This weekend saw new headlines. the largest single drop in the stock-markets in years, and now panic is beginning to emerge. The euphoria of Trump's tax cuts for the rich has dissipated as quickly as a snowball in summer. Billions of dollars were lost overnight!
Really? Did some sudden catastrophe just destroy hundreds of millions of dollars worth of assets? Was it flood or fire or war? NO!
If one is to judge the health of the economy by the strength of the stock market alone, this is what happens. I warned of it many times, (actually I was just passing on pundits' warnings). The stock market today is not functioning in the way it was intended. Originally, the stock market was created to help industry find alternative sources of funding (than just borrowing money from banks) for expansion and growth. It has since been turn into a glorified casino. Some people win and some lose. The value of the stock has stopped being a truly representative indication of the value of a company, yet salaries are based on it as indeed are loans to the company.
The world economy today, the USA economy, the Asian economies and/or UK economy are not that much different to what they were last week, yet today's headlines could well become tomorrow's catastrophe if people start to panic and sell-off before a run occurs. This is further aggravated by the fact that this last year, Trump's touting of the growth of his economy (that was no more real than his clean coal) has really caused an overstimulation of the value of the stock-market, making it ripe for a market correction. If as is often the case, people borrowed money to invest in the stock market which is now due for a correction; and in the meantime interest rates rise, what will happen? The assets people are buying now will be worth less than they paid for them, while their debts will be way greater than what they paid! That's how bankruptcies are created.
Unemployment figures alone as quoted by the Tories are not a full indicator of economic growth. This is especially the case in today's new 'gig' economy, when the numbers are influenced by students and other part-time workers on zero hour contracts. Low productivity is a problem, and also the real world numbers. For example, the number of rape case (as was recently reported) that have now been dropped because there was insufficient training and/or police staff to do their investigations properly.
I want to see how the Tories are going to keep their borrowing so low as they did under austerity! I want to see how they are going to honour their promises of HS2, Polaris, a renewed NHS, a healthy military and police force. That's what you get when you try to boost an economy through economies (austerity). There is only one way to grow effectively and efficiently and that is through investment. Allowing your infrastructure and assets to depreciate may improve your bottom-line profits for a short while, but in the end they are self-defeating.
So people lay off, lay of Labour and Corbyn when they say they will borrow. Ask instead, what they will do to ensure that it really is an investment, be it long or short-term.