[DrBubb]

The UK's progression on this pathway is even more likely than it is for the US.
And the UK is now ahead of the US on the path.



source: The UK's sorry state

This post has been edited by DrBubb: 07 May 2009 - 09:48 AM

[DrBubb]

Some people may not like to see copies of other posts.
But I thought this issue was important, and needed some proper discussion here on the Main board.
Mods, please transfer to Off-Topic, or the Financial section, if you do not agree //

tinecu, on May 7 2009, 03:18 PM, said:

I guess we are moving from stage 8 to 9 to 10...
I think the central banks will resist raising rates for some time yet.

That's right.
Watch for the currency to continue to weaken, and people to start getting their assets out of the UK, where they can.

Banks are going to be pushed to lend, so those who cannot sell assets, will borrow against them, and move the money out. This will serve to increase the indebtedness and vulnerability of the UK. Meantime, the government will not want to admit it is happening, because that we act as encouragement for others to do the same.

Slowly, the UK is creeping up on the "No Exit" point, intentionally blind to the dangerous path that they are on.

Meantime, what do I see on Bloomberg at this very minute?:

They are talking about the BofE expanding the purchase of bonds, to keep rates down. This is a very temporary fix, to a unfixable problem that Brown's government has baked into the cake through years of ignoring outrageous and dangerous house price inflation. Thanks to that huge, world-leading house bubble. Spain, Holland, and the UK are stuck in a similar very sad corner. But the per capita size of the UK's debts is bigger, and London has relied heavily on grotesque growth in its financial sector.

DrBubb, on May 7 2009, 10:42 AM, said:

A chart that should keep every UK homeowner and UK Prime Minister awake at night !



The UK is truly bankrupt if incomes fail to rise alot, and/or property does the "normal" overshoot to the downside.

This is based on the following statistics on historical Price-to-Income ratios / attachment=1049:housepriceratios.pdf
What if it overshoots, and falls back to the 24% discount seen after the last crash?

Also discussed on this GEI thread: The UK's HPC will be much, much worse than 1990

And also : On SP

[Sceptacled Bear]

LTNS,

Yeah it's funny though, when it's presented so graphically it looks kind of chicken and egg... I'm always a bit suspicious of such 'obvious' predictive stories...is an economy's default state trade or non-trade?

History says the former, so somehow commodities will continue to flow, but what we have to trade will be worth considerably less...human cost.

[richyc]

dr bubb, what is the "no exit" point?

also, where do you see the best place to be putting sterling cash now?

[drrayjo]

Yeah...but Nationwide found a few thousand homes whose value rose half of one per cent over a few months in early 2009.

Put that in your bearish pipe and smoke it! I think you'll find the market is going to do very well now.

Oh, and

...and other lame attempts at pithy, affected blase bullishness.

[Har Fast]

Bubb,

Interesting and informative, but I don't fully understand step 7 ("Deflation triggers excessive money supply growth")

Should it be "Fear of deflation triggers excessive money supply growth"? Otherwise, can you explain what is meant?

[ParticleMan]

Bubb - at #10 the walls go up.

Thenceforth you have...

11/ Producers source local labour or are supplanted by those who do
12/ Labour costs soar in local labour markets
13/ Production moderates in local markets
14/ Security of supply becomes a national concern
15/ Foreign nations with little more than surplus capacity to trade in increasingly shallow markets begin to starve
16/ War

This post has been edited by ParticleMan: 07 May 2009 - 11:04 AM

[Pedro for the Fed]

betwixt 8 and 9

[Pedro for the Fed]

nice piccie btw

[DrBubb]

richyc, on May 7 2009, 09:58 AM, said:

dr bubb, what is the "no exit" point?

The point at which there is no turning back, and a Greater Depression, starting in say, 2010, becomes inevitable. At about the same point, it may prove very difficult to pull up stakes and leave the UK, because the currency may lose its value or convertibility. That's why I am suggesting that people get their money out while they still can, and even think about moving abroad.

More: The Merits of the UK are Considerable, but...

richyc, on May 7 2009, 09:58 AM, said:

also, where do you see the best place to be putting sterling cash now?

Sorry, I cannot say for sure. My own free cash is in: C$, A$, and HK$

This post has been edited by DrBubb: 07 May 2009 - 11:50 AM

[Panda]

Temp fixes i agree, next stop, failed gilt auctions, rising interest rates, propping up our trashed currency, we are the next Iceland.

A trade off;

1. Trashed economy

or

1. Trashed currency

Which one, i say they will raise interest rates and say to hell with the indebted, once the banks have recapitalised.


Because this is what it is all about, create the indebted, recapitalise the banks, deflate earning power, then watch them walk away and watch the man on the street fight for a crust.

[Injin]

ParticleMan, on May 7 2009, 11:59 AM, said:

Bubb - at #10 the walls go up.

Thenceforth you have...

11/ Producers source local labour or are supplanted by those who do
12/ Labour costs soar in local labour markets
13/ Production moderates in local markets
14/ Security of supply becomes a national concern
15/ Foreign nations with little more than surplus capacity to trade in increasingly shallow markets begin to starve
16/ War

I think we might see faux war or cold war or even war by proxy (terrorism) on a waider scale rather than an all out nukefest.

"Official" wars aren't started by leaders if they can be atomized within 15 minutes.

[DrBubb]

มร หล, on May 7 2009, 11:51 AM, said:

Thai Baht, Dr Bubb. Any ideas.
Oh, jolly nice to see you old boy.

Why Naht?
Thnx. Im easy to find, do a G. search