BUBBLE ABOUT TO BURST?

International Monetary Fund chairperson Christine Lagarde is highlighting that something needs to be done about Britain's housing bubble. The IMF are suggesting either a rise in interest rates, more house building, or a combination of both.

It's Friday. It's financial. It's Friday Financial with JULIAN SAYER.

Mortgage misery on the way for millions.

This week I want to give a quick recap on what's been happening since I started writing this blog back in February, both on the subjects I have covered, and geographically around the world.

First domestically. A few weeks ago I covered the problems building up in the housing market, and it looks as though it will become even worse than I had feared. The Bank of England even admits a housing bubble is forming, the bubble is out of control and when it bursts it will cause misery for all involved. This is the concern for millions, and if it does it will so damage the UK and its economy over the rest of this decade. This paragraph was taken from the article below which is well worth a read:

"The independent think tank raised the alarm about the most vulnerable 770,000 households already with mortgages, saying they were “doubly exposed”. Typically, they might have very low equity in their home (less than five per cent), might be self-employed or have an interest-only mortgage, making them less attractive to lenders. Secondly, it would take only a relatively modest rise in rates by 2018 for a third of their income to be eaten up by mortgage repayments."

http://www.independent.co.uk/money/mortgages/millions-face-becoming-mortgage-prisoners-as-rise-in-interest-rates-could-trap-to-23m-homeowners-9399137.html

How is this Governments gamble to ride the housing market to stimulate growth for the UK economy going to end? They will have to be very careful, it's already overheating and they have an extremely difficult balancing act ahead, but these housing bubbles don't tend to end well! As a whole the UK economy is growing, but it lacks of any real strength, which means it is very susceptible to outside shocks, and everywhere you look around the world, business is struggling and central banks are panicking.

HOME SWEAT HOME

A young couple look in horror through an estate agent's window at the ridiculous cost of buying or renting a home in Britain today.

It's Friday. It's financial. It's Friday Financial with JULIAN SAYER.

Millions are working themselves into the ground just to pay the the rent

IN EVERY facet of society the working population are finding it harder and harder to get on in life. I have looked at employment, pensions, tax, and inflation, and everything is going against a hard working person. This week I want to look at how difficult it is to get on the housing ladder, and who is benefiting from this artificial market.

Since Margaret Thatcher sold off the council houses and promised everybody should have the chance to own their own house, the UK has fallen in love with home ownership. We have seen over the years just how important the housing sector is to the economy. A booming housing market often means a booming economy. The solicitors, Estate Agents, removal  men, DIY stores, carpet shops to name but a few all benefit enormously when house sales are high. It's been an important part of this Government’s economic policy to try to help get the housing market moving again after the financial meltdown back in 2007.

After the 2007 financial crisis, lending changed overnight. The leveraged institutions simply could not get hold of funds in order to lend for mortgages. Employment became harder and salaries reduced and house prices fell. Demand dried up and they simply stopped building houses.

The wealthy were eager to buy every asset that the Quantitative Easing driven, low interest rate environment demanded. Housing is back in demand. With demographics, immigration and a reduction in supply, there is a huge shortage of houses.

The Government even realised there is a problem;

http://www.parliament.uk/business/publications/research/key-issues-for-the-new-parliament/social-reform/housing-supply-and-demand/

The problem is that with supply failing to keep up with demand, rents are rising faster than incomes in some parts of the country, meaning that a higher proportion of people's wages are spent just keeping a roof over their heads.

POWER TO THE PEOPLE

Polly Toynbee joins protesters inside the Conduit Street branch of Starbucks (Image courtesy of The Observer)

byHARRY BLACKWOOD

We've already got it. we just need to use it properly

WITH the World Cup due to start in Brazil shortly, it's very appropriate that coffee has been in the news recently.

Firstly we had the news that Cafe Nero had been following the long practiced tradition of multi-national coffee chains and had been avoiding tax. Next up we had Starbucks - the company that led the way in tax dodging - announcing that it was moving its European headquarters to the UK. They cheerfully added that this would mean they would be paying more tax.

Well, that's jolly good of them. See, in the past they've not been able to see the benefits of coughing up tax. Oddly enough they've been unable to see that things like hospitals and schools and other nice stuff is paid for from tax receipts. So, it's nice that they've at last seen the error of their ways and will now be tipping vast sums of money into treasury coffers.

