Saturday, August 09, 2008

Can we undo the damage of easy credit?

... the [political] system which has for sixty years precipitated the greatest debt cycle in history may be inadequate to address the greatest deflationary cycle in history if it chooses to prescribe the same snake oil which sickened the economy in the first place rather than the balanced (fiscal) diet and (strict economy) excercise we all know would be better for us.

The road back from economic folly will be long, hard, narrow and possibly untrodden, warns London Banker in a masterly essay on the need to re-establish a savings culture.

(htp: Jesse's Cafe Americain)

6 comments:

sobers said...

The UK needs to realise that we have been supported for the last 30 years by North Sea Oil. That is now winding down. What's left to bring in the export revenues? Manufacturing has almost entirely gone. Farming, mining and fishing have been ignored and left to wither on the vine. The only big success story is the City and the financial markets. And they could disappear in a flash if we don't manage it well. Look how much business left NY after Sarbanes-Oxley came in.

We do not make enough money to afford the indulgences we have as a nation. Supporting millions on benefits at a time when over a million Eastern Europeans have come here and all found jobs is not sustainable. Equally the massive govt waste of funds throughout the system will have to end. Taxes will probably have to rise, and spending fall, to pay for the borrowing and govt promises in the future (pensions etc)

On a personal level people will need to realise that the current levels of personal consumption cannot be afforded. More work, for longer, of a productive sort will be required. Less foreign holidays, less flashy electronic goods, less fancy houses, less "designer" clothes will be the order of the day. No more "I've made £25K on my house, so I can remortgage and spend £10K of it". Spend within ones means, work harder to get the same income.

Something tells me that the "Telling it like it is" Party won't get many votes at the next election!

SACKERSON said...

Sobers by name and nature; thanks for your comment.

Welshcakes Limoncello said...

Savings? What are they, then?

SACKERSON said...

I sink ve are going to find out.

dearieme said...

"Farming, mining and fishing have been ignored": oh, come off it. Fishing has been actively buggered ever since Ted Heath's time; farming gets a surreal web of subsidies, protections and interferences; mining shot itself in the foot, hurrying forward its inevitable doom. None were merely "ignored".

SACKERSON said...

I remember seeing a chart of employment in the mining industry since WWII and it was simply a long decline, most of which had happened before 1979. Yet folk memory says it was all Mrs T's doing.