What's wrong with the UK economy for dummies

A Councillor in my town recently tweeted. "How do we help small business in #woky? Lower parking changes ? Refunds of parking charges with minimum purchase? Regenerate town centre? "

For me this is a collection of short term measures that helps them start out, and one expensive 10 year measure that would provide great stimulus for it's duration. But no lasting solution because it does not address the problem we have and would in-fact compound it.

John Redwood (who I feel is a criminal by the way , but a clever chap who knows exactly why we are in the shape we are) wrote a very good piece recently on why America is in such bad shape.

It's is here.

Basically it comes from importing everything and helping or even encouraging local people to buy even more of it with debt. John makes his main living out of advising people where and how to invest so keeping it like this and knowing when it will change is good for business. Maddeningly inappropriate, dark ages insane legal, but good for him.

Anyway. Enough Tory bashing Kaz. They are all the same. That's why the public are so disengaged.

Compound 2 
That with the fact that the bonus hunting @ankers lent out 5 times each persons salary and finders fee hunting IFA's doctored applications to whatever other income streams they could dream up. People could borrow so much that they would have nothing to spend . . and had to jump on the band wagon because property boomed. Sitting on a home would make you richer than working. Others with more money available just bought to let and sat on several.

= Poor disposable income for majority of those who purchased homes after 2000.
= Sensible aspirational young (#woky) need to save more deposit.
= More men and woman in family home must work.
= Less families in town midweek and those who are likely on a budget.

Compound 3
A town centre needs people to spend money there. But many of us do nothing of intrinsic value,  and our resources do not replenish fast enough us to work them into value if we did. Most of our jobs are trying to get people to by stuff they don't need (with bank debt), make things that help those people who are trying to sell things the debt ridden do not need do not need, or do the accounts. Too few do anything of value. Too much physical value is imported . . too much money is leaving the country. Too much is just moving around.

= Little actual new value being created. = Less wealth being created. 
= Money just moving around shrunk by tax from active economy and partially redistributed in the form of debt thanks to deficit.

Compound 4.
The property bubble burst. Couples on £22k each with 5% equity on flats worth, (sorry not worth, they only cost £60k to build) that cost them £180k, found themselves in properties worth £160k. They now have negative equity. Probably better will go bankrupt. They already had a mortgage that left them nothing left to spend in town. 

Fractional reserve banking mean't that banks had lent out 5 times as much money as they had deposited but houses were 30% overvalued. The country was literally bankrupt if the property prices were allowed to be what they should. Build cost plus a bit of profit.

= No back up confidence. Even more likely to save just to pay off mortgage debt.
= Banks all bankrupt on property collapse.

Compound 5. 
So we reduce interest rate to 0.5%. Me being a Mr clever pants saw it coming and have a lifetime tracker, 2 actually because I am a landlord but one who will campaign to give all tenants the Right2Buy so their kids can have a nest egg too.

Now nanny and Grandad get nothing from their savings, the pension has been going up by 0.8% for the last 5 years not real inflation. Nan and Granddad buy food, energy and council tax, not gadgets. Their Grand kids in the £180k house have just enough to stay afloat, but no hope for starting a family. Good thing too because they are so stressed about loosing their job and home they would struggle as parents. Grandparent's seeing their family stall offer savings to invest in meeting Gread Grandkids before they die.

= Pensioners have less to spend, what they might they are saving for both themselves and grandkids.
= Pensioners are the only reliable daytime offline shoppers.

Compound 6. 
The internet, better international management, large companies started moving office workers and customer service abroad to developing countries where working 13 hours / day, six days per week, with no welfare state for £6k is legal.

= Very little low basic labour work, and what there is will not even pay the bills.
= everyone must gain skills in things can make money here. e.g. IT and moving money.
= Young academic aspirational training harder than all the rest. Less time to go shopping. Chores for weekend.
= Less academic young just want to get by and not give 110% for a boxroom have absolutely no hope and no money to spend, more likely to look for trouble and drain resources.

Compound 7
Joining the EU. Ever met anyone who was happy where they are. Yes. Wokingham . .for now. Everyone else seems to want to move abroad, and guess what, and some foreigners are the same and some of them want to move here. The grass is always greener. They work here for enough to share a box room . . and so must we. They have no hope of buying a home here and buy land back home, guess what that does to house prices there for those who stayed?
International relationships are formed so not only do the workers go home for Christmas and spend there but international families every year for life. I married a Moroccan and spend about 4 months disposable income seeing family abroad at Christmas, not in town.