So why the change in attitude from Starbucks? Have they suddenly developed a guilt complex or taken on a new philanthropic approach? Have they hell. Since the outcry a couple of years ago over their tax avoidance, they've been losing customers. This is nothing other than soft soap PR. Rest assured they'll still be doing their utmost to deprive the Treasury of as much as they can.

Walk down any High Street and you'll still see idiots paying through the nose for Starbucks coffee despite all the publicity and boycotts in 2012. Quite frankly I despair. Our town centres are awash with coffee shops - both multiples and independents - so why the hell would anyone choose to give Starbucks their hard earned cash? In fact why would anyone choose to NOT use an independent?

PENSIONED OFF!

There may be trouble ahead... retirement pensions will increasingly become unaffordable in the coming years, whether it's the state retirement pension or company and private pension schemes

It's Friday. It's financial. It's Friday Financial with JULIAN SAYER.

It's official. The UK state pension is worst in Europe.

It's been a busy two weeks looking after my six year old during the Easter holidays, but that's the conundrum of modern life. One of my pet hates is the lack of time modern life gives you; investing your most precious commodity (time) into the teaching of your greatest asset (your children.) So I am afraid this week's blog will be a short piece.

How a society looks after it's young, old and most disadvantaged says everything about it. This Government's continued attack on the most disadvantaged continues relentlessly. The poor, unemployed, handicapped, young and old are all suffering with reduced income, while the rich and multinationals continue to flout the tax laws stashing trillions of pounds in off shore tax heavens. This week I want to take a look at what's happening in the pensions industry, how it's affecting the pensioners now and how it will affect you when you retire in the future.

Having worked in the industry for twenty odd years, one thing I know for sure, is that this Government will continue to reduce the amount of pension you are going to receive in the future. Everything points towards it, an ageing population, reduced tax revenues, low employment levels, and longer life expectancy. In the UK we were once the envy of the world with our well run state and private pension schemes, and those lucky enough to have worked in the "golden generation" have reaped the rewards and are enjoying the benefits of these schemes. Sadly, just like our other world renowned institutions like the NHS and Railways, our pension system will be run down and hived off for the profit of the few, and to the detriment of the many.

BBC OFF THEIR TROLLEYS

The irony of Tesco profits being hit because workers don't earn enough.

ByHARRY BLACKWOOD

HAVING worked for the BBC for a short time, I can tell you categorically that most BBC journalists don't know their arse from their elbow.

Such is the narrow gene pool that the BBC selects its journos from (think Oxbridge and public school) that it's no surprise that they get the wrong end of the stick when it comes to even the most basic news judgement.

This week there was a classic example of what I'm talking about when Tesco announced its yearly results. The High Street behemoth posted profits of £3.3 billion. Worth pointing out at this juncture that a billion is a thousand million. So, a bunch of glorified corner shops pulled in 3,300 piles of dosh with a million quid in each. Nice work of you can get it.

http://www.bbc.co.uk/news/business-27046105

But the BBC wasn't interested in this massive amount of profit because some highly paid executive had already decided that 'the story' was a six per cent drop in profits. Except it wasn't. If you strip out new store openings, the like for like fall was only 1.4%. Not too shabby in times of austerity, inflation and queues outside food banks.

THE MEN WHO SOLD THE WORLD

Whether it's Spain, Greece or the United Kingdom, once proud nations have had their strategic state industries, wealth, assets, cultures and futures systematically stripped and sold-off to pay for the damage wreaked by greedy investment banksters and their friends in politically low places.

It's Friday. It's financial. It's Friday Financial with JULIAN SAYER.

Banksters have stripped countries of their assets and brought misery to millions.

In every region of the world I can think of, the sovereignty and wealth of each nation is being sold to the highest bidder.

The once proud people of each country are having it sold from beneath them. Each nation, and the people within it, are under attack, not from the so called terrorists we hear so much about, but from within the financial markets that demand their pound of flesh.

In every country, the people who run the Government have largely decided they no longer wish to serve the country's best interests, but prefer instead to serve the interests of the chosen few; the billionaires, the hedge funds, and the investment banks. They are in the process of gorging themselves on the sales of assets, houses and nationalised industries all around the world. The general public is being short changed in every respect.

Here in the UK whether it's the Royal Mail or LloydsTSB, the taxpayers' assets are being sold to help keep the nation's debts under some sort of control. You can argue the rights and wrongs of selling all the state's assets, but when you do, at least get fair value.

