Last Sunday I was listening to “Broadcasting House” (aka “B.H.” to fans) on Radio 4; one of the highlights of my listening week.
First up, there appeared to be a wonderful opportunity to find out what two heavyweight economists thought of the current situation and of the government’s policies. They were Lord Desai and the current professor of the subject at Cambridge, whose name I’ve sadly forgotten and probably won’t get around to checking. Sadly, the discussion didn’t convince me that economics, famously called the dismal science, is really a science at all. Their responses to a simple question of what tests we should apply to the new measures to decide their possible efficacy were predictably obscure; at least they were to me. No matter how brilliant these men must be, their communication skills left much to be desired. You’d think the BBC could have wheeled out two better communicators. As there are now chairs for the public understanding of science, and as economics is a sort-of-science, there is a strong case for creating a post of Professor (at the University of Life, of course) for the Public Understanding of Economics. Neither of these two luminaries would have got my vote.
B.H. presenter Paddy O’Connell, however, does get my vote, as an interviewer able to mix gravitas and humour according to the weather conditions. (I’m not joking; he even interviewed people queuing for the grand re-opening of the pier at Weston-super-Mare, during a downpour) I particularly liked the way he chaired the segment where guest reviewers cover the Sunday papers. Sunday’s panel comprised Craig Brown, whom I found disappointing for such a well-known columnist; there was a novelist whose name has escaped me, and the find of the day, Emma Harrison, who runs a recruitment agency called A4E, specialising in helping long-term unemployed people back into work; a worthwhile purpose and seemingly a delightful person to boot.
While many other people on the show, including her fellow-panellists, seems too be recycling the gloom-and-doom aspects of the media’s response to the UK government’s cuts package, Emma Harrison was a lone voice proposing a more positive approach. As the person who clearly had the most experience of working with the people who potentially could be among the worst affected (if the cuts are indeed regressive – see an earlier post) it was encouraging to hear her say that the glass-half-empty approach that tends to be favoured by our media (bad news sells papers, dear boy) can be totally counterproductive. Well said Emma; she’s the only guest on the whole show whom I shall look up on Google.
Finally, a piece about corgis was narrated by Tom Conti. Maybe he needs the work these days but why choose a Scots actor, seemingly exaggerating his native accent, to read a not particularly funny (IMHO) monologue in the person of a dog that is famously Welsh. (This last item is from my “I think you’ll find …” Department of Pedantry). Maybe there was some comic subtlety about this that passed me by.
Finally, I heard a new definition: an optimist is someone who picks up the crossword with pen in hand.
Despite my gripes on this occasion, B.H. still rules for me.
Wednesday 27 October 2010
ECONOMY GROWING FASTER THAN EXPECTED BUT PERSONAL DEBT WORRIES PERSIST
The UK's economy grew at 0.8% between July and September according to official figures from the Office for National Statistics (ONS). That growth is double the 0.4% expected by most analysts.
"This is the second major GDP growth surprise in a row and suggests that the UK economy is more resilient than many had feared," said James Knightley, economist at ING.
"The government will no doubt take this as a sign that the private sector can fill the gap created by public sector cuts, but with consumer confidence, hiring intentions surveys and housing activity data all softening we remain cautious."
The key is that phrase “hiring intentions”. I am a glass-half-full person, so I like to focus on the facts that the GDP increase is double what was expected and that it’s the strongest third-quarter figure in a decade, according to the BBC’s Stephanie Flanders.
However … a growth in GDP does not necessarily – and quickly – improve the lot of the majority of people in this country, particularly those who are already in debt or who face losing their jobs as a result of the recently-announced spending cuts. Our economy is still rather dependent on relatively non-labour-intensive sectors, e.g. financial services, so today’s good news is “necessary but not sufficient”.
Until those “hiring intentions surveys” also show a rise, there will still be large numbers of people going into bankruptcy or taking out an IVA (a Protected Trust Deed in Scotland).
I too was in that situation not so long ago. However I found another way, which I detail in my book “Back to the Black: how to become debt-free and stay that way.”
What is also encouraging is that construction seems to be showing the strongest gains in the last couple of quarters, as this would lead to job creation more than some other sectors.
To quote Stephanie Flanders again: “There is still plenty to worry about in this recovery: much of it beyond our shores, and beyond the government or the Bank of England's control. But for today at least, I think we're allowed to join the cabinet in a sigh of relief.”
