Tuesday, February 14, 2012

Moody's is worried about the lack of growth in the United Kingdom economy

Credit rating agency Moody's says there is a possibility that the United Kingdom might lose its triple A rating (apparently not a strong possibility, but it might happen).

Moody's is worried about the lack of growth in the United Kingdom economy.

I am not economist.  I listen to all those clever people appearing on the media talking about "kick starting", "pump priming" and all that stuff about Keynes versus Hayek and it all seems just noise.  But I do know about public moods and public sentiments and public opinions.

Therefore I can tell Moodys:

There will be little internal recovery and growth until the ordinary people "feel good".  They will feel good when they have paid off their private debts (mostly credit cards, but some mortgage reduction) and saved a modest amount (£3K?) in case of calamities such as losing their job.  When that happens they will "feel good" about the future and start spending money and sustained significant growth will happen.

The good news it that a lot of this is already happening.  My guess is that we are probably close to a tipping point already (but I am not an economist).  Small businesses are supposed to be expanding, which is always a good sign.

The pound has fallen against the Euro which should help exports (although I am not happy about the way the politicians have tied us into the EU economy with all its record of lying governments, political interference and economic incompetence).

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