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This is a spare 'blog in case my main 'blog at markwadsworth.blogspot.com isn't working
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.