Thursday, February 26, 2009

Chris Dillow has a lovely piece today about Alex Curran cutting back in these recessionary times. In her case, of course, it makes no sense as I'm sure Liverpool haven't cut back on Steven Gerrard's wage packet.
But somehow we all feel better for making an effort, and I'm assume she does too. I'm not sure it makes a lot of difference - many years ago, when Onassis was facing a real crisis, in so far as his ships were being laid up at a great rate as the oil companies were shunning him, he was asked why he didn't cut back on his personal spending.
" When the problem is $300 million, what difference does $300,000 make?"
Of course, not long after that the Suez Canal was shut, and the only person with ships available was Onassis for the extra voyage round South Africa. It's said he make enough to pay all his debts from the first set of contracts he signed the following week.
Now you might think that Livanos would be upset that he hadn't cashed in as he had long term boring contracts with the oil companies. Not a bit of it. He promptly revoked all contracts and did the same with his ships.
But I digress. My point is - unless outgoings are in excess of in-comings - saving a bit makes no real sense. If you were happy with your rate of saving before, what's the reason for changing now? And if you have a mortgage, you will be paying less so there's a bit more to tuck away.
The problem comes because quite large numbers of people are significantly worse off ( not Fred the Shred, obviously) notably those who have squirreled cash away and have seen their income drop by about 75% on average. They are the ones who will be cutting back, and they are the very ones who have done absolutely nothing to deserve a cut.
So in the spirit of these times, and in order to help the economy, I have been on a spending spree.
I have bought sugar, tea and milk for the office.
Oh, and some chocolate biscuits.

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