DC writes: help us finish the job
Prime Minister David Cameron writes ...
"This week there have been more signs that Britain is turning a corner.
David Cameron
"This week there have been more signs that Britain is turning a corner.
Nick Herbert on his visit to flood hit areas of Cumbria
Please note that the post below was published more than ten year ago on 21st November 2009 Nick Herbert MP, shadow cabinet member for the Environment, Food, and Rural Affairs, was in Cumbria this morning to see the areas affected by the flooding. He writes on Conservative Home about his visit. Here is an extract. I’ve been in Cumbria today to see the areas affected by the floods. I arrived early in Keswick where I met officials from the Environment Agency. Although the river levels had fallen considerably and homes were no longer flooded, the damage to homes had been done. And the water which had got into houses wasn’t just from the river – it was foul water which had risen from the drains. I talked to fire crews who were pumping flood water back into the river, and discovered that they were from Tyne & Wear and Lancashire. They had been called in at an hours’ notice and had been working on the scene ever since, staying at a local hotel. You cannot fail to be impressed by the
Comments
These are different things, GDP reflects money leaving a market. Usually in the form of bonds seeking a more attractive interest rate.
this is great for a small eection of the population (bankers,investors and stock traders) But its not so great for those on fixed incomes, pensions or even benefits (the bulk of the population) as prices rise well before wages do, thus their purchasing power, and hense living standard declines.
the problem is that interest rates have been held artificially too low for far too long, while the movement of bonds does cause the nominal gdp to raise, but economic progress to fall. This will fail eventually and hopefully not too late. Those bond yeilds will put immense pressure on interest rates, more than the BoE can control, thus finally pushing up interest rates by a substantial amount.
Take another area, housing. Now ideally people would be able to afford a small house in their area, but they cant, due to an overpriced market, now you could make it easier for people to borrow more money thus further increase the price of houses, and helping to maintain the inflated price. But its batter to allow the market to correct itself and house prices to fall to their normal level.
People feel good when house prices rise and politicans like that, but its hardly progress and good news for people looking to buy their first, or even to rent one.
It often seems mad to me that everyone cheers when house prices go sky high, but rails when the price of electricity the house uses does the same thing.
Real GDP is not growing nearly as fast as most of us would like and it is unfortunately not yet translating into rising living standards for most people - hence DC was right to say what we want to see is "a recovery which all hardworking people can share in."
But GDP it is growing in inflation-adjusted terms as well as nominal terms.
You may remember "Whiteside's law of real terms" a few weeks ago - that bad news "in real terms" will be perceived as all too real while good news "in real terms" will be perceived as wholly imaginary.
Because living standards are not reflecting growth the limited recovery we are seeing is an excellent example of Whiteside's law. That does not mean that there is no genuine economic growth.