Christmas! I said, or words to that effect. I definitely invoked our saviour, and I was as flabbergasted as anyone involved in the Nativity Story itself. I stood stock still like the ass on seeing a child being born in a manger; I gaped like the Wise Men beholding the star in the east; and I quivered like dear old Joseph on being told by his wife that she was about to give birth to someone else’s child, but it was really quite all right, darling, and there was no case for jealousy and it was indeed a great compliment that she had been chosen by the chap in question.
“How much?” I asked again. We were at the Christmas tree dealer, and my shining-eyed 11-year-old had picked a lovely eight-footer. It was freshly cut and smelt sweetly of sap. Its branches were more or less symmetrical, and its Nordmann needles were glued on as tenaciously as the cilia of a TV anchor’s hairdo.
My friend the salesman had already used his buzzsaw to whittle the stem, so that it would fit in our stand, and now it was being shoved through the wind-tunnel jobby and swaddled in white plastic netting. The only question left was the price.
I had a vague memory that last year, and the year before that, we had been asked for something in the region of £30 to £35 for a tree of identical height and beauty.
So when he said, ” Fifty-five pounds to you, my friend, and that’s as cheap as I can do it,” I not only boggled; I was placed in a momentary embarrassment. “Look here,” I said, after rustling theatrically through my wallet, “I am afraid I only have £50 on me,” and there was one of those difficult pauses.
We looked at the tree, wrapped and ready to go. We looked at my daughter, agog with excitement, and already thinking about the candy hooks and little robins and lametta and other exquisitely vulgar stuff that we were going to drape all over it while we all ate mince pies and danced around to Slade’s evergreen anthem, Yer it iz Merry Christmas.
I looked from tree to girl, from girl to tree, and I knew there was nothing for it, and so I foraged despairingly in my wallet again. There in a secret compartment I found some Syrian money, and some US dollars, and the beady eye of the tree dealer fell on the greenbacks.
“How many dollars have you got?” he asked, since he is a well-travelled entrepreneur. “Three,” I said. And so for fifty quid and three dollars I did the deal, and as I fed the trunk into the back of the car I thought, “Huh!”
We are told that a new menace stalks the economic landscape. We are told that prices are going to slump as demoralisingly as they did in Japan in the Nineties. We are told that for the first time in a century or more the great tapeworm of deflation is going to coil itself in our collective economic entrails, sapping life and confidence from the system. We are told to fear deflation far more than inflation, and all I can say is that on the evidence of my annual Christmas tree transaction, we are being told a load of old cobblers.
advertisement
The price of Christmas trees is up by about 30 per cent, and here is a clear, unmistakable sign of how a fall in the value of the currency can hit every household in the land – or every household that buys a real Christmas tree.
The pound has fallen against the euro, so that you pay more for your German tannenbaum. Sterling has fallen against the Danish krone, so that you pay more for your Nordmann non-drops; it has fallen against the Norwegian krone, so that you pay more for your classic Norwegian spruce; and it has fallen against the Serb dinar, so that you pay more for your Serb blue.
And yet people are also paying far more this year for trees that are grown here in the UK – and between 70 and 80 per cent of the British Christmas tree market is still home-grown. It is a fascinating example of how devaluation can import inflation into the price of goods that are actually produced in Britain, by British workers, with entirely British ingredients, including British soil and British rain.
You might expect the British trees to remain comparatively cheap; but then that would be to ignore the role of the Danish Christmas tree barons who apparently control the market in this country.
When they see their plantations in Scotland, they don’t see British trees. They see European trees. They see trees that could be sold as easily in Frankfurt or Paris as in London, and so they apply a universal euro price – and hey presto, I end up paying far more, in sterling, for a tree that is almost certainly grown in the UK.
Even if the trees are not produced or controlled by Danes, the general lunar pull of the euro Christmas tree price has its effect on the British wholesalers, who take advantage of the position to jack up their prices and increase their margins.
