Thursday, January 08, 2009

Government Continues To Surprise

Blogging's light - too much work, alas. I'm too busy earning a living to make any money, as the saying goes.

I think almost every day that our rulers can't get any more despicable. Then I pick up the paper.

Hundreds of bail hostels are being opened in residential neighbourhoods without public consultation as part of moves to ease jail overcrowding.

People living next door to properties earmarked for suspected criminals and prisoners released early from jail are only told when the premises are about to take their first inhabitants.

Since the privately run hostels will not have live-in staff, neighbours are given a number to phone in the event of problems, according to a document leaked to The Times. Local councils will only be consulted on the “suitability” of a building to house up to five ex-prisoners and suspects granted bail.

I see. At least you find out about the new traveller camp. (Resistance is useless)

I see the government have officially denied reports that they're printing money. So it is true then. Obviously you can't call it printing money, with its resonances of Weimar and Zimbabwe. "Quantitative easing" is the approved expression. "Easing" is so much gentler a word than "printing".

So those on fixed incomes, already stuffed by low interest rates if they have investments, are simultaneously going to see their pensions eroded by inflation. Look at the BBC's example of Mr Routledge - a 77-year old bloated plutocrat with no less then £15,000 of savings.

Since a heart complaint forced him to take early retirement from his job with BOC, Mr Routledge has received a company pension - now £96 a month - on top of the couple's combined weekly state pensions totalling £150.

They receive housing and council tax benefit but lose out on the full amount because of the very savings they put aside to fund their retirement.

A couple with less than £16,000 in the bank qualify for the benefits and can hold £6,000 in savings without affecting their payments.

But for every £500 they have saved over that amount, the authorities assume they earn £1 per week in "tariff income" and reduce the benefit payments accordingly.

The Routledges' tariff income is calculated at £18 per week, or £936 per year.

But with their interest payments falling well short of covering this, Mr Routledge said it has effectively left them hundreds of pounds a year worse off.

In other words, the Government is assuming (for benefit-slashing purposes) a 10% return on the £9K of their savings over the £6K limit. It's grotesque. They're being punished for their attempts at self-reliance.

Roger Bootle was on the Today programme this morning saying 'nobody is worrying about inflation'. I see a new capitalist myth in embryo here. For the last 20 years all economics correspondents presented rising house prices as indubitably and self-evidently a Good Thing - apparently we talked of nothing else at "our dinner parties". It was only early last year that someone actually organised a poll which reported that no, people didn't see it as a good thing. Not surprising really, given that no one on a low or even average income could afford a house any more. What the myth screened was a slow-motion asset transfer of the housing stock to the wealthy.

Looks like the 'nobody is worrying about inflation' myth will attempt to cover the slow-motion destruction of private pension assets. After all, they've already been destroyed quite successfully at the front-end, the paying in end. Where are the final salary schemes of only eleven years ago ? Now it's time to have a go at the back end, at the people already receiving pensions.

(And is inflation that low ? Energy prices, council tax - the big hits on the fixed-income budget ? I don't think my council tax is likely to decrease - do you ?)

Who profits ? Well, if you have enough money, in such an environment working to preserve it is pretty much a full-time job. Hence my point at the front of this post about being too busy working to make any money. Those with a lot, and the time to shuffle it around, should make hay even in this economic climate. It's Mr Average who'll be stuffed.


Anonymous said...

The government doesn't want self reliance, Laban. If you rely on yourself, you don't need them.

Furry Conservative said...

BTW, that expected 10% return is NET, not even gross! Perhaps the government could release a list of approved banks who offer a rate of 10% net of tax, to help those prudent savers they are so callously defrauding.

As for the printing of money, unleashing inflation with an electorate which is predominantly elderly and getting older is suicidal. However, doesn't stuff like this take 18 months or so to feed into inflation? If so, it will happen AFTER the General Election.

Once again, scorched earth from Labour.

As for council tax, regardless of whoever wins the election they will rise by at least double digits the year after. Expect 10, 15% rises.

Anonymous said...

If I were Mr Routledge, I'd blow £10k on a holiday (preferably somewhere warm), just leave the £6k in the bank and get the full benefits. At age 77 what's he saving for anyway ?

Harry J said...

The amount of notes and coins in circulation is about 3% of the overall money supply. The remaining 97% is debt in some form or other. It's numbers on a computer screen. The money supply increases year on year and with it comes inflation. Inflation is an inevitable result of a fractional reserve banking system and is essentially a hidden tax. A system that gives a monopoly on creating money, out of thin air, to private, commercial, banks. What they don't 'create' is the interest they charge.

The money supply in the UK has more than doubled since Labour came to power in 1997. The introduction of notes and coins is the one way of increasing it that does not result in debt. This whole 'credit crunch' nonsense is completely manufactured. It's an old trick that's been played many times before. Increase the money supply and availability of credit, with the resultant debt, and cause a boom, then decrease it, using whatever excuse you can find, and cause a bust. Gordon Brown is wholy culpable in all this.

"Banking was conceived in iniquity and was born in sin. The Bankers own the earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of Bankers and pay the cost of your own slavery, let them continue to create deposits".- SIR JOSIAH STAMP, (President of the Bank of England in the 1920's, the second richest man in Britain):

"Banks lend by creating credit. (ledger-entry credit, monetized debt) They create the means of payment out of nothing." -- Ralph M. Hawtrey, Secretary of the British Treasury

"The few who understand the system, will either be so interested from it's profits or so dependant on it's favors, that there will be no opposition from that class." -- Rothschild Brothers of London, 1863

"We are completely dependant on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system.... It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon." -- Robert H. Hamphill, Atlanta Federal Reserve Bank

Martin said...

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." =

Thomas Jefferson.

But of course Hayek said everything should be orivate, so what did old TJ know about anything?

Anonymous said...