UK VAT drop vs Australian Method...
- Thread starter Solari
- Start date
The VAT thing didn't seem to take off as well as the government had hoped. Businesses just getting the extra cash they make by increasing their sale prices by the amount we would have saved with the 2% cut.
Businesses are going to be better off, joe public doesn't seem to be getting any benefit...
Businesses are going to be better off, joe public doesn't seem to be getting any benefit...
The idea of the VAT cut was to encourage people to spend.
If it has done that or not waits to be seen.
If people had been given a "one-off payment" instead (as they were in at least one US state) the problem is that the majority of people simply saved the money instead.
This just didn't help the economy at all.
The ultimate way to do it would be if the government gave everyone a "one-off payment" but in "any shop vouchers".
So vouchers that could be spent in any store you like, but they had to be spent, you couldn't put them in a bank.
Otherwise the throwing of money at people just doesn't help the situation.
Although this thread may indiacte getting money would result in it being spent - the majorty of people wouldn't.
If it has done that or not waits to be seen.
If people had been given a "one-off payment" instead (as they were in at least one US state) the problem is that the majority of people simply saved the money instead.
This just didn't help the economy at all.
The ultimate way to do it would be if the government gave everyone a "one-off payment" but in "any shop vouchers".
So vouchers that could be spent in any store you like, but they had to be spent, you couldn't put them in a bank.
Otherwise the throwing of money at people just doesn't help the situation.
Although this thread may indiacte getting money would result in it being spent - the majorty of people wouldn't.
im sure on the news there was a portion about christmas spending beeing as good/better than last years.
most of these buisinesses are just greedy and the huge corporations are laying off people all over the place regardless
Very true, but signs are positive from this week's trading on the high street. John Lewis announced an increase in sales this week and a record in online trade.
Of course, the main worry now is what will happen in January. Will Christmas 2008 be the last binge before the mother of all credit hangovers?
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A massive part of the problem is the banks reluctance to give out credit, both to the general public in the form of mortgages etc, and also to business, hence Woolworths went bust as it couldn't buy it's supplies on credit anymore. Giving the banks an injection of capital is a good way to get them closer to lending again, and one way of doing this that doesn't make the general public feel aggrieved would be to give everyone a one-off payment.
And to say it won't help the economy at all, it had limited effect (just like the vat cut) but it did have an effect, iirc the quartely growth when they got that cheque was 3.3% compared to sub 1% before and after. Problem is any measure at this point is a waste, it's too little and too late.
12Bn in a vat cut compared to a difference between deposits (eg savers) and lending at RBS alone is £700bn, thats £700bn that RBS has given out that it simply doesn't have. But that's fine, cause debt is money right? and we haven't had to just bail out several of the large banks?
Yes debt can be a useful tool for putting money into the economy, but not when it's done stupidly, if person or company A can afford to repay say a £10,000 loan, then giving him £50,000 is stupid yes? but obviously if you can package that debt up and sell it on to some investor, who insures against loss with a CDS, then it's not your problem anymore, but it is a problem.
And to say it won't help the economy at all, it had limited effect (just like the vat cut) but it did have an effect, iirc the quartely growth when they got that cheque was 3.3% compared to sub 1% before and after. Problem is any measure at this point is a waste, it's too little and too late.
12Bn in a vat cut compared to a difference between deposits (eg savers) and lending at RBS alone is £700bn, thats £700bn that RBS has given out that it simply doesn't have. But that's fine, cause debt is money right? and we haven't had to just bail out several of the large banks?
Yes debt can be a useful tool for putting money into the economy, but not when it's done stupidly, if person or company A can afford to repay say a £10,000 loan, then giving him £50,000 is stupid yes? but obviously if you can package that debt up and sell it on to some investor, who insures against loss with a CDS, then it's not your problem anymore, but it is a problem.
I blame the government not the banks for pretty much all of this, in the end something which has not really been mentioned is the upsurge in debt management companies.
Now I agree banks were probably to easy to get money from so joe bloggs employee could get his monthly / quarterly bonus, for example target = £250k a month loans done 240k a month loans not paid out because of A,B or C = 11k should i pay them out so i get my £2k monthly bonus or should i not pay them out and get naff all ? tough call eh
but now we have an underbelly of society who take out numerous loans as many as they an with no intention of repayment and after a month or two take all there debts to debt management / CAB and boom the banks have X amount to write off as bad debt.
how much of the billions written off i wonder is down to debt management and the CAb ?
we live in a society whereby there is always a way out, always something you can do to avoid repaying your bills. The problem i see as it is now is the government made all unsecured debt worthless due to the ability to go to Debt management, and now there trying to give poeple a way out of paying there mortgages which is going to increase the risks for the bank in lending to houses.
then they want the banks to lend ? why the hell would a bank lend in this current climate, the interest rates is nothing, the profit margin will be nothing, and at the end of the day most of them are taking stock of what they have, re organising for the future, no matter what those labour idiots do it aint going to help.
oh and the vat cut, dont get me started its a gimmick plain and simple, looking at the proposed increases there giving us a one off tax reduction which is going to cost them 12 billion for one year, then they are going to recoup billions more than that year on year from now on.
Its raising taxes by spin, something labour are increasingly good at.
