Consumer inflation down to 4.5%

The Consumer Prices Index (CPI)  fall is the biggest drop in 16 years , down from 5% to 4.2%.

The primary reasons for the fall are

• Transport costs, affected by  price of fuel which fell this year but rose last year
• Sharp fall in the price of crude oil
• Supermarkets reducing meat prices

What is the Consumer Prices Index?

According to Wikopedia

A consumer price index (CPI) is a measure of the average price of consumer goods and services purchased by households. 

So the consumer price index does not measure what the actual prices are but instead, it measures changes in the prices of the items chosen to be included in the index. From the list above you can see that downward change in the consumer price index this month was caused by fuel and oil price decreases and meat price decreases. 

The items included in the index are meant to be representative of most people’s expenditure.

Every thing else that families need to buy have not decreased much, in fact some of these items may have increased but the overall effect of the prices changes is that the index itself has gone down. I suspect that the only difference most people will see to their budgets is that fuel prices have come down!

Banks and charges for withdrawing cash

There are rumours that the banks are going to start charging people for withdrawing cash from their bank accounts.

Now I think that this is going to be an unpopular move for many people but it is going to seriously effect the lower paid and those on benefits. 

Most people used to withdraw their benefits from Post Offices in cash! This government worked hard to force people to have their benefits and pensions paid into bank accounts. Apart from the damage that this did to the local post office network, it means that most people now have their benefits and pensions paid into a bank account.

If the banks are allowed to start charging for cash withdrawals then this will hurt the lower paid and those on benefits. These people are struggling to survive in this ‘credit crunch’ environment where everything, especially energy bills, costs so much more now than they did a few years ago.

The banks want to get themselves back on a sound footing financially. But their greed for profits and bonuses was the primary factor for the ‘credit crunch’ and the recession. People have lost homes and jobs as a result. Businesses have failed as a result of banks withdrawing credit.

The banks have already done a lot of harm to many people, they should not be allowed to cause more damage to people’s lives just to rebuild their profit margins!

The prices increases and the recession generally have hit the lower paid and those on benefits more than most other groups.  

Yet the banks are now proposing what is effectively a tax on the lower paid families in the UK!

It is time that this government started governing. It is time that they dictated to the banks how they are allowed to make profits. The banks should know what is acceptable and what they are not allowed to do. There should also be a limit, a cap, on the profits of the banks to stop them from increasing prices too much.

The lower paid and those on benefits should not be used to rebuild the profits of greedy bankers!

Government plans tax cuts to help the economy

Recently the government have been very certain in their plans to borrow a huge amount to spent on building projects. The PM has been adamant that this is what needs to be done.

The opposition have said publicly that this would be wrong because it would not work and would leave a legacy of debt that would to be repaid in the future. 

It is now being revealed that the government has changed it’s mind and will be introducing tax cuts in an attempt to revitalise the economy.

I trust that they will publicly acknowledge that this was the stated policy of the opposition.

What I want to see the government do with the tax cuts is to only provide them to households with an income of  less than, say, £30K per annum.

Why?

• Because these are the people who need the money.
• These are the people who are being squeezed financially with increased costs for most things that they have to buy.
• These are the people who will need to spend the extra mony (those who can afford to live without extra handouts will simply save the money and won’t help the economy be spending it)

Those on benefits should also have a share of this spending power although this will need a decision by them to make money available to the benefits system. But they need to make this decision simply on compassionate grounds.

The banks should now be told that they are a public service

Base interest rates have been cut by 1.5%

So that should reduce people’s mortgages and loans and credit card payments. But the banks seem to be trying to keep the higher rates in place whilst taking advantage of reduced base rate.

The fact that  Lloyds TSB and Abbey have said they will pass the cut on in full means that every other bank could do the same if they wanted to!

Unfortunately the banks seem to want to get their profit margins restored. In my view this should not be allowed to happen. The banks failed the people of the UK by their greedy rush to make as much money as possible over the last ten years.

Record profits have been announced. Huge payouts in bonuses and incentives have been given to those who run the organisations.

But this has, in my view, been at a great cost to ordinary people and businesses. We are threatened by recession, many people have lost their jobs and many business have folded often at great cost to those who set them up in the first place.

