Here in Britain, we are always told how well-off we are, and what a wealthy country we live in, and perhaps when you look at the general statistics, it may even be true, on average. But averages can be very misleading. In this well-off country, most of the wealth is owned by a tiny minority of people. The rest of us are just fighting over the scraps, and are not well-off at all. Sure, we have some advantages, like some welfare state, lots of gadgets we can’t afford in the shops, and so on, but can we afford to pay the bills? Nope. Can the country afford facilities like good education, healthcare, libraries and so on? Less so than in the past, is my impression.

An average house in this country costs £160,000 (€192,000) and the median wage is about £26,000, (€32,000) or 1/6th of the price of the house.

We think of the Southern European countries as being relatively poor (an out-of-date idea, but it is common here). Let’s see what they are like in these terms. Gross averages are hard to find online for some of these, but here’s what I’ve been able to dig up, based on a (small) 60sq.m property as a cheapish rough guide.

Bulgaria - average house price is under €50,000, average income €2,200 (22:1)

Greece - average city centre house price €296,000, average wage €8,400 (35:1)

Italy - houses €420,000, wages €30,000 (14:1)

Spain - houses €240,000, wages €24,000 (10:1)

On the same basis as these, though, a 60sq.m UK house would be €900,000, representing a ratio of 4.6:1 compared with the average wage. OK… well, on the basis of those figures, houses in the UK are actually relatively affordable for the natives. On the other hand, some of those European houses are far more affordable for a Brit than for the natives…

In which case… it’s time to move! And get some darned sunshine for a change.

Five years ago the Kodak stock price was trading just below $30 a share. Today it is just 55c and the company has filed for bankruptcy protection in the USA. It now has 18 months to turn the business around or die.

Why is this? Well, they make cameras and film… but the market for film has been disappearing rapidly since digital photography began to take off. Certainly, not many digital cameras can rival the picture quality of a good film photo, not least because 35mm film is the equivalent of 25 megapixels which few digital cameras have. Also, there is probably some truth to the impression people have that analogue is somehow richer in tone than digital. This is much like the way that transistor-based radios never sounded as good as the old valve-driven sets of yesteryear - that and the fact that they stopped building them in wooden cabinets, perhaps. Plastic is versatile, but just not the same.

So who needs film? Professional photographers, certainly, and a few other artists perhaps. You and me? The mobile phone or a cheap digital camera is probably good enough for most. A few will want a better digital camera, certainly: the pictures you can take with a good camera certainly can show the difference.

And who needs to wait a week or two to see the results of our snaps anyway? Now I can upload a picture to Facebook directly from my phone the instant I’ve taken it, if the signal can get through - this is ideal for crappy party shots and the like, after all.

So Kodak certainly has their work cut out if they want to survive. They do printers as well, which they promote as having cheaper ink than their rivals, which is true - but the print quality is not yet up to standard. If they can get that sorted out as well in the next 18 months, there may be a future for them yet.

The UK newspapers are reporting that the Nationwide Building Society says that average house prices rose by 1.1% in 2011. Or, should I say, mis-reporting? Because not one that I have checked has mentioned that inflation is around 5% (officially, and unofficially probably significantly higher). That means, of course, that a 1% rise is in fact a 4% fall in “real terms". Only London beat the inflation rate with a real increase of about 0.4% (reported by the news media as a rise of 5.4%).

Here are sample reports from the Daily Telegraph, This Is Money, the Daily Express ("Shock Rise in House Prices", no less), a relatively interesting article from the BBC (which still fails to mention inflation, however), and so on.

Here is the Nationwide’s Quarterly House Prices Report for December 2011. If you look at the graph entitled “Long term real house price trend” you will see clearly, looking at the red line ("Real House Price") that the line is descending. Indeed prices are also declining relative to earnings (the graph to the right), surprisingly. And they need to, of course. In London a house is still over 9 times average annual wages. In the rest of the country they are about 4.7 times, which is still too much. A stable figure is 3 to 3.5 times one person’s wage. If the average wage is, say, £25,000, a house should be around £75,000. Both partners in a household shouldn’t have to work, in fact: if you go back a couple of generations this was the normal situation. These days, even a joint wage of £50,000 isn’t enough to get a house for most people as the average house price is well above £150,000.

The Chancellor of the Exchequer gave his Autumn Statement yesterday, involving much fiscal tightening as the economic situation has deteriorated since the budget in March. His statement was informed by the November report of the Office for Budget Responsibility, (OBR), which is basically pretty grim reading as far as I can tell (I’ve not had the time to read it all but have skimmed it pretty deeply).

