To think it's depressing that everyone seems to think after this recession we should just return to exactly how things were?

[kake]

Does anyone else get this sense? What I mean is that everybody is lamenting this recession, quite rightly as it's awful, and I feel for everyone who has lost their job or is struggling.

But on the other hand there doesn't seem to be an acceptance that in some ways this has been at least a little bit caused by complete over-consumption in the good times and that we need to change our ways a little bit. Or a lot. When people talk about house prices especially, the consensus always seems to be that if there's any talk about a recovery that must be a positive thing, with the implication that we should be getting back to stupidly inflated house prices as soon as possible.

I find it depressing, as someone who didn't buy partly because we couldn't really afford it but also because we were really cautious and didn't want to overstretch ourselves. But now we're seeing a lot of friends who did somehow being rewarded as their mortgages have been slashed.

I'm also someone who wishes that taxes had been much higher for what I consider to be well paid people (and that would include my DH!) during the boom, so that there hadn't been such a disparity in income in this country then. It's a shame that higher tax levels in future will have to pay off debt not contribute to the national benefit! If I mention this to (well paid) friends they look at me as if I'm mad, although they are people who in principle I think sort of do believe in equality, just not if it affects their/our pockets. My view is that as satisfaction with income is largely relative (ie it matters more to people apparently that they get paid more than their neighbour than their absolute wealth), then if everybody is taxed more at higher income levels, then we'd all be in the same boat and it wouldn't make much difference.

But I feel like I'm STILL swimming against the tide, just when I would have thought more people would begin to feel like this. We have lots of friends who work in the banking sector for example who've been through a bit of a rocky time but now seem to be out the other side and better off than ever and sort of with no lessons learned!

It just seems ... so wrong! Or maybe I just got out of bed on the wrong side. And this post isn't as articulate as I would have hoped!

Same here Mad, our car is 9 years old, nothing wrong with it except for a few scratches here and there.
Certainly won't be getting rid of it next year. And even if we did, there is no way we could afford new anyway - we tend to buy 2-3 year old cars!

Yes, I think that lower earners probably do get a better deal here in France in some ways though to be honest, not being in that situation myself, I am not very well acquainted with all the benefits.

Higher earners are taxed punitively. However, since people pay out less for mortgages (due to restrictions on borrowing) and don't generally pay anything much in the way of school fees, I don't think that the affluent have a much lower standard of living here than in the UK, with the exception of the world of finance (which just doesn't exist here in the same way as it does/did in London). My DP runs a mid-size retail chain and I'm sure that our standard of living is not dissimilar to what it would be in the UK.

Hi Bonsoir. I'm a bit confused as you seem to be against what you term punitive taxation but then you say that in France higher earners don't have a much lower standard of living than they would in the UK, despite being taxed punitively. That sounds as though punitive taxation does not produce ill-effects in France and the economy still functions?

kake - the economy still functions in the UK you know! I also said that there are other effects of the taxation system (that creates a large servant class) that personally I find distasteful. And the taxation system here discourages high-earning second earners, which is very bad.

I didn't say it didn't, I'm not sure that I understand your point to be honest. What I am trying to find out is whether and where countries have managed to have a 'functioning' economy with lower income disparities than in the UK and how they have done that. I think you said earlier that punitive taxation regimes never result in growing economies. But then you said that the French tax regime is punitive. I was just trying to get to the bottom of this. Apologies, I think it might be time for me to bow out of this debate.

Going away from the budget (as too annoying to think about - agree with ABD) I think there has to be change but to try and deal properly with climate change. EG I used to work in the city and was shocked that many of my colleagues would fly away for weekends at least once a month if not more. That is why BAA claim Heathrow and Stansted need to be expanded...

As a starting point, I think there should be massive encouragement for people to generate their own electricity or have local greener solutions than relying on new coal power stations, people should be able to work from home and save on petrol and not just buy new tat because some sunday life style supplement tells them they need it!

Don't walk away Kake. You've started up something really important and interesting here.

I do think it's worth stating that as Inflation now seems envitiable that people should start seriously looking at becoming self sufficient, growing veggies, keeping a good stock off non perishables etc in the garage/cellar etc, buying kids clothes in the next size up.
Just a friendly heads up.

re "inflation seems inevitable"

Not really. We have a long way to go until current deflationary environment dissipates, and demand picks up enough for inflation to come back. At the first signs of any of the above, BoE will start to raise rates and reducing money supply, so no, I don't think inflation is inevitable.

Grow your own veggies, by all means, though

Cote, i think you are really mistaken about inflation, but only time will tell. Lower mortgage payments brought down the RPI, but that's only because the BoE cut rates and is "printing money" - an inflationary force. If inflation does remain above target, they will be threatening any chance of a recovery by raising rates, and will be under tremendous pressure not to do so.
The risk is still very much on the inflation side, IMO.

I don't know if we're going to have inflation or deflation in the short/medium term, or what sterlings going to do, or house prices for that matter. I don't know if France or the UK is a better system.

But in the long term, I'm totally fed up that it looks like DS will be working his whole life to pay off the debt that our generation has incurred, and that all our widescreen tellies, huge mortgages and flying hither and thither will be paid for by him with rising sea levels, huge tax burden etc..