Here’s a link to that Stephanie Flanders piece: http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2010/10/good_news_on_gdp.html
If you want to know more about how I personally escaped the threat of bankruptcy and IVA and found another way, go to www.back-to-the-black.com
"This is the second major GDP growth surprise in a row and suggests that the UK economy is more resilient than many had feared," said James Knightley, economist at ING.
"The government will no doubt take this as a sign that the private sector can fill the gap created by public sector cuts, but with consumer confidence, hiring intentions surveys and housing activity data all softening we remain cautious."
The key is that phrase “hiring intentions”. I am a glass-half-full person, so I like to focus on the facts that the GDP increase is double what was expected and that it’s the strongest third-quarter figure in a decade, according to the BBC’s Stephanie Flanders.
However … a growth in GDP does not necessarily – and quickly – improve the lot of the majority of people in this country, particularly those who are already in debt or who face losing their jobs as a result of the recently-announced spending cuts. Our economy is still rather dependent on relatively non-labour-intensive sectors, e.g. financial services, so today’s good news is “necessary but not sufficient”.
Until those “hiring intentions surveys” also show a rise, there will still be large numbers of people going into bankruptcy or taking out an IVA (a Protected Trust Deed in Scotland).
I too was in that situation not so long ago. However I found another way, which I detail in my book “Back to the Black: how to become debt-free and stay that way.”
What is also encouraging is that construction seems to be showing the strongest gains in the last couple of quarters, as this would lead to job creation more than some other sectors.
To quote Stephanie Flanders again: “There is still plenty to worry about in this recovery: much of it beyond our shores, and beyond the government or the Bank of England's control. But for today at least, I think we're allowed to join the cabinet in a sigh of relief.”
Here’s a link to that Stephanie Flanders piece: http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2010/10/good_news_on_gdp.html
If you want to know more about how I personally escaped the threat of bankruptcy and IVA and found another way, go to www.back-to-the-black.com
Friday 22 October 2010
THOSE CUTS: PROGRESSIVE OR REGRESSIVE?
Are the measures announced in HM Government’s Comprehensive Spending Review progressive or regressive, i.e. do they favour the poorest or the richest, relative to their respective incomes? Or are they totally fair, as claimed? You might well think that this debate has been flogged to death, so I won’t add my inexpert economic analysis; however the Institute for Fiscal Studies (IFS) now states their view that they are on balance regressive.
That’s also the view of Tim Harford, presenter of “More or Less”, one of my favourite radio programmes. Here’s a clip of what he said on the radio on 21 October: http://news.bbc.co.uk/today/hi/today/newsid_9113000/9113265.stm
(BTW, I found that clip easily, from the very user-friendly “Today” website. The programme is of course a National Treasure, though that other NT, Sandi Toksvig, says: “I love the Today programme: twenty minutes of news, crammed into three hours”)
That’s also the view of Tim Harford, presenter of “More or Less”, one of my favourite radio programmes. Here’s a clip of what he said on the radio on 21 October: http://news.bbc.co.uk/today/hi/today/newsid_9113000/9113265.stm
(BTW, I found that clip easily, from the very user-friendly “Today” website. The programme is of course a National Treasure, though that other NT, Sandi Toksvig, says: “I love the Today programme: twenty minutes of news, crammed into three hours”)
Wednesday 13 October 2010
CONSUMER CONFIDENCE INDEX
Nowadays, consumer confidence is taken as an even more important barometer of the economic health of the UK than is any index of industrial output. That’s why it was rather depressing to read this morning that confidence is at its lowest level for more than a year, according to a monthly confidence index published by the Nationwide Building Society. This drop is, of course, in anticipation of the spending cuts to be revealed in the Comprehensive Spending Review next week.
Experts at the British Retail Consortium predicted that the figure would be “volatile” until after the impact of the cuts was known, which seems to me “a PhD in the bleedin’ obvious”. However when we actually look at the numbers, I wonder how meaningful is this “index” and the media coverage it’s had. The September index was reported by the BBC to have dropped by 9 to 53 in September. Thus a drop of 15%. In a month. By contrast, it rose 10% in August. Can both figures really be true? Of course I realise that recent announcements of planned cuts could have prompted a drop this large; however I have looked at the Nationwide website and it’s clear that this index fluctuates greatly almost every month. It was only 45 a year ago; moreover it was 100 only a couple of years before that, at a time when the credit crunch was already well underway. Surely a more meaningful measure of confidence is actual retail sales?
