The five risks that scare us most

I think the UK Government is already inflating its way out of the problem at the expense of the 'man in the street'. Hense all the complaints about low interest rates paid on deposits even though RPI is running around 4.5% this year and, more tellingly, the cessation of sales of index-linked bonds to the public.

I think Paul is right. Inflation isn't a fear - it's a fact. Today's news is that inflation is "surprisingly sticky"! What a load of codswallop! And of course it won't be till really really stupid inflation occurs, and impoverishes us all, that riots start to happen... Don't cry for me ARGENTINA!

One option of stimulation would have been to REDUCE the V.A.T rate to 15% on a long term basis.

By Increasing the V.A.T. rate all goods then obviously become dearer, consumers then by less, the less goods that are then required translates into less goods that need to be manufactured which then translates into less people are then needed to be employed, unemployment lines then grow further, tax reciepts go down, benefit payments go up, less tax is collected.

By REDUCING the V.A.T. rate goods then become cheaper, more goods are bought, more people are required to manufacture the goods, unemployment lines go down, tax receipts go up, benefit payments are then reduced.

Simple isnt it.

There are years of "MARKET CRASHING" news in the pipeline, what on earth is driving the markets upwards ???

I would commend Martin Wolfe's article in the FT to this author!

(and anyone else who would like a serious overview of the current economic situation)

Quote "To put it crudely, the US wants to inflate the rest of the world, while the latter is trying to deflate the US. The US must win, since it has infinite ammunition: there is no limit to the dollars the Federal Reserve can create. What needs to be discussed is the terms of the world’s surrender: the needed changes in nominal exchange rates and domestic policies around the world."

http://www.ft.com/cms/s/0/fe45eeb2-d644-11df-81f0-00144feabdc0.html?ftcamp=rss&ftcamp=crm/email/20101013/nbe/MarketsMorning/product

Perhaps the markets are holding up because people don't want to put their money in anything other than cash of any description. And all this QE money has got to end up somwhere.

Mr KInobee

THe learned economist, Maynard Keynes, in 1931 said in a broadcast:

"Whenever you buy goods you increase employment - though they must be British home-produced goods if you are to increase employment in this country."

In the the 30s there was a campaign to "Buy British". This is not allowed today under EU rules. Of course if you are strongly patriotic you could always ask - where was this made? But t'm afraid the answer will rarely be; "This is British-made"

If you spend an untaxed £100 each week on vatable goods and services you pay at present an extra £17.50. From January first you will pay £20. That is an increase of just over 2%. I am often asked to pay £!.80 - 2.00 for a cup of coffee.

Therefore an easy way to save is to give up one cup of coffee for each £100 you spend each week on vatable goods and services.

I am a pensioner. I do not spend £100 a week on vatable goods and services. If I make the coffee at home it costs me about 15p a cup.

Indeed it would be worth initiating the 'pensioners' index. One that has a basket of goods that reflect the expenditure of those living in retirement.

So. No mortgage, debt interest, or work related travel, but an emphasis on food, utilities, presents for grandchildren and of course the price of wine.

Anyone know of one?

I still find it difficult to understand why our stock market has to follow the US stock market. How much of our ever-decreasing export trade goes to the USA? Not a single one of the shares in my portfolio is a US company. If US investors want to produce an enormous bubble in US government bonds, why should sheep-like UK investors (or is it investment managers?) do the same?

Has anyone else noticed that shares beginning with the letter A do better than those starting with (say) M or S. Is the outperformance purely due to lazy investment managers who don't get beyond the top of the list?

I don't have a good opinion of investment managers . . . . . . .

So no debt interest - perhaps - but certainly no interest on savings.

Can't do simple DIY jobs - London prices for a plumber, builder etc.

Fire service staff need £4840 to meet extra cost of living in London.

Pensioners living in London get nothing.

There is a table for inflation of costs for a pensioner - it is higher than the standard figure.

Give me an hour and I will find it.

Well - it took two minutes.

Inflation Hits Pensioners Hardest

Pensioners are bearing the brunt of surging food prices and rising inflation.

Over 75 year olds continue to be hit the hardest by surging inflation. This age group saw their inflation rate increase from 4.8% to 5.4% in June, according to Alliance Trust’s independent study of age related inflation.

This is the highest level inflation has reached in the six years that the study has been conducted.

I have a portfolio of shares that is currently appreciating at an annualised rate of 20%; a most unusual experience for me; tell me, when will it all come crashing down.

Dear Jeremy and Bernard, I thought you might like to know that, after I emailed my MP that it was crass and verging on dishonest to use CPI - which was discredited by the ECB and BoE a while back - instead of RPI to inflation-proof pensions, be they public or private, my MP has explained to me, in a long and detailed letter, that CPI is the appropriate and most accurate rate applicable to pensioner expenditure. So there you have it!

What do I think? mmmh? More shtupid than interesting! We now live in a world where equity and truth count for zilch, and the only major actions are those in ridiculous positions of power who still don't understand the real world - of which the latest are Lord Browne and Vince Cable..

If one is considering 'fairness' ,whats fair in the pensioners losing the

extra age allowance if his/her income is over the derisory £20K ??

Elder one ...please make sure you use fairly tight stop losses on your portfolio so you can sleep at night!

Dear fred pyatt

I think the markets are up because interest rates are low. Savers want better yields than cash held on deposits will give. So more investment risk but the rewards can be either bettter or much worse. Brave people !

Problem is Kathleen, selling and buying back in - for retail - costs around 5% neither counting where lies the true top or bottom of the market, nor offer to bid spread; its not a pleasant decision to make. Stop losses set on individual shares is one thing, a complete portfolio is something else. I survived the last crash to '09 and everything recovered plus some; but one worries.

More QE does seem likely, and widely expected. It has also been suggested that some of this may be used to buy corporate debt. If so, this will lead to further falls in corporate bond yields and even lower interest rates all round. Inflation is the inevitable outcome which is why investors are buying commodities such as gold, and the shares of mining and oil companies.

Oh an elder one

realise the 20% gain buy something vatable before 2011 now you have made 22,5% .not bad for one year of investing.

tony1kinobee

You are write if it is manufactured in UK

Surely inflation will definately rise if we continue Quantitave Easing.

A theory would be that QE is used to keep the economy stimulus going, however this creates inflation and as salaries increase the debt is then devalued.

That is all well and good if the stimulus works and salaries increase, but for a lot of folk (inc most of the public sector) salaries are unlikely to increase at all, never mind in line with inflation... likewise for most retired people.

If the gov continue with QE, there will be a lot of pain for the man in the street.

So who is QE2 meant to be helping, joe public? don't think so as all it will do is stoke inflation which will eat more into salaries and savings. Business? not small or medium sized businesses which will still be left struggling to get finance at anything other than punitive rates. City, probably, they can then sell back the govt' bonds that they hold for a nice profit and then go back to the BoE for another cheap loan so they can spin it all round again.

Cut VAT to 15% to stimulate speending, not strangle it with 20% VAT. Hammer tax avoidance and public sector inefficiency with equal measure. Stimulate all sectors and regions of the UK through investment in education, infrastructure and health, and take a leaf out of Germany's book: Mittelstand is the way to develop our economy, world class small and medium sized enterprises run by entrepreneurs, not playthings of the city and venture capitalists.