The result is a roaring Christmas tree price inflation that does not reflect any shortage of trees, and may indicate that we may have actually misunderstood the risks of the current economic climate.
Is my pricey Christmas tree the canary in the mineshaft? We have interest rates as low as they have ever been; we have the Government borrowing at a truly dizzying rate, flooding the system with money. Is there not a risk that a year or so from now we will have inflation, not deflation?
Is there not a risk that we are effectively repeating – on a much bigger scale – the mistake of the Lawson reflation of 1987? And, of course, the shake-out in the high street will itself exert an upwards push on prices, with the loss of much loved old cheapo retailers.
When we got home I found that we had lost our Christmas tree lights, and I thought, I know, I’ll go to the place we always go. I’ll go to Woolworths, I thought.
[First published in the Daily Telegraph on 09 December 2008 under the heading, “If only the so-called slump in prices had started with my Christmas tree.”]
So the whole deflation scare has to be seen in the context of who benefits. We have to follow the money. If people fear deflation, they will buy government gilts or bonds. In both America and Britain we are seeing a death spiral, collapsing house prices, collapsing tax revenues, collapsing retail sector. We are also seeing an ever larger gap between government outgoings and income. At the same time we are seeing capital being repatriated, as fear of not getting your money back takes hold. So the governments of both countries need to scare the punters into buying gilts or bonds. Hence we have talk about deflation, but the government controls the printing press, so they can create as much inflation as they like, but they can’t control where it goes.
So when Tony came to power, they didn’t increase direct taxation so much, but indirect taxes went up. petrol, beer, etc.
However, the inflation tax is the one that most people never understand. When we came off the gold standard, there was no limit on the amount of new paper notes that could be printed. As Keynes said “By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.” So Tony started printing about 14% more notes a year, some was spent on war, some on mad social projects, some on welfare etc. Once it was spent in British society it found its way into the things that people competed for the most, which was housing. So we had the greatest housing boom in history. When I was a boy, you could borrow 3 times earnings to buy a house. Average salaries are about 25,000 pounds in Britain, so the standard semi should cost about 75,000 pounds. Now that the market is dropping like a stone, we don’t know where prices are.
There was an article the other day in the Telegraph about how the British (and American) economies are built on permanent inflation, if we had deflation today it would be a nightmare, in terms of killing pension funds, insurance policies and forcing people out of their homes, thus also killing the banking system. If house prices dropped to 3 times earnings, most people would lose their homes. So now the government is printing money like mad, they need inflation to take off, and quickly. They need to force up the nominal value of houses, but prices will continue to fall in real times, ie measured against gold.
As you know yourself from the Christmas tree example, prices of many things are going up. Sterling is falling because the government is madly printing paper notes, and foreigners are leaving. As Lenin said, ‘the way to destroy capitalism is to debase the currency’, which is what Gordon is doing. But he still needs people to buy his gilts, to fund his extravagance, hence the deflation talk. And it is talk, prices of houses are falling at the moment, but that will change next year, once the freshly printed notes hit the street.
Since we went off the gold standard the pound has lost 97% of its buying power. We are about to lose the last 3%. This is how an economy based on permanent inflation always ends. As Hayek pointed out, we are on the road to serfdom.
Millions of people are going to see their life savings evaporate, their businesses go bankrupt. If you don’t have gold or silver, life will be very hard.
jim Puplava has a good radio show about many of these issues at financialsense.com. Also Eric Janszen has a good website at itulip.com.
When any system is set up, first you have the innovators, then the imitators then the idiots. The idiots are now firmly in charge and the system has reached its inevitable end. It always was an immoral and evil system, pensioners who now must choose between food and fuel, soon won’t even have that choice. i don’t envy any politician today. It is enough to make a decent man cry, but economic law is about to assert itself. You can’t live beyond your means, unless you’re me, which you aren’t. And I won’t tell that secret to anybody.
Like, wow.
