Ref today's article on the Time website - Biffo on the bog - http://entertainment.timesonline.co.uk/tol/arts_and_entertainment/visual_arts/article5977397.ece
Anyone upset by satire deserves to mocked mercilessly regardless of their position in society - the more "important" they think they are the more important it is to remind them that they are mere public SERVANTS.
Biffo seems an appropriate nickname in the circumstances.
Father Ignatius Brown
Thursday, 26 March 2009
Monday, 16 March 2009
Eat butter and enjoy life
I have just enjoyed a bowl of freshly chopped fruit topped with a large helping of delicious double cream - and I am already looking forward to sitting down this evening to a light supper of ripe, unpasteurised Camembert, fresh bread and a couple of glasses of rich red wine.
My cholesterol is normal, my blood pressure (according to my Doctor) is "that of a healthy 19 year old" and I am only slightly overweight for my height and age (but I walk a brisk 6-miles a day so am reasonably fit).
I refuse to eat margarine since in my humble opinion it is disgusting and thoroughly unnatural - give me butter any day (and every day) - if I die a week earlier than I should at least I will die happy.
Now for some very dark chocolate and more tea.
Blessings
Father Ignatius Brown
My cholesterol is normal, my blood pressure (according to my Doctor) is "that of a healthy 19 year old" and I am only slightly overweight for my height and age (but I walk a brisk 6-miles a day so am reasonably fit).
I refuse to eat margarine since in my humble opinion it is disgusting and thoroughly unnatural - give me butter any day (and every day) - if I die a week earlier than I should at least I will die happy.
Now for some very dark chocolate and more tea.
Blessings
Father Ignatius Brown
Sunday, 15 March 2009
The dream of self-sufficiency is just that - a dream
So forget it.
You could take heaps of advice from articles such as this one on The Times - http://property.timesonline.co.uk/tol/life_and_style/property/gardens/article5896294.ece?Submitted=true - about growing your own.
But my advice is don't bother - growing your own is highly inefficient - a complete waste of time and money. Last summer I ate some of the most expensive potatoes in the world - I grew them - cost about £50 a kilo - better off using your local farm shop - economies of scale leave you free to relax after work.
If you do take up a spade or trowel do it for the fun - not because you think you'll save money.
You could take heaps of advice from articles such as this one on The Times - http://property.timesonline.co.uk/tol/life_and_style/property/gardens/article5896294.ece?Submitted=true - about growing your own.
But my advice is don't bother - growing your own is highly inefficient - a complete waste of time and money. Last summer I ate some of the most expensive potatoes in the world - I grew them - cost about £50 a kilo - better off using your local farm shop - economies of scale leave you free to relax after work.
If you do take up a spade or trowel do it for the fun - not because you think you'll save money.
More risk - less regulation please
Andrew Lilico, writing in the Sunday Telegraph ( http://www.telegraph.co.uk/comment/personal-view/4996305/We-need-more-risk-and-less-regulation-of-the-financial-sector.html ) effectively makes the point that I have previously tried to make:
Thank you Andrew for making the point more clearly than I have done.
Andrew Lilico is the author of 'What Killed Capitalism? The Crisis – What Caused it and How to Respond', published today by the Centre for Policy Studies www.cps.org.uk
- that risk is essential for efficient markets,
- that policies that distort the price of risk lie at the heart of the financial crisis, and
- that government action that compensates people for taking risks and losing will simply add to the problem, not solve it.
Thank you Andrew for making the point more clearly than I have done.
Andrew Lilico is the author of 'What Killed Capitalism? The Crisis – What Caused it and How to Respond', published today by the Centre for Policy Studies www.cps.org.uk
Friday, 13 March 2009
Short selling is not an easy option
Tracy Corrigan's article on short selling on today's Telegraph - http://www.telegraph.co.uk/finance/comment/tracycorrigan/4980710/Sooner-or-later-a-short-seller-is-going-to-be-caught-short-themselves.html - drew a response from one reader asking why shareholders bother loaning their stock to short sellers since the loan fee would not make up for the fall in the share price.
They did not appear to appreciate that short selling is not as simple as they make out.
Short selling is not necessarily enough on its own to drive a share price down far enough for the short seller to make money (particularly if the stock is very liquid and there are more buyers than sellers).
