Thursday, February 14, 2008

This site has been saying it for years.

Standard of living will fall, warns Mervyn King

Families have been warned to expect a decline in their standard of living as rising food and fuel prices place household finances under severe strain. Would UK economic policy be better served by following the ideas in random late night HPC blog comments (probably after coming back from the pub) rather than professional economic advisers? Yes - probably, the evidence emerging seems to suggest so.

Posted by housing carbuncle @ 02:14 AM (1657 views)
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16 thoughts on “This site has been saying it for years.

  • It just shows you that Darlings comments are totally out of step with Mervyn King. Having secured his next 5 years, maybe we should not be too surprised that he feel more comfortable to come out with what he really thinks. With companies startig to lay off people in the finance business, I hesitate to say this is the start of it. Pickfords are looking shakey, one or two more estate agents must be close to shutting more offices, I’m sure the new owners of Jaguar will want to save money and Northern Rock is still a monument to overindulgence. There is going to be an end to the “we’ve managed gain with no pain” story we’ve heard from the Government. I think many more people are seeing the tax and spend economy for what it is. We’ve had money pumped into the system via “off balance sheet” spending: PFI, equity withdrawal and credit being the biggest. With this hyped to maximum, it doesn’t take a degree in economics to work out that things are going to get worse. And the whole country is starting to realise it.

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  • Ooooooo!

    Such unhappy bloggers on the Telegraph sites thesedays. Hope they aren’t representative eh Crash?

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  • growler – how I agree with your comment on ‘off balance sheet spending’.
    I think that PFI must be one of the biggest ‘cons’ of the last ten years. We are all going to be paying a fortune in the future to ‘rent’ these new hospitals and schools. We, the people, owned them until GB sold them off – and where has that capital gone? Wherever it’s gone, it won’t be spendable again.

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  • japanese uncle says:

    Renationalization without compensation (as those conmen have already pocketed enormous profits) seems the only solution.

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  • tyrellcorporation says:

    JU… that’s a massive backward step in my opinion. The state has a pretty bleak record at running anything (apart from being quite good at large budget deficits). Return to the 1970’s? – no thanks.

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  • it_is_going_with_a_bang says:

    Mr Darlings fundamentals. I.e. what hasn’t fallen apart – yet.
    It’s hard to see where his fundamentals will be when people have no money to spend – I would imagine that will be the time when he gets kicked in his fundamentals.

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  • planning4acrash says:

    Well, they have chosen. The only radicalism now is to shift money from the pound into Euro (until they begin dropping rates), other growing currencies and in having punts at Gold price fluctuations. Of course, we now have a right to work in Europe, so maybe you could get a job paid in Euro’s? Oh, yer, nobody was tought to speak French and German, bummer.

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  • Can someone (from the Office of National Statistics) please explain why just 3% is considered a “problem” level of inflation, when 20 years ago 3% would have been celebrated as victory against inflation?
    In the 70’s we had double-digit inflation and if you look at the actual prices you see in shops, this is much more like what we are seeing.
    In my opinion we are being lied to on the most extraordinary scale. Real inflation is double-digit again but the official statistics are massaged so that public sector pay increases can be kept artificially low. THIS is why so many people working in the public sector are so unhappy. The hand that is meant to feed is actually the hand that takes. It takes your labour, and rewards you by robbing you with below (real) inflation pay rises.
    We are the Enron Nation, along with the USA.
    See http://www.shadowstats.com

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  • it_is_going_with_a_bang – “I would imagine that will be the time when he gets kicked in his fundamentals.” :-0

    If I hear more quote from Halifax or whoever by the likes of ‘supported by sound fundamentals’ or ‘underpinned by sound fundamentals’!? This so-called ‘economy’ if fundamentally a mess. ‘sound’ it isn’t.

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  • Ruth Lea, an economic adviser at Arbuthnot Banking Group, said the Governor’s warning underlined the plight facing many families.

    “For a large number of people, the cost of living is not rising at two per cent — it is increasing at close to six per cent or seven per cent. Then on top of that you have taxes digging into their incomes — particularly council tax.”

    Are you listening Mr King, the numbers you’re working with are [email protected]!

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  • So now we have a polar difference in story between the chancellor and the governor. This is basically good news for anyone looking for the housing market to regain some sanity though.

    Mervyn King saying “I will not bow down to housing market pressure any more” and Darling saying “Nobody panic – it’ll all be fine”.

    Oh dear.

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  • Geed, they well know the numbers they are working with are a lie. But the CPI means the government can try to keep wage demands down, so in effect everyone naively accepts a paycut. These ‘standard of living falling’ comments from the BoE is a round-a-bout admission that the CPI bears no relation to the actual rise in the cost of living.

    Let’s be honest, a good number of people were living a lifestyle that was well beyond their means, it will do them good to live within them for the next two decades.

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  • Bang on Chris.

    I was surprised at the weight of the 0.1% increase according to most press reports. I can’t rememeber last years 3.1% CPI whopper being reported with such negative enthusiam. It was as if everyone knew that the 0.1 represented a far greater REAL hit to the consumer.

    BoE; “according to official figures we are 0.2% above our target and this represents a huge fall in the standard of living”. This is essentially what they are saying, anyone looking from another country would be asking whats the problem, according to your figures inflation appears to be behaving fine, what’s all the bother? Clearly the BoE know people are hurting, Darling wont acknowledge this, and Merv to save a bit of face realises he must show at least some connection with us layfolk on the streets irrespectiove what they stupid ONS figues say.

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  • japanese uncle says:

    tyrellcorporation

    Were there any major railway accidents comparable to the series of disasters involving hundreds of casualties, one after another, during the days of the British Rail?

    Wasn’t the BBC much better respected before it started to be headed by investment bank thugs?

    Good onbudsman is all we need, not the private capital which certainly tends to priortise their profit before the public safety and welfare.

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  • Surely all he is pointing out is that being poorer isn’t the same as inflation. He is saying, or at least adopting this as an argument, that prices are rising and that as a nation of indebted poor people we can’t afford them. I do seem to recall that inflation is viewed by some as solely an increase in the money supply, and nothing to do with prices within the system. However, as we certainly do have inflation as well we would seem to be b*gg*red on both counts. More fuel for the dramatic price falls in houses.
    Imagine an economy with a 100 gold coins and a 100 apples and no apple trees. As the apples were eaten their price would rise, but that isn’t inflation just a reflection of their new true non-inflated price.
    Maybe this is a justification to ignore inflation in the future, and to write off price increases as simply that. Future wage agreements will reveal all. Good for him though, best man for the job.

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  • speculatorone says:

    Off the subject a bit, can anyone recommend a decent on-line share dealer to join?

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