chris955

Sometimes during the horizontal tango I detect a faint smell of burning.

Pistolpete2

If only inflation were the real problem.

Since I have taken the early retirement route and at this point have no pension to speak of I have to make it my business to be informed as to where the key economies are going or I will run out of money fast. That is not to say I know where to go financially but one can stay ahead of the game almost as well by knowing where not to go.

Reading articles such as this one in today's DT gives one a better insight into key issues which face Europe and the UK economy:

http://www.telegraph.co.uk/finance/c...are-costs.html

Some extracts:

"...a high degree of public support for further cuts in welfare spending. Where once the Tories were regarded as cruel and heartless for wanting to slash benefits, it now seems that they can’t be tough enough. Politically, Osborne is therefore pushing at an open door when he says this is not just about saving money – it’s about fairness and enterprise.

If there wasn’t already enough to worry about in Europe’s fiscal meltdown, forecasts point to destruction of the very foundations of the European social market economy. Taking into account the expected decrease in fertility and mortality rates, the burden on active workers of healthcare and pensions spending is expected to grow over the next 20 years to 63.5pc of GDP per capita in Italy, 61.6pc in France, and 53.3pc in Germany.

Favourable demographics mean that by comparison, the projected UK burden is relatively small at just 38.7pc. Yet it is still quite high enough.

As is only too apparent, much of Europe is incapable of supporting its present pensions and healthcare promise. Herb Stein, one time economic adviser to President Nixon, famously remarked that if something cannot go on for ever, it will stop.

In Europe, stopping is going to make the present outbreak of economic, social and political instability over deficit reduction look like a stroll in the park.

We are only in the very early stages of Europe’s wider fiscal crisis. There is still much worse to come, regardless of whether the euro survives or not.

It is hard to find a single chief executive who is interested in serious investment on mainland Europe right now. For all the reasons highlighted, the place is regarded as too toxic to touch. The future of the euro is just one among a mountain of negatives.

All of which means that Osborne can expect little or no help from the Continent in his efforts to get on top of Britain’s own debts. Europe is set on a five to 10-year period of nil growth, falling living standards and brutally disappointed expectations. All that Europeans can look forward to once the present phase of austerity comes to an end is yet more austerity. "

Ouch!

"......tax increases and swingeing cuts in capital spending has damaged growth badly and therefore steepened the climb back to health.

The Coalition went for the easy hits, rather than the really difficult, long-term stuff. This has not served either the Government or the economy well." - as per usual - see also Obama who lost the initiative after nine months in office due to a poorly set list of priorities from his political advisors, in my view.

"Osborne rejected the case for tax cuts yesterday, but actually, putting money back in people’s pockets is the best thing he could do to support demand and give the British economy a fighting chance against the winds blowing in from Europe.

To be effective, such tax cuts cannot be temporary, but must be permanent, and therefore funded with far more draconian action on welfare than we have seen to date. Cameron and Osborne need to ask themselves just three questions. What are they in government for? Is it compromise and defeat? Or reform, growth and a sustainable future? "

Pit Bull.

It's not good news on the economy front, they are saying there's going to be no growth and continued recession, I thought things were picking up.

Zen10

When I hear this I always ask - how? Just more financial wheeler-dealing in London? Or a renewed commitment to proper manufacturing? etc

Bud the Wiser

I started to seriously plan my retirement in 2008, I'm probably further away from forecasting any possible date now than I was then. Inflation, as you say, is only a small part of the equation. Means testing, market instability, fiscal cliff, national debt, pension funds, health care,etc.etc.etc. Add to that the greatest unknown of all - How long you're going to be around for - and you see difficulty of retirement planning. The old adage that you withdraw 4% per annum from your nest egg doesn't seem to hold up in the current climate.

dunroving

Annuities are one way to guarantee you won't end up with nothing - but if you pop your clogs the day after you purchase it, it's all gone (except for the ones with guaranteed periods, or that incorporate a surviving spouse provision).

Annuity rates aren't great - but from what I've looked at, they are greater than 4% ...