I don't have the figures to hand but when the short selling ban was imposed the FSA's own figures showed that outstanding loans of shares (a good proxy for short positions) were only a small percentage of the floating share capital of many financial institutions that were suffering from falling prices.
It turned out that the reason their prices were falling was that many shareholders were simply selling (including mainly institutional shareholders owned by the same financial institutions - and the same shareholders that were loaning out their remaining stock to short sellers). The reason why they were selling was because they had finally come round to the short sellers view that the stock was over-valued and the business models were weak.
The short seller is taking a contrary view on the direction of the market (even naked-short selling - which I understand is illegal - whereby they sell without even borrowing the stock - is simply a bet against the direction of the market and not in itself a driver of the market). They are predicting that sentiment will change - there is no difference therefore between selling short and buying long - the are just two pages from the same book.
Plenty of short sellers lose every day - you just don't here about them because it's not a "news story". Don't fall for the media's love of the boogeyman story - it often clouds the facts.
Blessings
Father Ignatius Brown
They did not appear to appreciate that short selling is not as simple as they make out.
Short selling is not necessarily enough on its own to drive a share price down far enough for the short seller to make money (particularly if the stock is very liquid and there are more buyers than sellers).
I don't have the figures to hand but when the short selling ban was imposed the FSA's own figures showed that outstanding loans of shares (a good proxy for short positions) were only a small percentage of the floating share capital of many financial institutions that were suffering from falling prices.
It turned out that the reason their prices were falling was that many shareholders were simply selling (including mainly institutional shareholders owned by the same financial institutions - and the same shareholders that were loaning out their remaining stock to short sellers). The reason why they were selling was because they had finally come round to the short sellers view that the stock was over-valued and the business models were weak.
The short seller is taking a contrary view on the direction of the market (even naked-short selling - which I understand is illegal - whereby they sell without even borrowing the stock - is simply a bet against the direction of the market and not in itself a driver of the market). They are predicting that sentiment will change - there is no difference therefore between selling short and buying long - the are just two pages from the same book.
Plenty of short sellers lose every day - you just don't here about them because it's not a "news story". Don't fall for the media's love of the boogeyman story - it often clouds the facts.
Blessings
Father Ignatius Brown
What's Lord Meddlesome's game?
Lord Meddlesome reminds me of that strange little character from one of the Asterix books who caused consternation wherever he went yet always wore a smarmy smile as if immensely pleased with himself (or am I confusing fact with fiction).
He is obviously highly intelligent (and possibly entertaining in small doses - like arsenic) but I get the distinct impression that it's all one big game to him - that he doesn't care tuppence what the outcome is as long as he can be seen to have influenced it (as for Gormless Clown, I somehow think Lord Meddlesome regards him as a useful fall guy for when they lose the election).
He is obviously highly intelligent (and possibly entertaining in small doses - like arsenic) but I get the distinct impression that it's all one big game to him - that he doesn't care tuppence what the outcome is as long as he can be seen to have influenced it (as for Gormless Clown, I somehow think Lord Meddlesome regards him as a useful fall guy for when they lose the election).
Thursday, 12 March 2009
Numis Securities see through Gordon's folly
If you want a really bleak assessment of the housing market, check out this article on today's Telegraph - http://www.telegraph.co.uk/finance/economics/houseprices/4974499/House-prices-could-fall-by-further-55-per-cent.html - it's also pretty damning on this government's proposals for solving the credit crisis.
Skip the statins and get a real life
Thank you to Christopher Hudson for an interesting article on the Daily Telegraph today - http://www.telegraph.co.uk/health/4974840/Wonder-drug-that-stole-my-memory.html - drawing a tentative link between the use of statins to reduce cholesterol and possible side effects such as poor circulation and memory loss.
Here's my alternative therapy for living a happy and healthy life:
Eat a more balanced diet and take plenty of gentle exercise - the body will look after itself.
Red wine, dark chocolate, porridge, fresh air, long walks,small amounts of cheese made from unpasteurised milk, plenty of leafy greens (broccoli, sprouts etc), wild salmon, berries and laughter - they all help.
None of us are immortal - if you die a few years earlier than the average so be it - at least you will have lived well without pumping yourself full of drugs and big pharma full of your pension.
Blessing for a long and happy life.
