The Micawber principle

“Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

 

Which seems like a sensible way to run a household and even a country, however not being any sort of “expert” on economics I may be wrong.

I watched a programme called “the flaw” the other night which was about the American “crash”, and it appeared that the bankers and the rich were not to blame; it was all the fault of the public because “they” borrowed money against the equity in their houses-sometimes two or three times a year, what didn’t come across so well was that “they” were sold mortgages at high interest rates and wages were either stagnant or falling, so that the only way “they” could keep their heads above the brown runny stuff was to borrow to live, and eventually “they” ran out of equity and defaulted on their mortgages.

 

Allegedly the mega rich were not willing to pay decent salaries to the “working class” but were willing to lend them money, and then sell the debts off to others so that they didn’t carry any of the risk and stay mega rich.

The “others” being the banks.

 

From what I can tell the same thing has happened here in Blighty and correct me if I am wrong but salaries are stagnant or falling, house prices are on the down, debt is on the up and “we” are well into the mire.

 

The Gov decided that it would increase taxes, reduce benefits, and hammer “us” with all they could in the very vain hope that it would provide oodles of dosh to pay orf the deficit.

Which hasn’t worked, because when “we” have less money “we” have two choices-borrow or spend less, and it seems that “we” have decided to go with the second option, which means that manufacturing is teetering on the edge, revenues to the Piss Poor Policies Millionaires Club Coalition have plummeted and the deficit is increasing.

 

I saw on the news this morn that the Gov is going to close the VAT ‘loophole’ on goods (mainly DVDs and CDs) sold from the Channel Islands which will “bring in about £100 million” which it won’t because “we” will stop buying stuff from Guernsey and Jersey and allegedly 1700 jobs may go costing “us” £65 quid per ex job per week.

 

So do we need to spend more to drag ourselves out of the non-bankers balls up, only if “we” have the money to do it-case in point.

 

I took out my private pension when I staggered over the old farts line, 25% cash and a pittance each month, but, I discovered that there was another lurking in the ether from a company I worked for in 1983 which was worth £3,000 or so, and after a bit of probing I found out that I could take the whole amount in cash under the Trivial commutation lump sum thingy.

Great I thought, three grand will keep me in stale bread, gruel and pussy food for a while and I might even be able to put the heating on occasionally or even buy something I want-WRONG!

 

What I will get is 25% tax free £750ish, and the remaining 75% £2,250ish will be taxed at “emergency” rates-£750ish, leaving me with £2,250ish.

So will I be going out and blowing my “windfall” on goods so that manufacturing can crawl out of the hole-no.

 

This Daft Old Fart will use it to live on until this bunch of arsehole MPs in this unelected Coalition get their marching orders, or until they realise that in order to spend “we” have to have the loot to do it.

 

Micawber was right, but it seems that the shirt lifting Eton Dorm gang do not understand the basic principles of economics.

 

But correct me if I am wrong…

3 comments for “The Micawber principle

  1. November 10, 2011 at 12:04 pm

    So the telly programme blamed the public for overextending and let the banks of the hook, and yes of course the banks shouldn’t have been lending out money to people who were were going to be forced to default if the housing bubble popped. But the banks aren’t the last link in the chain. Above that you’ve got the government – more than one in fact – keeping interest rates artificially low and implicitly or even explicitly guaranteeing to bail out lenders. Even during the Clinton era the White House was helping inflate the bubble, and I expect Dubya would have carried on if he hadn’t got so busy with the War on Tourism. Dirt cheap cost of borrowing was always going to mean every bugger was going to borrow, and the belief – largely correct, as it happens – that the federal had put out a safety net was always going to mean that the banks wouldn’t feel the need to be all that picky about who they lent to and whether they’d get it all back.

  2. Voice of Reason
    November 10, 2011 at 4:43 pm

    In the US, minimum wage in 1971 was $2 per hour. Had it kept pace with inflation, it would be about $12 per hour now – what some skilled and semi-skilled factory workers are getting.

    So yes, many had no choice. However, in one generation, we also went to a society where many of the young expect 2 expensive holidays a year, a big house and 2 cars immediately after college, and so on.

    • November 11, 2011 at 3:40 pm

      It really does come down to expectations in the end.

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