Tuesday, January 1, 2008

2008, the year of facing inflationary realities

Anger as rail fares rise by up to 14.5 per cent

"Train companies have been accused of imposing "unjustified and unfair" price increases of up to 14.5 per cent from tomorrow amid warnings that the cost of many season tickets will go up by many times the rate of inflation" Or is it that inflation is many times the rate of inflation?!

Posted by planning4acrash @ 10:49 AM (1242 views)
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16 thoughts on “2008, the year of facing inflationary realities

  • The new reality really is starting to bite.

    These hikes in the costs of transport are actually to pay for senior management to offset their salaries against inflationary increases. Meanwhile Virgin workers are told that they cannot have any “dangerous pay increases” to combat inflation. According to the CPI, inflation is low don’t you know:

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  • japanese uncle says:

    The biggest losers are the sheeples who must commute every day. Although they have been soothed by the fictitious inflation of their biggest assets – house, this trick will no longer be effective as HPS is becoming a severe reality. What should follow? Four seasons of discontent, which will justify anything including military adventurism, exactly as seen after 1929. Again sub-prime crisis has been engineered as part of the much bigger ‘scheme’ in geopolitical context. No doubt about it.

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  • planning4acrash says:

    Yes, let us remember that the “benign” inflation rate of November actually ushered the first time that RPI has been double CPI. Were pundits relieved that the government could fudge figures to this extent? Does that explain the optimism? This is a bubble that must be burst eventually and it will be very similar to the ERM situation, IMO.

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  • I suspect that some of the rises are probably down to Gordon “I took Prudence out and shot her” Brown’s
    selling the rail operating franchises and allowing them to increase their pices , ie just another form of
    indirect taxation.

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  • David Smith's Sub Prime. . . says:

    wow!

    Just imagine the extra rail fares from say Portsmouth or Brighton to the smoke. Then add in the extra stealth taxes generally from last year. Then add in the extra £200 the average tax payer will have to pay for Crash overshooting on his spending for the last year (£38 billion in the first 8 months which is £2 billion short only already and the end of the year total hasn’t been reached). The £200 will probably increase by the way.

    Looks like an interesting year for the average commuter on say £40k?

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  • David Smith's Sub Prime. . . says:

    By the way I am glad I am just an economist writing what Mr. Murdoch tells me I must write…

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  • @ Japanese Uncle, could you elaborate on the military adventurism idea? I can’t imagine Britain or America having the stomach for war after the farce that was Iraq. I’d say a more likely outcome is that China’s rampant growth slows down dramatically in the wake of a US recession, causing domestic unemployment. This would foment unrest amongst the people who left the countryside to work in the cities. The political leaders might look for an external enemy to blame. If we’re lucky, they’ll limit their military adventurism to just Taiwan or North Korea. If we’re unlucky, China will go after Japan or South Korea, both home to several large US military bases. That could trigger a world war in the same way that Germany’s invasion of Belgium forced the UK into WWI.

    Back to the main article… maybe somebody could draw a graph of rail fares compared to RPI / CPI. I think rail fares are a far better indicator of domestic inflation than e.g. cheap clothes from Turkey or cheap sat-navs from Malaysia.

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  • planning4acrash says:

    Its simple, you can if you like, atribute WWII to the Great Depression, Germany printing money after it, hyperinflation there. Extremism tends to be stronger in depressionary conditions. Lets hope not. America is probably trying, right or wrong, to avoid that eventuality with its pre-emptive action this time around.

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  • japanese uncle says:

    drewster

    You will never want a powder kegs in this world at the moment. For instance, Pakistan-Afganistan region after the assasination of Bhutto and Iran, indeed. (This region produces the most of poppy/heroin on earth. It was natural that Taliban who banned growing of poppy were targeted after 911.) Massive US military (naval in particular) build-up in the vicinity of Iran is a public knowledge where one (staged) skirmish could trigger a full-scale war quite like what happened in the Gulf of Tonkin in 1964, which might well be supported by another fake terror incident stateside and possibly one in GB as well. Iran’s geopolitical significance is beyond argument. Furthermore exactly as you pointed out Senkaku-Islands with massive oil deposit is and will always remain a issue of fierce argument among China, Japan and South Korea (FYI Japanese ownership of the islands is unquestionable according to international law, though I am not particularly a patriot). In Japan some of the younger generation without qualification nor job, thus no future are openly and quite wrongly discussing their desire for wars, as the only way out of their current misery.

