Saturday, 5 November 2011

A new country called State of Uncertainty

Grim faces indicating impending doom are now the rule rather than the exception. The Feel Good Factor of Big Society is nowhere to be found and strikes are in the air. The whole package is "work longer if you manage to keep a job and pay more for a reduced pension eaten by inflation created by higher taxes."

Fuel tax and all other taxes are basically multiplying factors that generate inflation. There is no escape from this. Businesses are going to transfer the taxation burden to consumers in the shape of price increases. The more taxes we pay, the higher prices in the shops will be. As prices rise, people with reduced incomes buy less and less and sooner than later employees are no longer needed because sales go down.

If people are afraid of what may happen to their jobs, they will naturally spend less, even if they still have buying power. This is not only about economics. It is also about psychology because psychology has a lot to do with what is going at the moment. At the end of the day, everything is about trust and trust is missing because those in power don't trust those who are governed and viceversa.

The crisis is not about choosing between Capitalism or State Control. It is about balanced economics and balanced economics is missing because of widespread corruption.

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