Credit Crunch bites the Indebted

I must be one of the few people enjoying the headlines generated by the "credit crunch".

For too many years, too many people have been adopting a buy now pay later mentality. Swapping leisure time and consumer goods in the present for a life of indebtedness to repay it all back. The problem has been aggravated by the hidden tax levied by governments - inflation, which reduces the value of these debts over time.

Well, to try and keep the Inflation Nation on the rails, the government keeps dropping interest rates, even though common sense of rising commodity prices and increased money supply indicate it should be doing the opposite, if it really wanted a well-managed, sound currency of lasting value.

Funny thing is, despite official government lower interest rates, free market rates are having to apply to the money banks are lending each other through LIBOR. Could this be the beginning of the irrelevance of government rate-setting?

Council Tax and Worker Pensions

A recently reported statistic on BBC news caught my attention, with the factual statment that 20%, or one-fifth of UK council tax payments goes to fund the pensions of retired council employees.

What an amazing statistic that is, in other words, we are paying for the promises of prior generations, who made these claims on their own children and grandchildren. How fair is that? Is it any surprise essential services such as rubbish collection and street cleaning fall by the wayside, when the actual amount of free cash available for these services is constantly shrinking.

I wonder where the graph of future claims like this is heading, unless it is checked now? Quite simply this is another example of what taxes are really spent on. This whole thing is unsustainable, and some people are in for a shock in the years ahead.

Speeding Fines : The new new form of taxation

Just in case anyone was under any doubt whether speeding fines were justified, or are a new form of taxation the government feels we need to be scared into paying, they should read this story here.

Basically, this bloke was found guilty of doing 37 mph in a 30 zone. OK, so there is a crime of sorts there, although that is not the bit that should anger anyone. This guy subsequently modified the appearance of the rear of his car with a GB Sticker, newly styled number plates, then claimed to the police it wasn't his car. A bit naive, and they proved he had bought those things since. What sentence could he expect for this "heinous" crime, if any? Well, you might expect an extra £500 fine or so for stupidity, but instead he has been sent to prison for 80 days. Amazing, what independent judge could have justified a sentence of this size?

Can we guess perhaps there is a case of making a high publicity example of someone to scare us all into complying with our driving taxes, ermmm. speeding fines.

Wow, how much safer the streets are now we've locked up this serious criminal...

At the same time, we are aware of this story where some poor girl was allegedly abused by her stepfather for 10 years, yet the police lost her file and told her they wouldn't be proceeding...

Welcome to Police State Britain, controlling the general population our speciality.

By the way, I can honestly say I've never received a speeding ticket in my life (a Fiat Doblo with 4 children in it probably can't do much over 80 anyway...), but even I can see that speed cameras, if their true purpose was to stop road deaths, would be far more usefully placed outside schools, or busy residential roads, instead of motorways and dual carriageways with 50mph limits. Remembrance Avenue in Sittingbourne always spring to mind as a prime example, and anyone who has tried to cross it will know what I mean.

UK Budget robs lower paid taxpayers

A lot of people are quite rightly pointing out that the latest adjustments in the UK budget that came into effect this tax year are very damaging to the lower paid. The major point made by all is the loss of the 10% starting-rate, which was a great incentive to the lower paid.

I completely agree this was a disgrace, but what has escaped the eyes of most is the way that the drop in standard tax rate from 22% to 20% has also robbed savers who pay into pension schemes. Now, instead of receiving a 22% tax credit, you only receive a 20% tax credit. As if "Golden" Gordon Brown hadn't already done enough to destroy the virtue of saving for retirement.

I would say that if you are a standard rate taxpayer, there is now zero point in contributing to a pension scheme, since I bet that by the time you retire, ever more inventive ways such as "Golden Gordons" famous loss of the tax credit on dividends, will have been invented to siphon parts of your pension pot off, and that your pension will ultimately end up paying more than a 20% tax. Not to mention the atrocious annuity rates available and the loss of capital forever once you are forced to buy an annuity.

Note that the MPs can still claim a 40% tax credit back on payments into their own pension schemes. In fact, they can contribute up to 100% of their salary into a pension scheme and get 40% tax relief on the payments.

Definitely a case of protecting ones own self interest at the expense of the people who voted you in.

Owning all the Wealth in the World

Socialists often argue that the rich are getting richer and the poor and getting poorer, citing the example of someone like Bill Gates

This argument is fundamentally flawed in that it makes the assumption that wealth can only be measured in terms of a national currency. Indeed, under such a system, the rich will get richer and make ever greater claims on the future of others through interest-yielding debts, etc. but if transactions could be conducted in whatever currencies people wished to use, the reality would be somewhat different. Imagine where a farmer pays for services in vegetables from his farm, or I trade my knowledge of fixing someone's computer in return for a plumber fixing broken pipe. These are economic transactions based on skills, knowledge and a decent work ethic.

The problem with these schemes? None, except that such transactions would not be taxable by governments who prefer us to always be on a treadmill, with a variety of taxes that need paying simply for us to maintain our position in life.

As I get older, the more I realise national currencies are a curse.

Court Jesters and Royal Fools

People often criticise shows like Jeremy Kyle for their exploitation of the poor and vulnerable.
I tend to think the complete opposite, and liken the whole spectacle to court jesters, the royal fool and circus freak shows of years gone by. Think about it, these people help themselves to huge chunks of our earnt wealth, the least they can do is entertain us a bit for it instead of remaining faceless. In fact, everyone sponging off the state the way these guys are should have to appear on one of these shows at least once in their lifetime to help earn their money, ala Lizzie Bardsley.

How Denmark could do with shows like this, as the Working in Denmark blog shows, Denmark is blighted by an even bigger social security problem than the UK's.