It was reported in much of the media that the OBR has cut back its growth forecasts for the economy, and indeed they have, but the worst of it doesn’t seem to have appeared in many places, although I saw it online in a Daily Telegraph blog by Jeremy Warner. Because of the Depression, the economy will be 13% smaller by 2016 than was expected in 2008, and “not much bigger than it was in 2007.” Public sector job losses are expected to double up to 710,000. Disposable incomes will shrink some 2.3% this year and shrink again next year, at least. World output fell 1% in September. And most telling of all, standards of living are not expected to rise for up to 14 years! I suppose that means up to 2025. That sounds like a Great Depression to me!

Unfortunately, I couldn’t find this last prediction in the report, but I guess I can take his word for it, for now. It seems plausable given the depth of the Depression around here.

But… in any case, there’s more. In their opening paragraphs, the OBR say,

We stress-test our fiscal forecasts and judgements using sensitivity and scenario analysis. The central economic and fiscal forecasts assume that the euro area finds a way through its current crisis, but a more disorderly outcome is clearly a significant downside risk. This risk cannot be quantified in a meaningful way, as there are numerous different ways in which such an outcome could unfold. Suffice to say, the probability of an outcome much worse than our central forecast is greater than the probability of an outcome much better than our central forecast.

In other words, if the Euro crisis deepens, so does our economic gloom. And the odds are in favour of this happening.

So what is the government, and indeed what are foreign governments talking about doing to fix all this? Well, who knows? It’s all hot air anyway since nobody knows the answers to economic problems. In general they are talking about how quickly they can return the economy to “growth". Our economy is forecast (now) to grow by 0.7% next year (GDP, 2012). As an aside, remember that inflation is around 5% so really that “growth” is minus 4.3%. So, let’s talk about real growth for a minute…

Achieving real growth is probably the wrong target to be aiming at, in my thinking. By the time this forecast reaches its end-game, in 2016-2017, we will be in a position to know with reasonable certainty whether the world has reached the peak oil point: that is, whether in fact we are starting to run out of oil, noticeably, because production can no longer be increased and will be beginning a long-term decline.

This, and the global warming problem, point the finger firmly towards a different target. We should be trying, not to grow, but to develop sustainable economies. Our standards of living can still improve without growth. Improvements in technology can achieve this, and so can improvements in government, indeed. Economic growth is a shibboleth that is destroying the world we depend upon and it is not necessary. It is also something of an illusion as our constantly depreciating fiat currencies confuse the issue of when we have growth and when we have inflation anyway, and the system encourages decidedly unsustainable debt bubbles as we must all surely realise by now.

This handy table can help calculate where to live in the UK if you want to save money:

http://www.moneyexpert.com/utilities/uk-debt-comparison-tool/

It shows where it is easiest to get into debt (London and the South West, because of their relatively high accommodation costs), where the job prospects are poorest (Northern Ireland, Yorkshire and the North East), average hourly pay rates around the country (which, because of the debt levels, don’t make up for the accommodation costs in the expensive areas, it seems)… and the retail price index around the country.

It seems £10,000 or so of debt, not including mortgages, is pretty normal. I’ve written an e-book about managing debt and there are some free videos on my debt page.

So the USA has at last had its credit rating downgraded from AAA to AA+ by a credit rating agency (Standard and Poors). It still looks too high to me. Surely a rating of AAA should be reserved for countries with low levels of debt that they can easily afford to repay without having to print money or borrow yet more (raise their debt ceiling)?

Shouldn’t it be for countries running budget surpluses? And countries with low inflation (I mean real inflation, not the massaged beyond all credibility official figures)? Even AA+ seems too high for much of the West right now, the USA especially as their debt situation, as far as I can tell from my general reading about it, is completely unsustainable. If I was in an equivalent position personally, I suspect the bailiffs would be at my door and I certainly would not have any A’s in my credit rating.

And what is the real inflation rate in the USA? Well, according to NIA, the dollar has lost 84% of its purchasing power over the past 10 years, so with the simplest possible calculation that averages out at 8.4% a year. The official figure is 3.56%. Which one do you believe? Here in the UK I am sure the position is similar. The official inflation rate at the moment is between 4% and 5% depending on which official measure you choose. But I know that a weekly trip to the supermarket Tesco is costing me over £40 for what just last year cost me £25. Electricity and Gas are going up by more than 15% this month. Travel has gone up. Subjectively, the situation reminds me of the late 1970’s and I suspect a real inflation rate of around 10%.

