Talking down the economy

SGE1

Mayor of London Boris Johnson said earlier this week, "There is a risk of us all starting to sound like a suicide cult".

Now I'm not normally one to agree with Boris on anything, but I do think he has a point.

Confidence is at the root of all things, including the stock market, and the banking system. As that drops, people sell their shares and withdraw their deposits, and as a result, £billions of wealth are wiped out in an instant, and banks begin to fail. This leads to classic prisoner's dilemma circumstances: the benefits of all acting together (i.e. keeping our money in the banks, and not selling our shares) far outweighs those of people acting individually of each other (i.e. people selling and withdrawing) - but as everyone wonders what everyone else is about to do, knowing that it would only take a minority of 'defectors' to ruin general well-being, salvaging your own skin becomes more important. And so everyone panics.

Surely the way to break the cycle is not to hysterically blather on about how much worse things could get, if the very action of talking about it is likely to bring it about, at least more quickly than it would have occurred otherwise?

This is all independent of actual economic circumstances, I appreciate that, and no doubt things still wouldn't be great if everyone put their happy hat on, but I can't help feeling that they would be better off than they are now.

mbga9pgf

You dont happen to have a large BTL portfolio do you?



What we supposed to do? Pretend e are happy that our banks are bankrupt?

That 4 million will be unemployed by 2011?

That the taxpayer, the taxpayers children, and the taxpayers childrens children will be paying off the debt we ran up in a 10 year boom of greed?

mizzbiz

Okay, so the public should be confident and spend their money while investment bankers rub their hands with glee as they use us to short shares and make a fortune off the back of our stupidity, with the end result being the same, whether we are confident or not.

Scepticism only in my corner.

Kez100

Confidence has all but gone, that is true.

What we deserve is to know is that all of our deposits are safe if held in the UK FCSCS covered banking institutions (or whatever it is called). Be it 100% guarantee for all personal, business, public sector, and charity (and anyone else I have forgotton) or nationalisation, I don't care.

We need to be able to get on with our lives (what is left of them) without that worry over us.

Banks have lied before so now trust has been destroyed and only time passing will rebuild trust; it won't come overnight. 50k is all well and good for some but it needs to cover everyone for everything on normal deposit.

macaque_2

SGE1 wrote: »

Mayor of London Boris Johnson said earlier this week, "There is a risk of us all starting to sound like a suicide cult".

Sentiment is important but so is honesty. The current mess is product of spin and denial. Our long term health as an economy relies on us facing some harsh truths about our work ethic and spending habits. If we are going to pretend that we can go on relying on mew, overstaffing in the public sector and benefits as a substitute for productive work, we will never get back on our feet.

skap7309

SGE1 wrote: »

Surely the way to break the cycle is not to hysterically blather on about how much worse things could get, if the very action of talking about it is likely to bring it about, at least more quickly than it would have occurred otherwise?

People have a right to know. I would like to know where all my taxes are going as they try to prop up the good times which -

A) Is not working
Are going to ensure taxation is put through the roof for the next 10 years.

A downturn can be a good thing as it clears the 'crap' that has built up in the system over the years. I.E. Personal debt and false wealth.

john.xs

overstaffing in the public sector. are you having a laugh. you obviously havent been in my hospital!!!!!!!!!!!

chopperharris

Listen people your fogetting the big debt , london olympics prices.

Maybe boris is downplaying for the figures.

And anyway how come theres not been a cardiff, belfast , or edinburgh olympics when london already had its shot before?It woudl have worked out bloody cheaper too.

mvengemvenge

SGE1 wrote: »

Confidence is at the root of all things

No, I'm afraid it isn't.

Confidence is at the root of only two things in the current climate. One is banking an finance, the other is people's willingness to go out and spend some disposable income on goods in shops and other places.

Many other things affecting people are factual. If you want a loan for a car, you can't get one. No amount of confidence will change your bank manager's mind. If you want a mortgage, you need a much larger deposit than you have recently. No amount of confidence will make your lender give it to you deposit-free. People are losing their jobs (for many this is their first recession), and no amount of confidence will change the dramatic loss of income many people are experiencing, and not all of these people are losing jobs just because their boss has 'lost confidence', usually it's because he/she has no choice.

Personally, I think this enforced return to 'old values' (ie having to save up for things you want) is no bad thing in itself, but for many, many people it is a big culture shock after years of being able to buy things at the drop of a hat.

My personal 'message' to people would not be 'keep being confident', but 're-assess your priorities in life and place less importance on material possessions'.

But hey, that's just me...

Sapphire

What I cannot stomach is that the bankers, even those working for institutions bailed out by the taxpayer, are still earning massive bonuses and pay increases (there's been a lot about this in the Grauniad and ST, for example), instead of being prosecuted for what they've done. Under Callaghan, didn't the main people who had been responsible for the problems at that time get prosecuted? Weren't regulations tightened up after then? Why are those who are getting kicked out of failed financial institutions getting massive pay-offs for bankrupting the country? Why isn't this obscene group of people calling itself the 'government' doing something about bringing in regulation? Why is this 'government' still in power? What will it take???

Word's fail me...

StevieJ

I included this link from the Sunday-Times on the Rogers thread, I think it sits quite well here.

http://business.timesonline.co.uk/tol/business/columnists/article5580642.ece

Most journalists appear to see benefit to their careers by wallowing in the mire, at least this article tries to apply some perspective.