Now I agree banks were probably to easy to get money from so joe bloggs employee could get his monthly / quarterly bonus, for example target = £250k a month loans done 240k a month loans not paid out because of A,B or C = 11k should i pay them out so i get my £2k monthly bonus or should i not pay them out and get naff all ? tough call eh
but now we have an underbelly of society who take out numerous loans as many as they an with no intention of repayment and after a month or two take all there debts to debt management / CAB and boom the banks have X amount to write off as bad debt.
how much of the billions written off i wonder is down to debt management and the CAb ?
we live in a society whereby there is always a way out, always something you can do to avoid repaying your bills. The problem i see as it is now is the government made all unsecured debt worthless due to the ability to go to Debt management, and now there trying to give poeple a way out of paying there mortgages which is going to increase the risks for the bank in lending to houses.
then they want the banks to lend ? why the hell would a bank lend in this current climate, the interest rates is nothing, the profit margin will be nothing, and at the end of the day most of them are taking stock of what they have, re organising for the future, no matter what those labour idiots do it aint going to help.
oh and the vat cut, dont get me started its a gimmick plain and simple, looking at the proposed increases there giving us a one off tax reduction which is going to cost them 12 billion for one year, then they are going to recoup billions more than that year on year from now on.
Its raising taxes by spin, something labour are increasingly good at.
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Personally I'd have been more inclined to spend with the extra money in my pocket. 2% of a mundane item makes sod all difference so it doesn't make me want to spend. 2% extra in my pay packet is a fair bit more so I'd be prepared to treat myself with the extra disposable income... but horses for courses..
The government is also thinking on a grander scale then just you or I. Sure, we may still not buy that luxury good because its only ~£20 cheaper, but the VAT cut will stimulate business trading, where 2% will make a huge difference.
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I seem to be one of the few people here who's not getting a government handout!
Me too.
My mum only gets paid 25k AUD a year and she doesnt get it because she is just above the limit centerlink will pay her anything for.
25k is almost nothing =/
Of course it is, I don't think anyone thinks otherwise. The notable intention being, of course, to repay it when the economy recovers.
Of course, we all know we won't be able to anyway.
Which is caused by the low interest rates that the bank of england persist in reducing.
Surely it's more down to the complete breakdown of the securities market, eg they can no longer sell their existing debt bundled up as securities so they've had to resort to the old-school idea of actually having capital from savers, which is nowhere near enough to cover what they used to lend at.
Bank of England interest rates generally mean very little to the rate banks lend at, the LIBOR and also the cost of new government bailouts like 14% on the preference shares, and the fee's for the guaruntee schemes, mean far more to them as thats where they get the money from, not the BOE.
Also obviously a portion from savers, but with the government pushing the banks to drop mortgage rates due to the BOE cut the banks are also having to drop savings rates, hence making it less likely people will save, and those that do will have put their money into fixed rate savings so the bank can't make any savings there.
Either people/the idiots in charge need to realise that this is gonna hurt, a lot, and ploughing money at it isn't going to do much as there simply isn't enough money to be thrown at the problem, or something seriously drastic has to be done, such as a national bank to give loans to people/business to buy deflating assets with, cause that'd be a good way to spend taxpayers money.
Bank of England interest rates generally mean very little to the rate banks lend at, the LIBOR and also the cost of new government bailouts like 14% on the preference shares, and the fee's for the guaruntee schemes, mean far more to them as thats where they get the money from, not the BOE.
Also obviously a portion from savers, but with the government pushing the banks to drop mortgage rates due to the BOE cut the banks are also having to drop savings rates, hence making it less likely people will save, and those that do will have put their money into fixed rate savings so the bank can't make any savings there.
Either people/the idiots in charge need to realise that this is gonna hurt, a lot, and ploughing money at it isn't going to do much as there simply isn't enough money to be thrown at the problem, or something seriously drastic has to be done, such as a national bank to give loans to people/business to buy deflating assets with, cause that'd be a good way to spend taxpayers money.
because there now buying things they dont want just so they dont have the money or they are sticking it under a mattress? lol
Or putting their money in foreign ISA's with far better interest rates.
BOE interest rates don't, or shouldn't, have a massive effect on savings rates, not even lending rates as banks don't generally borrow directly from the BOE.
The problem isn't the rates it's the idiots in charge (eg gordon brown and alistair darling), who after the BOE cuts interest rates immediately starts criticising the banks for not 'passing on the cut to homeowners', even though there is nothing to pass on, they aren't overly affected by it.
The only way they can afford to cut their SVR is by cutting the amount they pay out in interest to savers, If banks were 'allowed' to set their SVR based on commercial factors rather than the crap that spouts out of browns mouth then savings rates would still be attractive (maybe actually above inflation, that'd make a change) but on the other hand the idiots who bought their house with no deposit and are quite possibly already in negative equity and hence can't remortgage get stung with realistic interest rates on their debt.
The problem isn't the rates it's the idiots in charge (eg gordon brown and alistair darling), who after the BOE cuts interest rates immediately starts criticising the banks for not 'passing on the cut to homeowners', even though there is nothing to pass on, they aren't overly affected by it.
The only way they can afford to cut their SVR is by cutting the amount they pay out in interest to savers, If banks were 'allowed' to set their SVR based on commercial factors rather than the crap that spouts out of browns mouth then savings rates would still be attractive (maybe actually above inflation, that'd make a change) but on the other hand the idiots who bought their house with no deposit and are quite possibly already in negative equity and hence can't remortgage get stung with realistic interest rates on their debt.
No they're putting it in places like ICICI and Santander. And of course the recent Icesave, which cost the country billions in fsa compensation because there was no incentive to save in england.
Amen, if the people didn't scream for rate cuts it wouldn't matter that they dropped the boe rate but alas that's the boe's intention and every change in the boe rate thus leads to an equal change in savings rates.
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Icesave cost the country billions because it was a dodgy, unregulated, foreign bank based in a bankrupt country. Of course, if people want to repeat those mistakes and invest in places like Spain and India then let them go ahead - I just hope they don't expect the government to bail them out, they have been warned.