Wednesday, Apr 18, 2007
After the gain comes the pain
This Is Money (Daily Mail): After the gain comes the pain
Gordon Brown has relentlessly boasted of his success in defeating boom and bust. But the reality is that no one has yet found a way of overcoming the economic cycle. Once again growth has been allowed to run away and as the brakes are slammed on, we will have to face the dire consequences...........
Posted by cashisking @ 08:43 PM (135 views) Add Comment
5 Comments
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1. confused76 said...
Wow!... clearly written, objective, to the point...
After Mr. Blair, it is now Mr. Brown's turn to will finally seal the fate of New Labour and consign it to the dustbin of history!! The spin, the lies, the deceptions, the every-project-runs-over-budget, the incompetence, the lack of accountability, the internal fights... what a pathetic end!
2. japanese uncle said...
From a devil's advocate's point of view, things look quite differently.
The BoE could well have raised IR last month as many concerned parties including HPC reasonably expected. But they did not, quite unreasonably. As a result, inflation is now officially one point above target, which officially forced Merding King to issue a letter of explaining (what a ceremony!) and fully endorsed by the main stream media even talking about 0.5 pp rise at a stroke now. What a carefully staged and effective procedure to prick the bubble!. 0.5pp rise in IR at this volatile stage!
This is nothing short of, nothing more than a farce.
3. Sam said...
actually I think it was too late by the end of 2005. reducing rates then, and not increasing them in 2006 made a slight problem worse.
they could have slowed HPI down and a few people would have made no money, or perhaps even lost a little, let wage inflation catch up with hpi over the next five/ten years and let HPI revert back to it's mean over the next ten. they could have even done it and most people wouldn't have noticed -- all that they would see is houses are no longer a good investment.
4. dugmug said...
It sounds workable in theory, Sam, but as the article states, "the reality is that no one has yet found a way of overcoming the economic cycle." In a boom, people keep buying because they're afraid of "missing-the-boat" (be it first time buyers or "investors"). If the boom stops booming, there's less incentive to rush and buy, so things slow down still further, so there's even less incentive to rush and buy, so things slow even more, and so on. To keep prices going up enough to maintain sales, but keep increases low enough to maintain affordability (otherwise you end up with forced sales, no new FTBs, eventually even no new BTLs, etc), would require a level of precision management that nobody has yet achieved, which is why it always goes pop in the end.
5. Vicmac64 said...
What has Gordon heard and more importantly 'where has he heard' the phrase 'and end to boom and bust'? Doesn't seem he's smart enough to come up with this himself???? so where is this all pointing to???