The banks should not be allowed to go back to paying huge bonuses for directors and senior staff. They have had their day, the feeding frenzy should now be stopped! 

The regulatory bodies, who themselves have failed by allowing the banks to behave in such a greedy way, should now step in and dictate the limits that the banks are allowed to charge the public and businesses for their services.

Borrowing to get out of the recession

The Prime Minister seems determined to go ahead with spending his way out of the recession by borrowing a large amount of money to spend on large, presumably labour-intensive, building projects.

He said: ‘The responsible course of action is for borrowing for the investment that is necessary both now and for the long term – and for borrowing to fall as a proportion of national income as the economy recovers and as tax revenues rise again.’

The idea would seem to be to provide jobs for the people involved in these projects, and then expect them to spend the money thus helping shops and businesses. This would infer that the bulk of these jobs would be in the building sector.

But it would seem to me that there is an inherent problem with this approach.

Basically the government is unable to restrict the available jobs to people who are resdent in the UK!

We have already seen the UK flooded by European workers all happy to work at low rates and all of them happy to take their earnings back to their own countries!

A large amount of the money spent on jobs will not be used to get the UK economy going again, instead it will be used to help the economies of other European countries!

Of course the citizens of the UK will end up paying back all this borrowed money! I doubt that there will be too many people from other European countries sending us money to repay this debt!

The UK economy – who is right?

A European Commission six-monthly report has suggested that the European Union itself was in, or was close to, recession. They also say that:

Britain will be hit the hardest by the recession compared to the other European leading economies.

Only Estonia and Latvia will suffer deeper recessions than Britain!!!!!

This contradicts the UK government statements that Britain is ‘well placed‘ to withstand a recession!

So why are we getting these contradictory reports? Surely The European Commission has the full facts of the state of the UK economy. Surely the government doesn’t have a ’second set of books’ which they use to run the UK economy. 

It doesn’t make any sense to me that the European Union officials will have a different view of the state of the UK economy than the government since both sets of people are working from the same data!

needing to keep warm all the time!!

I read with interest today in the news that Macmillan Cancer Support are campaigning for winter fuel allowance to be given to all cancer patients. Good idea I thought but does it go far enough? No I do not think it does. 

At present the fuel allowance is available to all pensioners and is not means tested. This means that many well off people are given £200 when they have no problems paying their fuel bills. I do not know the reasoning behind this, but there are so many people who need their heating on because of health related problems who cannot afford it. I wonder if it was made a means tested allowance if there would then be enough to help those who are sick and cannot afford to pay for the heating that they need. 

I have been corresponding with people who are too young to get the winter fuel allowance and they are already wearing thermal clothing, and layers even in a couple of cases shawls and blankets. This is because they are too scared to put the central heating on for fear of running up bills that they cannot pay.

The electric and gas companies have an answer to anyone who cannot pay their bills. It is a pre-payment meter! Well the last thing that you want as a disabled person is a pre-payment meter.What happens if it is cold in the house and you have no more money on the meter?

In this day and age it is disgraceful that people are not able to keep warm in their own homes. The media will have a field day if someone dies of hypothermia and it is found that they were a sick or disabled person who could not afford to put the heating on.

This is short sighted of the government; after all how much will it cost them to treat the people who end up sick because they have cold houses? I know for myself that when I get cold I hurt, and then I will be back and forward to the gp for more pain relief. Or I will be having to have more expensive treatment at pain management clinic. Is this really cost effective?

I would like to see a situation where I can afford to heat my home to a level where I am able to cope with my health problems.

In the meantime I will keep on wearing my thermals and gloves in the house and I will still not be warm!

(just in case anyone wonders how I can use a computer with gloves on, I cut the finger tips off so I can still work the computer)

Can any government keep our identities safe?

It is hardly surprising that many people are very concerned about the government’s plans for huge databases holding all our personal information and identity details.

For a start there is the ‘can we trust a future government not to enslave us’ concern. This is a serious concern. Once all our details are online then it just takes a click of a mouse to deny us access to our bank accounts, to put false information into our police records or to remove our identity altogether!

But at this point of time the question is ‘can the government keep our identity details safe and secure’? And the answer seems to be a resounding ‘NO‘!