There is no doubt that the Royal Mail sale reeks of desperation and mismanagement. Royal Mail shares are currently more than 70% higher than the 2013 sale price. The investment bank that advised the Government made millions, even Mr Osborne’s best man had his finger in the pie. Everybody involved made a nice little turn, with the exception of the taxpayer who lost out to the tune of £750m. A full breakdown of the sale can be found here;

http://www.bbc.co.uk/news/business-26819971

CAPITAL PUNISHMENT

Rising London property prices bringing misery to millions

 byHARRY BLACKWOOD

ONE of the most accepted signs of madness is hearing voices inside your head. These voices generally tell the affected person to do irrational things that could be easily described as mad.

Well, all over the country - but especially in London and the South East of England - there are people who are very obviously mad. There are voices in their heads that are telling them that now would be a good time to buy a house. As crazy as it sounds, they are doing precisely that. It's madness of the type that affected The Dutch in the 17th century when tulip mania gripped the country and tulips were changing hands for thousands of pounds.

The UK equivalent of this form of madness can be seen every day on the streets of London where very ordinary houses are changing hands for more money than the average person will earn in a lifetime. What's more, this gross stupidity is belong encouraged by the government with the BBC, as usual, acting as chief cheerleader.

The government wanted to create a housing bubble in a desperate attempt to mask the dire state of Britain's economy, but they saw that there was a major problem: lenders unwilling to grant mortgages much above 80% and potential buyers being unable to save the massive amount of cash required for a deposit. Enter stage far right the Help to Buy Scheme.

REFLECTIONS ON ME, YOU, MANKIND AND A MOTE OF DUST

A voyage of discovery. It's September 5, 1977 and NASA/JPL's Voyage 1 spacecraft is launched atop a Titan IIIE/Centaur booster at Cape Canaveral's Launch Pad 41 (left). Thirteen years and 3.7 billion years later scientist Carl Sagan insists with NASA's Administrator Richard H Truly that for the benefit of public education the cameras of mankind's little robotic emissary are turned towards the inner solar system for a photograph of the Earth. At this distance, beyond the orbit of Neptune our planet is photographed as just 0.12 of a pixel (right).

As guest blogger, ANDY FLEMING in his own lifelong

voyage of consciousness-raising, makes the ultimate connection between our ancient and vast cosmos and the human spheres of politics, economics, and philosophy. In the process he deduces that our very survival depends on new economic institutions, caring for each other and cherishing our Pale Blue Dot, the Earth, the only home humanity has ever known.

I’m sure that all of us who share the same political, economic, sociological and philosophical perspective of this unique, revealing and informative blog arrive at this standpoint via a variety of routes. For some of us, our journeys may have been circuitous and lengthy, perhaps taking a lifetime. Meanwhile others may have been encouraged at an early age to foster a sense of equity, fairness, critical thinking, healthy scepticism and a disdain for greed and selfishness.

My own voyage of awareness, consciousness-raising, synchronicity and connection-forging has taken me from my college education in science, then my university education in sociology, my employment in youth work, the retail sector and the media and then on to my burning passion: marvelling at the vastness of the cosmos and our place in space. Anyone who knows me knows that my avid interest is mankind’s original science of astronomy, practised by generations of human beings, way back into the mists of antiquity.

Whatever subject we use as a vehicle in our individual journeys of discovery that reveal who we are and from where we came (both as individuals and collectively as a species), the road often includes a pivotal turning point or spiritual awakening. Our whole world view changes profoundly and with it our beliefs and aspirations.

Such profound personal development and change often arises through exposure to the works of great philosophers, sociologists, poets, authors or religious leaders. And yes, sometimes, as in the case of Nelson Mandela politicians too! Such progress may also not be without some personal discomfort and stress, and indeed to some people, change may be a psychological imperative as they battle their own personal demons.

Personal change within the political or religious spheres for example may lead to profound conflict with one’s peers, friends and family as one develops new ways of seeing society and the physical world. These new beliefs and new ways of thinking with healthy scepticism often place the person on a direct collision course with prevailing paradigms and the orthodox perspectives of the social and physical worlds. The invariable outcome however is a better, healthier human being at peace with oneself, the wide world and the cosmos.

VOTE. BUT ONLY IF YOU WANT A POLITICIAN

byHARRY BLACKWOOD

More than ten years ago when I first started banging on about the not voting thing, virtually everyone thought I was bonkers.

