Britain's Debt Pandemic - New Statesman. Is economic meltdown on the way ?

Like hell it is. Real-world inflation is more like 7% right now.

Right. And after 40% tax, that 5% is 3%... which is less than half the real rate of inflation: saving ain't worth shit if you actually have any decent amount of money to save.

Houses alone have inflated 15-20% per year in the the last few years... I take it you don't spend any money on housing either?

Mark

Not long ago I got a bill for someone I'd never heard of mailed from a dentist. (Not my name) When I rang them they said they treated people without checking for ID and have never had a problem before. So they give credit to this person who gives a false address. Just shows how easy credit is to obtain.

I had another several letters to someone who had borrowed in three different ways from the Halifax using a garbled address which was partly mine. (But not my name)

No wonder people are in trouble with debt when even big banks don't check adequately in their desperation to get business.

I was reading in the Mail today about identity theft. One woman was arrested on the basis she was someone else.

But the money you spend on housing -- in the form of your rent or your mortgage payments -- isn't subject to this inflation, is it? They don't go up each month as the value of the property rises.

And, of course, if you really want to, you can save your money in property bonds (though they primarily concentrate on commercial property, since that's a lot easier for a fund to manage commercial properties than residential ones).

Steve

X-No-Archive: yes In message , Geoffrey Mortimer writes

I've been saving for 35 years, ever since I threw-up a secure job and an index-linked pension and became a freelance in a feast or famine profession. I had a mortgage in those days and two school age sprogs who seemed to be going on foreign trips every bloody term.

Before doing so I saved hard so that we had enough money to live on for a year. We survived and ever since then I've concentrated on saving and have never felt comfortable unless I'm doing so. I have a paranoia about debt even today, and always pay off my credit card in full. Over the years tax demands made occasional large holes in my savings but I always paid them. All through the 1980s and 1990s I was stuffing money into a private pension fund. Large cheques were often paid into the fund as single premium payments. In 1997 the fund was switched into a SIPP which I'm now drawing down as a quite obscene pension I have little need of so, guess what? I save it.

Yes... My whole life has centred around savings. I've even had a national savings account until recently which had been started when I was six.

Go back near 50 years to 1958 and my then fiancee and I had to take part-time jobs to save the twenty per cent deposit on a GBP3000 flat! In

1958 GBP600 seemed an awesome amount. A year's pay. We managed it by 1960.

Saving? Yup -- tried it and it works.

None of the above is a result of any great probity on my part. More a fear of debt as a consequence of being a kid living with relatives who used to hide when the rent collector or tallyman called. That sort of thing leaves an impression.

X-No-Archive: yes In message , snipped-for-privacy@aol.com writes

I can believe it. When I recently took back a flat from a tenant who had suddenly terminated his lease, I was astonished to discover that the electricity key meter had been substituted for an account meter.

I learned that Southern Electricity had switched the meter on the say so of a telephone conversation with the tenant without bothering to check with me.

I suspect that's because they have no right to know.

As a landlord, I don't think that you can restrict where the tenant gets his leccy from unless you resell it to him via a communal meter.

tim

And because it's cheaper to buy goods out of savings and the interest earned on them than it is to buy them by borrowing the money and paying interest on the loan unless the goods are subject to price inflation higher than the interest on your savings.

Steve

X-No-Archive: yes In message , "tim (moved to sweden)" writes

The landlord has every right. My leases are standard and ban removal or alteration of fixtures and fittings without the written consent of the landlord. An electricity meter is about as fixed as they come.

But you NEVER buy investments through a bank. Buy them through a funds supermarket.

Are these sales, or sales adjusted for floor space? AIUI retail sales are adjusted to produce like for like, where that is based on floorspace. So if you had 100Sq ft of shop and sold 100, then next year increased your floor space to 150Sq ft, you'd have to sell 150 just to say that sales remained flat. This might be a fair way of measuring your efficiency, but it says nothing about what the public are buying, since in this example they bought

50% more but the shops would give the impression they didnt buy anything more.

What savings rates are these, and what do you recon is the real rate of inflation?

I can get 5% tax free on savings up to £250 a month.

You do however have a good point here.

As we say at work designed... that implies someone thought about it.

Yes, but it's not yours, so I suspect that you have no rights over it at all.

You mean it's the tennant that's their customer not the landlord?

What about if you make it a condition in the contract. My contract with my current letting agency says I can't change suppliers without getting permission from them.

