Wednesday, August 24, 2011
Wealth destruction the new normal
WEALTH preservation is now the name of the game in the West. The challenge, for most people, is not to make more money: it is to try and preserve what they have. Declining equity and property prices, ultra-low interest rates, lowish pay rises, elevated inflation and increasing taxes are combining to squeeze nearly everybody. This shouldnâ€™t come as a surprise: the UK economy shrank by about six per cent during the recession; and there has been far too much borrowing from future expected production to fund consumption today. A country that produces less (which is what it means to have a smaller economy) must consume less; the value of its land and companies will also be worth less.