Now, I'm in great company. Not only are millions of 'ordinary' people realising that we can't change the system unless we first smash the system, but people like Russell Brand are articulating perfectly what I've believed for ten years. Hell's teeth, even Jeremy Paxman has said he totally understands Brand's stance on not voting.

Sadly, there are people out there who just don't get it. They blabber on about voting being our democratic right and something that people fought in wars for, blah, blah, blah. Actually if they opened their eyes just a little, they'd see this "democracy" is a complete sham. Smoke and mirrors. Throwing a few crumbs to keep us plebs happy.

Well, I'm not happy. I'm absolutely seething.

Here's why.

* I don't want to live in a society where the weak, the vulnerable, the sick and the disadvantaged are picked on and picked off one by one. That is precisely what we have seen the Tories and their LibDem bitches do since they came to power. The sick. The disabled. Those with too many bedrooms. The long-term unemployed. All have been in the cross hairs of the nasty party and ace marksman Iain Duncan-Smith.

* I don't want to live in a country where young people are told they have to work in crap dead end jobs or they'll lose their few quid job seekers allowance. Or where bright young people work for three years at university to get a degree and then find they are £50,000 in debt and the only jobs available are part time supermarket positions. Or where people graft in Poundland for free to give them work experience. Imagine that: working in a shop where everything is worth a pound except you.

* I don't want to live in a country where obnoxious footballers are paid more in a week than a neuro surgeon or a heart consultant will earn in a year. We have nurses run ragged on £25,000 a year or less but Wayne Rooney and his mates are earning a million quid a month. From a moral, ethical and compassionate point of view there is simply no justification for this nonsense.

* I don't want to live in a country where corporations and wealthy individuals are allowed to find loopholes in tax laws to avoid billions in tax every year. Tax that would mean those poor bastards who are being made to suffer could actually have decent lives.

THE BRITISH BULLSHIT CORPORATION

Are you thinking that with so much Government propaganda and 'interference' now is the time to adjust your sets?

Proudly telling you what the government wants you to think.

ByHARRY BLACKWOOD

I'VE been a huge critic of the BBC for a long time, so it may surprise a lot of people to know that I worked for them for a while.

Considering the money they waste and how much the top brass are paid, working for the BBC in an 'ordinary' capacity isn't going to make you rich; in fact the pay is crap. But I'm really glad I spent some time working for 'auntie'. For starters I enjoyed the work and especially the interaction with listeners, but best of all it gave me a useful insight into a totally dysfunctional organisation that nowadays is nothing more than the mouthpiece of the Bullshit Factory aka The Establishment.

There are some good people working for the Beeb, but largely it's infested with middle class, posh people from privileged backgrounds and top universities who have no idea what it's like in the real world. Arse and elbow spring to mind.

A recent story that featured on BBC Breakfast illustrates my point perfectly. They reported on a survey that showed personal saving in the UK was at an all-time low and queried why.

Well, I'll tell them why: just about every working class person in the country is on the bones of their arse. They can barely put food on the table every month and pay for fuel and electricity without stashing a few hundred quid every month into a flaming ISA or a savings account.

The further down the pecking order you go, the worse it is. It's no wonder that pay day loan sharks like Wonga (big Tory donors) are reporting record profits. No wonder also that Food Banks are opening up across the nation at alarming rates.

MIND THE GAP . . .

It's Friday. The topic is financial. It's FRIDAY FINANCIAL with our resident expert JULIAN SAYER.

Poor people pay taxes and rich people avoid paying tax. How the hell can that be right? Read on . . .

MIND THE GAP . . .

It's killing you!

MILLIONS of people have an uneasy feeling that something is not right in the global economy –

but they struggle to put their finger on what exactly the problem is. Now pay attention and don't fall asleep, when I tell you the very root of the decay is tax, and in particular, the abuse of tax rules and regulations.

As I mentioned in last week's blog, the middle and working classes have endured ten years of a reducing real income, while the super-rich have got richer. The tax burden is forever increasing on the people who can least afford to pay, while the wealthy and multinational corporations are paying less and less. This scenario is widening the income inequality gap, and is the root cause of the social breakdown.

Governments have to raise tax in order to pay for the services a society needs. The more tax they can generate the better the services and pensions they can provide. If tax revenues start to decline, then those services have to be cut. If you really want the breakdown of how much the UK and where it raises these taxes from, you can find it here.

http://www.hmrc.gov.uk/statistics/receipts/info-analysis.