Father Ignatius Brown
www.father-ignatius-brown.com
Here's my alternative therapy for living a happy and healthy life:
Eat a more balanced diet and take plenty of gentle exercise - the body will look after itself.
Red wine, dark chocolate, porridge, fresh air, long walks,small amounts of cheese made from unpasteurised milk, plenty of leafy greens (broccoli, sprouts etc), wild salmon, berries and laughter - they all help.
None of us are immortal - if you die a few years earlier than the average so be it - at least you will have lived well without pumping yourself full of drugs and big pharma full of your pension.
Blessing for a long and happy life.
Father Ignatius Brown
www.father-ignatius-brown.com
Wednesday, 11 March 2009
Fortune favours the brave
The Times is currently running an article on its site (http://www.timesonline.co.uk/tol/money/property_and_mortgages/article5854972.ece?Submitted=true) about a landlord, called Robert Hughes, who has made a million on buy-to-let property and is proud of it.
Naturally, yet sadly, in this bitter and jealousy ridden world the article has attracted various vindictive comments about Mr Hughes.
For what it's worth, my thoughts are:
"Good on the man for having the guts to go out at 14 and start making money and then to see the opportunity in property in the early 90s long before it became a fad. Sounds as though he has worked hard and taken risks - any rewards are well deserved (and any hubris can be forgiven).
Blessing on him."
Naturally, yet sadly, in this bitter and jealousy ridden world the article has attracted various vindictive comments about Mr Hughes.
For what it's worth, my thoughts are:
"Good on the man for having the guts to go out at 14 and start making money and then to see the opportunity in property in the early 90s long before it became a fad. Sounds as though he has worked hard and taken risks - any rewards are well deserved (and any hubris can be forgiven).
Blessing on him."
Let interest rates float free
Mr Greenspan has apparently said that the Fed could not have stopped the housing bubble in the US forming because it wasn't really in control of interest rates (it was all the fault of those prudent savers in the East). Which seems to imply that the Fed's fiddling with interest rates had no effect and was therefore pointless.
From which we conclude that it would probably make more sense to simply disband the Fed and leave interest rates to float free on the open market.
This would mean more uncertainty on the direction of interest rates.
More uncertainty = more risk - which means more volatility which would be a good thing since borrowers would take more care with leverage.
It would also make markets more responsive to changes in fundamentals and more efficient at price discovery. This would lead to a more accurate long-term pricing of risk and so might reduce the likelihood of substantial (structurally debilitating) bubbles forming.
Which all sounds good to me (it certainly doesn't sound worse than what we have got through market manipulation).
Blessings on the free-market - let's make it truly free.
Father Ignatius Brown
From which we conclude that it would probably make more sense to simply disband the Fed and leave interest rates to float free on the open market.
This would mean more uncertainty on the direction of interest rates.
More uncertainty = more risk - which means more volatility which would be a good thing since borrowers would take more care with leverage.
It would also make markets more responsive to changes in fundamentals and more efficient at price discovery. This would lead to a more accurate long-term pricing of risk and so might reduce the likelihood of substantial (structurally debilitating) bubbles forming.
Which all sounds good to me (it certainly doesn't sound worse than what we have got through market manipulation).
Blessings on the free-market - let's make it truly free.
Father Ignatius Brown
Tuesday, 10 March 2009
How to recharge electric cars
An amusing and interesting article from Boris "the Mayor" Johnson on The Daily Telegraph site today about the joys of driving an electric car (in this case the super-charged Tesla) : http://www.telegraph.co.uk/comment/columnists/borisjohnson/4964210/How-to-drive-fast-have-a-good-time---and-still-save-the-planet.html.
Naturally one of the questions that sceptics always ask is - "how long does the recharge take - and how do you manage it on long journeys?"
Well - presumably the recharge problem could be sorted by having easily replaced batteries?
So you pull in at the Battery Station and a nice young women in clean overalls smiles sweetly (at you or the car, it doesn't matter). Then she deftly lifts your bonnet, yanks out your old power pack and neatly inserts a new one in the time it takes you to shake nutmeg on your latte.
Off you go with a cheery wave of thanks - feeling smug and warm at this pain free, low cost refuelling experience.
Oh happy day!
Father Ignatius Brown
Naturally one of the questions that sceptics always ask is - "how long does the recharge take - and how do you manage it on long journeys?"