Do people really believe governments any more? I’ve given up on them: their lies are so transparent. How to defend against it? Well… hard to say. Clearly the currencies are going to hell and the banks are unsafe. Gold? Silver? Probably, if you have the money to invest (unlike yours truly).

It is a perennial problem in the UK, and, I suppose in other countries too, as to what to do about accommodation. A house is very expensive, with typical prices in the UK at around £220,000 for a quite modest, indeed small, house or flat (apartment). Of course prices vary a lot: out in the countryside it could easily be £175,000, in London, £340,000 for the same thing. But whatever the price, is there a way of deciding whether it is better to buy or rent?

Well, the common argument is that it is better to buy, because you own an asset. However, most people don’t pay cash, they pay for a mortgage. I think that this alters the calculation a lot. In the long run it has to be a good idea to own an asset, but the cost of that asset can make a big difference. Is it better to pay rent while you save up so you can pay cash in the end, or is it better to pay for a mortgage and move in right away?

Let’s look at trying to buy a flat in London compared to renting a similar flat, also in London. Renting a small 2-bed flat in London is about £1,000 a month. The price, about £340,000. Calculations done using this calculator from the BBC, assuming the historical average interest rate of 7%, and comparing with 12% which happens from time-to-time (and worse). I will assume a repayment mortgage rather than an interest-only/endowment mortgage, because in the latter case you still have to set aside the extra money to pay off the capital in the end, even if you are hoping that some worthless insurance company can invest it for a profit for you (and as we have seen in the Credit Crunch, that is a vain hope: invest it yourself, carefully, or expect to lose some of it).

First of all, renting in London.

Ouch! Plus, you have to save something to build up the cash to buy, eventually.

Next, a mortgage for £300,000 at 7% interest (assuming £40,000 deposit and to make it equivalent to the cost of the rent).

So… at 7% you are in fact buying just over two houses for the price of one.

At 12%:

At 12% you are buying just over 3 houses for the price of one.

So… is renting better? Well, you could spend £300,000 on rent, and save up £300,000 to buy, and you would be no worse off than if you had taken out a *low interest* mortgage. At high interest, it would be much more expensive to buy.

On the other hand, this all assumes constant prices. We are used to seeing prices, and rents, rise. Indeed, over the last 30 years or so, it would have been nearly impossible to save fast enough to keep up with the rising house prices. With house prices typically rising at some 10% a year, where else will you get £30,000 of effective income for doing nothing? So, up until recent times, it was probably sensible to get the mortgage and pay, because over the course of a few years the increase in value of your home would have rendered the mortgage payments negligible in comparison. You could have bought a house for £60,000 and by the time you paid it off it could easily have been worth £250,000: more than the price plus interest, so a clear profit.

Now however, the calculation looks different. Prices are no longer rising, they are slowly drifting downwards, in an annoyingly hard to follow zig-zag pattern. It is, of course, impossible to be certain which way they are going to go over the next 25 years. Although we are used to prices going up, this is not the only direction and in economic depressions of the past, prices have trended downwards for longer than 25 years at a time. It could happen again. It could be happening now. We just don’t know. We do know that the politicians and economists don’t know what they’re talking about.

My bet? Rent and save, as long as interest rates are below 7% and house prices are increasing at less in cash terms each year than I can afford to save each year. If that formula changes, it will be time to look again at the figures. What do you think? Leave a comment and tell me if I’m wrong, or right!

What happens to these figures if we do this calculation in the countryside somewhere? In Bleanau Gwent in darkest Wales, the average house is only £80,000. Assuming you would need £20,000 deposit, the calculation looks like this.

Rent

Mortgage at 7%:

At 12%:

The calculation, in fact, looks the same: just over two, or three, houses for the price of one when you’re paying a mortgage. But saving is a *lot* easier here. Even on the National Minimum Wage of about £950 a month net, one person could afford the 7% mortgage, just about, and if they were really careful with their money, they could save a little too. If they were sensible and got married or rented out a spare room, they should be able to save quite rapidly.

However, looking online, the £200pcm places in Wales seem a bit… poor: flatshares and the like. The absolute minimum rental for some quality of life seems to be £300pcm (£90,000), or £644pm at 7% (£193,200), £956 at 12% (£286,800). At 12% this is beyond the minimum wage for one person, but a couple could easily rent and save some £1000 a month at those rent levels, it seems to me. A house could be purchased for cash there (or somewhere abroad with a nice climate) within 10 years.