Can't he make not changing it a condition of the tennancy agreement?

OK that won't stop the electricity company changing the meter, but will mean that he can withold deposit etc if it happens.

On Thu, 20 Oct 2005 18:35:30 +0100, GSV Three Minds in a Can mysteriously appeared thru the usenet mist to inform us thus...

You are referring to official inflation. abelard will tell you this is not the same as true inflation (higher) and also, inflation differs from one person to another. Those worst hit by inflation include those on fixed incomes and those who live from hand to mouth.

You only have to look at gas/elec/water/council tax increases to see true inflation for these people is much higher than published data.

So what is true inflation?

Certainly, for me inflation has been negative for some time - most of my expenses, flights, food, clothes have all significantly come down in price.

No, because ignoring the other areas where prices are falling does not give a true picture.

Jim.

X-No-Archive: yes In message , hummingbird writes

I can't help wondering if the huge influx of very reasonably priced Chinese goods into the UK has kept inflation down in a small way. Is there anything the Chinese don't make? My new shredder is made in China, as is just about everything else. All good quality, too.

Sadly this is the time of year when otherwise useful stores forget their core business and clear out their bread and butter stock to make way for masses of Chinese-made plastic Christmas trees, wrapping paper, crackers, miles of tinsel and so on. They rarely seem to pass on the benefits of their bulk-buying to their hapless customers.

On Fri, 21 Oct 2005 10:57:36 GMT, snipped-for-privacy@jibbering.com (Jim Ley) mysteriously appeared thru the usenet mist to inform us thus...

Read lardy's site:

He explains the difference between govt RPI and true inflation. Govt RPI is a huge contrick.

That's what happens for lucky people who spend more of their income on such items, including consumer electronics etc. But it's not the case for those who spend a large proportion of income on 'essentials'.

I also question what the actual inflation is on many food items. I can think of many items which have gone up by far more than published inflation over time - eg potatoes from 6p-10p/pound to 50p+/kilo in five years.

[ My local club/bar has just increased the price of bottled mineral water by *50%* to £1.50 for 330ml. It was increased by ~20% only one year ago at the same time the brand was changed from Vittel to some shoddy unknown cheaper brand packed in inferior plastic bottles. Mineral water now costs 4 1/2 times more than petrol! ]

I also question your claim on flight prices. ISTM airlines are imposing surcharges nowadays due to high oil prices.

You miss my point about the pattern of spending for different people. A retired single person on state pension who lives in their own home doesn't spend much money on "expenses, flights, food, clothes" as you do. They have to pay the essential household bills which have gone up by far more than published inflation for some years. By contrast, you are offsetting these increases with your spending on goods which have gone down in price. Oldies don't have that luxury.

Well it's not accurate certainly, but as you admit no two people buy the same things.

Er, food and clothes are essentials, they've been falling a lot, if you're not rich enough to afford the council tax in your expensive house, move somewhere smaller.

Where do you pay over 50p a kilo for spuds? You should try using cheaper shops...

That's likely your club, perhaps drink tap water... Certainly bottled water from the supermarket has not changed in this manner.

My first flight to Italy 10 years ago efficiently bought at the time for the minimum price, was more expensive than the 8 flights combined I've taken since, flights have plummeted in the last 10 years, and have not significantly increased in the last couple.

No I don't, you cannot claim that the _true_ inflation rate is a particular value (you claimed 7%) because that may well be true for some people, however for some other people it's negative, as you now say it completely depends on what they spend it on.

No, but they have their own home, which they choose to keep and are therefore having to pay more council tax, if they didn't choose to do so, selling that large asset and moving somewhere smaller would certainly do more to improve their cash situation than moaning about RPI.

And young people don't have the large housing assets either, that's why we smooth out the spending throughout our lives, you should expect an old person to be spending more than they're earning - reducing assets.

Jim.

And abelard's site is impossible to read anyway.

Are you suggesting OAPs are buying bottled water in clubs? As an

*essential*? I'd ask for tap water meself.

Indeed, which is precisely why 'baskets' of commodities are used, rather than one single item. RPI or any other measure can only ever be a general indicator; some essentials are staying the same price, or getting cheaper (eg food, clothing) while others are getting more expensive (gas/leccy, council tax). An argument that does have some force is that OAPs may find it harder to get to cheaper outlets for food and clothing, so are forced to pay over the odds at corner shops and such.