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Author Topic: Rods2  (Read 2469 times)

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STMO123

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Rods2
« on: 12 March 2013, 19:26:28 »

Do any of these ideas grab you?  :o


http://m.bbc.co.uk/news/business-20617088



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Rods2

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Re: Rods2
« Reply #1 on: 13 March 2013, 01:34:32 »

In a word - No.

They are like somebody going to the doctors with breathing problems and chest pains. So the doctor prescribes some pain killers and cough medicine as that will make them feel better. Instead of telling them the tough medicine they need; to quit smoking and stop the full English breakfast in the morning cooked in beef fat, the beacon sandwich for lunch and the burger or sausages for tea.

The only way to kick start the economy is to cut public spending and taxes, where since 1991 government spending has gone from 32% of GDP to 52% in 2008, it has now fallen back very slightly. Once the private sector is growing with an increasing government tax take, this will take care of the deficit. Personally I would be quite brutal on this where public sector pay is typically 10 to 20% higher than the equivalent private sector jobs, so would target this, which is what Ireland has done and as a result they look like the only one of the PIIGS likely to escape the fate of Greece, Spain, Portugal and maybe Italy.

To make it more likely that the money from the tax cuts would be spent, rather than saved or used to pay down debt, I would target tax thresholds, which I think should be raised towards £12,000 so those of the minimum wage would pay minimal tax. That way every employed person gets a pay rise, outside of the public sector and with their tax bill going down a bit it would soften the blow for them. I would also taper these pay cuts, so those at the top got the biggest percentage cuts. Many civil servants, GPs and top managers at local councils are on £100 to 200k a year. With the 7% drop in real wages since 2008, most extra money from tax cuts would be spend by necessity.

All these clever ideas are bit like get rich schemes all very clever, but the don't work. Flooding the economy with money just produces inflation if there is not a corresponding rise in demand and output increases from manufacturing or services.

Without these changes I can't see anything other at best than stagflation, stagflation and stagflation as the country coasts into a major Sterling crisis. The PM and Chancellor have ruled out, spending and tax cuts, so we know it is not going to happen. The sooner the Chancellor goes back to his previous career of refolding towels the better for the country as he has no interest or grasp of economics and by accounts prefers to leave this to treasury officials, while he plays, Napoleon, plotting the 2015 Conservative election victory.

The BOE are coming up with all these crazy ideas where they have had a very bad recession and pulled many wrong financial levers and have run out of ideas. With less talking of the pound down and too much QE we would now have much lower inflation and a much smaller fall in real wages.

The BBC does not mention, public spending cuts at all as this would be against their mantra 'all public spending is good however wasteful it is'.  >:( >:( >:(

It is interesting that they mention a housing bubble and yes the multipliers have gone up due to a housing shortage, but where I live in an expensive London commuter belt area. A small 3 bedroom 1970's semi or end-terrace house is about £200k.  Now these days a couple need 25% deposit and this is normally the biggest sticking point as they want their good times and holidays etc, etc, so don't want to save it. So, say the bank of mum and dad provides it, that leaves £150k to find, so for a couple £75k each the mortgage has to cover, now divide that by 3.5 and they need a salary of £21,500 each. Perfectly possible for most skilled jobs and a UK average wage of £27,000 which in this area due to the London effect and very low unemployment is not difficult to get. For a flat at around £150k, even easier.
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Lizzie_Zoom

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Re: Rods2
« Reply #2 on: 13 March 2013, 09:19:13 »

There you are Steve, an answer in a nutshell; well Rods2 version of one!! ;D ;D ;D ;D ;) ;)
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Kevin Wood

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Re: Rods2
« Reply #3 on: 13 March 2013, 10:01:20 »

Yep, public spending has been the elephant in the room throughout all the government's half-hearted attempts to pull us out of this. Had they cut out a significant chunk of it, across the board, without "ring fencing" the most inefficient areas of public spending, on day one, we might now be getting somewhere.

The problem is, this costs votes, and the next general election is now starting to loom, so don't expect things to improve any time soon. Our whole political system and those who inhabit it are unfit for purpose, IMHO, not just the chancellor.
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Varche

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Re: Rods2
« Reply #4 on: 13 March 2013, 11:28:47 »

In a word - No.

They are like somebody going to the doctors with breathing problems and chest pains. So the doctor prescribes some pain killers and cough medicine as that will make them feel better. Instead of telling them the tough medicine they need; to quit smoking and stop the full English breakfast in the morning cooked in beef fat, the beacon sandwich for lunch and the burger or sausages for tea.