Do you agree? What do you think about this calculation? Am I missing something?

Billionaire investor Warren Buffett has hosted a private gathering at an Arizona resort for American billionaires who have pledged to give away at least half their wealth.

Well, how about giving some of that money to me? Oh, OK, I suppose I’m not as deserving as the starving millions. Sigh. It’s just that it seems to be very hard to get rich when you’re as lazy as me. :(

I think philanthropy is a good idea for rich people, although some cynics will point out that they took their money off poor people in the first place and in fact are only giving some of it back. Nevertheless, rebalancing the economy is a good idea - too much concentration of wealth is economically inefficient, and bad for those that don’t have any money too. It also can make a real difference, since governments and charitable organisations don’t seem to be changing much with their efforts (barring the eradication of smallpox). Perhaps a more personal approach, a direct approach, will actually achieve something tangible.

Is it OK to go around assassinating unarmed “terrorists” and enemy leaders? I mean, not for you and me, we’d be done in an instant if we tried to take the law into our own hands, but is it OK for governments? Certain ones at the moment seem to think its a jolly idea. They shot Osama, and also claim not to be targeting Gadaffy Duck directly, whilst dropping three massive bombs into a bunker they, presumably, knew was occupied by the Colonel (NATO/US claim to be targeting command and control systems, which will include various individuals of course, rendering the concept of not targeting specific people meaningless). I’m not saying these folk don’t deserve it, but is it morally sound?

Well, we all know killing people is supposed to be bad, but in the real world, bad people usually have to be stopped by force one way or another. Despite what the churches and whatnot say, most people accept that self defence is right. Most people in the West are not unduly upset by the death of Osama (assuming its real and recent as claimed).

We must bear in mind that the targets of these assassination attempts (in the case of Mr Duck) need not be one-sided: he can send his own assassins across the water, and probably will, if he lives long enough. Our own great leaders may be writing their own death warrants: a reason, I suggest, that such behaviour is generally avoided by them: it makes them more vulnerable to assassination themselves. A war and the killing of tens of thousands of nobodies is one thing, but our glorious leaders can’t be put in the line of fire…

Personally I think they should all be locked in a room with one loaded gun and let them sort it out between themselves. So, yes, I think assassination is more moral than the killing of large numbers of people in a wider conflict. Why kill thousands when one will do?

Hmm… and while I’m on the subject… I just note that Iraq has loads of oil; Afghanistan has the route for a long-planned oil pipeline from Iraq to the sea (and a load of heroin production); Libya has oil. Yemen doesn’t have much: it is expected to run out by 2017; Syrian oil production peaked in 1996 and it may become a net importer within a decade. Libya on the other hand has an estimated 60 years of reserves. So which countries would you be most interested in taking the opportunity of intervening in, if you were the West, and stupidly dependent on oil?

My new e-book, How to Eliminate Massive Debts with Tiny Payments is online! I know a lot about this subject, as it happens, so I thought I would distil my experience into a quick guide to getting out of debt as fast as possible, even when you can’t afford it. Indeed, especially when you can’t afford it. So many people are, in effect, conned into taking on debts they can’t afford that now the whole world’s economy is busy choosing between a new Great Depression or massive inflation as the best way to eliminate the systemic financial toxicity.

If it sometimes seems to you that the whole world is conspiring to keep you poor, this video might help to explain it. It shows, using interviews with top fund managers and similar types, how the wealthy elite are exploiting the financial system to impoverish entire nations, just so they can make more and more money themselves in the short term. It shows how they are, effectively, destroying the world and warns it could end in world war once again.

It talks about globalisation, which of course from a capitalist point of view maximises efficiency since it keeps unnecessary costs low: resources are obtained where they are cheapest and goods are produced where they are cheapest. In purely financial terms, this is of course sensible. But it also impoverishes most people, over time.

One interviewee also comments that the Credit Crunch was the inevitable result of deregulation that the wealthy promoted in the 1980's (the 'Big Bang' in London), which was introduced in Britain because of the industrial crisis here. That in turn (he doesn't say) was probably caused by decades of over-taxation and bureauracracy... first things swing one way, then the other, and there's no escape for anybody, it seems, while political decisions are being made by dummies (as another interviewee commented).