Here in Canada (the True North, Strong and Free) we don’t take marginalization as our burden. If the Yanks want to pay extra, fine.
at least Boris thinks that some xmas decorations are tacky and that tree’s are getting to expensive! i had to take mine home on the bus because i couldn’t afford a taxi!
Shucks!
We live in Malta, the i-word (inflation) is the most painful sound to my ears – together with ‘eco-tax’ and ‘parliament’
Never mind Christmas trees, what about the price of the Telegraph? 90p it just cost me! When I first started reading Boris’s column two and a half years ago it was 65p!
True about Telegraph hike in cost StevenL! At least with a tree you could buy one half the height at half the cost ….
Mel
If Boris bought his Christmas tree in a market, all the traders are having to charge much more for their wares. The cost of hiring their pitch has rocketed, and transport costs for their are also much higher. I was talking to several market traders, (as I urged them to vote for David Cameron – they all said they would) and these strapping lads were explaining to me just how much more expensive life had become. They all said that they were serving a high number of customers, but any extra profit was being wiped out by the sharp rise in their overheads.
PS. Anyway Boris, the pound is at such an all time low and still sinking, you got your tree cheap. $3 is only worth £2.0286, you saved £3. So much for Gordon’s economic rescue plan.
Stephen, the rise in the price of the Telegraph is down to the fee they pay the Mayor for his column. (JOKE)
Sinking £ to $, I wish it did it two years ago when I visited London. That was more than 1:2 at the time(£ to $). Everything was so darn expansive and the quality was inferior.
But I want to be a Boris toady here because this article is immensely entertaining and funny. It’s amazing that a super busy mayor of London can still find time to write to entertain his readers. Thanks so much and have a wonder X’mas. Perhaps the pricey tree will dish out some miracles for your family.
Sinking £ to $, I wish it did it two years ago when I visited London. That was more than 1: 2 at the time(£ to $). Everything was so darn expansive and the quality was inferior.
But I want to a Boris toady here because this article is Immensely entertaining and funny. I’s amazing that a super busy mayor of London can still find time to write to entertain his readers. Thanks so much and have a wonder X’mas. Perhaps the pricey tree will dish out some miracles for your family.
Wrong, wrong, Boris. Spend more. Thrift chic as espoused by rich persons like yourself is merely accelerating the dive into slump…
You should be spending like there’s no tomorrow (and there may not be): it is your patriotic duty. And rather fun.
Christmas thrift is humbug http://www.guardian.co.uk/lifeandstyle/wordofmouth/2008/dec/09/thrifty-christmas-humbug
Azza: I’m not sure £50 plus $3 for a Christmas tree equals thrift. Rather, it was a surprise and indicative of currency fluctuations, supply and demand, etc. See the post titled ‘A Deep Recession’ from 28 October and the section that is “What is the point of asking such people to protect their loot? Whom does it help if they keep it in their Luxembourg bank accounts?” But the article you mentioned is also a good read.
Looking at this article from a different viewpoint, why are we all endlessly worrying how much things cost? Of course, it must be worse if you have loads of kids depending on you and your family portrait includes a bloodhound and a pickup truck, but really most of us have enough to make ends meet and we have very little control while the Mad Fuehrer who thinks he is a superhero (Gordon) remains in charge.
Maybe our addiction to materialism is because we equate it with the things we lack. We should remember it is only money, not love.
ps. Has anyone fallen for this?
Mmm. Gordon Brown said in the House today, he had saved the world. His two bully boy henchman have obviously overdone the medication by which they are controlling him.
Saved the world…. he thinks he is a superhero. The only superhero Gordon resembles is Doctor Doom, whose flaw was his overwhelming arrogance. He had many humiliating defeats and was abandoned in hell by the Fantastic Four. Finally, his conceit made him try to lift the Hammer of Thor, but he was not deemed worthy so he failed.
Saved the world? How’s that exactly? By exporting all our wealth to them?
