Nicole Inoculates Acorn Audience

Nicole Foss speaking at The Acorn in Penzanceby Jonathan How

Canadian speaker Nicole Foss made an appearance at the Acorn Arts Centre at the beginning of April. She was on a European speaking tour and Penzance was her next stop after the Swedish Parliament! She has lived in the UK in the past and said that Cornwall has always been her favourite part of the country – so she was delighted to be back.

She started by warning the audience that the UK’s debt to GDP ratio is the second highest in the world at 466%. In addition, on a global scale, it has one of the worst house price bubbles and this is now starting to deflate. To those who doubt that there is a bubble she projected maps showing the ratio of average house price to average annual earnings. For many years the figure had been about 4 and in Penwith in 1998 it was still between 4 and 6. But by 2006, after massive house price inflation, the figure was more than 8 and, although there have been some falls, the ratio is still staggeringly high and cannot be sustained.

She predicted that the bubble would collapse in the way that bubbles always do. Large numbers of unsold houses on the market with vendors unwilling to reduce prices. The more desperate sellers eventually give way and this leads to a downward revaluing of all properties and ultimately major house price deflation. While many people fear monetary inflation Ms Foss is one of the few experts who predict that deflation is far more likely. But just because prices are falling it does not mean that things are necessarilly getting cheaper because wages may well fall faster. There are also knock-on effects from financial crises – they tend to trigger disruptions in the supply of commodities like oil.

The UK has had a huge energy dependence on North Sea oil and it is unfortunate that this supply is now tailing off just as long distance supplies are likely to become more volatile. She also felt concerned about the massive quantities of food that are imported into Britain and pointed out the huge impact that currency fluctuations can have and how vulnerable this makes us. In the long term it will not help us having the financial hub of the City of London in our country. She warned that this is a place where money just chases its own tail and no real wealth is created at all.

It might sound as if Nicole Foss’s talk was just doom and gloom. But she has said that she wants to bring people together in a room and then inspire them to work together to do what can be done at a community level. “I also want to warn them, provide a kind of psychological inoculation if you like ...” She feels that if people have had some degree of forewarning they will be able to act more rationally if a financial tsunami hits. There are no foolproof survival methods but she recommends the following individual actions:
- minimise debt
- eliminate dependence on credit because availability of credit is going to go away
- hold a supply of real cash
- rent rather than buy (you’re paying someone else a small fee to take the property price risk!)
- move into land, tools ... anything tangible, over time
- beware of the banking system – it has a long way to fall
- sell excess real estate, shares, commodities (you may well be able to buy them back later for less money if you really want to own them)
- investing in precious metals is probably only sensible if you can afford to sit on them for 20 years
- gain control over essentials (food, water, energy supplies)
- get to know your neighbours and build stronger local community bonds – you may well have to rely on these people in the future!

Nicole promises to be back in Cornwall in the summer. In the meantime you can check out her blog at:
www.theautomaticearth.blogspot.com

Listen to Nicole being interviewed by James Marshall of Penwith Radio