About Recession and How We Do things...

[markjay]

Just a few thoughts following the current business news and other recent events....

The IMF are warning that the UK should reduce taxation. We have slipped down the competitiveness scale from 9th place to 12th place. Growth prediction halved - and it was originally only half (or so) that of Europe's anyway. One year on, the coalition government is still blaming everything on the Labour years - which to my mind implies that they don't actually know what to do. Following on from the students' demonstrations, industrial unrest is looming due to the government's planned austerity measures.

A couple of our clients went into receivership over the past few months, the rest are seating tight and hardly spending any money. Many of them seem to be now thinking that just sitting-out the recession is no longer an achievable goal, and their hopes for recovery in the foreseeable future are diminishing. Some of the Charities we work with say that their sources for large donations have almost dried-up.

Members of my family tried to board a train from Waterloo last night. Apparently there was an incident near Epsom, where a passenger was seriously injured and stopped the train mid-route to Waterloo. However the station became a battlefield - the barriers were all lifted due to the crowd, police and train employees all disappeared from sight - and it seems that some people tried to board trains rather violently. Trains were boarded packed but had no crew so were going nowhere - and there was absolutely no information available. In all that chaos, bizarrely, the ticket office (well protected behind thick glass) kept selling tickets for the non-existent trains - claiming that they are not aware of any disruptions.

(*deep sigh*)

Is it all related? Are we really 'past-it' as a nation?

 

[markjay]

Note - yes this is a rant, and yes it will all look better in the morning. And no, this is not political - or rather, as my doctor keeps telling me, it is less important how we got to where we are now, it is far more important to decide where we go from here.

 

[Deleted member 37751]

Your Doctor is correct.
Putting political rhetoric to one side, we need to think of how to get out of this recession and not wallow in self pity.
I think a lot of it is in the mind; while ever people keep banging on about 'tightening our belts' and 'the current economic climate', nothing will ever get done.

People need to be encouraged to go out and start their own business or just try something new instead of just moaning about the hand life has dealt them.

 

[Benzowner]

I heard on the news this morning, and I must admit it surprised me, that 60% of the nations GDP is based on the retail trade. Big problem now is that fear of spending has entered the mindset of most people and the retail trade is suffering, which means our GDP is also suffering, which is why growth is being halved from the predicted levels. The upshot of this is that the worst thing to happen would be an interest rate rise. Now, this is where the banks need to do something. Base rate is at 0.5%, my business overdraft rate is at 9%. I am sure if you went for a mortgage of bank loan those rates are also much higher. I know we don't want the banks to go the same way as they did a few years ago, much of which was greed on the banks with their sub prime lending, but the banks need to release the pressure that a lot of small businesses are under and make lending money cheaper mthan it currently is.

Just my 2 peenuf

 

[neilrr]

Can any economist tell me, why do we have to have growth?

 

[grober]

Our problem is we don't employ people to make things any more. We had a "get out of jail free card " handed to us in the 70s in the form of North Sea Oil and Gas but we failed to exploit it enough to revitalise our industrial manufacturing base. Instead we chose to expand the financial and service sectors or rely on more public sector spending to keep the economy turning over. We are so far down that road now I don't know if there's any easy way back? Opening yet another branch of Tescos is just not going to cut it in the global economy.

 

[davidjpowell]

I heard on the news this morning, and I must admit it surprised me, that 60% of the nations GDP is based on the retail trade. Big problem now is that fear of spending has entered the mindset of most people and the retail trade is suffering, which means our GDP is also suffering, which is why growth is being halved from the predicted levels. The upshot of this is that the worst thing to happen would be an interest rate rise. Now, this is where the banks need to do something. Base rate is at 0.5%, my business overdraft rate is at 9%. I am sure if you went for a mortgage of bank loan those rates are also much higher. I know we don't want the banks to go the same way as they did a few years ago, much of which was greed on the banks with their sub prime lending, but the banks need to release the pressure that a lot of small businesses are under and make lending money cheaper mthan it currently is.

Just my 2 peenuf

Given the recent years I'm not sure how many business owners trust banks. Relying on them not to pull the overdraft makes people reluctant to go forward, rather than stand still.

I'm not convinced that things are not going to go back downhill at the present time unfortunately, as I am feeling much more vulnerable than I have in the past.

 

[snoop51]

I heard on the news this morning, and I must admit it surprised me, that 60% of the nations GDP is based on the retail trade. Big problem now is that fear of spending has entered the mindset of most people and the retail trade is suffering, which means our GDP is also suffering, which is why growth is being halved from the predicted levels. The upshot of this is that the worst thing to happen would be an interest rate rise. Now, this is where the banks need to do something. Base rate is at 0.5%, my business overdraft rate is at 9%. I am sure if you went for a mortgage of bank loan those rates are also much higher. I know we don't want the banks to go the same way as they did a few years ago, much of which was greed on the banks with their sub prime lending, but the banks need to release the pressure that a lot of small businesses are under and make lending money cheaper mthan it currently is.

Just my 2 peenuf

From Moneysupermarket website

Mortgage
For example, the market-leading two-year fixed rate for borrowers with a 20% deposit is from Leeds Building Society, priced at 3.79% with a £999 arrangement fee. While homeowners will be safe in the knowledge their rate will not rise over this term, putting the same deposit down on the best two-year tracker instead (from Market Harborough Building Society) will only cost 2.75% and a £645 fee.

