Have you had enough yet?

It strikes me as odd that people don’t realise they are becoming economically poorer every day. Central banks and bankers have been actively increasing the prices of basic necessitates for 3 years now. But none of the “older and wiser” generation seems to care. They let the bankers earn their bonuses and the politicians continue to lie to the public and embezzle taxpayers’ income in exchange for opinions. Dividing the people is the best way to stay in power. They will continue to have debates and enquires whilst ignoring all the conclusions. Where do people think all the money comes from for these lavish public enquiries? Its more and more debt burdening our society with payments we don’t wish to make. Remember in the UK the largest part of society is the baby boomers, they are unlikely to do anything to change their lifestyle – even if it means the destruction of society after they have long passed away. The Media are equally guillty of self interest - why is the Levenson enquiry into media the number one news story, when we our very economic foundation is failing?

I believe this will all end badly. We do not seem to have enough economically active participants in society. A generation has been mollycoddled into believing that money is the new God and owning “things” will make them happy. There comes a time where the leaders in commerce, politics and society have to think about a purpose greater than just having a quiet life and ensuring their children are safe and happy. This is that time. We need leaders who remember that they can change history and inspire confidence in society. They can change the very nature of our consciousness. I only hope they realise the sense of accomplishment that comes from a greater purpose before its too late.

We are looking at war. As the price of basic food stuffs increase and society becomes increasingly divided, people forget about the empathy that binds humanity and destruction ensues. To ensure we remain divided our leaders (unable to think of new ideas) simply ask us to turn on each other rather than using our collective power to generate ideas through which we succeed. Maybe this time might be different – but I doubt it.

What we should be focusing on how to fix this:

Dilution of vested interests

We need competition to keep them busy and actively free market. Break up the “Too Big to Fail” banks ensure that we enshrine into law the inability for a firm to take more than 15% of a market thus forcing companies to move into other markets to grow and compete through ideas. Banking is a special sector it is not really a service it is the providers of capital to make our system work – it should be efficient but boring and stable! After all its risk management. They should not have growth targets set by analysts, capital should be provided to them through equity looking for a safe place to invest not speculate for capital growth. Stable dividends and growth with inflation! The same with any part of society that is linked to our basic needs – utilities, food. Speculators have plenty of other riskier ventures to investigate – films, fashion, new technology, developing world economies and towns etc...

Debt for measureable return

Arguably what bankers are meant to be good at? They should evaluate the risks and provide debt to governments and companies where they expected return and risks are carefully balanced. Of course we should spread our wealth, investing in a few risky items; but the majority should be linked to the obvious investment we need in housing, education, defence and economically productive work.

Link economic goals to average life span

We should be able to predict the size of various sections of our economy. Eg 0-10 year olds, 10-25, 26-39 and so on. Each section has clearly documented needs. We need to link our economic goals to the age groups and execute clear plans to enhance each of these sections of our society. As an example we need to link state pensions to average life expectancy to enable retirement age to rise as our chance survival increases.

Farmland and Food production

Push to enhance mechanisation and new bio-technology industry and can feed the world with a smaller amount of natural resources. Whether its Myco protein or laboratory enhanced plant produce. We need the world to buy our ingenuity and create food for the starving people of the world in an affordable way. This would be far better than continuously giving them a bit of development aid.

Education & Invention

We need to link these two concepts. You need to learn through practical experience. Develop an understanding of education and the real world applications.

Generation of Power

We need to invest in scientists and R&D to develop a new power generation system .Whom ever does this will be the strongest nation on the planet. There are two arguments to this. Either necessarily is the mother of invention and we start a war to turbo charge our R&D to destroy an enemy or we provide huge incentives, tax breaks and prizes to companies and individuals around the world to gain the expertise necessary to do this. We discount maths, engineering and physics and chemistry fees at university; give firms incentives to pay these people more; and develop R& D discounts which increase when products generate larger profits through international sales.

Smaller more community based local government

Much has been said about David Cameron’s “big society”. No one really knows what it is or how to do it. What we agree on is that the government is too large and we need competition which enables change in our communities. I would advocate the “open source” approach. Why do programmers work for free in open source communities to execute a new piece of software and then maintain it? It’s because they are passionate about it and find it interesting. We need to do the same in our communities. Why doesn’t the government open source their requirements in local communities and ask the people who want to help to engage? From improving council tax collection to keeping the streets clean, the government needs to publish the data they have and allow people to take control. Like any organisation, they need to create a free and open area for people to communicate and create so build a government version of SourceForge.Net. We have the resources and the passion to help why not provide the tools to do this?