= Lower local wages.
= Less disposable income out of what is earned due to high cost Christmas / birthday etc.
= Increased travel = pollution.
= Increased old age care costs back wherever family originated.

Compound 8.
Inspirational young leave home areas for where their are established opportunities  Leaving many pensioners with no local family to support them. No innovators to create opportunities  Adding to the welfare burden there.

= Increased tax burden to subsadise poor areas.
= Top tallent (who are the only people getting paid well) congregate one area. Making demand for housing very high.

Grim is it not.

Now Jonny Redwood knows all to well where the fixes lie. But I think he and his cronies so busy making money out of having the best information on what things they might do, they don't have time to care.

Below are a list of what Tory donors are thinking about with their spare cash.
Invest in Asia, buy land and rock bottom in Greece and Portugal or even stretches of Africa (where energy will come from when the oil runs out).
We have our own currency and they need other currency as they export their ill gotten gains. Maintain relations with naieve Middle East oil princes so can sell assets to them, sell him weapons to keep the poor Arabs from claiming sovereignty of their land creating their own resource companies. Oh and do it all in a tax haven wrapped in a trust so future generations can live of the cream of the peasants labour but daft spoilt junky kids are unable to blow the capital or loose any of it in one of many divorces.
ched the point where many people are not having their families. It's not a game any more. 


Anyone can pick flaws though. Here is how I would fix it.

In answer to the actual question

How do we get people to spend in the town centre. 

In regards to the suggestion of a town regeneration investing 100s of millions in upgrading everything in a middle of an IT Mecca that may well not be an IT Mecca in 50 years is unsustainable?

I would not do it yet. It would hide the problems for another ten years and probably compound the damage. We must do it with local economy money. Not by private investors who must make such a huge margin for both their profit and to pay huge local contributions as well. Definitely not with a secret contract with no breakdown of costs to add corruption to the bill.

Rents and rates have to drop. that mean greedy landlords have to have empty shops for a while or we have compulsory purchases. I prefer a #Right2Buy law.

If you do want people to use the town rather than online then more events is all it can offer. Do them smaller, cheaper and attractive to different niches. St Patrick soon. Lets hear some bag pipes in Wokingham and have the kids learn some sword dancing. The libraries have worked this out and so there are already experienced civil servants to do the planning.

If you are fed up of signing petitions against the latest evils pushed through by corporate interests in politics put in your calendar 28th August to visit www.GoodEgg.org.uk.

Why I stopped voting Conservative

I am a conservative in that I believe that government runs business inefficiently. I also believe that business in competition is necessarily selfish and cruel.

I believe it is the role of government to create an environment in which business can provide momentum and drive, but not at the cost of quality of life. 

The benchmark is to create an environment in which all who are willing to work an honest week until their mid 60s can raise a family at a timely age if they so choose, with a good provision for security, health and education.

More and more people become disenfranchised with the Conservative leadership. Not with what Conservative means but what the Conservative party has become. Business interests dictating policy and government directly running businesses or quangos. Both cruel and inefficient.

What is the solution. How about get involved! Join the Conservative party and change it from the inside yes? ... NO.

There are just too many self interested business men involved and they will join the rest at the top, not you. Some have gained economic respect due to their wealth and party contributions regardless of its source. Inherited wealth, successfully reducing costs for large companies simply by reducing front line wages to below a local living wage or helping them avoid tax and drive tax paying competitors out of business, being ahead of the curve on the financial markets,  personal tax avoidance, land ownership and hoarding.

Not only are these non-'wealth creators'  allowed to influence policy in their own best interests, but they represent the aspect of business that provides nothing of value, increasing the burden on those who do. Individually costing you more than the worst of lifestyle benefit families.

By joining them as a hard working local with an ideology for change your support adds in-touch credibility to a leadership that deservedly has none.

I stood as a Green councillor in 2012. Why. Business men are going to get involved in that too and cycle will start again.

I agree. Until a minister is forced to sign away future revenue streams for the privilege of serving his country the cycle will continue. But, as of yet, I believe the Green party, currently at least, would be hard pressed to drive for wars or unsustainable consumption while allowing the London casino to continue to steal 10% of what you do, without flagging themselves as hypocrites.

For me the cut off point has been reached. When someone of average intellect is willing to work a 40 hour week can not support a family by their late twenties or early thirties, society has failed. This is not growth, this is not efficiency, this is not progress and I believe it was avoidable.