Well - presumably the recharge problem could be sorted by having easily replaced batteries?
So you pull in at the Battery Station and a nice young women in clean overalls smiles sweetly (at you or the car, it doesn't matter). Then she deftly lifts your bonnet, yanks out your old power pack and neatly inserts a new one in the time it takes you to shake nutmeg on your latte.
Off you go with a cheery wave of thanks - feeling smug and warm at this pain free, low cost refuelling experience.
Oh happy day!
Father Ignatius Brown
Monday, 9 March 2009
What's holding you back?
I think it was JC Penny who said something like: "Show me a shop assistant with ambition and I will show you someone who will change the world - show me a genius with no ambition and I will show you a shop assistant".
Talent is nothing without application and goals - but clear goals and dedication to achieving them can make up for all manner of shortcomings.
Talent is nothing without application and goals - but clear goals and dedication to achieving them can make up for all manner of shortcomings.
On the last gasp of the British consumer
In response to this item on The Times website - http://business.timesonline.co.uk/tol/business/columnists/article5799391.ece
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"It's the lottery mindset - "Just think lucky" - the great, deluded British consumers think they are chanting their way to shopping Nirvana but instead are heading for the gutter."
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"It's the lottery mindset - "Just think lucky" - the great, deluded British consumers think they are chanting their way to shopping Nirvana but instead are heading for the gutter."
A message to Gordon Brown and others
So Gordon, you don't think the current financial crisis could have been predicted?
Well take a look at this article from the New York Times in September 1999, http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&scp=16&sq=Subprime&st=nyt, in which the following appears:
"In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.
''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''
The same thinking could have been, should have been applied to the growth of credit and the housing bubble in the UK (and was by Vince Cable and others). So Gordon, PLEASE don't pretend this all blew up last year, could not have been predicted and could not have been avoided. Your policies are more to blame than the actions of any individuals in the financial services industry.
Well take a look at this article from the New York Times in September 1999, http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&scp=16&sq=Subprime&st=nyt, in which the following appears:
"In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.
''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''
The same thinking could have been, should have been applied to the growth of credit and the housing bubble in the UK (and was by Vince Cable and others). So Gordon, PLEASE don't pretend this all blew up last year, could not have been predicted and could not have been avoided. Your policies are more to blame than the actions of any individuals in the financial services industry.
Recent postings on The Times
Here are some of my recent contributions to various debates on The Times website (at least the ones that got published):
On the revival of interest in Mock Tudor - http://property.timesonline.co.uk/tol/life_and_style/property/buying_and_selling/article5850999.ece
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"My Grandparents lived in a mock-Tudor ,1930s semi in East London - I thought it was the grandest place in the world for holidays (particularly since it had a fish pond in the garden, wood panelling in the sitting room, and stained-glass, leaded windows in the front door). It's still my dream home."
On the trust about housing market statistics - http://property.timesonline.co.uk/tol/life_and_style/property/buying_and_selling/article5851014.ece
-
"So, 5, 7, 8 and 10 are the only ones really worth watching since they are based on objective measures of completed data rather than subjective measures of impressions, views, feelings and t-leaves. Look at the macro-picture - and don't be fooled by one month's set of data."
On popular trees for small gardens - http://property.timesonline.co.uk/tol/life_and_style/property/gardens/article5816736.ece
-
"Buy a crab apple - our Malus Robusta, in a 15x30 ft London garden, was perfect - beautiful white blossom in spring - ideal height and light shade in summer - wonderful autumn leaves - and gorgeous red fruit shining like Christmas baubles through the winter (providing valuable food for blackbirds)." [To clarify - I was referring to the beautiful Malus x robusta 'Red Sentinel' .]
On whether now is the right time to return for investors to return to the property market - http://property.timesonline.co.uk/tol/life_and_style/property/article5853505.ece
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"So - to clarify - some people are acquiring homes at 35-40% of their summer 2007 values - which leads Douglas & Gordon to declare: “We are 10-15 per cent off the bottom" - in other words, if you pay more than 50% of 2007 values you'd better have a good reason. That sounds about right."