The Daily Mail reports the Prime Minister saying that

It is important to recognise that we cannot promise that every single item of information will always be safe because mistakes are made by human beings.
 (3rd November 2008)

 

This is an admission that everyone who has said that the State should not be holding all this private and personal data on huge computer systems is in fact correct! The Government seems to have enough trouble keeping  secure and safe the information on us that it currently holds.

Recent blunders with people’ identity details include:

• A memory stick holding passwords which allowed access to the Inland Revenue tax and child benefits Gateway website was found in a car park.
• The loss of a computer hard drive containing personal details of approximately 100,000 members of the Armed Forces was lost. 
• A memory stick containing details of approximately 84,000 prisoners was lost. 
• A ‘top secret’ report on Al-Qaeda was left on a train by an intelligence office.

And don’t forget the classic loss from HMRC of two computer discs whch contained the details of everyone who recieved child benefit. That was approximately 25 million people!

And in case people think that these ‘losses’ are unavoidable where human beings are managing the data then of course they are right. What compounds the problem is that huge amounts of data can be stored on very small devices which can fit in pockets or bags.

They can easily be mislaid or stolen. In fact it is often difficult to know which it is, and this means that these losses always have to be treated as though the worse case scenario has occurred.

So who wants to trust any government with massive computer systems which hold all our personal identity details?

‘deflation’ – a word from the past

I came across this blog. well worth a read.

http://johnibii.wordpress.com/2008/11/01/specter-of-deflation-lurks-as-global-demand-drops/

 

As dozens of countries slip deeper into financial distress, a new threat may be gathering force within the American economy — the prospect that goods will pile up waiting for buyers and prices will fall, suffocating fresh investment and worsening joblessness for months or even years.

By Peter S. Goodman
The New York Times

The word for this is deflation, or declining prices, a term that gives economists chills.

Deflation accompanied the Depression of the 1930s. Persistently falling prices also were at the heart of Japan’s so-called lost decade after the catastrophic collapse of its real estate bubble at the end of the 1980s — a period in which some experts now find parallels to the American predicament.

 

Definition: Deflation occurs when prices are declining over time. This is the opposite of inflation; when the inflation rate (by some measure) is negative, the economy is in a deflationary period.

http://economics.about.com/cs/economicsglossary/g/deflation.htm

 

Annd another definition

Investopedia Says:
Declining prices, if they persist, generally create a vicious spiral of negatives such as falling profits, closing factories, shrinking employment and incomes, and increasing defaults on loans by companies and individuals. To counter deflation, the Federal Reserve (the Fed) can use monetary policy to increase the money supply and deliberately induce rising prices, causing inflation. Rising prices provide an essential lubricant for any sustained recovery because businesses increase profits and take some of the depressive pressures off wages and debtors of every kind.

A general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government, personal or investment spending. The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy, which can lead to an economic depression.
http://www.answers.com/topic/deflation

 

Use the link above to read the whole article.

Taxes might have to rise!

 

The front page of the Independent newspaper carries a report of a speech by the Chancellor, in which he indicated that ‘taxes might have to rise if the economic downturn is prolonged’.

Alistair Darling warned that Government revenue has collapsed because of the recession. He said that ministers would attempt to stimulate the economy by accelerating spending projects even if it meant a sharp increase in Government borrowing.

The Independent Thursday, 30 October 2008. Report by Nigel Morris, Deputy Political Editor

http://www.independent.co.uk/news/uk/politics/darling-tax-may-rise-in-downturn-978540.html

Mr Darling said that people should be in no doubt that the Government will take the necessary decisions.

It will be interesting to see the public reaction to any attempt to raise taxes at this time. Especially if the tax increases are seen to be necessary because of the greed of the Financial sector and the lack of controls by the government in power to curb these excesses.

Putting it bluntly: the Financial sector caused these problems and the goverment has allowed it to happen – so why do I have to pay higher taxes to bail them both out?

We are already one of the most taxed nations in the world. People are struggling to pay the bills. The ‘credit crunch’ is affecting many people.  

No doubt there will be other tax increases required at the same time to allow for inflation and for other government projects. Unless of course the government shelve these other projects that they are planning to  implement!

I think that it will be political suicide for any government to raise taxes when they have been so closely linked to the problems that the UK is going through.