Labour's "Miracle" Economy

magic_pants

Personally I think there are too many posters giving credit to New Labour here. Certainly the previous Tory Government had their problems but I am in no way convinced any regime would have done any different faced with the ERM fiasco. I think that getting on for 10 years in Government is plenty of time to have carved out stability in the economy and, on the face of it, that's exactly what it looks like. However, as mentioned, scratch the surface and you see what an absolute sham it all is. The amount of borrowing by this Government has been enormous and the "Tax and Spend" philosophy of Gordon Brown just smacks of "Tax and Waste". But I think the whole aspect of consumer debt is what will be the undoing of the economy which has continued unabated for years. The de-regulation of the financial sector has had many positives for this country but for irresponsible lenders (and, I might add, borrowers!) it has been a disaster and will come back to haunt us as a nation. Nothing makes my blood boil more than seeing all the "Borrow this...", "Borrow that..." adverts on TV which, if you look at the channels and types of programmes they appear during are clearly aimed at certain demographics and, dare I say it, socio-economic groups C2, D and E which I find absolutely disgusting and people like Carol Vauderman should be thoroughly ashamed of themselves.

LizEstelle

Actually, before anyone gets too dewey-eyed about the golden era which preceded Tony and his cronies, let's not forget little things like the poll tax, Black Wednesday, double-digit inflation (and mortgage rates), teachers and nurses on supplementary benefit, boom followed by bust every couple of years and the wholesale destruction of local government and public infrastructure.

I've never been a fan of New Labour but I do know that political/economic reality, like most other matters, normally comes in shades of grey rather than black and white. The times we're living through may well NOT represent an economic 'miracle' but, like most people, I'll settle for 'ok-ish'!

ZTD

Sorry to spoil a political bun-fight, but they're all the same. Red, Blue, or Yellow - it's just different heads the same party. There is more difference in opinion between two members of the same party, than there is between the official policies of the three.

If you truly want a choice, you're going to have to go for the smaller parties. Even then, power corrupts.

I'm afraid our way has already been mapped out by those that have preceeded us. There will be more "bread" and more "circuses" until the populace snaps.

Allsmokeandmirrors

As I remember it, The Conservatives in the early 90's did have the same problem on their hands, being excessive debt, and sky-rocketing house prices. But back then, interest rates were increased, which put the brakes on the heated economy, which gave house prices the necessary push back downwards to reality they so needed..
At the moment, Labour seems totally transfixed on keeping us from facing the real truth, that house prices are probably 40-50% overpriced, and people have borrowed way, way above what they should have..
And how are they doing this? By keeping interest rates are low as they dare..

I don't think I'm overstimating the importance of house prices and personal debt, on the future of the economy.

High house prices are helping absoultely no-one but the banks, Estate Agents, the Government (through Stamp Duty etc), and those lucky enough to be able to sell up!

ZTD

The UK has been the 51st state of the US since WWII. Interest rates are set in Washington and rationalised in London.

Pobby

Allsmokeandmirrors wrote:

As I remember it, The Conservatives in the early 90's did have the same problem on their hands, being excessive debt, and sky-rocketing house prices. But back then, interest rates were increased, which put the brakes on the heated economy, which gave house prices the necessary push back downwards to reality they so needed..
At the moment, Labour seems totally transfixed on keeping us from facing the real truth, that house prices are probably 40-50% overpriced, and people have borrowed way, way above what they should have..
And how are they doing this? By keeping interest rates are low as they dare..

I don't think I'm overstimating the importance of house prices and personal debt, on the future of the economy.

High house prices are helping absoultely no-one but the banks, Estate Agents, the Government (through Stamp Duty etc), and those lucky enough to be able to sell up!

There really does seem a change in sentiment.A few years ago people were saying how wonderful things were becoming{if you owned your own home}.Now I see people very,very exposed to an economic change.people with really high mortgages,folks with large personal debt.Do I feel ``richer`` because my house has increased by 250%?Not a jot.The last thing on my mind would be to draw equity out of it but many have done so.It just a pain in the butt for first time buyers having to pay for ill value homes.

In the past there has been property booms but by and large they have been accompanied by high wage inflation.This I can understand.This time it hasn`t happened.How dangerous is that?

The BOE is now ``independent``!! yea right!}.It`s main task is to use interest rates to stop rampant inflation.The way we value inflation is open to all kinds of perverse practices.Now lets say that we used housing costs,utilities and rising council tax,clearly we would arrive at a figure that greatly exceeds the 3% or so that the government would have us believe.The bank would be forced into raising rates in a dramatic fashion.

With the amount of debt it would cause economic melt down.However,imho,this is a time bomb waiting to explode.Glad I am not intending to get G.Browns job in the next few years!

tomstickland

At the age of 34, I have thankfully not been fooled into taking out more credit than I absolutely need, and I'd really like to trade up to a bigger house, but the increase I'd need to make on the mortgage would put me in the "over-indebted" category. So I sit tight, hoping, and waiting for reality to bite, when house prices fall, and I can then trade up.
Give it another 5 years, and my financial prudence should pay off.

Am I alone in these views?

No, I'm the same. I'm 33, borrowed the minimum for an acceptable flat to live in, no credit. I have no "MUST HAVES". Keeping up the joneses is a waste of time. Who cares what they think? If they're impressed by a new car which someone can't really afford then they're stupid.

elantan

but then tom you have that beautiful bike and seat lol

ollyk

Hereward wrote:

The changes in the insolvency rules were enacted to allow more entrepreneurs to start their businesses and continue the growth of the economy: it was not the intention of the government to make it easier for individuals to avoid their debts, although this has happened to some extent.

I am sorry but that is utter rubbish! It is just too much of a coincidence that we are living in a period that is seeing record levels of debt and that such a change could be introduced! Also what better way of keeping a 'smoke and mirrors' economy ticking over by introducing incentives to start riskier business..?

Allsmokeandmirrors, great post. Lets keep our fingers crossed for a FEW more rate rises hey? :beer: :j

Hereward

ollyk wrote:

I am sorry but that is utter rubbish! It is just too much of a coincidence that we are living in a period that is seeing record levels of debt and that such a change could be introduced! Also what better way of keeping a 'smoke and mirrors' economy ticking over by introducing incentives to start riskier business..?

Allsmokeandmirrors, great post. Lets keep our fingers crossed for a FEW more rate rises hey? :beer: :j

The insolvency laws were changed before people began to realise how much debt was funding the UK's economy. Small and Medium Enterprises (SMEs) are the power house of the UK economy, the insolvency rules were changed to enable more people to start their own businesses without the worry that they would be financially scared for six years if they failed. The rule changes were designed to help those who had the entrepreneurship skills continue to start businesses, even if there previous ones failed, rather than have to claim any state benefits.

Once the rules had been relaxed, the general public began to realise that they could discharge their debts far more easily than in the past, which is exactly what the began to do; unfortunately, some of the people who chose this route did not learn any lessons about money management and began to run up large debts again (this time with poorer credit ratings).