Low interest Rates, A Boon To The Banks !

Just as there are benefits, there are costs associated with keeping interest rates below their natural level for an extended period. Some argue that an extended period of low interest rates (below the natural rate) is a key contributor to the housing boom and the marked increase in household debt relative to after-tax incomes.
Other costs are associated with very low interest rates. First, low interest rates provide a powerful incentive to spend rather than save. In the short term, this may not matter much, but over a longer period, low interest rates penalize savers and our pensioners that rely heavily on interest income.
Those desiring higher nominal rates might be tempted to seek more speculative, higher-yielding investments, such as property, fueling the property boom.
The keeping interest rates low for an “extended period” may lead to a Japanese-style deflationary economy.

Our Government needs to show some bravery, and start increasing interest rate, slowly.

A Gift From The Tax Payer?

The United Kingdom has not always been a country obsessed with house prices. But the Housing Act of 1980, brought in by the Thatcher Government, changed the face of home ownership in the UK. Many former local authority tenants paid less than £10,000 for council houses, that would be worth 10 times more a decade later. The massive discounts, resulted in more than a million people getting a £10,000 gift from the tax payer. Margaret Thatcher was elected to Westminster for over 10 years on the back of this policy. The result was a prolonged boom in house prices along with a chronic shortage of affordable housing. In some countries, the offer or giving of rewards is referred to as “electoral treating”. Electoral treating is legal in most countries.

Clean Air

In a case before the United Kingdoms Supreme Court, the UK is being held responsible by the EU for not fulfilling its duties to allow its citizens clean air. The EU air pollution laws attempts to put an end to the decades-long scandal of air pollution, which kills thousands of people in Britain each year. Three years ago, Mayor Boris Johnson, published research showing that it caused 4,300 deaths annually in London alone, while the Government’s official air pollution watchdog later put the nationwide mortality figure at 29,000. One in seven British children have asthma. David Cameron has included “environmental legislation” among the areas for renegotiation where he believes Brussels has “gone far too far”. Yet polls show that UK voters believe Brussels has a “negative role” in areas such as health care, employment, inflation, housing and tax, but many people consistently say it has had a good effect on the British environment. The EU is widely credited with forcing the pace on improvements to the quality of air and rivers.

294 Flood Defence Schemes Cut

Spending £50 million on flood defences in Leeds, as reported in the Evening Post on 8th Feb, when the flooding in the UK on the 23-24th June 2012 cost £498 million alone. The cost of flooding can be enormous, it is worth spending more, to save more in the future. This Government needs to wake up to the cost of flooding. Plugging the gap in Leeds will just lead to flooding elsewhere in Yorkshire. This £50 million is a drop in the ocean, and only stops a once in 75 year flood.

The floods in 2012 came in the wake of government cuts to flood protection, which has seen 294 flood defence schemes cut which had indicative funding in place in 2010. The £50 million announced recently for Leeds, is just the reinstatement of one of those schemes. Rupert Ponsonby (Conservative) recently said in the House of Lords; “Despite hard times, we protected the flood budgets as far as possible with a 6% reduction in spend over the four years 2011-12 to 2014-15 compared with the previous four years.” I would not call a 6% drop in funding protecting spending. Because flood defences are a long term problem, the politicians rely on smoke and mirrors and hope for the best. Back in the late 1990s the BBC s climate change web site, predicted more extreme weather, more precipitation and floods, that is exactly what we are experiencing, only 10 years later.

Bloomberg endorsed President Obama

It is rather interesting, that on the other side of the pond, the Mayor of New York Michael R. Bloomberg has endorsed President Obama in the presidential campaign. It is even more interesting because Mayor Bloomberg was once a Republican, whilst Barack Obama is a Democrat. Bloomberg decided that Mr. Obama was the better candidate to tackle the global climate change that he believes might have contributed to the violent super-storm, hurricane Sandy, which took the lives of at least 80 in the USA and caused billions of dollars in damage. Democrat Mitt Romneys values do seem similar to Conservatives over here in the UK. Mitt Romney thinks its fair that he pays an effective tax rate of about 20%, on his $22 million income.

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