The only way to kick start the economy is to cut public spending and taxes, where since 1991 government spending has gone from 32% of GDP to 52% in 2008, it has now fallen back very slightly. Once the private sector is growing with an increasing government tax take, this will take care of the deficit. Personally I would be quite brutal on this where public sector pay is typically 10 to 20% higher than the equivalent private sector jobs, so would target this, which is what Ireland has done and as a result they look like the only one of the PIIGS likely to escape the fate of Greece, Spain, Portugal and maybe Italy.

To make it more likely that the money from the tax cuts would be spent, rather than saved or used to pay down debt, I would target tax thresholds, which I think should be raised towards £12,000 so those of the minimum wage would pay minimal tax. That way every employed person gets a pay rise, outside of the public sector and with their tax bill going down a bit it would soften the blow for them. I would also taper these pay cuts, so those at the top got the biggest percentage cuts. Many civil servants, GPs and top managers at local councils are on £100 to 200k a year. With the 7% drop in real wages since 2008, most extra money from tax cuts would be spend by necessity.

All these clever ideas are bit like get rich schemes all very clever, but the don't work. Flooding the economy with money just produces inflation if there is not a corresponding rise in demand and output increases from manufacturing or services.

Without these changes I can't see anything other at best than stagflation, stagflation and stagflation as the country coasts into a major Sterling crisis. The PM and Chancellor have ruled out, spending and tax cuts, so we know it is not going to happen. The sooner the Chancellor goes back to his previous career of refolding towels the better for the country as he has no interest or grasp of economics and by accounts prefers to leave this to treasury officials, while he plays, Napoleon, plotting the 2015 Conservative election victory.

The BOE are coming up with all these crazy ideas where they have had a very bad recession and pulled many wrong financial levers and have run out of ideas. With less talking of the pound down and too much QE we would now have much lower inflation and a much smaller fall in real wages.

The BBC does not mention, public spending cuts at all as this would be against their mantra 'all public spending is good however wasteful it is'.  >:( >:( >:(

It is interesting that they mention a housing bubble and yes the multipliers have gone up due to a housing shortage, but where I live in an expensive London commuter belt area. A small 3 bedroom 1970's semi or end-terrace house is about £200k.  Now these days a couple need 25% deposit and this is normally the biggest sticking point as they want their good times and holidays etc, etc, so don't want to save it. So, say the bank of mum and dad provides it, that leaves £150k to find, so for a couple £75k each the mortgage has to cover, now divide that by 3.5 and they need a salary of £21,500 each. Perfectly possible for most skilled jobs and a UK average wage of £27,000 which in this area due to the London effect and very low unemployment is not difficult to get. For a flat at around £150k, even easier.

Well we have a Uk budget coming up. Osborne had better come up with something good. I suspect he won't (no mandate, hands tied, no room for manouevre, eye on getting back into power at next election). Spot on with Osborne playing Napoleon plotting the next conservative victory. He won't be chancellor for very long.

BOE. Best idea they are going to come up with is plastic money instead of the current cloth/cotton notes. That will be a real topic, something to divide the country and take the spotlight off real troubles.

PIIGS and Spain in particular. I am not so sure that Spain is actually in as much trouble as people think. They have reduced their deficit from 9% to 7% of GDP. Has Britain? err I think it has increased by another £300 or is it £600 billion. Keep the spotlight on anywhere else...........

I do like the idea of everyone getting a cheque for £10,000. I just hope expats are eligible - I would promise to spend it in the UK, honest. :y
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cem_devecioglu

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Re: Rods2
« Reply #5 on: 13 March 2013, 12:29:26 »

my solutions for UK economy is simple..
 
nationalize the bank of England.. burry the owners in cement..
 
kick IMF..
 
and thats it..
 
if industry still dont come alive declare war to whereever you like ;D :y
 
 
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cem_devecioglu

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Re: Rods2
« Reply #6 on: 13 March 2013, 12:31:45 »

oh!! forgot to say erase all the debts .. who else asks for money shoot him ;D ;D
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Lizzie_Zoom

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Re: Rods2
« Reply #7 on: 13 March 2013, 12:33:37 »

my solutions for UK economy is simple..
 
nationalize the bank of England.. burry the owners in cement..
 
kick IMF..
 
and thats it..
 
if industry still dont come alive declare war to whereever you like ;D :y

Yes that is the old way Cem, and I fear history could repeat itself with that one. ::) ::) ;)
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cem_devecioglu

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Re: Rods2
« Reply #8 on: 13 March 2013, 12:39:59 »

my solutions for UK economy is simple..
 
nationalize the bank of England.. burry the owners in cement..
 
kick IMF..
 
and thats it..
 
if industry still dont come alive declare war to whereever you like ;D :y

Yes that is the old way Cem, and I fear history could repeat itself with that one. ::) ::) ;)

is always valid ;D :y
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STMO123

