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For Many, It'll Be A Very Unhappy Financial New Year-Telegraph

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http://uk.finance.yahoo.com/news/For-many-unhappy-financial-tele-1824401677.html?x=0

For many, it'll be a very unhappy financial new year
Jeremy Warner, 18:26, Thursday 30 December 2010
It will only need a small nudge to tip some households into destitution, writes Jeremy Warner.
In one respect, Brendan Barber, the TUC general secretary, had it about right in his new year message; for many people, 2011 is going to feel "horrible". Around 60,000 public sector workers will lose their jobs, and across the economy as a whole, living standards are likely to fall. Growth will be sluggish, if not negative in some areas. Inflation will remain high, so real wages will fall. Meanwhile, the Government will struggle to get on top of the deficit.
But that's where Mr Barber's grasp on reality ends. Both he and the Labour leader, Ed Miliband, seem to believe that with different policies, the coming adjustment can somehow be avoided. In so arguing, the Left has descended into fantasy.
It's easy enough to see why they might delude themselves. Despite the worst banking crisis in 100 years, and the deepest economic contraction since the Great Depression, to many people, it hasn't felt much like a recession. Unemployment has remained relatively low by the standards of past contractions, and thanks to rock-bottom interest rates, many households have enjoyed a significant boost to their disposable income.
The collapse in business demand has been countered by higher government spending and robust domestic consumption. House prices have undergone only a mild correction, and thanks to public support the City is once more skipping along as if in the midst of a full-scale boom. Why can't we just continue in the same vein? That's what they're doing in the US, where more fiscal stimulus is being piled on top of yet more quantitative easing. Is it not madness to follow the European periphery into self-imposed austerity?
This is a seductive message but it's also cloud cuckoo land. To think that Britain can be saved from the consequences of years of credit-fuelled excess by continuing to apply more of the same defies logical analysis.
Ministers, meanwhile, suffer from a different form of delusion: a conceited belief in their own powers of economic alchemy.
Their message is that things are now unambiguously on the mend, that the mere act of announcing a credible deficit reduction plan has somehow put the worst behind us. Already the sunlit uplands seem to beckon. If only it were true.
I'd never urge ministers to fill the airwaves with pessimism. To stand any chance of getting out of this mess, we need decent private sector growth, and perpetually sounding the air-raid siren hardly helps. Yet there is a sense in which policymakers are not telling it as it is for in fact, the debt workout has barely begun.
To understand why, take a look at where we were meant to be by now, three and a half years into the crisis. By common agreement, the UK economy became dangerously unbalanced during the long years of boom. We weren't exporting enough, and importing far too much. The illusion of rising living standards was kept alive by soaraway credit expansion, rapid growth in public spending and constantly rising house prices. Like all illusions, it couldn't last.
Nobody welcomes a crisis, but it did at least provide an opportunity to get the economy on to a more sustainable footing. Rebalancing it away from debt-funded government and consumer spending and towards private investment, savings and net trade became the over-riding goal of macro-economic policy.
But how much progress has been made? Hardly any. In fact, the policy response to the downturn has only succeeded in making matters worse. Household debt remains at near-record levels indeed, in nominal terms, it hasn't fallen at all. It wouldn't require much say a P45, and/or a rise in mortgage rates to tip many households into outright destitution.
After a brief upward blip, the savings rate has returned to one of the lowest in the developed world. And despite all the brave talk of deficit reduction, central government spending and therefore borrowing reached an all-time record last month. Meanwhile, growth in imports is still outpacing the recovery in exports. Our trade and current account balances remain deep in deficit.
A big uplift in business investment does, admittedly, provide cause for encouragement, but in other respects, the hoped-for rebalancing is still in the starting gates. We live in a policy-induced stupor, shielded from the consequences of past follies by fiscal and monetary stimulus.
That's why it hasn't so far felt like a recession. Yet nothing can be put off for ever and for many, next year will be when the pain starts to bite. Austerity has been on a long fuse, but begins on January 4 with the rise in VAT. The inflationary consequences of devaluation will, through higher interest rates and falling real wages, further damage our already declining living standards
.
I'm not trying to argue that supporting the economy via negative real interest rates and government spending was the wrong response to the banking crisis. But nobody should be under any illusions about how these levers work: they could only ever succeed in smoothing and slowing the pace of adjustment. They could never, as Messrs Barber and Miliband seem to believe, eradicate it. Next (Xetra: 779551 - news) year comes the moment of truth.

