Wednesday, October 26, 2011

Well done Merv. Xmas cards from your banker chums this year.

Families are £15 a week worse off than this time last year: 'It's the biggest squeeze in living memory,' says King

.Cost of living squeeze is said to be the longest and deepest for at least 60 years .Average weekly household income after tax at £597 .King: CPI inflation rate of 5.2% 'very uncomfortable' The annual drop in spending power of £780 from taxed income, according to the monthly Asda Income Tracker. Yesterday the governor of the Bank of England, Sir Mervyn King, said workers in Britain have been hit by the biggest fall in living standards ‘in living memory’. The £15 drop in weekly spending power is the biggest in the four-year history of the study, while the current cost of living squeeze is said to be the longest and deepest for at least 60 years

Posted by khards @ 09:51 AM (1903 views)
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28 thoughts on “Well done Merv. Xmas cards from your banker chums this year.

  • only 15 quid don’t think so

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  • mark wadsworth says:

    It’s a funny old world when a supermarket like ASDA is telling the truth and the BoE is lying.

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  • Thecountofnowhere says:

    Families are £15 a week worse off..because of the BoE’s actions.

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  • walmart has a lot of power, in the USA (not sure if this went ahead) walmart is taking on the government over medicaid what we need is a world war or a massive volcano to blow to reset the structure of world power – reduce the power of corps, there are certain food companies in the USA which have so much power they control what kids eat at schools etc due to the highest return for the companies involved.

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  • The largest areas of inflation I have personally experienced are in Petrol, Tyres, Car Insurance, and Food.

    We have managed to circumvent the petrol by cutting back on the mileage we do, this should also save on the tyre wear. We have also managed to circumvent food rises by shopping around, we also buy in bulk at bookers which keeps costs down. We have also cut down on takeaways.

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  • @3 Mark

    War would be very profitable for bankers if governments weren’t already insolvent.

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  • Can someone please explain to me how the residential rental market is immune from the so called “squeeze”?. All I ever seem to read (or in a very limited personal way hear) is that rents are on the rise – surely the affordability factor as I call it applies to this sector just as it does to the mortgage market. My question is prompted by hearing that the daughter of a close friend is facing a rent review on her 1 bed box. The amount payable is anticipated to rise from £1k per month to £1200 per month – thats a hefty dent in someones disposable income when everything else appears to be on the rise and as she works in the public sector is subject to a pay freeze.

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  • khards how would you compare bookers to costco? we were thinking about getting a bookers card

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  • Merv’s zero interest rate policy ramped up house prices by up to 300% in only a few short years. Surely £15 per week drop in living standards is nothing to this country of home owners. We are all rich beyond our wildest dreams, except I can’t pay the gas bill.

    What is interesting is that Mervyn King admits these things at all. House price ramping has been denied.

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  • jack

    perhaps the same reason why tulips from amsterdam kept rising before falling 99%

    rents are rising because people can’t buy,however,if markets were allowed to work then prices would fall and first time buyers would buy rather than rent as banks lend 90-100% mortgages again,however,this would not push up as people with buy to let portfolios would sell or go bust and the supply of forced sales would keep prices falling.

    in japan prices are 40% less in actual terms than 1991 and property/stockmarket investing is avoided like the plague…they had zero interest rates too

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  • you know mervyns face makes me want to vomit

    fuel, food, insurance, flights, clothes, everything going up in price due to uncontrolled inflation this guy is a complete dickhead – although the clever public stunt to make him look bad made the public feel for him – what utter rubbish we are fed in the country suppose they learned a lot from propaganda during WWII

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  • Mark, I haven’t been to costco because it’s 60 miles away, has a membership fee and I would have to pay 2 x Dartford toll charges (which have also gone up 50%)

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  • bookers is free membership? what are prices like for meat and veg

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  • Mark, Booker is free membership. You will need to provide a (fake) business card to join. Prices are good for fresh meat, cheese and vegetables if you buy in bulk. eg. Frozen spare ribs £2.80 per Kg, frozen chicken breasts £4/kg etc.. I have a vacuum pack machine so I can split up the packs and freeze stuff.

    Chilled promotions
    Other stuff

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  • @ taffee (Wednesday, October 26, 2011 10:25AM) – many thanks for your reply – much along my line of thought. I guess I’ll just stick with my formal economic learning from the late 70’s on Price elasticity of demand.

    Mr Wadsworth – any thoughts/comments?

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  • mark wadsworth says:

    Jack C comment 6 , to be honest, it’s a mystery to me how the UK government has managed to suspend the laws of economics for so long, normally the markets win out again after a couple of years.

    Quite clearly, rents (or mortgage repayments) just soak up most of the ‘surplus’ which people have left over after paying for ‘essentials’ (whereby ‘essentials’ is a social or cultural concept, it does not just mean food and a blanket). I’ve done plenty of charts correlating wages and house prices or wages and rents, and the line of best fit says you can estimate prices or rents by deducting £6,000 or so from net salary and timesing that by a constant.

    Maybe it’s simply the case that most people are still in a house price bubble mentality, which in the short or medium term can override normal rules of supply and demand and pricing etc.

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  • mark wadsworth says:

    So to actually answer Jack C’s question, normal patterns say that if the basic cost of living goes up by £100 (or if wages go down by £100), then rents (and hence mortgage payments for a new purchaser) must come down by about £100.

    I suppose the get-out here is that if real essentials, food petrol heating go up ten per cent, then people can reduce the ‘discretionary spending’ of the basic cost of living by the same amount, leaving the same amount left over to be soaked up as rents.

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  • MW i do think people still think prices are about to shoot up, god knows how anyone will afford them if they did, things are tight now for people, the public have little understanding of economics and are clearly deluded much like Gordon Brown

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  • MW – “I’ve done plenty of charts correlating wages and house prices”
    I bet Mrs Wadsworth is one happy lady!

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  • MW i do think people still think prices are about to shoot up, god knows how anyone will afford them if they did, things are tight now for people, the public have little understanding of economics and are clearly deluded much like Gordon Brown

    I think most people aren’t that stupid – but there are a lot of people who will always talk the market up.

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  • HP dont you think?

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  • Quick sample taken a while ago round the office colleagues.

    “If you have £100 in a bank paying 10% interest a year, how long will it take before you have a total of £200 in the bank?”

    Every person I asked said ten years.

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  • what sort of office do you work in?

    so every person got it wrong

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  • @22 : More to the point, tell us the name of the bank!!

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  • Guy’s I cant resist stealing Rant’s thunder on this one – he works in Threadneedle Street !

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  • Most of the folk here are the supposedly wiser side of 40…

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  • Nice one Jack – the really bad news is he asked the question at the last MPC meeting!!

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  • Timmy – on a similar but real theme – I listened to the TSC evidence session yesterday – really funny as George Mudie asked the questions and Mervyn threw some (not all to be fair) of his toys out of the pram !

    http://www.parliament.uk/business/committees/committees-a-z/commons-select/treasury-committee/news/treasury-to-hear-from-bank-on-quantitative-easing/

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