economic situation is dire

[MakemineVanilla]

Parliament finally have a debate on probably one of the most serious issues currently regarding our financial difficulties and hardly any f*%#@rs turn up

 

 

Only 17% of the money created by banks by handing out loans is to consumers and businesses; the rest is loaned for the speculative activities which create asset bubbles.

[peterms]

[CVByrne]

The tumbling of oil prices continues. It's becoming a worry now. Oil is at a 5 year low. 

[MakemineVanilla]

The tumbling of oil prices continues. It's becoming a worry now. Oil is at a 5 year low. 

 

As the song goes: No futures. No futures. No futures, for yoouu!

[CVByrne]

 

The tumbling of oil prices continues. It's becoming a worry now. Oil is at a 5 year low. 

 

As the song goes: No futures. No futures. No futures, for yoouu!

 

 

Haha 

 

 

But seriously though, this is becoming a worry now especially for the Eurozone economy, we need OPEC to cut supply and also for the ECB to embark on Quantitative easing. 

[MakemineVanilla]

 

 

The tumbling of oil prices continues. It's becoming a worry now. Oil is at a 5 year low. 

 

As the song goes: No futures. No futures. No futures, for yoouu!

 

 

Haha 

 

 

But seriously though, this is becoming a worry now especially for the Eurozone economy, we need OPEC to cut supply and also for the ECB to embark on Quantitative easing. 

 

 

Am I right in assuming that the fall in the oil price has adversely affected the UK Exchequer's revenue?

 

But isn't the low oil price holding down UK inflation and so keeping interest rates low?

 

So very much a bad-news-good-news scenario.

 

QE might increase demand within the EU but I think the Germans are against QE in principle. 

[chrisp65]

The tumbling of oil prices continues. It's becoming a worry now. Oil is at a 5 year low. 

 

 

My education continues.....why is this a bad thing?

Other than its an indicator of reduced demand which indicates reduced need for energy which in turn might indicate recession waiting to pop up in the stats somewhere.

[CVByrne]

The tumbling of oil prices continues. It's becoming a worry now. Oil is at a 5 year low.

As the song goes: No futures. No futures. No futures, for yoouu!

Haha

But seriously though, this is becoming a worry now especially for the Eurozone economy, we need OPEC to cut supply and also for the ECB to embark on Quantitative easing.

Am I right in assuming that the fall in the oil price has adversely affected the UK Exchequer's revenue?

But isn't the low oil price holding down UK inflation and so keeping interest rates low?

So very much a bad-news-good-news scenario.

QE might increase demand within the EU but I think the Germans are against QE in principle.

The possibility of Eurozone Deflation is the worry. There would be obvious knock on effects for the UK.

Germans are against QE because they believe it might fuel too much inflation down the line. But the Germans have always had an ott fear of inflation more than anything.

[CVByrne]

 

The tumbling of oil prices continues. It's becoming a worry now. Oil is at a 5 year low. 

 

 

My education continues.....why is this a bad thing?

Other than its an indicator of reduced demand which indicates reduced need for energy which in turn might indicate recession waiting to pop up in the stats somewhere.

 

 

 

Target inflation of above but close to 2% is what is needed for a healthy stable economy for both the ECB and BOE.

 

When inflation is high you increase interest rates to take more money out of peoples pockets and to incentivise people to save and not spend. This should lower inflation. 

 

but when inflation is dropping and below 2% interest rates need to be cut to make credit cheap, reduce any yields on savings and encourage people to spend.

 

Oil prices is highly correlated to inflation, as goods need transportation and people need energy which mostly comes from fossil fuels. 

 

With interest rates bottomed out now at almost 0% in Eurozone and inflation dropping dangerously close to 0%. Falling oil prices could trigger deflation with very little recourse available to a central bank left. 

 

Japan suffered its lost decade from such a cycle. close to 0% inflation and 0% interest rates. 

 

The longer interest rates remain low in the Eurozone the more damage to economies like Ireland which has by far the largest growth in Europe, very low interest rates has fuelled massive house price inflation and is a danger for the long term economy and cost of living. 

 

OPEC need to cut supply, and the ECB need to embark on Quantitative Easing like the UK and US have done. 

[chrisp65]

Edited December 9, 2014 by chrisp65

[chrisp65]

the 500 million mark note was a response to the odd German fear of inflation

 

it's their equivalent of our unemployment numbers I believe

[CVByrne]

the 500 million mark note was a response to the odd German fear of inflation

 

it's their equivalent of our unemployment numbers I believe

 

They suffered from hyper inflation after WW1 which has ingrained the fear of inflation above all else in their psyche. As such we should understand that there is a level of cultural bias towards things rather than rational objective thinking. 

[Risso]

 

The quality of left wing memes continues to decline I see.  What utter nonsense that is.  Take Bentley cars for example, obviously out of reach price-wise to most, but the Crewe factory can't keep up with demand, and employs over 4,000 people, plus all the people employed elsewhere in factories who make the parts, ad agencies, etc etc.