This is clearly a case for study by BBC Radio 4’s excellent programme “More or Less”, which looks more deeply at numbers in the news, especially when they might have been misrepresented (Can that really happen? Shock, horror!). Naturally, most of us know only what the media tells us about the impact of the cuts. For example, I thought I read at the start of the process that the spending reductions would be spread over 4 years or so; however, we never hear that fact nowadays. Whenever the media talk about, say, 25% cutbacks in departments that are not being ring-fenced, the stories give the clear impression that the cuts and the resulting job losses will be more or less immediate.
A related example: one of our allegedly serious papers carried an interview last week with a single mother who would be seriously affected by the recent decision to restrict total benefits payments to UK average income. The article clearly stated that Ms X would have to consider a move out of London, away from family and friends, “within the next couple of months”. However the benefit limit decision will not be effective till 2013; a fact that was not mentioned in the story. Why not? Could this omission be because bad news sells papers? Am I being too cynical?
Here’s my point: the tendency of many media outlets sometimes to oversimplify and usually to paint the worst possible picture of any new development adds further to the stress on people who are already in debt or who think they might be in the future. It’s important to put things in perspective and that’s something that’s hard to do after reading some of our doom-and-gloom media coverage. As that old French philosopher said (at least I think he was a French philosopher, but my information comes from the media), “my life is full of great disasters, most of which never happened”.
If you have concerns about your own debts, read my book “Back to the Black” about the necessity of putting your financial situation in perspective before deciding your response to any demands from your creditors; or any piece of bad news you read in the press.
Experts at the British Retail Consortium predicted that the figure would be “volatile” until after the impact of the cuts was known, which seems to me “a PhD in the bleedin’ obvious”. However when we actually look at the numbers, I wonder how meaningful is this “index” and the media coverage it’s had. The September index was reported by the BBC to have dropped by 9 to 53 in September. Thus a drop of 15%. In a month. By contrast, it rose 10% in August. Can both figures really be true? Of course I realise that recent announcements of planned cuts could have prompted a drop this large; however I have looked at the Nationwide website and it’s clear that this index fluctuates greatly almost every month. It was only 45 a year ago; moreover it was 100 only a couple of years before that, at a time when the credit crunch was already well underway. Surely a more meaningful measure of confidence is actual retail sales?
This is clearly a case for study by BBC Radio 4’s excellent programme “More or Less”, which looks more deeply at numbers in the news, especially when they might have been misrepresented (Can that really happen? Shock, horror!). Naturally, most of us know only what the media tells us about the impact of the cuts. For example, I thought I read at the start of the process that the spending reductions would be spread over 4 years or so; however, we never hear that fact nowadays. Whenever the media talk about, say, 25% cutbacks in departments that are not being ring-fenced, the stories give the clear impression that the cuts and the resulting job losses will be more or less immediate.
A related example: one of our allegedly serious papers carried an interview last week with a single mother who would be seriously affected by the recent decision to restrict total benefits payments to UK average income. The article clearly stated that Ms X would have to consider a move out of London, away from family and friends, “within the next couple of months”. However the benefit limit decision will not be effective till 2013; a fact that was not mentioned in the story. Why not? Could this omission be because bad news sells papers? Am I being too cynical?
Here’s my point: the tendency of many media outlets sometimes to oversimplify and usually to paint the worst possible picture of any new development adds further to the stress on people who are already in debt or who think they might be in the future. It’s important to put things in perspective and that’s something that’s hard to do after reading some of our doom-and-gloom media coverage. As that old French philosopher said (at least I think he was a French philosopher, but my information comes from the media), “my life is full of great disasters, most of which never happened”.
If you have concerns about your own debts, read my book “Back to the Black” about the necessity of putting your financial situation in perspective before deciding your response to any demands from your creditors; or any piece of bad news you read in the press.