It was so funny because the whole of the Tory side of the house exploded into gales of laughter and Gordon is too much of an El Stiffo to get himself out of it.
I think he misspoke, but it was a Freudian slip. It has just fed into the belief that Gordon has a God complex and is loving the credit crunch, in spite of the suffering inflicted on people who have lost their jobs (those poor Woolies girls jobless just before Christmas, for example).
Gordon is obviously over the moon because the polls are giving him a bit more support. He cares nothing that we are heading for financial disaster, because he thinks he looks a big man because he can throw money around and buy the country’s affection while telling the rest of the world to follow his lead.
Angela Merkel’s Financial Minister has spoken out strongly against Gordon’s cutting of VAT and overspending, so now Gordon says Germany is is no good and babyishly is excluding them from any meetings. He vows that the rest of the world are looking to him as their Saviour, but really he is “doing an Argentina”.
Argentina has become a watchword for economic disasters and spectacularly defaulted on its loans in 2002. Italy too knows of the risks of running up public debt.
The Economics Professor of the European Univeristy Institute Luigo, Guisio, said “Mr. Cameron is absolutely right and Italy’s economy is a benchmark for how bad things can get”.
In the meantime, Mandelson and Campbell keep feeding Gordon the happy pills, while he revels in delusions of grandeur and world domination. He was probably high as a kite in the House. (JOKE) A pretty picture isn’t it?
when Gordon misspoke, the denials of his office afterwards were about as convincing as Hillary Clinton’s when she said she had been under sniper fire in Bosnia and later had to embarrassingly backtrack.
Angela said: Looking at this article from a different viewpoint, why are we all endlessly worrying how much things cost?
The family portrait doesn’t have to include a dog and a pickup truck for people to be unable to make ends meet. In fact I can’t afford a dog or a pickup truck! I’ve spent every day meeting with the Abbey National this week – they’ve contrived charges and provided no ervice whatsoever for that money. The charges create other charges and when I tried to have a dialogue with them they put the phone down on me. The debt collectors were more civilised and helpful. The bank was awful. I was told yesterday that they refused to close my account (everything they demanded has been paid) and would not give me an assurance that the account would incur no further charges. They wouldn’t confirm that all DD’s had been cancelled and standing orders stopped either. I asked to put in writing our conversation and for the bank representative to sign it with me to agree that the…..
…conversation we’d just had. She refused. The manager refused. I was told it wasn’t her job to give customers advice. I left thinking I was in the twighlight zone here!
The dependance on banks should be stopped. they are just state sponsored theives.
Gordon Brown gives the impression that if you don’t agree with him, you are a non-person and should be annhilated. He just can’t take criticism, and together with his monster ego, these are disastrous qualities for a leader.
David Cameron jumped right on it when he said he saved the world, and said “At last, we have it on record!” and he then pointed out Gordon was kidding himself he was saving the world while this country went down the pan.
Dr. Doom is spot on.
Jaq did you know you can sue building societies and mortgage companies for unauthorised charges, just like you can banks?
My remark about the bloodhound and the pickup truck was just a silly joke. Nobody knows better than me how awful money worries are, because at one time years ago, I nearly lost my home, and had to fight like hell.
MartinsMoneyTips@moneysavingexpert.com
If you go to the above link, the whole process is explained to you. They also give a standard letter that you just have to copy out and take you through every single step you will have to go through in easy stages.
I am so sorry if i gave the impression that I take other peoples’ financial difficulties flippantly. I totally don’t. You are dead right when you say banks are mortgage companies are thieves. I know how horrible and hard it is, but I have learnt through hard experience how to fight back. If I can help in any way at all, let me know (contact me through Mel, who has my details).
That Martins Money link is really good. He encouraged thousands of people to get bank charges back and started the campaign to do so. He KNOWS what bastards these people are.
http://www.moneysavingexpert.com/
I gave you his e-mail, the above is the link for his website.
http://money.aol.co.uk/german-minister-slams-uk-spending/article/20081210205054168728226
German minister slams British government spending, see the above link.