If you are fed up of signing petitions against the latest evils pushed through by corporate interests in politics consider www.smart-voter.org


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Update 2015. I'm standing as an independent in Wokingham. I left the Green party in 2014 when I was unable to get any Green party candidates to make a meaningful commitment. I don't think it is appropriate for a political candidate to maintain the right to lie unnecessarily. so I had no-one within the party to support.

 

The causes of unaffordable homes (and therefore the things we 'MUST' fix

If we are going to have affordable housing we need house prices to reflect better what they cost. This means less section 106's and less developers, it also means stopping 'buy to let' being the only pension a person can rely on. 

But before we build loads of houses we need to make sure that land and homes are what they should be relative to the essentials cost of living first. UK is already unsustainable populated so any building should be done well, i.e. people get appropriate homes for the right price.

The main problem. Lords taxing the peasants.

A landlord should either provide a valuable service or they are simply a new version of a lord of old taxing the peasants who work the land.

Hoarding land is a low work way of providing a robust income as well as providing a tax free legacy as it will avoid death duty of 40%. As your property portfolio ages the mortgage payments  (if any) become lower relative to rents and profits go up, allowing you to purchase more properties. You might perhaps pay a little over the odds since you know it will pay off in the end.

Your grandchildren, who inherit the 'business' can then charge other peoples grandchildren to rent from them. Your grandchildren will therefore have money to purchase more properties and expand the trust. Or, if they are creative, they will use their rent income to buy faster appreciating assets or land in developing counties. Removing the wealth from uk circulation, driving unnafordable housing in other countries and expanding the number of other people's grandchildren their grandchildren can tax for having access to one of the basic needs. Shelter.

The demand for homes will has increased not  simply because their are more people at edge of their finances, otherwise the value of property would not be able to fluctuate as it does. The problem will be a property hoarders who have more money available who are thinking long term and avoiding 40% death duty. 

There is a double whammy here. The increase price means people who bought their home have higher borrowing. Not only has our new buyer purchased a home for double for multiples of the build cost, but they will pay multiples of that to the bank before they pave paid it back.

Meanwhile there is a new additional waste work (work that has no real world beneficial output). Those people who simply had to rent because prices are so high will have to have their relationship with the property managed. If they owned. The would not and the manager could instead job share with a doctor or recycle.

This has reached epic proportions in the UK. #RentBritain

The fix would be simple were it not for many buy to let landlord having little equity and that house prices need to come down by about 50% to be a real reflection of the cost of actually building a home. A reduction like that would create a negative equity bomb. No, prices can not come down by 50%. 

Thankfully we did not adopt the Euro. So we can still fix it.

If we can not deflate property prices we must inflate everything else. Including Salaries. 
Perhaps 10% / year for ten years. This can be done by printing money. This effectively steals from the rich to give to . . whoever they give the money to so it would be nice if it was split evenly with Nationals.

It would normally create a run on the pound as senior politicians, I mean investment bankers, try to get their money into globally stable assets, ready to buy back in to the UK after the printing has stopped. But since other counties are hemorrhaging at the moment it may not. I would drop the EU for a bit and restrict capital flow. Like Malaysia did in  1978.

http://www.larouchepub.com/other/2004/book_reviews/3132malaysia_v_imf.html

If our 'Wealth Creators' are so clever let them try to create money by getting people here to do something of value. Not buying and selling imported goods, hoarding land or gambling with the advantage of inside information.

To stop property from inflating also we must carefully limiting lending so that working people can only borrow the money they should afford for a home. 

So how do we stop those landlord grandchildren buying the properties and starting the process again?

Here are some options I like.

Make private further buy to let on homes illegal and turn it into a national service.

'Right to Buy' extended to private market, for private and business. If you are letting out a property are either providing a service or are privately taxing another human. And should go and do some useful work. If after 2 years your tenant feels that you are not providing a service they have the right to purchase the house from you at the going rate. Using avoidance tactics *kicking out 2 days before, selling to a mate, must be made to be 'not worth trying'. In the same breath the administrative costs of the transaction must be negligible.

Land hoarding businesses holdings to be be subject to death duty. So if you hold shares in several businesses where. 

Alternatively scrap death duty and introduce a wealth tax. e.g. 1%.

But don't expect this to happen without some kid of change to what we demand of politicians when we vote. Here is a list of some large political donations financial sources.

http://www.richest-people.co.uk/articles/who-owns-london/