Up to now I think every generation has worked hard to provide a better future for their children. But our generation has spent our children's money, used up their planet, polluted their air, and eaten all their food (by overfarming, overfishing, and demanding food that uses too many resources such as water, or to be flown in). We are a selfish bunch, and although DH and I have tried to be more careful in recent years I don't absolve us of the guilt of this mess.

Bah. Can someone say something to cheer me up?

love is all you need?

Well, true enough. I must admit that about 18 months ago both DH and I were earning quite big salaries and we were miserable. Now DH earns a bit less and I earn pin money, and we're much happier. Staying true to our values does give us much more happiness than the latest car. Although apparently our 13 year old car went up in value dramatically yesterday

goodnightmoon - Cutting rates and printing money would be an inflationary force if we were starting out at a normal or even low inflation environment.

As it is, this is deflation. BoE is cutting rates and printing money to get you out of deflation, not so UK can become Zimbabwe with rampant inflation.

There is a long way to go between coming out of deflation and then even low inflation. BoE will be increasing rates and cutting money supply way before inflation starts raising its head.

For now, they are only trying to get out of the deflationary hole.

Cote, if your weekly shopping bill costs you £35 a week more this year than last year, forgive me but is that not inflation ?

Cotedazure: I know earlier that you were saying that savers should not be taking this personally and that deflation is beneficial for us (sort of).

However, as the BBC acknowledged - and Sorrento demonstrates with her example - savers without mortgages are actually experiencing 3% inflation, unlike mortgage owners who are experiencing deflation. ie we are not receving the full benefit of the interest rate reductions as our shopping is still costing more (albeit not much more).

I;m going to read the whole thread later, but;

last night I was thinking that in future, any government figures for 'growth' should be offset by the figure for personal borrowing.

I am suffering deflation on my savings (have no mortgage) but on the other hand just sold my 13 year old knackered car and bought a 2nd hand car at HALF the price that particular model was 12 months ago for the same age/mileage/model of car.

So in effect that £3k that I just took out of savings, is worth what £6k was this time last year.

To me thats better than getting 3% in my isa and having to spend my £3k car budget on something older and not such a good make of car.

With regard to spending/borrowing I have lived to my means for years, paid off my mortgage by staying put in a small house, and have been scoffed at until recently by friends with big mortgages (big houses), car loans, latest gadgets all on credit.

I have recently become something of a guru on living on a budget and no one is scoffing any more!

i see very little evidence of this deflationary hole, and there's no limit on how much money can be "printed" so i repeat that i see the risks to inflation.

Plus, the BoE cut rates to try to jumpstart the economy, not in an attempt to get us out of deflation. As you well know, the bank's measure of inflation is still well above target, and not coming down as quickly as expected.

Deflation is real, it's just a shame we can't eat LCD televisions otherwise we'd be home and dry.

But we were going to die anyway - mankind was always just going to be a tiny blip in time terms on this planet so none of it hugely matters surely, whether we have an extra 30,000 years on the planet or not.

I don't know if the frugal are really being rewarded though although I cas see how Fj is feeling good about things. it's those of us with large mortgages (as I said above mine is well over £1m) who are been given the biggest gift of all - my 2% mortgage interest rate , although it will be going up in June sadly and if we get a load of inflation like the 20% of the 70s then big loans will become small loans, wages and what we charge our customers etc will go up too.

Xenia how do you sleep at night with a million mortgage, I burst into tears when DH told me he'd bought a house for £250k I nearly slapped his face.

I wish it were a million. It would be zero had my ex husband not made rapacious financial demands on divorce. Always marry men who earn a lot more than you. Most women follow that principle. If you don't then you pay the price. At least I've never been in a relationship where a man takes financial decisions like that - I find it inconceivable that he could do that without its being a joint decision but may be that's the price you pay when you earn less than a man. May be I am lucky after all to earn a lot.

my house cost me 50k ten years ago-it was at it's peak 'worth' about 200k-(it's only worth that if you want to go somewhere else-but they all increased in value comparatively too,and i feel at home here)within a year of me buying it they were 75k,i wouldn't have been able to have afforded it then. i changed jobs,i got a nice car/phone/expenses a right doss basically-have got hundreds of pairs of shoes and handbags,nice jewellery etc but we earn less than 20grand for 4 of us and are at rock bottom. i am mrs budget-i've never been happier.
we are going to buy a family car-i had a nice audi in the old days-we'll get a ten year old focus as actually i am doing fuck all so can walk/use the tram. if we need to get somewhere we hire/use the train.
my life has changed immeasurably-i love it.
i hate the fact that the rest of the ignorant mancs voted against the congestion charge though-that really pissed me off.

Well to be fair the whole mortgage is in his name Xenia so it's my house but his debt.
There needs to be balance in any relationship, I couldn't be a kept woman long term, I treated myself to a bit of maternity leave, but equally I couldn't keep a man or have a husband who earnt less than me no matter how worthy the cause.

I'm afraid I also can't get my head around the idea of being poor and happy, I get not needing material goods, handbags, shoes whatever. But having to walk into a supermarket and choose between toothpaste and dinner which I've had to do in the past is not something I'd ever allow to happen again.