You may need to set captions on this using the CC button or up-pointing triangle button on the lower right. It has French subtitles anyway, but you can choose other languages for subtitles with this button and the right-pointing triangle that comes up on it when you pop up the menu, or the middle icon on the popup menu (depending on the particular interface that comes up on your system).

This video looks at working conditions in China. I think most of us are aware that pirate capitalism is rampant in much of the world, as indeed it used to be in the West in the early days of the industrial revolution. For the most part, in the West, we have eliminated these practices from our local factories. However, many companies get around these rules by manufacturing their products where the labour is much, much cheaper, and where the rules to protect them are simply not enforced. 22 hour working day anyone?

In the film, the Disney corporation is singled out. However, many other companies are known to be doing the same thing. Apple, for example, is reported to have admitted to using child labour. Abercrombie & Fitch have been criticised for conditions in the Phillipines, and for lack of transparency about their practices. This document talks about many other companies including Gap, Banana Republic, Nike and others better known in the USA than in the UK.

You can find a lot of information from the IHS Child Slave Labour News website, if you’re interested.

But what can we do about it? If we don’t buy their goods, these people will be out of work… maybe. Or maybe boycotting such companies will gradually push them in the direction of improving their practices… and, unfortunately, increasing prices. Another problem is that it seems these days rather hard to find any products that are not made by third-world or Chinese slaves (I include very-low-paid workers with inhumane working conditions in this category). But we don’t need most of what we buy anyway, do we? We don’t need to change our wardrobe every season. We don’t need to buy crap that falls to pieces in next to no time at all, deliberately to encourage us to buy a replacement. We can buy reliable, durable goods in the first place. And we can distinguish between ‘need’ and ‘want’. Can’t we?

Santa’s Workshop [33m]

Is there anything else we can do about it, other than shopping more responsibly? I’m looking around online as I write this to see what I can find. AntiSlavery.org has a few suggestions (including signing up to give them some money, of course). Mainly they want people to join their campaigns or ‘like’ them in their social networks. They have a 2m30s video here:

I think for those of us who don’t have much money, donating is not very interesting; for those of us who don’t want to be campaigning, or don’t have the time, that’s not much use either… I know the idea is to build up a critical mass of people to force governments to do a bit more, but clearly they aren’t close to it just yet. On the other hand, there are petitions, and suggestions of how to annoy various retail chains by writing to them with awkward questions. This may be a bit easier. And maybe a bit of fun too…

The Products of Slavery site has a nice interactive map showing the variety of products made through forced labour around the world. You can click on it to get more details for each country.

They generally recommend purchasing “fairtrade” products preferentially. Well, OK, but such products are usually more expensive… and the drive to cheapness is part of what has led the world to produce in this way anyway.

Historically, slavery was abolished in much of the world as part of a complex series of events, discussed on the International Socialst Group’s website (naturally, they have a particular perspective on the issue… but who doesn’t?).

Short answer: the alternative is to be a kind of financial slave, basically. Why? Because you won’t know how you are being ripped off. The method is on the one hand very subtle, and on the other absolutely outrageous.

The problem with the financial system, if these two short videos are correct, and I rather think they are, is that it depends on perpetual economic growth to work. Unfortunately, we live in a world of finite resources. OK, we might sneak off into space, and get more from there having destroyed our homeworld, but it ought to be possible for us to run our finances without such destruction too.

The problem is that most of the world’s money is not really ‘money’ at all, but debt. The system by which it is created is through people and businesses taking out loans. So it all has to be paid back, with interest… and the interest hasn’t been created! So there is a constant game of catch-up being played, for which a small level of inflation is the continuing visible portion of the price. But it is worse than that. The system is ‘exponential’ in nature: that is, it is constantly accelerating. Sooner or later, it always must crash disastrously.

But don’t take my word for it, or even that of these two videos. Any standard economics text will tell you the same if you look up ‘creation of money’ in it. You can also check the Wikipedia entry, for example. Note though: not all economists actually agree as to how money is actually created! I find it amazing that economists, in effect, don’t actually know something that one would have thought would be really fundamental to economics!

Anyway, these two videos are called ‘Money as Debt.’ The first one introduces the mainstream economists’ theory, and criticises it, and the second one explains some of the history and implications of the system, and makes some suggestions as to what we might do about it. I think we may have to do something about it fairly soon.

Money as Debt I [37m]

Money as Debt II {77m]

I’ve written about debt and credit cards before, but this video, ‘Maxed Out’, is one of the best for explaining the predatory tactics of the bank and credit companies. Yes, people are at least partly to blame for getting into debt, but they are at the same time being tricked into taking on debts that are deliberately structured so as to be very hard if not impossible to pay off. Taking on credit card debts is like being a hapless dinosaur walking into the La Brea Tar Pits. I’ll summarise some of the tricks below, but first, here is the video.

