Wednesday 20 November 2013

Call that a recession?

The Bank of England has just announced that it may well elect to hold interest rates at their current historic low even if the rate of unemployment falls below the critical figure of 7% earmarked by the new Governer. 95% mortgages are springing up like wild fire and this week we learned that the Co-Op bank agreed to appoint a fromer Methodist Minister as its CEO. This decision was taken after the banking crisis of 2008. We had been assured that appointments to such positions would be subjected to the closest scrutiny. Another empty assurance.

House prices are rising at levels even greater than we saw before the market collpase of 2008. Frankly, all this can only ever lead to another, bigger collapse than the last one. Our levels of persoanl debt have also continued to rise in spite of the so-called "austerity cutbacks". There are two conclusions which may be drawn from this. One is that people aren't as hard up as they say they are. The other is that people are just borrowing their way out of trouble blissfully aware that they haven't a cat in hell's chance of paying it back. Sadly, the statistics favour the latter over the former.

One of the biggest flaws in the measures to address our woes in the wake of 2008 was the failure to recognise and reward savers. It is the latter which will set the country on a sustainable course of recovery. Although it will take longer, it will be genuine and weather any storms. Instead the country appears to be borrowing it's way out of trouble. We might as well have Ed Balls as Chancellor and just go the whole hog!

On any level, this is lunacy. We are merely replicating the days of Labour under Brown and Blair. History has shown us where that led. To do so again beggars belief. Surely the Government has an ounce of common sense? Fuelling another housing bubble and financing HS2 do not seem a sensible way to address our growing national debt. As the Archbishop of York has highlighted this week, there have never been so many people earning a wage who can't make ends meet. Why is that?

I suspect that our inclination to compromise has a lot to do with it. Of course fuel is more expensive and food inflation is crippling but I can't believe how many people are letting themselves fall in to debt. I also can't believe how little our Government is doing to deter them. Companies such as Wonga must think it's Christams every day at the moment!

Speaking of Christmas, if the levels of debt are high now, I shudder to think what they will be come February when the inevitable credit card bills gently plop on to a million door mats. Much has been written about the future of the church this week as the argument over women bishops rages on. The fact is that the church should be at the forefront of efforts to tackle the avarice driving our debt levels. Avarice is one of the great evils of our age which is not exactly helped when we have high profile public figures such as Simon Cowell proclaiming school to be a waste of time when all you really need is a bit of luck.

The next banking collapse will make the last one look like a ripple on a mill pond. We need to act quickly before the ripple becomes a tsunami...

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