By John Booth-People might be fooled into thinking that the recent stock market rise is good news for pensioners and the economy. The truth is that money is going into shares because interest rates are so low, shares give a better chance of a return.
However low interest rates means low annuity rates. A pension = pension fund x annuity rate, so a high pension fund is countered by a low annuity.
Keeping interest rates artificially low doesn’t make up for a poorly performing economy.
Only with an economy producing goods and services that people want to buy will a prosperous economy result.
Putting money into failed banks and the stock market does not create wealth it only makes matters worse as wealth is diverted from the real economy into the pockets of speculators and the rich.
It seems that nothing has been learned from the bank collapse and the economy is on the same trajectory as before.
The government cannot keep pouring monopoly money into the banks through a 0.5% bank rate for much longer without collapsing the economy completely but it is obvious they are going to try.
When the collapse will come, and by collapse I mean going to 25%+ unemployment, depends on how longer the government can keep this charade going.
But one thing’s certain the longer it is, the worse the consequent collapse will be.
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