Maxed Out: Hard Times, Easy Credit and the Era of Predatory Lenders [1h 30m]

OK. So, to the tricks. It would be posssible to write volumes on this subject, but a blog is not the place for it so I’ll try to be brief. Some of the tricks are blatant and obvious, and some are subtle and maybe even accidental to some degree.

First, a subtle one (not entirely accidental either: watch the videos on ‘The Century of the Self‘ to see why). The companies, the media and the government collude to promote the idea of a consumer-spending-based society: a fantasy lifestyle is promoted throughout the media and commercial worlds, to such an extent that citizens in the West typically end up feeling practically entitled to the ‘good life’. That feeling of entitlement runs deep and sits there in full form just beneath the surface in most people. And it causes massive overspending on endless junk and entertainment that people, in fact, do not actually need. Except in their heads. And that’s enough.

When the economic times are good, and regulation is going through one of its regular slack periods, people can take out large loans based on the ‘equity’ in their homes, and use that as they please. The debt gets added to what’s owed on the house, but when prices are rising rapidly this can be easily covered over a few years from the rising value of the property: the idea is if you get stuck, you can sell the house at a profit anyway. But when the market turns, as it always does eventually… houses get repossessed because the owners can’t or won’t sell them or they owe more on them than they are worth because the values have dropped.

This is a general pattern with lending, and not just on homes. It applies to bank loans, credit card loans and other so-called ‘unsecured’ lending (loans not based on your home or other large asset, generally). When interest rates are low, or inflation is high, it is usually possible to borrow easily. Then the screws tighten: maybe interest rates skyrocket from 2% to 20%. Maybe unemployment goes up massively. Whatever. The upshot is the banks get to seize a load of property from people who owe them money. This cycle happens 1-6 times over a normal human lifetime, roughly: once or twice massively, a few more times in a smaller wave.

The credit card companies and banks charge very high over-limit or overdraught fees, and high late payment fees. If you go over limit or are late paying, they often also exercise the right stated in their small print to increase your interest rates. They will also sometimes do this if you have been late or over limit to another lender. These companies make very big profits from delinquent customers as a result.

If they can’t get you with late/over-limit fees, the next best thing for them is for you to pay the minimum payment each month, forever, or for as long as possible. Customers who pay off their debts every month are worthless to them. So guess what? The poorest customers, that is, those most likely to be unable to pay everything off every month, are their most profitable customers (as a group). Big financial institutions finance these ‘payday loan’ shops you must have seen springing up like Japanese Knotweed all over the place in recent years. Why? Because those business specialise in lending to this customer group…

Bank staff are trained not in banking, but in sales.

When a customer starts struggling with their payments, the above charges and any others they companies can think of are quickly added to the debt. In the course of even just a few months a relatively small debt can be multiplied many times over by the charges. Finally the customer is driven over the edge and liquidates their assets, declares bankruptcy, or something similar. The bank gets the assets (approximately). They don’t care about the actual debt: the debt plus charges was the target all along. As soon as you show financial weakness they will pile on the charges and, in effect, take everything they can before you can stop them.

Big name banking institutions, pillars of the community, world famous names: these are among the worst, the most piratical. Don’t think that a famous high-street name will be honorable. They will not be, when the chips are falling in their favour as described above. They have all contributed to the way the laws are written; those laws allow their practices.

When customers try to re-finance loans, or consolidate loans, that is, trade-in their old loan with high payments for a new one with different terms and hopefully lower payments (the commonest type), it is not necessarily the case that those customers are given a good deal, or even a better deal. Maybe the payments will go down from £500 a month to £450 a month. Probably £250 would have been possible. Maybe the interest rate will go down from 25% to 20%. Sound good? But maybe the monthly payment will have gone down so much that over the long run of the loan, you’ll end up paying more interest overall. Whichever way you try it, there’s an angle for them… watch out. Do your own maths, carefully.

The banks target students in further education preferentially. Firstly, they are away from home for the first time and are easy prey for overspending. Secondly, those that evade that trap can become long-term ‘lifestyle’ customers who think that having some credit cards is normal and OK. And being future graduates, they could be high earners too. Good future customers for lifestyle loans for cars, houses, etc. Not many of them in the modern world will manage to keep enough of a surplus to save up instead of borrowing their way through life, unfortunately.