[chrisp65]

yeah, it should have shown a drip of wine in each of the lower glasses on the last picture

 

and in the background a box of even cheaper small glasses from China waiting to step in if anybody asks for more

[CVByrne]

 

The quality of left wing memes continues to decline I see.  What utter nonsense that is.  Take Bentley cars for example, obviously out of reach price-wise to most, but the Crewe factory can't keep up with demand, and employs over 4,000 people, plus all the people employed elsewhere in factories who make the parts, ad agencies, etc etc.

 

 

People don't try to see the interconnected pieces. How one rich guy in a Bentley may have started his own business and employs 500 people. Or how that differs from people born into wealth who inherited wealth. What's the point caring so much about others in an envious or vindictive way. 

 

 

Best advice I can give to any school kids or young adults is. Forget about politics, forget about your "dream job". 

 

Be very pragmatic

 

1) What are you good at

2) What jobs require those skills

3) What is the best balance of pay and progression against enjoyment in that job.

 

Go for that career. Work is work, you are paid to do it don't believe life should be easy. If you join the public sector you are choosing job security and pension over potential higher earnings but with the added risks of the private sector.

 

You get more take home pay by promotions, not by tax cut, not by strike action. Be better, work hard and get promoted.

 

How you spend your money is also key. Chasing materialism isn't the best idea. Do you need a car or do you want a car. Don't complain about being out of cash if you smoke 20 a day. Don't complain that your boss doesn't like you if you take 3 sick days a month. 

 

Pragmatism, the game is the game. You know the rules, focus on what you have control over and you'll have the best chance at having a good life. 

[Risso]

 

 

The quality of left wing memes continues to decline I see.  What utter nonsense that is.  Take Bentley cars for example, obviously out of reach price-wise to most, but the Crewe factory can't keep up with demand, and employs over 4,000 people, plus all the people employed elsewhere in factories who make the parts, ad agencies, etc etc.

 

 

People don't try to see the interconnected pieces. How one rich guy in a Bentley may have started his own business and employs 500 people. Or how that differs from people born into wealth who inherited wealth. What's the point caring so much about others in an envious or vindictive way. 

 

 

Best advice I can give to any school kids or young adults is. Forget about politics, forget about your "dream job". 

 

Be very pragmatic

 

1) What are you good at

2) What jobs require those skills

3) What is the best balance of pay and progression against enjoyment in that job.

 

Go for that career. Work is work, you are paid to do it don't believe life should be easy. If you join the public sector you are choosing job security and pension over potential higher earnings but with the added risks of the private sector.

 

You get more take home pay by promotions, not by tax cut, not by strike action. Be better, work hard and get promoted.

 

How you spend your money is also key. Chasing materialism isn't the best idea. Do you need a car or do you want a car. Don't complain about being out of cash if you smoke 20 a day. Don't complain that your boss doesn't like you if you take 3 sick days a month. 

 

Pragmatism, the game is the game. You know the rules, focus on what you have control over and you'll have the best chance at having a good life. 

 

 

That sounds dangerously close to common sense, go away and find a Facebook poster about bankers' bonuses and foodbanks as punishment.

[blandy]

...If you join the public sector you are choosing job security and pension over potential higher earnings but with the added risks of the private sector....

That's not really true though, is it?

The IFS says the government's own spending watchdog (the Office for Budget Responsibility) expects 1.1m jobs to go in the eight years from 2010/11 to 2018/19, of which a quarter have been lost to date and that while total market sector employment is expected to rise by around 2.6 million between the start of 2011 and the start of 2018, which will more than offset the total reduction in general government employment.

So because the Gov't is hacking away at public services, public sector jobs are not secure, or more secure than equivalent private sector ones.

Also it's something of a myth that private sector jobs are better paid.

 

The true scale of the gulf in pay that separates private and public sector workers is revealed today in an report that includes the impact of "gold-plated" pensions for the first time.

Workers in the state sector received a fifth more than counterparts at private firms when pensions were factored in, according research published by the Institute of Fiscal Studies.

The think tank said teachers, doctors, nurses and other state employees received an average of £28,000 a year, while private workers received £27,000.

However, generous pensions added £6,000 to public workers' pay, boosting the total to £34,000 a year.

By contrast, the pensions offered to private workers added just £2,000 a year, giving £29,000 overall, the report found.

Anyway, here's one view, on Gideon's idiocy from a former Gov't Monetary Policy Committee member

As Robert Skidelsky wrote recently: “Cameron and Osborne cannot get it into their heads that if governments start cutting their deficits when the private sector is still shell-shocked by the slump, the policy will not produce growth but deepen the slump and slow down the ‘natural’ forces of recovery.”

