In which I offer my fourth Christmas wish …

In the run up to the Big Day I thought I’d present my top five Christmas wishes. In reverse order here’s number 2.

Wish #2: I wish to be wrong about the prospects for the economy.

These days being always right or, more accurately, never admitting to being wrong is a crucial attribute for success. But I like to be contrary. So in the runner-up slot in my list of Christmas wishes I hope to be proved massively, incontrovertibly and unarguably wrong. Incorrect. In error. Mistaken. Unsound. Er … wrong about the economy.

I think 2011 will be a terrible year for the UK economy. I do not see much, if any, prospect of an increase in demand for goods or services either here or in existing or new markets abroad. It looks to me that the global financial systems are only marginally less vulnerable now than they were just before the financial crash.

I should make it clear that I’m not an economist. I like to think though that I’m a reasonably well-informed bloke. So my economic hunch is just as likely to be right (or wrong) as anyone else’s. What I do have is direct personal experience of what deficit reduction means in practice for the people affected by it.

The possibility of my redundancy earlier in the year was enough to force a change in our spending habits. A small amount of RPS demand and economic activity flowing from it lost to the economy to be sure. But imagine that multiplied up by every family feeling that unease.

The certainty of my redundancy – as you may have seen Mrs RPS discuss – has led to more reductions in our demand as we do what is sensible for us as a family. We stop spending. Actual redundancy will produce a further reduction in demand by us. So that’s less in the way of goods and services the rest of the economy will be required to produce for us. Again, imagine the multiplier.

Eminent people tell us not to be worried by the sharp reduction in spending that the government wants to achieve. Like any sensibly run family budget we’re told that the national economy has to respect its limits and pay down the credit card bill. Maybe I’m an economic ignoramus but when someone can point me to a family that has an army, navy and air force or its own hospitals or road network will be when I begin to believe that what holds true for a family budget holds equally true for nation states.

Everything I know from our family experience. Everything I know from my experience of the real world and its inhabitants. In short everything that I have ever learnt tells me that the chances of the economy leaping into life solely because it has been freed of the need to borrow £80 billion or so a year are slim.

Politicians have ramped up the rhetoric to justify deficit reduction targets of eye-watering  ambition. The trouble with rhetoric like that is that it can work too well. People still left with a public sector job and people who have endured lean years in the private sector just to hold on to their jobs have heard the rhetoric. They believe it. And they will act on it.

Prudent paying down of personal debt is admirable for individuals but it is a nightmare for the prospects of businesses who want to sell those same individuals goods and services.

Now, I want a new job soon. In fact I have to have a new job soon. I want a flourishing economy and labour market into which I can sell my labour. So that’s why I hope to heaven I’m wrong and the Christmas Fairy grants my Christmas Wish of personal error … fingers crossed for an economic miracle in 2011.

About redundantpublicservant

A redundant UK public servant looking for work, sharing his experiences and providing a space for others to do the same.
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2 Responses to In which I offer my fourth Christmas wish …

  1. Pingback: Tweets that mention In which I offer my fourth Christmas wish … | A redundant public servant's blog --

  2. Mean Mr Mustard says:

    I have no doubt we are in for a very severe time. The rule of thumb being that the correction has to be equal and opposite to the scam / bubble which preceded it. So you need to be thinking some way beyond just 2011…

    The economics bloggers seem to have a far better track record that the lamentable mainstream media. I started out in 2006 with the Daily Reckoning, mainly for the zany humour of the Mogambo Guru, a lecherous drug-crazed alchohol-dependent gold bug with a leeching family, who monitors financial dials from his Bunker of Doom, getting really freaked out by the Federal Reserve, and that was well before the Bear Stearns and Lehman collapse. He and a few others out there like Mike ‘Mish’ Shedlock think it will be hyperinflation.

    The best economics bloggers in my view are Stoneleigh and Ilargi at the Automatic Earth. They aren’t about stock tips or buying gold, but protecting ordinary folk from the worst of all this. They forecast deflation, diagnosing a debt-deflationary depression, and the responses you describe as the RPS finances go into hibernation fit with this scenario. Still, whether hyper, de, stag, or bi flation, the effects at individual level are the same – everything is pretty much unaffordable. Debts will be defaulted on as they cannot be paid – multiple claims on a shrinking underlying wealth will not be honoured.

    Ironically, those that leave or are forced out of the CS and get their (diluted) pensions in payment may well be relatively ahead, as they won’t be the first ’empty bag holders’ of the PCSPS ponzi scheme. Don’t believe me? ‘Unfunded liability’ is the very definition of a Ponzi… (future) (build a lifeboat)

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