On rents falling as properties flood the market - http://www.timesonline.co.uk/tol/money/property_and_mortgages/article5804211.ece
-
"I've negotiated a freeze on my rent for the last 3-years - one months void would wipe out any rise so the landlord and I are happy. This proves what I have been saying all along - the idea that there is currently a housing shortage is a complete myth - bang goes support for house prices." - and - "Wrong Mary in Brum - the people renting the homes they can't sell have moved into second homes (for tax reasons) or are living with relatives - or are renting smaller places - so the available space is increasing - that's why rents are falling so sharply (and why house prices will follow)."
On the government's half hearted loan guarantee scheme - http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5514650.ece
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"Great Conservative idea - should have been done months ago when Osborne first suggested it. Instead we have had to tolerate more delay and dither from the "do anything and do everything in a muddle party"."
In future I will try to remember to post thoughts here as well as on the site where the debate rages.
On the revival of interest in Mock Tudor - http://property.timesonline.co.uk/tol/life_and_style/property/buying_and_selling/article5850999.ece
-
"My Grandparents lived in a mock-Tudor ,1930s semi in East London - I thought it was the grandest place in the world for holidays (particularly since it had a fish pond in the garden, wood panelling in the sitting room, and stained-glass, leaded windows in the front door). It's still my dream home."
On the trust about housing market statistics - http://property.timesonline.co.uk/tol/life_and_style/property/buying_and_selling/article5851014.ece
-
"So, 5, 7, 8 and 10 are the only ones really worth watching since they are based on objective measures of completed data rather than subjective measures of impressions, views, feelings and t-leaves. Look at the macro-picture - and don't be fooled by one month's set of data."
On popular trees for small gardens - http://property.timesonline.co.uk/tol/life_and_style/property/gardens/article5816736.ece
-
"Buy a crab apple - our Malus Robusta, in a 15x30 ft London garden, was perfect - beautiful white blossom in spring - ideal height and light shade in summer - wonderful autumn leaves - and gorgeous red fruit shining like Christmas baubles through the winter (providing valuable food for blackbirds)." [To clarify - I was referring to the beautiful Malus x robusta 'Red Sentinel' .]
On whether now is the right time to return for investors to return to the property market - http://property.timesonline.co.uk/tol/life_and_style/property/article5853505.ece
-
"So - to clarify - some people are acquiring homes at 35-40% of their summer 2007 values - which leads Douglas & Gordon to declare: “We are 10-15 per cent off the bottom" - in other words, if you pay more than 50% of 2007 values you'd better have a good reason. That sounds about right."
On rents falling as properties flood the market - http://www.timesonline.co.uk/tol/money/property_and_mortgages/article5804211.ece
-
"I've negotiated a freeze on my rent for the last 3-years - one months void would wipe out any rise so the landlord and I are happy. This proves what I have been saying all along - the idea that there is currently a housing shortage is a complete myth - bang goes support for house prices." - and - "Wrong Mary in Brum - the people renting the homes they can't sell have moved into second homes (for tax reasons) or are living with relatives - or are renting smaller places - so the available space is increasing - that's why rents are falling so sharply (and why house prices will follow)."
On the government's half hearted loan guarantee scheme - http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5514650.ece
-
"Great Conservative idea - should have been done months ago when Osborne first suggested it. Instead we have had to tolerate more delay and dither from the "do anything and do everything in a muddle party"."
In future I will try to remember to post thoughts here as well as on the site where the debate rages.
An interesting link from Anon
Thank you to Anon's response to my Magic Money Pot posting - in which they included this link to a posting by John Redwood (a man whose time is rapidly approaching me thinks) - http://www.johnredwoodsdiary.com/2009/03/08/its-the-politics-stupid/.
I have also added Mr Redowood's blog to the blog roll.
I have also added Mr Redowood's blog to the blog roll.
A PS to the Magic Money Pot story
I for one don't believe that this magic money pot can cure all (or any) of our economic problems. I know that my taxes are going to go up sharply and that my pension is being destroyed and that interest rates will have to rise sharply too in a few years time.
That is why I am saving what I can, where I can - settling for low interest rates in exchange for capital security (and buying small parcels of equities when the market falls as a hedge against inflation).
My monthly credit card bill is half what it was this time last year and I have committed to renting for another year (on very reasonable terms since there is a glut of rental properties in our area) rather than buying a rapidly depreciating asset (and risking a sharp hike in my mortgage payments in say 5-years time when inflation takes off) - at least my rent is tax-deductible (unlike mortgage payments).