Nails it. CNAM

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Indeed, and in the long run it will be good if the country wakes from the decades-long illusion that borrowing = wealth creation, but in the meantime there must be scapegoats; thankfully this government will last the 5 years and perhaps take matters beyond the point where even a new Labour government could turn it back.

Reality approaches.

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Yet another scare story in the telegraph telling us all what we all already know, even the mumsnetters know all this, though they choose not to talk about it in public.

This article is the journalistic equivalent of a pot noodle, with all the seasonings and spices that torygraph readers love liberally applied, leaving a nice bitter taste but failing to provide an ounce of actual new information.

What a sh1t rag.

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Yep.

Import tariffs, higher top-end and bankster windfall taxes are becoming an urgent priority.

Come on Osborne - make your Bullingdon buddies cough up their windfall gains!

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Yet another scare story in the telegraph telling us all what we all already know, even the mumsnetters know all this, though they choose not to talk about it in public.

This article is the journalistic equivalent of a pot noodle, with all the seasonings and spices that torygraph readers love liberally applied, leaving a nice bitter taste but failing to provide an ounce of actual new information.

What a sh1t rag.

Do you think "we" all know it? That's not the impression I get every time I see the public engaging on the subject. All I see are the likes of Question Time audiences baying for "free" education, more of this and that and basically business as usual on the never-never.

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Yep.

Import tariffs, higher top-end and bankster windfall taxes are becoming an urgent priority.

Come on Osborne - make your Bullingdon buddies cough up their windfall gains!

What impact on the structural deficit would you see any level of banker windfall tax or whatever else we want to call it having? I can't see how it closes it, even the bank stuff is only measured in at best a few tens of billions when the problem is now in the hundreds, every year.

Myself, I think arguing about how it's all shared out is secondary to the problem that we're consuming it but without generating it.

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Yet another scare story in the telegraph telling us all what we all already know, even the mumsnetters know all this, though they choose not to talk about it in public.

This article is the journalistic equivalent of a pot noodle, with all the seasonings and spices that torygraph readers love liberally applied, leaving a nice bitter taste but failing to provide an ounce of actual new information.

What a sh1t rag.

I disagree. They don't get it.

I hear so many intelligent people saying what recession? Never happened. And then they carry on as normal saying there is no problem and there won't be.

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Yet another scare story in the telegraph telling us all what we all already know, even the mumsnetters know all this...

What a sh1t rag

What kind of ivory tower do you inhabit? In the real world, even the relatively well-informed see through a glass darkly and like a boiling frog dimly aware of its predicament understand little of true cause and effect.

Edited by drrayjo

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Yet another scare story in the telegraph telling us all what we all already know, even the mumsnetters know all this, though they choose not to talk about it in public.

This article is the journalistic equivalent of a pot noodle, with all the seasonings and spices that torygraph readers love liberally applied, leaving a nice bitter taste but failing to provide an ounce of actual new information.

What a sh1t rag.

totally agree, this is fast becoming another pointless rag

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The inflationary consequences of devaluation will, through higher interest rates and falling real wages, further damage our already declining living standards[/b].

....higher interest rates are normally used to stifle inflation...why is this rant different.....?.... :rolleyes:

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Good piece albeit a rather optimistic one. The government is literally busting our finances to keep the illusion going while hoping for an inflation that would make it all go away. Unfortunately numbers don't lie and markets are noticing that the austerity programme was just a myth. On top of everything else, I would expect payback to be particularly painful on this point (will Merv trash the currency or will he let rates rise???).