It really isn’t obvious to me, and the Chancellor certainly hasn’t explained why, it is necessary to balance the budget at all, and certainly by some randomly chosen date that is close by. Even if you do go for balancing the budget it is perfectly OK to do so over quite a long time period. Fifty or maybe even 100 years is probably a better time frame. Slow but sure wins the race. As Keynes said, in the long-run we are all dead. There appear to be many more costs to balancing the budget than not, especially when you have your own central bank and currency. So balancing the budget by 2064 seems like a plan.

Paul Johnson, director of the Institute of Fiscal Studies, was scathing in his critique. “How do we get to this sunlit upland in which we have a budget surplus? Spending cuts on a colossal scale is how, taking total government spending to its lowest level as a proportion of national income since before the last war … it is surely incumbent upon anyone set on taking the size of the state to its smallest in many generations to tell us what that means.”

Johnson went on to ask: “How will these cuts be implemented? What will local government, the defence force, the transport system, look like in this world? Is this a fundamental reimagining of the role of the state? One thing is for sure. If we move in anything like this direction, whilst continuing to protect health and pensions, the role and shape of the state will have changed beyond recognition.”

But there was also quite a lot of rather muddled thinking. The OBR in its Economic and Fiscal Outlook explained that tax revenues were down. The deficit is up since the March 2014 Budget by £4.9bn in 2014 and £7.7bn in 2015-16. Business investment is down a lot in all years since the March forecast. At long last the OBR forecast for average earnings growth was chopped from 2.5 per cent in 2014 to 1.8 per cent and from 3.2 per cent in 2015 to 2 per cent, which still looks too high. Despite that, according to the OBR, households are going to ignore the decline in their earnings and keep on consuming, so household debt rises sharply as compared to the March forecast. If consumers start precautionary saving, as they should, to give themselves some financial cushion, GDP growth would be lower.

All of this depends on solving what economists call the productivity puzzle, which is why output has risen only a little whereas employment has risen a lot, which means output per head has fallen. The OBR gives no explanation as to how, but assumes this puzzle is solved during the forecasts period, as if by magic. Why productivity takes off now when it hasn’t for the last six years remains unclear. This is fingers-crossed forecasting.

The OBR’s Table 5.7 sets out what the UK would look like under what they call their weak productivity scenario as well as what I call their rosy scenario. They consider the implications of growth in actual productivity remaining at ½ per cent, which was the average growth rate since 2008. The rosy scenario assumes productivity gradually rises to 2 per cent by 2019. This assumption that the productivity conundrum is magically solved, the OBR says, “is the most important and uncertain judgement in our economy forecast”. Of course it’s also the forecast’s greatest potential weakness.

These two outcomes, rosy and weak, are presented in the table. In the central forecast the economy grows at an average of 2.3 per cent in every year from 2014-15 to 2019-20. Debt as a percent of GDP falls from 80.4 per cent at the beginning of the period to 72.8 per cent at the end. The weak productivity scenario has markedly worse outcomes. GDP growth averages 0.9 per cent, so is under half the rosy scenario. Starkly, debt as a percentage of GDP rises steadily to 86.6 per cent by 2019-20. But this isn’t my nightmare scenario, which could easily be much worse than that, given what happened when a dose of reckless austerity was released last time.

[chrisp65]

Having worked both sides of the fence and now working for both sides of the fence I think i can say it ain't cut and dried.

 

Historically there was job security, it's certainly a bit harder to get rid of an individual in the public sector. But I left the public sector many years ago when it became clear job security was no longer a part of the equation. As for pay, when I left and went private I basically doubled my salary in 5 years doing the same job.

 

Now I see staffing in the public sector being trimmed, trimmed and trimmed again. But bloody hell, many of them are getting leaving packages and early retirement deals that I could only dream of.

 

As for pensions, I think it's rare to see a private pension anywhere close to being as good as a civil service one.

 

As for leave, there are still departments where you make sure you've taken your allocation of sick leave in the public sector. Whereas I don't take sick leave and I'm on call in the evenings, weekends and on holiday unless I make a really big deal about it. To the point where we now have a system of 'hard leave' and 'soft leave'. 

 

I'm private sector now, doing a job that exists in both sectors. All in all, I wouldn't go back.

[CVByrne]

To reply to blandy. I accept I'm generalising public and private significantly.

 

What I meant was the number of redundancies by and large over the past 2 decades in the Public sector is lower than the private sector. The need to find a new job and pay into pension funds etc.. is again something more associated with private sector. 

 

Jobs like Nurses or Teachers have a more defined life career plan than one would have working as an electrician or engineer say. But also longevity in a role has a bigger link to promotion in the public sector where in the private sector career progression is liked a bit more to performance. 

 

But at a very basic general level. Slower but stable career progression and higher job security is associated with public sector. Compared to possibly more potential for faster progression in private sector jobs of similar starting salary. 

[snowychap]

People don't try to see the interconnected pieces. How one rich guy in a Bentley may have started his own business and employs 500 people.

A bit more on those interconnected pieces: the guy may not have been able to afford the Bentley without the help/support/ingenuity and more of those 500 employees.