If you sue the banks for your charges your clam will be frozen for a few years whilst the OFT and the banks thrash it out in the courts.
Of course now that the Treasury own half the banks they might start leaning on the OFT regarding a number of investigations into banking practices. Because the Treasury hand out the cash no other part of government will dare ‘tread on their toes’ either.
So if you do try and sue the banks for unfair charges at very best you will get your money back in a few years time.
Steven, I know that the banks are freezing claims because they are appealing the decision, that did not go in their favour. But it is still better to protest and sue them than do nothing that is effective at all.
I was charged unnecessary bank charges for absolutely nothing at all and it was really easy to put in the letter and follow the procedure. If everyone did this, banks and mortgage companies would think twice about ripping people off. If people just lie down and take it, they feel they can do what they like.
It’s the courts that are freezing the claims ros, not the banks. If the banks have their way they’ll probably appeal it all the way up to the ECJ. As the situation stands they can hammer you with these charges and you can’t do anything to recover them. If you ask me they’ll want to keep it like that for as long as possible.
Now that the taxpayer has bought or aquired half the banks it makes matters a bit more complicated. The taxpayer is kind of suing himself now. I wouldn’t be surprised if the government steps in at some stage. It is another example of the downside of the taxpayer owning the banks. We’ve committed to not allowing them to fail, that means paying their liabilities.
Again, it is people who have managed their affairs responsibly are being expected to cough up for those that haven’t.
From a purely pragmatic point of view, there is a solution to the overpriced Christmas tree problem. An enterprising tree surgeon is renting out live Christmas trees that he grows, for £25 a time. You have it for the whole Christmas period, then he comes round, collects it, and carries on growing each tree until next year, when you can once more do the same thing, until the tree grows too big , but he grows others then. PERFECT PRACTICAL SOLUTION.
sTEVEN SAID: I wouldn’t be surprised if the government steps in at some stage.
You must be kidding me. Since when did they ever do anything to help the general public? They don’t care.
Angela – many thanks for the links.
Ros – I agree. The government encourages dependancy on banks who steal money from the poor and are then given public money from taxes.
Gordon Brown never meant to say he “saved the world”, nor was it a Freudian slip – it was the Tories on the other side who, before he even had chance to finish his sentence, had jumped up, waving their bits of paper and cheering ironically like fans at a football match. And of course Cameron had to put in his two pence. Ever considered that maybe Brown paused in order to wait for the noise to die down so he could finish speaking?
As usual, both the media and the Tories have blown it out of proportion.
Lea that isn’t what happened. Brown definitely said “WE SAVED THE WORLD…” and then the whole house erupted. He probably meant to say “We saved the banks” but he didn’t and the laughter was justified because it just confirmed his God complex. You can’t blame David Cameron for that. Gordon definitely made the error and has to carry the can for such a Freudian slip, but taking responsibility isn’t exactly his forte, is it?
Brown has brought back Peter Mandelson and Alastair Campbell, both renowned for spin. We should therefore be cautious in believing anything put out from now on by the Labour party. For example, they are already presenting an inaccurate picture of how much there has been a decrease in knife crime.
All economic news is presented from the point of view that Gordon is our Saviour, Gordon leads the world, when it is his profligacy that has to a large part caused our troubles. The picture of Gordon saving the world is a fallacy and wishful thinking on his part.
He definitely did say “We saved the world.”
The pound is worth less than the euro now. Gordon, you ruddy fool!!!
No, I’m afraid You got ripped off Sir. Even the finest trees cost up to 50p to plant. They can take around 5-7 years to become fully grown. The mark up for a seven foot tree depending on tree type should not be more than £40. Next time go on line and get one sent to you in the post in a great big parcel. It also saves you the hassle of carrying it home.
pmsl