Monday, Jan 22, 2007
Bill Robinson predicts a short recession
The Independent: With wages and inflation tamed, the days of savage downturns should be over
Most economic downturns are accompanied by a fall in asset prices. Last time, it was the stock market. This time, the bellwether will be the housing market.
Posted by sold 2 rent 1 @ 12:42 AM (166 views) Add Comment
8 Comments
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1. sovietuk said...
"inflation tamed" ?????
2. paul said...
I think Bill's recently bought a rather overpriced house, and really doesn't need negative equity right now.
Bad Luck Bill.
3. magnifico said...
A very good article, in my view.
I agree with the fact that the BoE independence ( some will argue with some reason that this is not quite so) does make a big change from the situation which created the big busts.
For example, if GB had full control over the IRs he would almost certainly have been a lot less inclined to cut them.
A downturn is on the cards but it will be small, and will probably cost Labour dear.This is it, until I change my mind again....
4. Nohpc said...
It appears inflation is tamed. The only thing inflating now is energy prices which is not contrallable with interest rates.
5. sold 2 rent 1 said...
The article was good although one possible outcome was missed
If we have a slowdown with low inflation and high asset prices then could this mean a deflationary slump is on the way
6. waitingfor hpc said...
inflation was never tamed just offset by China over the last 10 years and cheap labour from Europe (for the UK). Both of which can not and will not last forever.
7. bidin'matime said...
I think his overall tone of optimism is not borne out by the content of his article. He's effectively saying 'tomorrow I might need to wear a very light sweater, so long as those big black clouds I see coming our way don't actually contain any rain....'
8. geed said...
Remember inflation is measured by an index that is pure cobblers and it is still running at 3%. REAL inflation will never be a factor and this is where the HPCer's argument becomes weak, interest rates will never rise in a magnitude required to cap REAL inflation therefore in reality they will not rise above 6%.
Once CPI starts to come down, even by 0.1%, the BoE will act twice as fast to reduce IR's as they have to increase them.
The cost of housing is ridiculous, but unfortunately I think it will remain this way in many reqions unless borrowing regulations are tigntened and the Government decides to implement a REAL CPI.
Question is will the 6% be enough to push people to sell?