Tuesday, January 13, 2009

Labour's not Working - and even their aspirations aren't working

So the fall in the pound would help exports would it? Not according to official statistics it won't.
What this shower of economically illiterate novices failed to understand was that we don't make enough anymore to be able to export more.
Our imports are up 6% and exports only up 2% leading to the biggest ever gap. And all the celebrity hairdressing and financial services in the world will not bridge it.
Only the re-balancing of the budget and a sharp drop in imports of the trash people buy will get us out of this.
That means saving. Brian Boru takes me to task for repeating this mantra, but I promise you, it really is the only way. Think about it for a minute. What's the cheapest finance the Banks have? Answer, your and mine current accounts ( and savings accounts now, too) The more there is in these, the lower the average cost of funds to the Banks. The lower the average cost, the lower the rate they have to charge to lend money. The more they lend money, the more the multiplier will start to expand again ( down from about 13 to about 4 as far as I can see at the moment.)
So start putting that cash aside for a rainy day. It looks as if the savings ratio, which had fallen to zero, was 1.8% in November. Not much, but I suspect we will soon see this up around the 4/5% mark, which will be when things start to improve again - round about the summer.
Peter Oborne has an excellent critique of Brown et al today. The most startling point is there is not one member of the Cabinet who has ever occupied a wealth creating job. Mind you, that's obvious from their actions.
Various people have been suggesting this article is a travesty, as Jacqui Smith was a teacher and Alan Johnson a postman. Er, how exactly are these wealth creating? Teaching a young person is worthy, delivering letters is useful, but neither action creates wealth. See Iain Dale below ( hyperlink not working)
How Do You Define 'Wealth Creating'?
Iain Dale 3:47 PM
James Forsyth has kicked up a right old storm on Spectator Coffee House with a post highlightling Peter Oborne's assertion in the Mail this morning that not a single member of the Cabinet has ever occupied a wealth creating job. I often use the statistic that only five out of 350 Labour MPs has ever run a business.James's post has prompted a furious reaction in the comments. Our old friend David Boothroyd says...
How exactly do you define "wealth-creating job"? Jacqui Smith was a teacher and economics lecturer, which gave other people skills to create wealth. Alan Johnson was a postman, delivering mail to business and thereby helping them create wealth. David Cameron worked as a political adviser and head of PR for a TV firm - is that wealth-creating? Even if it is I would have thought being a teacher in a comprehensive school provides more benefit for society.Tiberous puts the counter view...
Wealth creators are those who take business risk with their own assets. They are people who indeed do have to meet a payroll. There would be no public sector without private sector taxes. In the generally understood terminology, then, the public sector is non-productive and does not create wealth. It is designed to serve those who do, but latterly has assumed a self-importance and self-justification which is grotesque, none more so than at the BBC. The humility of public service of yesteryear has been taken hostage.If we go by the Adam Smith definition of wealth creation, as the combination of materials, labour, land, and technology in such a way as to capture a profit (excess above the cost of production), then Oborne and Tiberius are certainly right. I would add a further element - risk. How many politicians have risked their own money in a business investment? How many politicians have ever directly employed other people in their own companies?Not many, I suspect.

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