Sunday 10 October 2010
BBC RADIO BRISTOL INTERVIEW NOW ONLINE
My interview on BBC Radio Bristol is now online at the "Audioboo" site: http://audioboo.fm/michaelmac43
Wednesday 6 October 2010
IN PRAISE OF MANUFACTURING
A most interesting piece on the Today programme this morning, (about 07:15, if you want to find it on iPlayer) about the importance to our economy of the manufacturing sector in general and of small businesses in particular. I switched on part-way through but the interviews I heard were with companies in the Jewellery Quarter in Birmingham; they were honoured in this way, not doubt, solely because the Conservative conference is in the city right now. The excellent presenter (James Naughtie, I think) and his interviewees together made the point that successive governments and the banks have failed to provide the environment where manufacturing could prosper (it’s now a shamefully small proportion of GDP) but that fact has been known for years. But their final clincher was one that had previously escaped me, obvious though it may be to you, dear reader: other things being equal, (which they never are) every new job created in manufacturing will contribute to the creation of far more jobs in supporting businesses than any new job in the service sector. Maybe this fact has always been obvious to the German government and that’s why both their small / medium business sector and manufacturing have been supported by more than words and maybe that's why their economy is both more healthy and more sustainable than ours.
We’ve often been told about the “trickle-down” theory, i.e. that increased wealth at the top will trickle down to those lower in the food chain (does this justify those massive banking-sector bonuses? Discuss). Maybe it works, maybe not, but this morning’s message about the crucial importance of our manufacturing sector could be called the trickle-round theory. Or the ripple theory. Whatever we call it, I hope that Messrs Cameron, Osborne and Cable were listening to the radio at the same time as I.
Sadly, after that excellent segment normal service was resumed; a piece about Sainsbury’s increased profits followed by one about the will-they won’t-they sale of Liverpool Football Club. The football story was repeated at least four times, I think, between 7:30 and 9:00; the manufacturing story was not. Perhaps that shows where our national priorities lie. No wonder the country’s in the same kind of debt crisis as Liverpool FC but, unlike them, we don’t have an American white knight on the horizon.
We’ve often been told about the “trickle-down” theory, i.e. that increased wealth at the top will trickle down to those lower in the food chain (does this justify those massive banking-sector bonuses? Discuss). Maybe it works, maybe not, but this morning’s message about the crucial importance of our manufacturing sector could be called the trickle-round theory. Or the ripple theory. Whatever we call it, I hope that Messrs Cameron, Osborne and Cable were listening to the radio at the same time as I.
Sadly, after that excellent segment normal service was resumed; a piece about Sainsbury’s increased profits followed by one about the will-they won’t-they sale of Liverpool Football Club. The football story was repeated at least four times, I think, between 7:30 and 9:00; the manufacturing story was not. Perhaps that shows where our national priorities lie. No wonder the country’s in the same kind of debt crisis as Liverpool FC but, unlike them, we don’t have an American white knight on the horizon.
Sunday 3 October 2010
UK DEBT STATISTICS SHOW WRITEOFF RATE INCREASING
The latest UK debt statistics, courtesy of Credit Action, show two interesting trends.
Firstly, the “write-off rate” on consumer lending by UK monetary financial institutions to individuals increased further in the second quarter 2010 to 7.4%. In this quarter, UK banks and building societies wrote off £3.47bn, most of which was credit card debt. In the 12 months to the end of August, they wrote off £10.9bn of loans to individuals.
Secondly, they reported that average household debt in the UK is ~ £8,590 (excluding mortgages) but this figure increases to £17,896 if the average is based on the number of households who actually have some form of unsecured loan. That’s a drop from £22,000 when I last looked, about 6 months ago, which shows clearly that people have been paying off debt.
By the way, if we include mortgage debt, then average household debt in the UK is now about £56,690.
The report concluded that total UK personal debt at the end of August 2010 stood at £1,428bn, a slight increase. Based on that, the people at Credit Action still make the statement that I quoted in my book “Back to the Black”. In their words: “Individuals owe more than what the whole country produces in a year.”
Firstly, the “write-off rate” on consumer lending by UK monetary financial institutions to individuals increased further in the second quarter 2010 to 7.4%. In this quarter, UK banks and building societies wrote off £3.47bn, most of which was credit card debt. In the 12 months to the end of August, they wrote off £10.9bn of loans to individuals.
Secondly, they reported that average household debt in the UK is ~ £8,590 (excluding mortgages) but this figure increases to £17,896 if the average is based on the number of households who actually have some form of unsecured loan. That’s a drop from £22,000 when I last looked, about 6 months ago, which shows clearly that people have been paying off debt.
By the way, if we include mortgage debt, then average household debt in the UK is now about £56,690.
The report concluded that total UK personal debt at the end of August 2010 stood at £1,428bn, a slight increase. Based on that, the people at Credit Action still make the statement that I quoted in my book “Back to the Black”. In their words: “Individuals owe more than what the whole country produces in a year.”
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