Wednesday, 27 March 2013

Merryn Somerset Webb's Look-alike News

LAST Saturday in the Financial Times, Merryn Somerset Webb argued that the there was little to chose between the crisis in Cyprus over 'a shock tax on bank deposits' and the British Budget with 'its sad admissions of failure (on budget deficit and growth) and its slightly bonkers-sounding solutions (looser monetary policy and more buying and selling houses).'  She wrote:  'these weren't different stories, just different aspects of the defining story of the decade'.  What's happening now is that big debts have been run up by sovereign states and now they're all trying to 'scam voters into paying them off.'

Clearly, Cyprus is in a bad way, but because our politicians are more subtle they can cover-up what's happening in a British way by simply depriciating our currency and going in for 'quantitive easing'.  Ms. Somerset Webb writes that this is not much better than the brutal Cypriot method threatened last week; merely more smooth. 

At has been calculated that if you'd put your money on deposit in the UK for the last 4-years that you would be worse off than if you'd kept it in Cyprus and endured the tax loss threatened last week.  Of course, this Cyprus tax of last week has now been modified, and will only impact on deposits of over 100,000 euros (£85,000) when the banks eventually open there.

Ultra low interest rates and inflation which is relatively high compared to the interst rates, means that it is impossible for savers in this country to make any return on savings that is real when allowing for inflation.  Cash is certainly not King at the moment, and judging by the Chancellor's recent utterances, he seems determined to drive up house prices in anticipation that the feel-good factor that this produces among middle-class voters will help the Tories in the 2015 General Election.  Some pundits are now talking of a kind of growing 'apartheid' in British society between those who own their own houses, and a younger generation who stand no chance of buying a home until prices come down.

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