To build on debt is to build on sand

While many families are struggling to survive in these times of austerity, the Tudor Whelans are unusual in that they used to enjoy a life of luxury.

Home was an £800,000 six-bedroom house with views across the Lancashire countryside. They drove a top-of-the-range Audi and Range Rover and their daughters went to private schools where fees cost up to £12,000 a year.

The family owned five horses ...

The reason why they are now impoverished appears to be that their vast business empire, when it existed, was built on debt.

Many people buy houses by taking out a mortgage, and many people get into financial difficulties as a result.  In many cases I am inclined to be sympathetic, but of course most people in Britain would not be able to buy a house without taking on debt.  Likewise, many people who start up businesses do so with borrowed money, but that is very different from trying to enlarge an already successful business by taking on yet more debt.

The Tudor Whelans did not need to build up anywhere like as much debt as they did.  Why on earth would any sane couple with debts buy a six-bedroom home for themselves and their two daughters? Why would anyone in their right mind buy expensive cars on credit?  Of course I do not know that the cars were bought on credit, but they were certainly bought at a time when the Tudor Whelans owed a lot of money.

The poet and politician Hilaire Belloc argued that rich people are morally obliged to give employment to the working classes.  I firmly believe that rich people are morally obliged to live their lives free from debt.  In fact I believe that we are all morally obliged to live our lives free from debt if we can.

The Tudor Whelans should have bought a three-bedroom house, and driven modest cars.  Their daughters should have gone to state schools from the outset, and a gerbil or a hamster would have been far less expensive than five horses.  At some point they should have stopped borrowing money to fund their business ventures, and set about the serious business of reducing their debt burden.

If they had gone down that route, then they might still have the three-bedroom house, and the modest cars, and the gerbil.  People who borrow money beyond what is reasonably necessary are a disgrace to their country.

A very British holocaust

If a dictator in a foreign country were to have thirty thousand people machine-gunned to death, the establishment would almost certainly portray it as a holocaust, or something along those lines.

The United Kingdom kills on average around thirty thousand elderly people every winter by making them freeze to death. I call that a holocaust.

The British government is tackling this holocaust by helping NHS hospitals to prepare to treat the victims of freezing weather, but maybe it would make more sense for people not to have to freeze in the first place.

Related previous posts include:

The next big freeze

Energy sector fat cats

The story of King Ed

People need to get real

Sometimes it is hard to avoid coming across as lacking in sympathy.  It is reported today that a Mumsnet survey indicates that many women feel that having a child harms their career, and it is also reported that the government is selling off £900m in student loans debt.  Apparently a lot of graduates fear that this will result in them being hounded for outstanding payments by private companies.

Regarding women in the workplace, Britain has persistently very high levels of unemployment.  In fact I am not sure that unemployment has been below the million mark since the 1970s, and even then the level of unemployment was much higher than in the 1960s.

People who are in work should therefore be grateful that they are lucky enough to be in work when so many people are not so lucky.  People who think that they are being unfairly held back in the workplace are welcome to complain, but would do well to reflect that they could be a lot worse off.

If you are not unemployed and miserable right now, then you could be before long.

As for graduates worried about debt, I feel compelled to point out that they are all volunteers.  Not one of them was forced to go to university, and therefore each one of them chose to burden themselves with graduate debt.  Of course they could refuse to vote in elections except for a political party which has pledged to cancel all graduate debt, but will they?  Does such a party even exist?

Evil Tories, communist LibDems

The Daily Mail is reporting that the Liberal Democrats are not happy about a Tory MP and government minister speaking out about the Pakistani community:

Qassim Afzal, the Lib Dem chairman of the party's Friends of Pakistan group, criticised what he called Mr Grieve's "loose language".

He told BBC Radio 5Live: 'I'm profoundly disturbed at a statement from such a senior Conservative MP against the British Pakistani community.

'This doesn't help bring communities together.'

Maybe the Liberal Democrats should judge the comments on the basis of their truth rather than on the basis of whether or not they help bring communities together.