They keep offering more credit cards, more loans, more financial products… most if not all of which you can, in fact, do without.

They keep raising their customers’ credit limits, so they can borrow more, and more, and more… and have to keep working harder and harder and harder to keep up with it all.

Another subtle trick that is widespread in society: blame the debtor. But… isn’t it the debtor’s fault if they borrow all this money they can’t afford? Well, is it? Go back and look at some of those techniques described above, and see if they are fair. Is it fair to lend to students who’ve just left home? Is it fair to promote a high-spending lifestyle to people who know no better? Is it fair to cycle interest rates down and up, and to pile on charges the minute someone slips a little?

When someone gets into financial trouble, you don’t have to look far to hear or see someone using the ‘righteous indignation’ voice against them: “Just how do you propose to pay back this money that you owe?” Or, “How do you propose to take responsibility for your debt?” What is this? Are they reasonable, taking into account the sly tricks used to get people to borrow more than they can afford? I don’t think so. Debtors should not fall for this voice. It is the voice of sado-masochism, and it leaps out the minute such people think there is a possible victim in front of them. If you refuse to cringe, the sadist will look elsewhere for his meat. Read The Fear of Freedom (Routledge Classics) if you want a psychologist’s portrait of such people. For now, just be clear in your own mind that it is not your fault if the law allows these piratical financiers to rip you off. Sure, you made mistakes. Everyone does, many times throughout their lives, in different ways. But making mistakes doesn’t make it OK to trick you; to knowingly lend you more than you will realistically be able to repay in a reasonable time, at a reasonable rate. You have some responsibility. But don’t shoulder the entire blame. Two-thirds or more of the interest and charges are part of the scam and are nothing to do with you.

One last point. I mentioned that the laws allow this kind of rip-off. There was a case in point on the news recently. A company is sponsoring free travel on the London Underground on New Year’s Eve. That company is a loan company. In the attached picture, you will see that the “typical APR” (Annual Percentage Rate) is 2689%… yes, two thousand six hundred and eighty-nine percent per year.

When asked about it, the voice of the government authorities, on this occasion London Mayor Boris Johnson, said that they were a legitimate company regulated by the Financial Services Authority. So that’s all right then.

And it is. Officially. So look after yourself, because the government does not. And this applies just as much in other countries as in the UK.

This video was produced before the Credit Crunch, and was suitably subtitled, “America Before the Bubble Bursts.” It spoke of sub-prime lending before the general public knew it was a problem. The video is basically about debt, especially credit card debt, and the usurious interest rates and tricks the companies use to rope people in, with things like student loans, pay-day loans, interest-free periods, and so on. As a preacher near the beginning of the video says:

“Our society has been set up to keep us struggling and not give us relief. I believe that there’s going to be economic fallout and I’m telling my church to be prepared. What goes up, must come down.”

A housewife says this:

“I just feel like everyone is living above their means, or struggling to get what people could have years ago, like a house and a car.”

They were right; but the economic fallout seems to be to be only just beginning. Nowhere near enough debt has been liquidated to put the Western economies back on a sound footing yet.

Here is the video [1h 29m]

David Icke believes a lot of strange stuff, completely unverifiable for the most part, but his description of the way the current banking crisis came about is clear and worth listening to if you don’t quite get how it all happened. He also makes a prediction about the third phase of the process, i.e., that the international financial system will be (deliberately, he says) crashed so that a global banking system can be implemented…

In reality, I’m not convinced that it needs a conspiracy theory to see that things are going that way. It is the natural order of capitalist economics and power-brokers in general to tend towards monopoly in all areas anyway. Banking is no different, I am sure - and politics certainly isn’t. And, such people being stupid, we can be sure that the proposed system won’t work either, and will probably lead, as David Icke claims, to some sort of financial dictatorship or at least fiasco, in the not too distant future.

Here’s the interview [about 40 minutes long - the first couple of minutes are not in English].

Living in London is stupidly expensive. Well, I guess we all know that, but I’ve been looking at the figures a bit more lately, as my wife doesn’t approve of our financial situation. Here, for a grand a month, I get a small 2-bed flat (British homes are the smallest in Europe, on average). In, say, Yorkshire, I can get a 2-bed house for about £350 a month. If there is work, even at the minimum wage, that is viable. Here, we are finding it almost impossible to save. In London, you are either decidedly well off, or poor. There is not much in the middle.