UkWinds5353

With the UK economy sputtering I wonder what entitlements are the conservatives thinking about cutting.There must be a certain segment that is plotting to use the current state of the economy to switch to a usa style medicare/medicade based system which is funded directly by employee paroll. With a difficult economy and the Tories running the government, how far can the UK be from changing the social safety-net?
Conservatives worldwide love to use government solutions as a means to fund and garner public sector wealth. A person's illness in the view point of many conservatives,is thought to be a way for insurance companies to provide a service and make a profit while helping the sick to become healthy. A recession is a dream come true for budget cutters.

Zen10

"Hundreds of contracts signed in 'biggest ever act of NHS privatisation' -
Labour says private contracts worth a quarter of a billion pounds have been signed this week"


http://www.guardian.co.uk/society/20...-privatisation

chris955

I must say most of those examples in the story make perfect sense.

UkWinds5353

This is how it starts.Slowly but surely the Conservatives will introduce what seem like a small amount of privatization then suddenly the percentages of private sector take over will become sizable. That is their game plan.Not saying the free market way is completely wrong.Just pointing out how government control agencies are cut back over time.It will be more difficult to pull off the accomplishment of privatizing the NHS over night and mostly because of it's popularity.But given time, the Conservative doctrine of Free market over Government dependency will be put in place. When the UK economy is flailing many Conservatives will blame the spongers for weighing down a once proud nation.God forbid if the economy tanks further the recession will be used to justify why people younger than say 60, must pay for private insurance until age elgible for old age style medicare/medicade.

The Republicans want to cut old age medical assistance in America by 30-40%. They want to issue oldsters a type of voucher and wish you well in getting an insurance company to accept it.You can guest how well that will benefit a person with pre-existing conditions. The Conservative Doctrine is the same the world over!

Bud the Wiser

Alas.....

http://www.telegraph.co.uk/finance/p...-printing.html

The comments section, once again, provides interesting reading. Hit best rated and read on.

TheArmChairDetective

I don't think it fair to single out the conservatives, it's nothing Labour didn't do on the road to ruin.

Pistolpete2

Thanks armchair.

Folks need to get themselves informed and see that BOTH main parties realise that the current state expenditure levels are simply unsustainable. Only Ed Balls seems totally out of touch with reality.

I posted just yesterday that the Tories are "pushing an open door" regarding cuts in benefits because the working Brit sees it as simply unfair that they have all the worries of housing and having children and being able to pay for them while those on benefits can have babies and get housing simply because they are on benefits. Cuts will come because they have to and because there is very widespread popular support.

In the case of the NHS, cuts will also have to come over time if only due to the change in demographic (aging population) but lets hope that there is a reasonable consensus as to where there is significant waste, or room for improvement.

Pistolpete2

I must admit that when I looked at annuities last evening after these posts here my gut feeling was that we were at an all-time low in terms of the sort of return that one can get today.

I'm not sure what typical life expectancy is for males today but I was told that my small annuity I purchased in 2006 (age 55) was using age 78 so a 20 year guarantee cost me next to nothing.

I see that life expectancy in the US at age 65 is (per 2009 tables) 17.6 years. If that is the case, you need to get 5.68% per annum returned to you just to get your capital back. Legal & General annuity tables are paying 5,354 for 100,000 with no indexation or guarantee.

I don't think this is saying annuities are a viable option unless you are absolutely sure you are going to live well past the actuarially calculated date of death and then only if you have purchased the plan with indexation to cover inflation.

UkWinds5353

I'm not saying the cutting of a budget hasn't been under the knive of moderates or liberals.But we can't argue with the history of past patterns.The doctrine of cutting social programs that benefit the working classes has historically been completely accepted and embraced as a political slogan of Conservatives. I don't think many moderates or liberals would put forth the idea that privatizing health care will produce a more efficient system.Most moderates would argue the opposite point of view.
Let us not forget the purpose of changing a health care system in the eyes of Conservatives, is not so much about efficiency but has everything to do with making a profit and adding to the free market.People have to decide if that's the change they want. Once the train leaves the station there is no calling it back.The question is, will the people of the UK collectively see this coming ahead of time before the damage is done. I love how major political parties in the UK connect with their counter-parts here in America.Campaign strategist here in the States actually are hired to plot the strategy of the political agendas in the UK.Interesting how that works. I wonder if that gets reported in the UK press?