rock, again where he was just lucky, that he had his mortgage with the very same Company.

All of this is of course very much like the great judgement of the likes of General Sir Mike Jackson, our heroic leader of our forces during the war and subsequent occupation of Iraq. Now he reveals in his recently published memoirs that he took his own legal advice before the war, just to check, and ensure that what he was going to be ordered to do was entirely legal. It was a close call, but he was proved correct, unless you listen to Nick CLegg of course who has previously referred in parliament to the illegal war in Iraq.

How is this linked to Andrew's wonderful Blog, well we always listen to the experts, whatever it might be about, about the disastrous policy of the Bank of England over low interest rates, and Quantitative Easing, I do wonder why we pay these 'experts' quite so much money. It is not as though we write with the benefit of hindsight, because saying I told you so is not an economic policy, but it would appear to me that the experts are, in many cases, the problem, and never the solution.

When these experts on the economy just ask yourself, who pays this person, what is their income, what is their self interest, do they hold shares, are they in any way involved in the market, because one old adage stays sound, 'he who pays the piper calls the tune'.

Catch/Moaner

As an ex Equitable client, I jumped ship at the earliest opportunity and took the hit on the penalty, which for me was approximately 15% of the fund value. Both Equitable and the organisation receiving the funds dragged their feet at every opportunity and I really had to drive the transfer through. At my age at that time it seemed a price worth paying.

I was later advised that the other organisations had been warned off poaching Equitable customers by the regulatory authorities for fear of further destabilising the Equitable.

There was undoubtedly some collusion between banks and regulatory authorities where the Equitable was concerned.

Inflation figures are just a snapshot of the economy and do not necessarily reflect everyone's lifestyle. The perceived inflation for many is very much higher - consumer prices will surely be driven down again by lack of demand but the rising commodity prices cannot be absorbed ad infinitum and factory prices will have to rise at some stage.

The level of economic ignorance on this thread is astonishing. Moaner has been particularly astute at displaying his/her lack of understanding some basic economic concepts.

Misconception #1: "If you want to start turning around the UK economy, you better stop stealing from the savers." WRONG
If you want to start turning the UK economy round, the savers better start spending. But as Andrew points out, consumers aren't doing that. If more money flowed to savers (eg tax cut) they would just save it (funny that), which means less money flows back to businesses, which means the economy grows less. And an interest rate cut isn't stealing. The bank can give you whatever interest rate it wants. And you can put your money wherever you want.

Misconception #2: Inflation is somehow rigged or inaccurate. WRONG
"They add in consumer electronics" - Why, do you think people never spend money on consumer electronics??? Just because the prices of some goods gets cheaper doesn't mean we should ignore it.
"They make no allowance for any item that are one-off purchases." TOTALLY WRONG. The CPI/RPI are both weighted by how often each item measured is purchased.

Misconception #3: "the GDP figure is similarly being cooked. Since Q4 2009, the ONS started to add "government spending" to calculate the GDP figures." WRONG
There are several ways of measuring GDP. One of these is the expenditures measure. This has ALWAYS included government spending.

(By the way, if you think points 2 & 3 are evidence of the ONS not being independent, you are totally nuts)

Misconception #4: "the public sector cannot ever grown an economy because it generates no money for any country in the entire planet" COMPLETELY GOBSMACKINGLY WRONG
What?!?!? So if the government spends money on building a bridge, you think the bridge just vanishes into thin air upon construction finishing? You think that if the government pays its employees wages, their income vanishes upon exiting the building? You think that the government educating people or treating the sick (NHS) adds no wealth to the economy? You think providing electricity or clean drinking water adds no wealth to an economy? You are completely bonkers.

Ok, rant over.

Ok, so the bridge has been built with taxpayers money. Has it been spent or invested, because surely where is the return to the taxpayer on the built bridge. Where does the taxpayer get their money from. Now if it was a Toll Bridge, then there might be no problem, but there are only a few Toll Bridges in the UK, so the bridge might just as well vanish, as far as the taxpayer is concerned, it's gone.

In a way a bit like the nuclear arsenal we have built up, it has not been used once in anger, so where has that money gone. So, some people might rant, but the analogy which might be used of the bridge is just so much hot air, the bridge, like the Lady, might just as well vanish.

Exporting is fine but we have to have the industries to make things that people want to buy. Most of ours were bought and shipped to places where they pay peanuts to their workers to make them compared to our work force. Reebok showing the Union Flag - Made in Vietnam for instance. If we can't compete on price then we have to show it is quality that matters and try that or learn that we can't pay ourselves what we used to.

Good evening each & Andrew.

"Lies, damned lies..."

The jobless figure is down. Yippee!

The number of unemployed who have had their claim suspended and been put onto the track of emergency payments..has gone up.
While the urge to equate a drop in the jobless figures to an increase in the workforce numbers is strong here and there. Where oh where does the truth lie?

It strikes me that we remain tied into the process of confidence be-gets confidence be-gets confidence and any actual improvement to anything or to the lifestyle of anybody 'must exist' because we wish it so.

The local elections are causing much unnecessary suffering in the party political cause.

P.S.

As for self certification mortgages.

The 'blame' lies fairly and squarely with the seller's utilisation of the same neat trick that was the industry standard in all matters financial...
The paying of bonuses at the point when the deal was signed.
Credit and cash were force-fed to even the most honest, if most naive, individuals.
Here too, as the song has it, forecasts for the future were rosy: "Things can only get better."
The thrust is yet the same. Maybe this time around the omelette shall become the soufflé as promised. We need only be more brisk with the whisk?