Loans
Sainsburys Loans between £7.5 - £14.999K over 4 years = 6.8%

Car Insurance APR (for monthly payments,No 1 Son's experience
Admiral bonus accelerator 25%+

I don't know what an overdraft facility or loan would cost me for my business I'm fortunate in that I need neither. I do agree that banks and financial institutions in general rip us off constantly though. I have no wonder in view of my Son's experience with Admiral that so many are tempted to drive with no insurance thereby increasing cost for the rest of us.

 

[crockers]

Can any economist tell me, why do we have to have growth?

Think of it in terms of your salary. If it didn't grow would your buying power be the same next year? Or would you have to cut back?

 

[markjay]

Can any economist tell me, why do we have to have growth?

I am not an economist, nor can explain this, but...

Personally, I don't really care if the economy 'grows' or 'shrinks' - but in a Pavlovian way, I've learnt that when the economy 'grows' we have lots of happy customers asking us for new projects, and when the economy does not 'grow' they are all sad-faced and definitely not in a spending mood. We employ people, when we have more projects we employ more people... when we have less projects, we lay some off or make them redundant. So from our very narrow point of view, a 'growing' economy is good news - whatever that terms actually means.

 

[neilrr]

So, it would seem we need growth.

We need more consumer stuff made & sold, more public infrastructure built, more houses built; in short more of everything.

If we continue doing this and, for the sake of discussion, the number of people, houses, roads, airports, TVs, PCs, cars, EVERYTHING, were to double in the next hundred years or so, would that be a good thing?

Would that be sustainable? If everything quadrupled in the next say 150 years what kind of world / country would that be? About 300 million peeps in the UK, most in the S.E., more than 100 million cars.

Seems to me the growth thing is ultimately a very short term, flawed premise to be building a society or economy around. It can't last.

 

[John]

I think a lot of it is in the mind; while ever people keep banging on about 'tightening our belts' and 'the current economic climate', nothing will ever get done.

Very strongly agree.

Unfortunately, this ill wind spreads - it becomes a self-fulfilling prophecy.

I've heard stupid people talking about the country being in recession at the beginning of the last decade... WTF?

I personally think unless you are directly affected by the current economy, or have reason to believe you will be or are utterly hopeless managing your finances, you should carry on as normal.

 

[Dryce]

I heard on the news this morning, and I must admit it surprised me, that 60% of the nations GDP is based on the retail trade

This sounds way too high.

Are you sure they didn't mean services as a whole - including retail?

 

[snoop51]

Very strongly agree.

Unfortunately, this ill wind spreads - it becomes a self-fulfilling prophecy.

I've heard stupid people talking about the country being in recession at the beginning of the last decade... WTF?

I personally think unless you are directly affected by the current economy, or have reason to believe you will be or are utterly hopeless managing your finances, you should carry on as normal.

I'm still spending or rather SWMBO is spending for me. If the economies falling apart it isn't my fault I'm doing my part, honest!

 

[Ade B]

We need some confidence back.

I bought some plants this weekend for the garden - doing my bit.

Anyone want to address the housing shortage - might know an architect


Come on people, chin up and get spending.


Ade

 

[stevieb15]

Note - yes this is a rant, and yes it will all look better in the morning. And no, this is not political - or rather, as my doctor keeps telling me, it is less important how we got to where we are now, it is far more important to decide where we go from here.

Actually history is a most essential part of charting new directoin, as if you dont know how you got where you are how do you avoid taking the wrong direction again.
Anyone who thinks polititians have a clue is clutching at straws, never forget polititians are transitory and will be replaced, civil servants helped create, present and implement the policies that got us in the dreadful mess we're in and they are still in place doing the same now!
I won't attempt to suggest how we move forward but ignoring how we got in this mess is not a sensible option.

 

[jonnyboy]

Spending is what got things in strife to start with, spending non-existent money on things not desperately needed that is.

 

[NOMONEYBUTAMERC]

Have to say i agree with Grober on this one . I have said for many years that every time you see a factory close , or an industrial estate knocked down , all that you see in its place is a Kwikfit, or a burger bar.
Those over forty or so , will no doubt remember manufacturing companies ,large or small , not far from where they lived.
For the past 35 years i have been in the "service" sector , primarily in engineering products. The customer base has changed very dramatically in this time , and in fact the products we sell are now almost exclusively made overseas. Industry has had little or no support from ANY government in this period, other than meddling in areas which they had no competence in ( theres a surprise ) , and gullible people were led to believe that the future was in call centres , shopping centres , or anywhere that you didnt have to get your hands dirty.
Today , if you work in a call centre , someone will be looking to see where they can outsource your job overseas. If you work in a shop , you will be selling goods which, in most cases were not made in the U.K. If you work in the service industry you will be looking for industry to service ( provided you can afford the fuel). If you work in a BANK , just smile smugly, safe in the knowledge that if you screw up today , "WE" will bail you out tomorrow.
Never mind, the sun will still rise tomorrow , your family will still love you ( unless your name is Giggs ! ) , and our lords and masters will dream up even more ways to drag us into the mire.

 

[Deleted member 37751]

I'm still spending or rather SWMBO is spending for me. If the economies falling apart it isn't my fault I'm doing my part, honest!

Spending all tha brass, thas been down south too long, I tell thee!

 

[snoop51]

Spending all tha brass, thas been down south too long, I tell thee!

Thas reet theer. Tha don't need ta tell me!

"On Ilkley Moor b'aht 'at."