Mixed metaphors can be fascinating and for some reason the one above has stuck in my mind years after I came across it in a spy novel. (A bottle of wine for the clever fellow who reminds me of it.) It seems quite apt for the economic mess we are in, and to quote one City editor, there are few problems that Governments cannot make worse.
Here George is going to stick his neck out and make a couple of predictions: 1) Living standards are probably at their post-war peak – I mean WW2 here. 2) House prices are in a similar state. 3) Part of this is due to the highest ever levels of taxation in the UK – for example, 65 per cent of the cost of petrol is tax. 4) Inflation is going to get worse before it gets better – if the Bank of England is reducing interest rates to prevent a slump then keeping inflation in check by raising the price of money i.e. interest rates, is on the back burner. 5) We are all going to get poorer. If you prefer the sound bite version – Hard Times Ahead. As The British Prime Minister Harold MacMillan said decades ago “You’ve never had it so good!”
My own training as a private and international banker taught me a couple of things but one of the most significant ones was the difference between banking and say, baking. If you have 12 bakers in town and one goes bust, hooray for the other 11 and the people who in work in them. But banking is different as it is not in really any bank’s interest to let another bank go bust if they have a run on deposits, as the panic could so easily spread to them. For a previous rant on panic see http://www.georgeemsden.co.uk/?p=100
Banks seems to have forgotten this fundamental point and have stopped lending to each other often at any price. As the wealth of most people is tied up in their homes (bricks & mortar) a tight credit regime will have dire consequences and this tightness will make a bad situation worse. A generation ago, when a bank got into difficulties the Old Lady of Threadneedle Street (Bank of England) would have had a quiet word with a few people and some of them would have clubbed together to buy up the stricken bank but things are more formal now.
The evaporation of confidence in the aftermath of the Northern Rock debacle will have social consequences too. Many people will be unable to move to a bigger property if they plan to have children or a bigger family. They will be unable to move to a better property in the catchment area for the nice school they want for their children. Their property will not sell for the price they could have got last year which means that they cannot afford to pay as much for the next one as before. For those who cannot keep up the payments, more properties will be repossessed and sold into a falling market. Eventually demand or rather affordability will meet with supply and things will pick up again – but don’t hold your breath.
For anyone waiting to get on the housing ladder they will always need two things – a deposit and a job – in that order and unsurprisingly, the 100 per cent mortgage has disappeared.
But there are always exceptions to doom and gloom. An estate agent I met a few weeks ago at a lodge meeting told me with a big grin how busy he was. Rather than waiting for business to come to him, his firm hits the phones and calls property owners in his area regularly. When someone says that they will move in say, three months, they get a call.
In another case, I was able to suggest using a pension benefit from a defunct employer to help boost a new small but successful business. The existing broker was no longer around and no correspondence was being received from the pension trustees or insurance company about what the funds were worth, for example. A networking colleague referred the person to me and it was good to be able to help. It is often a pity that Good news is No news as there are always people who are sensible, hardworking and succeed no matter how hard or silly times are.
For a change, last weekend found me in Brussels courtesy of my Valentine. She decided to whisk me off via Eurostar from the new St Pancras International terminal four months after the in2 Consulting Christmas Beano see http://www.georgeemsden.co.uk/?p=114
36 hours was enough to see the Manneken Pis, try fresh warm waffles, eat whelks (escargot) in a warm clear soup (much nicer than the cold ones served in the UK), eat our fill of mussels (moules), see Grand Place and nearby, a Chocolate Museum http://www.mucc.be/ not to mention trying several beers. The strongest of these was 9.1% ABV and of the fruit flavoured ones: strawberry, cherry and raspberry. The latter beers are generally sweet, and popular with the ladies for this reason. If you like this sort of thing in London, I can recommend http://www.lowlander.com/flash.html in Drury Lane with 15 different Belgian beers on tap as well as many other bottled beers.
Brussels may not have the glamour of Paris but it does grow on you and the 2 hour train journey from London is much more civilised than mass air travel. Arrival in the rain and a long taxi queue at the station led us to try the public transport system which was excellent. A JUMP card for a day, valid on all busses trams and metro costs 4 Euros – less than half the price of a Day Travelcard in London. Sunday was spent at the Atomium
which is celebrating its 50th anniversary http://www.atomium.be/ and is easily reached via the Heysel station next door to the well-known Heysel sports stadium.
From Thailand, my friends tell me it is Songkran or Thai New Year shortly so the Thais have a 3 day holiday http://www.sriwittayapaknam.ac.th/songkran.html and it is the hottest part of the year there now.
Back at home, my stats show an enquiry phrase “What happens with a joint life insurance policy, if both parties die together?” Answer, the eldest one is assumed to have died first under the doctrine of commorientes and usually arises in Inheritance Tax cases – another word for Scrabble maybe? http://www.hmrc.gov.uk/manuals/IHTmanual/ihtm12192.htm
On a lighter note, Premium Bonds are now available through W H Smith http://www.nsandi.com/products/customerwelcome.jsp?ccd=WQXPAA As the whole subject of financial planning can get very heavy, Premium Bonds are one way of leavening things a bit. Look at them as a Lottery Ticket where you can get your money back.
AN INVITATION – my pages read stats as at last night show: Hungary 2805, USA 2309, EU 100 and GB 68. As these relate to pages read, I have no idea how many people are involved but if you are in London, please drop me a line.