It is unsurprising to see the communist Liberal Democrats showing contempt for the truth, but we must remember that the Tories are not exactly known for their love of the truth.  After all, a Conservative government led by the evil communist Margaret Thatcher tried to have a man jailed because he dared to expose their lies.

The present day Conservative Party is at the moment trying to persuade the government of Iran to stop enriching uranium.  Maybe they should stop meddling in the affairs of other countries, and start to pay more attention to their own failings.

Update: the Conservative Party has not abandoned communism after all.  Grieve has recanted his heresy.

Come to the Forest of Dean, dear Roma

The Minister for Immigration, Mark Harper, has been trying to pretend that Britain is not in fact about to be flooded by immigrants from Romania and Bulgaria.

 

Apparently his reasoning is that people in those countries who wish to migrate to the west will opt for Germany and Italy and Spain instead.  Perhaps he could tell that to the people who live near Marble Arch, who have to contend with homeless east European immigrants.  He could even try talking to people in the Page Hall area of Sheffield.

 

Personally I think it would be ill-judged of Bulgarian or Romanian immigrants to head for either Page Hall or Park Lane when they could instead set up camp in that beautiful area of Gloucestershire which lies between the River Severn and the Welsh border.  The local MP is called Mark Harper.  Let's see how he likes the impact of Britain's open borders on his home turf.

Fat cats and commies

Once again I find myself writing about fat cats and communism.  It is reported today that the fat cats are still very much in the business of putting themselves first, with directors of big companies enjoying huge pay rises while millions of people are struggling and some are even turning to food banks.

How exactly do these companies benefit from paying excessive salaries?  Are they guaranteed not to become insolvent?  Are they guaranteed never to break the law?  Are they guaranteed always to pay their creditors in good time?

When people are poor, it is only to be expected that they will vote for socialism.  Socialism basically means that the state intervenes to assist people who would be disadvantaged otherwise, and so even the Conservative Party can be seen as a socialist party - in spite of the fact that they do nothing to curb fat cat salaries.  The main problem with socialism is that it can so easily spill over into communism.

Of course the Conservatives - like Labour and the LibDems - are communists.  Together they are leading Britain into ever higher levels of public spending and ever decreasing levels of personal freedom.  People should not vote for this, but they do.

If the fat cats do not want Britain to become a communist country in the next few decades, they should immediately cut their salaries and pay larger salaries to all of their employees regardless of status.  That way the ordinary people would have less incentive to vote for socialism, and thereby risk adding petrol to the fire of communism.

House price inflation

The press are reporting a surge in house prices, and linking it with economic recovery.

Prices fluctuate with supply and demand.  Consider the price of something for which supply is fixed.  There are only so many people who can be accommodated within the Wembley Arena at any one time, and so ticket prices will be governed primarily by demand.  The only way a given act can increase the supply of tickets is either by playing more than one concert at a given venue, or else choosing a larger venue.  Demand for tickets is influenced by who is actually performing on a given occasion, and also by how much money people can afford to pay.

When times are hard, many people spend their money primarily on necessities.  When the economy is growing, people are more likely to spend money on luxuries such as concert tickets.  With more people wanting to buy tickets, the price can be expected to rise.

It is only to be expected that people are more likely to want to buy a house when the economy is doing well, and yet the difference is that the supply of houses can in theory increase to meet demand.  In reality though it is unlikely that supply will increase to meet demand, and that is why house prices rise.

Perhaps the greatest pressure on demand for housing is immigration.  Another pressure is caused by fat cat company directors or public sector managers whose obscene salaries allow them to buy two or more houses while millions of ordinary people struggle to afford just one house.

It is misleading therefore to present rising house prices as an indicator of economic wellbeing.

The best way to ensure that demand for housing does not exceed supply is to stop immigration at once.  Another helpful move would be to make it illegal for anyone to have more than one mortgage at any one time, and also to place a cap on the value of new mortgages.  If fat cats are going to buy more houses than they need, then they could at least do so by paying cash instead of taking out yet another mortgage.

Previous posts on the subject of housing and fat cats include:

Micro-life

Has immigration killed the middle class dream?

The cats stay fat

Energy sector fat cats