Tax avoidance has become a real issue of late and has to be tackled if you want an equitable society. Corporation tax avoidance is the one that has made the headlines, with companies such as Google, Amazon, Vodafone and Apple making billions in turnover but paying very little in tax.

LABOUR DONT GIVE A SHIT ABOUT YOUNG PEOPLE OR THE LOW PAID

Stockton North Labour MP Alex Cunningham. His constituents have complained via Twitter because while campaigning for a Living Wage, he shamelessly exploits a young office apprentice by paying them just £125 per week.

By HARRY BLACKWOOD

If the Labour Party MP Sadiq Khan is to believed (please don't, he's a politician) his party cares deeply about Britain's young people. They must do. Why else would Labour be committed to lowering the voting age to 16?

Well, how about if it was nothing more than a callous and calculated plan to get young people to THINK Labour cares in order to grab a few extra votes? Forgive my cynicism, but a lifetime of dealing with scheming, duplicitous, lying politicians has taught me to be suspicious about everything they say and do.

The reality is that the Labour Party don't give a damn about young people. If they did they'd make a manifesto pledge to do something about the insultingly low wages paid to young people. The National Minimum Wage of £3.72 an hour for 16/17 year olds is nothing more than slavery. Hell's teeth why don't they just go the whole hog and start sending kids up chimneys again?

This issue of low pay was brought into sharp focus this week when Stockton North Labour MP Alex Cunningham was taken to task on Twitter by constituents after it emerged that he was taking on an apprentice in his office and paying the young person £3.37 an hour, or the princely sum of £125 a week for a 37 hour week.

GUTLESS ED 'MR BEAN' MILIBAND MAY NOT EMBRACE LIVING WAGE

Sir George Bain, credited with devising the UK minimum wage has told the Financial Times that his system of protection for the low paid is outdated

By HARRY BLACKWOOD

WITH impeccable comedy timing, the Manchester United footballer, Wayne Rooney, signed a new contract today that will see him earn £300,000 a week. Yes you read that correctly £300,000 A WEEK for kicking a football.

Now I realise that's not funny. No, what's funny is that on the same day as an oafish footballer was putting pen to paper on a contract that will see him earn over a million quid every month, Sir George Bain - the man credited with coming up with the UK minimum wage - was telling the Financial Times that his system of protection for the poor had run its course.

You bet it's run it's course. It had run its course the day it was introduced because minimum wage was never going to lift people out of poverty. It was only ever going to keep them IN poverty. After 15 years that's EXACTLY what it's achieved.

The same poor bastards that were working all week on minimum wage In 1999 to earn enough just to scrape by are doing precisely that in 2014. Earning £6.31 an hour (the current legal minimum for adults) certainly isn't living. Hell's teeth, it's barely even surviving. That's what millions in the world's sixth richest country are doing - working their backsides off just to exist.

What Sir George failed to properly address in his FT article is how his minimum wage concept has actually failed miserably. What it's done is normalise low wages instead of acting as a benchmark to create a ripple effect and drive wages upwards.

There has been no ripple. There are 1.2 million UK workers who are paid £6.31 (or within 5p of that) and a further 1.4 million who are on within a measly 50p more. Employers think they are gushing philanthropists if they pay a few coppers above what they are legally obliged to.

In total there are five million workers in the UK who are 'low paid' by using the "official yardstick" of two thirds of the typical hourly wage. AND THERE IN A NEAT LITTLE PACKAGE IS THE PROBLEM.

THE ARCHBISHOP AND THE JOBCENTRE

The Archbishop of Westminster, Vincent Nichols.

by HARRY BLACKWOOD

Nothing changes. This week the Archbishop of Westminster, Vincent Nichols laid into the government for its welfare reforms which he branded a disgrace.

Britain's most senior Catholic accused the coalition of removing even the most basic safety net, leaving society's most vulnerable facing hunger and destitution.

Now, I've got no time for the Catholic Church - or any organised religion - but having watched the Archbishop on BBC news, I was impressed with what he had to say and the way he said it.

I've been very fortunate with my career. I've never claimed a penny in unemployment benefit - or any benefit - but just over five years ago I had the audacity to try to make a claim when I went to my local Jobcentre for the one and only time

Here's how it went . . .