A pleasant conversation. #financefriday

This week has been wet and miserable here in the Black Country. I did get out and do a little gardening and filled up the bin for “green” waste. I didn’t do much writing or editing. Britain seems to be a nation of people who can’t cook these days and some would starve without take-aways. I do quite a lot of cooking and that saves me money. You have to shop around a little though. I have shopping delivered so use just one supermarket now, but if my gluten-free sausages are £3.50 a pack or 2 for a fiver, I obviously buy 2 and freeze them. Being thrifty means all those odd savings really mount up.

Discretionary income, that income you have left over when you’re paid for all the essentials is falling for everyone. That is the money you have left to enjoy yourself and socialise. If we don’t socialise, our mental health suffers and there is a mental health crisis in the UK, despite the fact it is ignored by the government and the media. Having money coming in from investments boosts your discretionary income. Investments can be savings, but higher interest rates are never passed on to savers. Banks value people who live beyond their means using credit cards. They give the banks high profits. Banks are having a tough time though, their balance sheets are suffering because they are loaded with government bonds that are falling in value. That isn’t a big problem, the bonds still pay a small coupon; the problem is what will happen if people panic and start withdrawing their money en masse? Then the bank can quickly go bankrupt or become very short of liquidity. Yesterday’s interest rate rise by the Bank of England made that little problem worse.

Bank shares do seem to be at bargain prices now and paying decent dividends. I’ve recently had a dividend from Nat West and yesterday I was paid a dividend by Standard Chartered. My dividend today is from Taylor Wimpey and at the end of the month it will be Lloyds and Reckitts’s turn to contribute a little to my discretionary income. Share prices of the banks have been falling and so it isn’t all strawberries and cream. I expect those share prices to soar when the Bank of England realise that high-interest rates strangle growth. Professor Danny Blanchflower who used to be on the bank’s MPC has been saying this for a while. The theory that high-interest rates take money out of the economy and reduce inflation is a fallacy. High-interest rates partly cause inflation by forcing up mortgage payments. To cut the amount of cash circulating in the economy, they must raise taxes. However, this government’s right-wing bible says raising taxes is a sin and punishable by an eternity in hell!

I need to get out this weekend and take some photos. Photography is an expensive hobby but once you have that expensive camera you don’t spend more on equipment for years. I like to go to places where people go for a relaxing walk, then I can relax too. I have had people harass me in the street and even come running at me swearing. On a quiet country walk, people just say good morning and a pleasant conversation often follows.

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