I'm no economist. I really don't get it. I bought a book called "How economics explains everything" and it was the biggest pile of pish I've ever read. I take a look in the economics sections of various papers from time to time and as far as I can see economic forecasting is nothing more than guesswork based on past examples - sometimes they even use relevant past cases on which they base their predictions...
How so many of these geniuses failed to recognise that a system whereby really dodgy American mortgages could be wrapped up with occasionally good investment opportunity and rebranded as AAA bonds / securities / whatever whilst the people making the rating were getting incentivised to produce more AAA rated bonds / securities / whatevers... well that's beyond me. Then again I'm a simple engineer.
So, it's no surprise then that I find myself at a loss to explain the situation we are faced today with regards to inflation, VAT and interest rates. Apparently inflation is above target and that has come as a surprise to some of these bankers / economists... Maybe if some of them tried living in the real world with appropriate bonus-free salaries, the effect of the price of oil might not so easily bypass them?
Anyway, I digress. Here I stand as a UK mortgage holding householder with a small family which includes 2 pre-school dependants. I don't suppose that makes me an out of the ordinary case study. I've got a mortgage, keep my home heated, buy food regularly and drive to work regularly. I work in the private sector and haven't had a pay rise in 4 years...
Due to increases in the price of oil and gas my heating bill has risen considerably over the last couple of years.
Due to the increase in oil prices, the cost of my food shoping has risen considerably in the last few years - see the cost of basics such as bread and milk.
Due to the increase in Oil prices, the cost of my commute has risen considerably in the last few years.
Now the government has added 2.5% to VAT which they expect will directly result in a 1.4 point rise in inflation, breaching the 4% level.
In order to 'cool the economy' it is apparently the view of some economists that interest rates need to rise in order to take some money out of the economy. That's some euphimism for taking more of my money in order to further reduce my disposable income, lest I am tempted to go on some massive spending spree tipping us into the abyss.
I just don't have the words now to express the anger and helplessness I feel as I stuggle to live in this country of bountiful resource being run by mad men who'd rather see me lining the pockets of Multi-National Energy company's shareholders whilst living in poverty than imagine a country without Trident. Lunatics who think that big business and big banks can really survive without a civil society for them to operate within.
The bile is rising!