Showing posts with label Alice in Wongaland. Show all posts
Showing posts with label Alice in Wongaland. Show all posts

Monday, September 9, 2013

Be Smart: Keep a Healthy Fear of "Alice in Wongaland"

First off, whoever coined this expression should at least get a Pulitzer Prize for creativity. Or maybe have their name inscribed somewhere in the halls of Parliament. Because the condition that “Alice in Wongaland” describes is one that is extremely harmful, if not completely toxic, to our already delicate economy. It describes an economy fuelled by debt, mostly spurred by consumer spending and one which does not rely on more sound economic principles, such as increased industrial output or rising exports. 

We've been down this path before and not that long ago, with disastrous results. The general population in the UK needs to be aware of this trend, resist some of their impulses and allow the economy to grow in a more sensible and sustainable fashion.

"Recruitment finance is a viable alternative to keep agencies solvent"

What? Stop Shopping?

I'm probably running the very real risk of getting lynched for saying this, but it is unfortunately true. While we have had a wonderful summer in the UK, many people have been encouraged by the sunny weather and various heart-warming events to start spending money again, buying everything from clothes to electronic devices. 

Obviously, high street merchants have been delighted. According to the Office for National Statistics, sales in July were at their highest level in over two years and the projections for the entire year are equally rosy. Retailers and their employees can certainly take some comfort in these statistics, but like everything else in life, there is a real tangible cost to all this.

Looking behind the Mirror

Unemployment is still hovering close to eight percent in the UK. Not that many more people have returned to work since the recession hit with full force five years ago. So where's the money coming from to afford all of these purchases? 

The truth is, it appears to have been made possible by consumers taking on additional debt, or even depleting their savings accounts. In extreme cases, they are taking out payday loans, just so that they can confidently stroll down the High Street. Folks, this isn't the way to build a sound economy. While nobody should be denied the pleasure, or in some cases even the necessity, of buying clothes or other things that they need, there is a time for everything. This just isn't the time.

Take Two Manufacturing Outputs and Call Me in the Morning

Consumer debt will never solve our current economic woes; it will only make them worse. The backbone of any sound economic structure is manufacturing and exports. Even an overwhelming amount of services doesn't do the trick. While recent economic news shows that the UK is slowly starting to ramp up production in several key industries, it is being dragged down by increased consumer debt. 

As unpopular as it might be, one solution might be to increase the cost of consumer borrowing, while simultaneously decreasing the cost of business debt. In the meantime, people want to be able to get to work and earn what they deserve, so they can go on a shopping spree with peace of mind. 

Recruitment agencies are certainly anxious to see people get back to work: after all, their livelihood depends on it. But with the current high unemployment, few jobs are being offered and agencies are not generating the revenues they are used to. They thus have to resort to recruitment finance to make ends meet, pay their monthly obligations and continue to keep their doors open.
Let's hope our economy can get itself back on the right track soon, so that everyone can benefit from the results.

Join 1000's of People Following 50 Plus Finance
Real Time Web Analytics