Tuesday, 30 December 2008

psychological not physical or fiscal

As my friend pointed out in the last blog it only takes a little bit of thought to solve what seem to be insolvable problems. It just needs a bit of joined up thinking. I was amazed that the CEO of Barcklays was telling us all that the recession was going to get worse and more people would have their houses repossessed. Well maybe he can explain why in this state of credit shortage, ( I hate the expression credit crunch as it sounds more like a chocolate bar. It has been invented by a media spin doctor to make it seem easier to ignore), that as a head of one of the largest banks in the world doesn't he help by reducing the interest rate on credit cards. The interest rate is about 2% but credit cards are still charging in double figures. Why should they do this because of the domino effect. If they charged less interest then consumers would be able to pay off the amount quicker and like most people be able to spend more. Just because consumers are given the opportunity to pay off something doesn't mean that they will stop using it. In fact they could actually spend more, so helping the high street, which in turn would mean that more shops would not close, that more manufacturers could produce more and believe it or not but the mood of the country would have a sense of optimism. Instead of having a country that is looking forward to unemployment and poverty, it could be a counrtry that would actually spend its way out of misery. I know there is always inflation, but that has to do with money supply not the cost index. We now have a situation where private compnaies, stragely the ones that used to be government owned can now raise their prices regardless of inflation, countires can restrict the supply of oil, because the price is going down and yet the government seems to be obsessed by keeping inflation down. Its not wage demands that pushes prices up but the singlemindedness of ensuring the shareholders don't unlike, the rest of us, suffer.
I am always amazed that with the prospect of hordes of people who are about to be made unemployed and living off benefits that this could be solved by simple edicts. Isn't this why we pay the Bank of England, isn't this why we have a chancellor. You cannot have the double standards. Why should a bank be saved but a high street chain not? If you profess market economics then you should live by it.
Which brings me to the (yet again) idea of privatising the post office. Now let me see, when privatisation was first muted, it was going to be more efficient, cheaper and better for everyone. Well the trains are still not running on time, ticket prices go up every year above the cost of inflation and still have to survive on government money, energy prices have risen faster than anything and as far as I can tell the only people who have benefitted are the banks who took the commision for the sale in the first place. Now the post office. Are these policy makers mad? What will happen when it can't survive, will the government buy it back or become its major investor like the banks?
I understand that our nuclear weapons manufacture is now owned by a private company based in California. Well what is going to happen when they go under and decide to close the factory? We will have to buy our defence from a private investor. Has no one in the Ministery of defence ever read Catch 22. Its about the war being run by private enterprise. The days of imperialism to advance the aims of private companies are over. Some governments have not realised this yet but they will.
The air attacks on this mornings news in retaliation for the rocket attacks is the same as the economy. Its no good the Isreali government trying to validate their position as they have caused the situation. You cannot force people over decades into a corner and then expect them to curl up and ignore you. After years of demoralisation even an old prize fighter will still fight in some sort of self worth. The Palestinians don't have an army so they fight the way they can. The bombing of innocent people is wrong. It cannot be validated under any circumstances. David Ben Gurian said that the death of a martyr will bring a hundred recruits. Each death this morning will be a martyr. Peace like the recession isn't fiscal or political, its psychological. Its like learning to swim, if you believe the water will hold you up it will. If you believe that you will drown you will. Survival isn't about the physical its about a state of mind. If they want peace they can have it. All it takes is to change the mood from depression to optimism. We seem to have lost that understanding.

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