    I had a trip to Italy recently, to find its middle class being wiped out on a massive scale, thanks to unsecure employment and inflation (doubled right after the intriduction of Euro. UK must never ever join Euro, remember!). And the majority without proper knowledge of history can be prepared to talk about war if their life standard will be threatened further. Things will be more or less the same in the UK after this economic meltdown reducing the majority of middle-class to near-slave situation.

    Disappearance of sound middle class is most alarming as they are the party that most prefers stability and hates violent changes. A nation could dive into facsim almost inevitably associated with military adventurism when this group normally serving as a massive social stabilizer is driven into despiar and forced on the queue for soup kitchens.

    Listening to Greenspan’s laughably illogical/unnatural excuses for his ‘misjudgment’ during his term as FRB chairman, which have formented the cause of the current financial turmoil, I cannot help feeling everything was utterly staged and engineered, as it was the case in 1929.

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  • Thanks JU, I agree with entirely with your points. Italy’s shrinking middle class is a warning lesson to us that we should avoid joining the Euro. It’s a good idea in theory but difficult in practice, just as the gold standard was. It was partly Germany’s loss of a middle class that led to WWII. The housing crisis in America could equally decimate the middle class there too. In the UK, rising inflation and housing costs are likely to shrink our middle classes.

    On the Iran question, why didn’t the UK/USA use the March 23rd Iranian capture of fifteen British sailors to justify a war? The whole thing seemed like a staged show on both sides.

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  • japanese uncle says:

    drewster

    Was it not simply due to the fact that UK was not fully prepared to start war with Iran at that point in time?

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  • Edgar Friendly says:

    japanese uncle: “Was it not simply due to the fact that UK was not fully prepared to start war with Iran at that point in time?”

    With all due respect, the possibility of the UK going to war with Iran is extremely unlikely. Impossible even. The UK might have been able to 50 years ago, but nowadays we can barely manage our small efforts in Iraq and Afghanistan. The UK does not have the numbers of troops, tanks, aircraft etc that would be required for such an undertaking. In order to go to war with Iran, the UK would have to reintroduce conscription and vastly increase defence spending and this build up would take a number of years.

    Even the USA couldn’t realistically fight a ground war with Iran. The US Army and Marine Corps are currently seriously overstretched.

    The best the US and UK could currently manage would be an air campaign possibly followed by a limited invasion of the Iranian province next to Southern Iraq/Basra where most of Iran’s oil is located and perhaps an amphibious assault on the coastal area where the Iranian oil refinery is located and the island where the bourse is. But all hell would break loose and the Iranians would be far from a pushover and could quite possibly inflict a serious defeat on UK/USA.

    The US military and intelligence services recently staged a revolt and undermined the Neocon’s war plans/noise in the form of the joint intelligence services estimate of Iranian nuclear ambitions.

    Ain’t gonna happen.

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  • it_is_going_with_a_bang says:

    2% Inflation my Ar*e.

    Oh let me guess, railfares aren’t included in CPI?

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  • If inflation is part of the CPI then I doubt it will be for much longer. No doubt it will return to the CPI when the rail travel inflation starts falling markedly.

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  • Edgar: That’s what I was thinking, there’s no way either country could stage a war right now. Even if the current financial situation turns out to be a mirror of 1929, it still took ten years to lead to 1939 and the outbreak of war. Probably best to focus on the situation here and now rather than what-ifs of a highly speculative nature.

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  • C'mon Correction says:

    Global inflation is in an upward spiral, it will get worse and worse for years to come. Once certain countries like the US and UK are firmly in recession in a year’s time, they will then flip into a deflationary spiral like Japan has been in. It remains to be seen if countries like China, India, Eastern Europe will still be battling inflation then, I suspect they will be for at least another decade regardless of what happens in the Western world.

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