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Re: Rods2
« Reply #9 on: 13 March 2013, 13:50:47 »

Well......I asked for your views in case it was just me that thought that these measures were insane. But watch out, they are being seriously considered. When you run out of bullets.......it's anything that comes to hand... :(
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Rods2

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Re: Rods2
« Reply #10 on: 13 March 2013, 17:58:45 »

Well......I asked for your views in case it was just me that thought that these measures were insane. But watch out, they are being seriously considered. When you run out of bullets.......it's anything that comes to hand... :(

The easiest things that come to hand once the politicians can't get the money that they need to pay for their lifestyle run the country is to take yours. So what starts off at a 2% mansion tax in 2015 under the Labour or LabLib government by 2020 will be at least 20% and apply to everything bigger than a rabbit hutch, dog kennel or duck house, but don't worry if you can't afford it, the Government will accept a 20% stake in the property instead and can sell this off to foreign investors to get the money the need to spend on vested interests vital services. Where it compounds after four years it will have been nationalized your house and it will belong to them and foreign investors, to whom you will have to pay rent.  :o :o

Also because they will desperately need all the cash they can get their hands on, saving accounts will be converted into 20 year Government bonds at 2%. As they will be desperately trying to inflate the debts away at the time, by the time a £100,000 bond matures, it won't buy a pint of beer. The UK government have done a similar thing in the past, in a time of need, with war bonds during WWII.

During the 1920's depression the US Government did a similar thing by nationalizing all privately owned gold apart from small pieces of jewellery.

These are the sort of nasty things that Governments do when they have run out of money, like Argentina, ask Repsol.  ::) :o :o :o :o
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Lizzie_Zoom

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Re: Rods2
« Reply #11 on: 13 March 2013, 18:03:44 »

Well......I asked for your views in case it was just me that thought that these measures were insane. But watch out, they are being seriously considered. When you run out of bullets.......it's anything that comes to hand... :(

The easiest things that come to hand once the politicians can't get the money that they need to pay for their lifestyle run the country is to take yours. So what starts off at a 2% mansion tax in 2015 under the Labour or LabLib government by 2020 will be at least 20% and apply to everything bigger than a rabbit hutch, dog kennel or duck house, but don't worry if you can't afford it, the Government will accept a 20% stake in the property instead and can sell this off to foreign investors to get the money the need to spend on vested interests vital services. Where it compounds after four years it will have been nationalized your house and it will belong to them and foreign investors, to whom you will have to pay rent.  :o :o

Also because they will desperately need all the cash they can get their hands on, saving accounts will be converted into 20 year Government bonds at 2%. As they will be desperately trying to inflate the debts away at the time, by the time a £100,000 bond matures, it won't buy a pint of beer. The UK government have done a similar thing in the past, in a time of need, with war bonds during WWII.

During the 1920's depression the US Government did a similar thing by nationalizing all privately owned gold apart from small pieces of jewellery.

These are the sort of nasty things that Governments do when they have run out of money, like Argentina, ask Repsol.  ::) :o :o :o :o


Yep, with the country ending up with £3 billion pounds of debt, so bonds almost worthless! ::) ::) ::)
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STMO123

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Re: Rods2
« Reply #12 on: 13 March 2013, 18:07:32 »

We're doomed Captain Mainwaring......doomed  :-X
« Last Edit: 13 March 2013, 18:20:24 by STEMO »
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Rods2

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Re: Rods2
« Reply #13 on: 13 March 2013, 18:20:55 »

Varche, I have to disagree.

Our deficit is slightly lower at 6%, but our debts to GDP using OBCD figures are very slightly higher. Our unemployment is much lower along with our austerity rate. 1% against over 3%. The cuts and tax rises in Spain this year will make your economy shrink again, whereas at least ours is flat lining. One of the things with how GDP is calculated is when internal consumption goes down, so do imports, which reduces the GDP fall, where it is calculated by:

GDP = Consumer Spending + Business Investment + Government Spending + (exports - imports)

In Spain, today it has been reported that the Spanish banks have over €200bn in losses with property loans alone that have yet to be declared. We are far further though the cycle of cleansing our banks, with an estimated £60bn to go, but they reckon this can be done from profits. I think it is about £10bn for HSBC, £9bn for RBS, £7bn for Barclays and £3bn for Lloyds. The rest is for smaller banks and building societies. I said at the time of the first bailout that there is at least €300bn of property losses in Spain and the percentage of those behind on mortgage payments is growing every month!

One advantage Spain has got is at least they can feed their population, which is not a luxury we have.
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STMO123

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Re: Rods2
« Reply #14 on: 13 March 2013, 18:23:32 »

Whadderyermean Rod? We've got more Mcdonalds than Spain, surely?  ;D
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