Simple ideas that have impact:

• Linking council tax IDs to payment, billing, housing, benefits and tax systems online
• Enabling communities to send it repair requests through mobile phones and keep abreast of community changes
• Develop an auction style system for government projects where Limited companies bid for work and build up a reputation of success through a feedback and recommendation system that is transparent.

why is the economy so bad 2011 - simple

Well its pretty simple (not really but lets simplify a bit)

1. The banks create money and they created too much based on assets that were not worth anywhere near their valuations. Mainly due to humanity's greed. No one wants to better the world for the next 100 years when they can enjoy money in their 30s/40s now! No sense in preparing for a future economy when you won't be there to enjoy it.

2. The baby boomers have been patting themselves on the back for 40 years on how well they have built the economy. On the face of it everything was amazing. The world was a completely different place compared to 1970 - they surmised that capitalism worked and greed was good!

Unfortunately everything they build was using debt - which was based on an expectation of future improvements, growth and a straight line graph of good happening in the economy. We know from history that the world doesn't work that way but they seemed to ignore these lessons.

3. If we take away the effects from debt the world economy barely grew to sustain the population growth. In other words we stood still, all the computers and machines and factories and management consultants didn't seem to improve our productivity faster than the population that we serve on planet Earth!

4. Lastly the 0.1% of very wealthy people on the planet don't want to lose any money and so they try and pretend that all the money they gave to poor people as loans is still worth the same. Like a cancer the problem continues to grow bigger until it kills the patient. The politicians don't have the tools of a skilled surgeon to resolve this so it will destroy government upon government until we find a new system. Let's hope the new path isn't right wing fascist! Remember when Germany were given a War debt they could never repay in WW1? No? Well it gave rise to a lovely fellow by the name of Hitler. He surmised that he could never repay the loans but if he killed all his creditors then there wouldn't be a problem!

5. This kind of monetary change leads to social volatility and creates instability in the world and when people become desperate they look for "the answer" from anyone who they think can help them. We didn't learn from our economic mistakes of the past; do you think we will learn from our world war mistakes? Time will tell...

6. This is the end of the business cycle. As we head into 2012 things will get worse until we are forced to change the way our system works.

7. FYI for every downward cycle there will be an upward one. The best we could have hoped for was to prevent deep troughs and high peaks but then we would be looking out for the future after we die....and no one does that!

8. All those baby boomers born in the 40s/50s/60s are now about to start retiring and there isn't enough money from our taxes to actually pay their retirement income. So objectively, a war which kills off part of the older generation would be perfect for wealthy investors...let's see if they can make it happen! [NOTE: No one would actually want this to happen - but then no one seems to want a war and it happens anyway]

9. The government keeps promising without ever delivering and the public don't have another alternative to choose from.

Comments welcome.

How to protect my savings?

Its tough in this inflationary environment to protect your savings from being eroded. People with financial backgrounds will tempt you to buy annuities (basically a set income for life) or buy various funds they recommend (and often get kick backs from).

The truth is no one knows the exact answer and some people will be lucky and others won't. For my 2 pennies worth you can read my recommendations below:

1. As a middle class person if you have a large capital sum of cash from a pension or savings (say 100K-200K) I'd say firstly check how you can lower your fixed costs. Which should be food, mortgage, utilities, council tax and travel. So buy in bulk at the places newsagents buy from - everything is a third cheaper although you have to buy 5/10 of them.

Utilities
For utilities, check if you're house can support solar panels for heating and/or electricity. With prices going up 16% or more a year, spending 10-15K of your money on this would provide you a return outweighing any risky investment as the returns are guaranteed by the government. For solar panels make sure you have a south facing (as far as possible) roof with no shady areas for best results. Ground water heat pumps also provide free heating for an upfront cost. Its worth removing yourself from the crazy fuel inflation we are all facing.

Tax
Check you're in the right council tax band by reviewing similar houses in your area on the UK Valuation Office Website

Travel
Get your freedom pass to travel on local transport for free after 930am and walk a little more (if you're in london try www.londonwalks.com which are quite entertaining)

Mortgage
If you have a large mortgage consider trading down to a smaller property.  If you don't have a mortgage maybe you don't need the space any more and you could sell giving you extra income for the future.

2. For zero risk for some of your money you can invest in inflation linked Gilts (UK government debt). From time to time the government issues these and its worth taking as a older person looking to protect savings rather than a normal savings account at a bank. Look the the post office website to see how to get them.

3. Make your income last further by travelling to countries with a lower cost of living. Buenos Aires in Argentina is a reasonably cheap city that is hard to distinguish from western european cities or the Ukraine/Slovenia are other cheaper countries - Do some research.

4. If you're going to invest in the stock market wait until 2012 as its much too volatile now and invest in companies that you know will always sell/make products because human beings need them and look at the dividend yield (the share of the profits vs your money invested) that the company provides you. As long as its higher than 5% your doing better than inflation. You can do this through shares ISA or in your pension through your income drawdown account. Corporate Bonds in larger companies may also have higher returns now - you'll need to buy a corporate bond fund to participate either through an ISA or your pension account.