Still, nice to see the MSM coming up with a rather lucid view of things, thanks for the post.

Edited by _w_

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here comes the catchphrase.....c'mon....say what you see!!! :lol::lol::lol:

cold_turkey.jpg

PS I'm getting exceptionally fecked off with trying to post a decent image that is not supposedly copyright from google to vent my spleen.

might have to take my custom elsewhere.

Edited by oracle

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2011 will be a complete disaster for millions of the population making Dave and Nick more hated than Margaret Thatcher, blaming Brown will no longer be accepted as an excuse as the majority of the population have very short memories of the past and are only interested in the present and future. Remember "The Times They Are A Changing" and so they will. ;)

Dave and Nick may find themselves put out to grass with Osborne and Alexander joining them and the UK once again in crisis. ;)

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2011 will be a complete disaster for millions of the population making Dave and Nick more hated than Margaret Thatcher, blaming Brown will no longer be accepted as an excuse as the majority of the population have very short memories of the past and are only interested in the present and future. Remember "The Times Are A Changing" and so they will. ;)

Dave and Nick may find themselves put out to grass with Osborne and Alexander joining them and the UK once again in crisis. ;)

...good time to call a General Election.....now that we know the true extent of the Brown mess ....would you wish to clean up his droppings...?...and get no thanks for the attempt ....play the cards right ...go to the country ...if the sheeple would like outright obliteration ...let them vote Labour..... :rolleyes:

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...good time to call a General Election.....now that we know the true extent of the Brown mess ....would you wish to clean up his droppings...?...and get no thanks for the attempt ....play the cards right ...go to the country ...if the sheeple would like outright obliteration ...let them vote Labour..... :rolleyes:

They would vote for an old wise Chimpanzee from London Zoo if they thought that would save them from terrible financial pain. I have spent 50 years studying the mentality of the British Electorate, but Hey we always seem to survive as another Saviour comes forth. ;) Who could it be this time one may well ask? :)

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They would vote for an old wise Chimpanzee from London Zoo if they thought that would save them from terrible financial pain. I have spent 50 years studying the mentality of the British Electorate, but Hey we always seem to survive as another Saviour comes forth. ;) Who could it be this time one may well ask? :)

...if Labour were to win ....due to the inflexibility of the Leadership challenge / succession process it would be Red Ed ....a Brownite anyway....due justice.....?..... :rolleyes:

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I shall make a prediction - virtually no public sector jobs will be lost. This is a con, designed to have the private sector believe the Govt is cutting big govt, the reality will be somewhat different. Remember Cameron is the ultimate socialist - 'the big society' man.

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...if Labour were to win ....due to the inflexibility of the Leadership challenge / succession process it would be Red Ed ....a Brownite anyway....due justice.....?..... :rolleyes:

No chance, I believe the next Election when it comes will be an outright Tory victory but not with the 6th form schoolboys in charge but a long time served senior Tory as Leader supported by a party who will gain great popularity in the next couple of years. The times will definitely be a changing. ;)

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here comes the catchphrase.....c'mon....say what you see!!! :lol::lol::lol:

cold_turkey.jpg

PS I'm getting exceptionally fecked off with trying to post a decent image that is not supposedly copyright from google to vent my spleen.

might have to take my custom elsewhere.

Use print screen if necessary then link to images uploaded in your free webspace.

Its a fiddle but it will work.

Another tip - Photoshop airbrush and clone stamp can tidy up copyright 'watermarks' sometimes, or even a simple crop if its near the edge.

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No chance, I believe the next Election when it comes will be an outright Tory victory but not with the 6th form schoolboys in charge but a long time served senior Tory as Leader supported by a party who will gain great popularity in the next couple of years. The times will definitely be a changing. ;)

My itch is telling me Labour would win hands down.

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