And what of other countries? Here, the pound sterling is a strong currency. But in many countries, a thousand pounds is a lot of money. Many people come to this country, live 10 to a house to cut their rental expenses and save like mad for a few years. They can then return home and purchase big properties. I knew someone who did this and returned to South Africa and bought a whole farm. My wife knows of someone who returned to Russia and bought a block of flats with his savings!

Now where in the world is nice, but cheap?

The Reverend Billy is a self-styled evangelistic priest who is a bit of a comedian, but with a serious message. As Christmas approaches, he asks us to avoid the “Shopocalypse": we are shopping too much, and too irresponsibly.

Remember, the environment is being destroyed by destructive capitalism - by built-in obsolescence - by we, the consumers, buying junk we don’t really need. And people’s lives are being destroyed in what amounts to slave labour camps in countries like China, Sri Lanka, The Philipines and more, as children and teenagers work 19 hour days making this junk for pennies that are barely enough to live on even in their own countries.

Reverend Billy presents his message with songs and jokes, but he is so right.

‘Twas the night before Christmas
And all through the house,
Not a creature was stirring,
Not even a mouse!

The children were nestled,
All snug in their beds,
While ads for new doodads
Played out in their heads…

Let’s hear it for the Reverend Billy!

So: how does one shop sustainably? Well, the video explains it briefly, but it is worth repeating. Shop at small local shops getting locally produced items wherever possible, and avoid shopping at the big multi-nationals as much as is feasible, in part because they use sweatshop labour often, and in part because the money you spend there is not recycled through the local economy as much, and in part because they are driving local businesses out of the market altogether. You might think that driving uncompetitive business into bankruptcy is a good thing, but in reality it is not so simple. Firstly, it is being done by illegitimate means: a) the use of ultra-cheap sweatshop labour; b) with artificially low prices which will be raised once the competition is gone (the usual monopolist’s practice); and c) with mind-numbing brainwashing “lifestyle” advertising which is being insidiously infiltrated into our very culture so deeply that we pretty much fail to even recognize that we are being advertised to any more - but we are. Secondly, a diverse economy is a healthy economy. If the marketplace is dominated by just a few monolithic corporations, it is inherently less stable and more prone to crashes, and the government is more easily blackmailed by these vast, wealthy and amoral organizations.

Well, I don’t have the money to shop anyway, as it happens. And I have to buy cheaply. I’ve noticed that the local shops are in some cases much cheaper than the Tesco superstore, for example with eggs and milk. I’m not one for price-checking but I will start looking at one item every now and then (hence eggs first, then milk… I’ll go on like that). There is more diversity in the superstores, so I will certainly use them for the main grocery shopping, but not so much, it seems, for the everyday items.

As for luxury items; I can’t afford them anyway. And I’m not unhappy. Sure I want to be rich and so on… but shopping doesn’t make people happy, I believe. People think it will make them happy, but if it worked, they wouldn’t need to keep going back so often, I think. My suspicion is that it gives a quick thrill, which fades, and the shopper ends up just a little bit less happy than when they started once the thrill has worn off. They are less happy because they know a) they’ve wasted some money; b) they’ve bought some junk which didn’t live up to their expectations; c) they’re burdened with extra junk to dispose of or keep dragging around with them as they go through their lives; d) they don’t know what else to do to make themselves happy (live in the moment, try enlightenment, try spending less, try spending time with people and not things, try doing things that can make them feel proud of themselves or pleased with themselves, develop their self-esteem ).

In the meantime… there’s Reverend Billy’s website, or you could read about how a sustainable economy might work, or this 21-minute video about how our production system works - or doesn’t: The Story of Stuff.

Why has Britain been declining for the last century or so? Well, there are probably lots of reasons - competition from around the world for one, legacy issues (old-fashioned equipment and systems in businesses that newer rivals don’t need to deal with), and… too much taxation.

Much too much taxation, indeed. At least, that’s what Eamonn Butler the author of this video, “Britain’s Trillion Pound Horror Story” and Director of the Adam Smith Institute, believes. He makes the interesting point that it cannot be correct that government spending can stimulate an economy, because such spending comes, ultimately, from individuals and businesses in the form of taxation, preventing those people and businesses from spending on goods and services. In other words, although he doesn’t say it, Keynsian economics must be wrong. I don’t know what the counter-argument may be, but certainly this side of it sounds, well, sound.

Britain’s Trillion Pound Horror Story [playlist, 5 parts of up to 15 mins each, 1h 12m total]