Saturday, 24 October 2009

Economic Barometers

Talking to business colleague of mine recently he told me a family member of his works in an upmarket estate agents. Business seems to be pretty good in that stratosphere, but they have one real worry - there simply aren't enough houses in the £10m+ bracket coming on the market to satisfy the demand.
In a sentence that about sums up this recession and financial crisis. The brunt of the hardship in this tough time has been endured at the low end of our earners. Over a million people in the 2.5m unemployment figure are classified as young and already we are talking of a 'Lost Generation'. One firm, who have fared well in this recession, has spent £200,000 on a graduate entrant scheme where in all their history they have drawn from the local labour pool of 18 to 25 year olds to man their sales desk engine. Now they start graduates there instead - it's a great investment in the future but a sad indictment of the times we are in and no incentive for young people to get a good education as it does them little favours.

What it seems is that those people who are rich may have had their net worth dented but their income stream only paused minimally - they are still exceptionally rich and earning a very strong monthly and annual incomes. At the lower and middle ends of the scale is where all the negativity has bitten hard. The stark reality is that while kids may have a lost out, there will be a new tranche of 45+ year olds who were made redundant who may never find equivalent work and earnings again - to add to those woes, they will not have sufficient pension resources to survive either. The future for those 'baby boomer' offspring is bleak.

While Prince Andrew puts out a plaintive call to protect the 112,000 people who are non-domiciles, who pay no tax in Britain he may as well have added those corporations who hide part or a majority of their wealth offshore. When Lehmans bank collapsed it left thousands of subsidiaries many housed in offshore territories known as tax havens - there can be only one reason why banks love doing this.

Small businesses, who constitute 97% of the companies in Britain, who employ over 13m people and who pay a disproportionate amount of the tax revenue in this country will be where the Government goes to get more - where VAT decreases have had least benefit and where bank lending has decreased by £14.7bn during this crisis. It will be the base level tax that will be increased most, rumoured to be a further 7% shortly while those who have demands of 50% will find ways around the system by using tax avoiding accountants and lawyers.

It all stems from the first port of call in the financial failure - to save the necks of rich bankers with no strings attached. Now we are looking spiteful in attacking bonuses but that will not stop banks making vast profits on high risk activities associated with products that benefit no one but banks themselves.

Politics takes a different view. No one wants to home in on the problem and admit responsibility, so conveniently parties like the BNP blame all those people who do not have Celtic ancestry or have skin of a different colour. If only people like Griffin knew that the Gallic races are not of these islands either but that is the domain of unintelligent brutes, they shape history as they like to suit their needs - that's why in their eyes Jews either deserved what they got or it never happened. It is when the country and crisis hits us and we see our lot diminished we look to the daft answers.

The answer is that there is a shortage of homes to be sold in the £10m+ bracket. Go figure.

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