5. Put your savings in another country on fixed deposits. If you have family abroad, say India, you can open a bank account there using their help. Rates in India are 9-12% per year on fixed deposits. Of course, you do run currency exchange rate risks but right now the West is unlikely to grow as fast as emerging markets countries like India.

6. Annuities are at their lowest level for decades and basically you're just outsourcing your money to someone else to look after in exchange for peace of mind. But with all the scandals and Life company failures it seems their not as safe as people once through they were. If you have the time do some research with lots of annuity providers if you're going down this route. Sometimes other providers can offer you up to 40% more for your capital. Remember to always give them a full medical history. Anything wrong with you will only increase your annuity. In this morbid world their trying to estimate when you will die so give them every reason to think it will be sooner!

What to change in Britain to improve the economy

There's no way to sugar coat it so here goes:

• We need to spend less money on consumer goods not made in this country which provide 5 seconds of entertainment

• We need to train more engineers, computer programmers, electronics experts, builders, plumbers and scientific personnel. Kits should exist to teach kids how to program, build and create electronics from a young age - making it a game! Remember games like sim city, it taught you about taxes, reliance on only one type of industry, failure, success, people's needs and desires...

• We need our broadcasters to set our children an example by helping them achieve their aims within the context of what our society needs. Basically, stop pointless celebrity programming and start showing science, hard work and praise from your society as important parts of our culture. In India for instance, the parents complained to the national stations when they scheduled cartoons during exam revision periods. What is good for salesmen is rarely good for our society

• Create amazing prizes for those that do well in all our schools. Nationally celebrate these people in newspapers and kids shows.

• Develop our tourism and historical cultural hertiage and broadcast it around the world with our leading arts programmes. Whether that's Downton Abbey or Who Wants to be a millionaire. We need to monitise our ideas quickly and efficiently - Britain has always been good at marketing.

• Give children a place inside and outside school where they learn and develop new ideas through gaming. Games help teach you about the importance of perseverance; hand eye coordination; educational games enhance your vocabulary; action games improve team work and communication for a common goal. I don't mean games where you just shoot people but remember even these can teach you about planning, team work, co-ordination to achieve one goal and the pleasure of success.

• Invest in Thorium power research and tidal power instead of wind and solar. Not only are wind and solar power remarkably unreliable for peak time electricity, they also have terrible efficiency rates and all of the production has already begun overseas. Thorium, is like nuclear power but cannot be weaponised and is much safer for the envronment. 15g of Thorium in a car can power it for its entire lifetime! It is Earthquake safe! We need to be first with this!

• Create invention labs at universities and towns across the country where anyone can register and design an invention prototype within a computer simulation. When 3D printers become widespread people can even create real versions of their prototypes.

• Crowd source more ideas about every law and every issue facing us

•  Move to open source programming environments for the government. Push as many problems as we can on to an internet problem solving forum with cash rewards. Anyone who solves the problem will be rewarded with kudos from the country and a payout to enable them to make a living. e.g develop a robust automatic payment system for councils to collect council tax, develop a model of congestion on the tubes and likely solutions. We pay consultants millions to "think" about these ideas but they never solve them - its not in their interest.They just churn the same stuff out over and over again - only people witn commitment and focus can solve these problems and to many consultants ist just another project.

• Link pensions and retirement age to the average life expectancy as measured by the 15 largest towns in the UK. Ask pensioners to teach in school part time about "life lessons", from what they learn, to what they felt you should avoid as a young man or woman. We learn through stories!

•  Publish government expenditure through centralised book keeping (automated). Count each council as a subsidiary and model their performance via automated utlities. They should all be inputing their standard accounts into one on-line system or uploading a standard template. After all, cash flow is money in and money out. It should be fairly obvious to spot outliers in many different categories.

• Develop larger supercomputers and quantum computers to crunch through protein shapes looking for cures to cancer and aid. We are the leaders in chip design. We need to expand on this hard. 

• The largest three broadcasters should provide free advertising in equal proportion for each of five largest parties in return for their broadcast licence. Also, the state should set a budget for the 5 largest parties by popular vote for an election and it should go up with inflation. Other parties will need to use innovate social media and popular policies to get into the top 5.

• Identify all vested interests when a politican makes a law or proposes one. If subsequently, their interests were not aligned to the government policy they should go to jail

• Force opposition parties to only argue a policy if they have another one which has been costed and explored in the same way (a tough ask!)

• A Tobin Tax should be implemented to prevent high volume high frequency computer trading creating volatility in our markets and prices.

• 99.9% of the world are consumers only 0.1% are creators - Britain needs to be in the latter category. As an example, everyone uses the Ipad/Iphone to consume information but only a few people at Apple helped create it.