I have also set the thermostat at 14C and am wearing extra clothes inside to save on heating bills. I have reduced my wine consumption by 4 bottles a week (by not drinking on Mondays, Tuesday, Wednesdays and Thursdays) - so saving another £28-£30 a week. I am also eating less (so losing weight - a stone since Christmas - and saving money).
I am not going to buy a new car this year - I will stick with the 10 year old model I have (and if necessary just get a new engine installed). Nor am I going to buy a flat screen TV or any other shiny paraphernalia.
Any extra money I get, whether from the government, Mervyn or the tooth fairy will be saved not spent.
By all accounts I am not alone. So now, tell me again, how is QE supposed to help?
Blessing and prayers as ever,
Father Ignatius Brown
That is why I am saving what I can, where I can - settling for low interest rates in exchange for capital security (and buying small parcels of equities when the market falls as a hedge against inflation).
My monthly credit card bill is half what it was this time last year and I have committed to renting for another year (on very reasonable terms since there is a glut of rental properties in our area) rather than buying a rapidly depreciating asset (and risking a sharp hike in my mortgage payments in say 5-years time when inflation takes off) - at least my rent is tax-deductible (unlike mortgage payments).
I have also set the thermostat at 14C and am wearing extra clothes inside to save on heating bills. I have reduced my wine consumption by 4 bottles a week (by not drinking on Mondays, Tuesday, Wednesdays and Thursdays) - so saving another £28-£30 a week. I am also eating less (so losing weight - a stone since Christmas - and saving money).
I am not going to buy a new car this year - I will stick with the 10 year old model I have (and if necessary just get a new engine installed). Nor am I going to buy a flat screen TV or any other shiny paraphernalia.
Any extra money I get, whether from the government, Mervyn or the tooth fairy will be saved not spent.
By all accounts I am not alone. So now, tell me again, how is QE supposed to help?
Blessing and prayers as ever,
Father Ignatius Brown
Mervyn's Magic Money Pot
So according to Roger Bootle (if I have understood correctly his article in today's DT - http://www.telegraph.co.uk/finance/comment/rogerbootle/4957996/Bank-must-react-quickly-to-avoid-the-pitfalls-in-quantitative-easing.html) the BoE can create all the money it wants to buy assets? And it is currently buying Gilts (which are issued by the government to borrow money to spend when it can't raise enough in taxes)?
In which case the solution to the current economic mess is simple and obvious: The government declares a five year tax holiday (no income taxes, no sales taxes, no corporate taxes for anyone). This frees up masses of cash that individuals and businesses can save (pay off debt) or spend as they see fit - so repairing their personal balance sheets.
If they save it this helps strengthen banks and building societies (and companies if people invest in equities and bonds). If they spend it then this boosts consumption. (Companies might also maintain or increase their dividends so boosting returns on investments and so encouraging more investment.)
Meanwhile the Government just issues masses of new debt (Gilts) which the amazing Mr King buys using his inexhaustible supply of magic money.
In five years time the Government starts raising taxes and paying back this debt (or not as the case may be).
Boy this sounds like fun - just like that children's fairy story "The magic porridge pot" (in which the villagers almost drowned in the excess of porridge created when Mrs Brown was unable to make the pot stop).
There's a moral in here somewhere.
In which case the solution to the current economic mess is simple and obvious: The government declares a five year tax holiday (no income taxes, no sales taxes, no corporate taxes for anyone). This frees up masses of cash that individuals and businesses can save (pay off debt) or spend as they see fit - so repairing their personal balance sheets.
If they save it this helps strengthen banks and building societies (and companies if people invest in equities and bonds). If they spend it then this boosts consumption. (Companies might also maintain or increase their dividends so boosting returns on investments and so encouraging more investment.)
Meanwhile the Government just issues masses of new debt (Gilts) which the amazing Mr King buys using his inexhaustible supply of magic money.
In five years time the Government starts raising taxes and paying back this debt (or not as the case may be).
Boy this sounds like fun - just like that children's fairy story "The magic porridge pot" (in which the villagers almost drowned in the excess of porridge created when Mrs Brown was unable to make the pot stop).
There's a moral in here somewhere.
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