Thursday, Nov 29, 2007
Mr King tells it as it is
BBC News: King says outlook 'uncomfortable'
Bank of England governor Mervyn King has sounded a downbeat note about the UK economy, warning that growth may slow and inflation was likely to rise.
Posted by mrmickey @ 09:28 AM (1710 views) Add Comment
26 Comments
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1. tick tock said...
Mervyn King has sounded a downbeat note about the UK economy, warning that growth may slow and inflation was likely to rise.
Stagflation it is.
2. planning4acrash said...
How do you hedge against stagflation?! Certainly not houses, any ideas?!
3. Icarus said...
'Mr King was sceptical about whether sub-prime losses in the US could, on their own, lead to a major market slowdown'. Again, this sorry crew are pushing the line that all these problems started 'abroad'. When everything is humming along these guys trumpet London's central role in international finance but when things go belly up - hey, London couldn't foresee this or do anything about it.
4. handle_it said...
http://en.wikipedia.org/wiki/Stagflation
5. jack c said...
I wonder if someone set off the fire alarm deliberately during Mr King's announcements unable to take any more? BBC business editor Robert Peston said that evidence heard from the governor before the interruption was "enough to make grown men weep".
Perhaps HPC will turn into HPM (House Price MELTDOWN)
6. alan said...
"enough to make grown men weep".....
Among the politicians Mervyn seems to be standing out as a man of principle and intelligence. I believe he is an honest bloke of the old school, who tells things as he sees them.
He has gone up in my estimation, and I hope he remains at the BoE for some time. It is one thing to want to buy a house at a lower price; another thing to have our country economically wrecked by political mismanagement. Hopefully Mervyn can mitigate some of the mess caused by our estwhile politicians.
7. paul said...
It should be remembered that the seeds of the current crisis were sown by the Bank of England in 2003.
Just to put it in perspective.
8. geed said...
"Enough to make grown men weep"
Just a sensational comment from the BBC. I feel it is somewhat an anticlimax of late. Finally everything is going our way and our comments with regards to house values and the wider economy in the UK are now justified.
I now find the comments coming to me, "well something has got to give" "it cant go on like this" etc... I almost liked being in the minority, going against the grain, perhaps even the under dog and now everyone is on my side. And this change in all but a few months.
The fight is over, it has been a hard slog.
9. Rockandhardplace said...
Weird, isn't it? When we sold to rent I got nothing but scorn and incredulity. Now people are giving appreciative nods and bowing to me as a sage. I can't say I mind, though.
10. Bigyin said...
Can King play the violin/fiddle (how appropriate)? Perhaps he should change his name to Nero and start playing...
11. paul said...
"I almost liked being in the minority, going against the grain, perhaps even the under dog"
Let Hercules himself do what he may, The cat will mew, and dog will have his day.
Hamlet, Act V Scene 1, William Shakespeare.
Shakespeare was a genius.
12. sovietuk said...
The full horror of 10 years of economic mismanagement by Stalin Bean is now emerging. I doubt whether Mr Bean will even be able to afford the minium payments on his bankrupt credit card economy.
13. cyril said...
geed - I've seen many false dawns with HPC so don't give up just yet.
The pleasure lies not in being able to say to your frieds "I told you so" but in having had the foresight to do something more sensible with your money. You did do something sensible with your money didn't you?
14. Dad Badger said...
As someone who, after years of renting, put an offer in on his first house and had it accepted on the day before Northern Rock went t1tz up, only to have the lender (Co-op) bizarrely/fortuitously reduce their mortgage at the last minute, making the sale a non-starter. I've been following HPC for a couple of months now. I suddenly have a re-newed sense that someone is looking out for me. I'm not laughing at my bosses (3 of whom have just completed on much bigger houses) just yet, but there's a little smile on the inside that hasn't been there for a while. Let's hope it keeps on truckin'!
15. C'mon Correction said...
UK
Rock
Between
Hard Place
16. geed said...
I haven't bought a house, so I must be bordering on genius ;)
The other sensible thing I have done of late is spend a 6 months sabbatical around South America, there is something quite liberating blowing a good chunk of your house deposit on an adventure.
I have a hunk of cash in UK ISA's, a little more in Stocks and shares ISA's ( not to happy with this lot of late but I'm way ahead as I've had it for many years but it may be time to get out), and a chunk of Australian dollars which are doing just nicely thank you.
I'm hardly Warren Buffet though.
17. Matt_the_hat said...
Don't worry Mervin will be removed shortly, to be replaced by some puppet for Mr Bean.
The thing we all have to consider is this, Liebor is for the working man (70% of which own their own house) who's only chance to make it in life is through property.The last decade has served these group very well!! However non have savings and are using their houses as a cash machine.
The cash machine is broken and house prices are falling. a) does the government control inflation and allow house price affordability to be re-established, or, b) let inflation run a-muck, fiddle CPI stats, and keep nominal (not real) house prices stable?
Those of you boasting on this site need to be very careful, some of us have lost out before (HPI) don't let yourselves be victims again through inflation, devaluation of the £ etc....
Please let me know if you think this is crap...
18. sold 2 rent 1 said...
This is the day when consensus came to the mainstream media that HPC has started.
Let’s get the champagne out.
Or maybe we should put the bottle back on ice and sit and think about the seriousness of the problems that lie ahead.
The banking system is a flawed and fragile beast that has been abused on a humungous scale by the greed of both borrowers and lenders alike.
This is not going to be like a 1990s crash.
It's not even going to be like a 1930s depression.
The debt levels built up say something much bigger is ahead and we should all be preparing for the dire times ahead.
19. jack c said...
S2R – very valid points – hopefully the majority of people will eventually wake up to the prospect of a very tough 2008/2009 and beyond.
I’ve just had a leaflet land on my doormat this morning “receive £200 free in time for Christmas” in the small print this is for applicants who are successful in applying for an IVA ! There are 11 headline grabbing titles including consolidate and clear all of your debts, a government backed scheme, write off up to 75% of all your debt and only pay for a maximum of 60 months the rest is written off. What a joke personal finance and borrowing has become.
20. Growler said...
It's easy to be happy about the situation. I've sold 2 and now am renting - but this is more to do with serendipity. My employer wanted to relocate me and I had to rent - just as well as it happens.
I think once people realise that they have had happy days and we're back to normailty, they can't really complain and be credible. It will be interesting to see what the words will be that explain howcome the wildy high estimates on the HPC site now have to be down-graded.
21. geed said...
Sorry, my second post should have been addressed to Cyril, as read in solitude, it is a bit off the topic.
Speaking of protecting your cash against a devaluing pound, does anyone hold any Euro's?
G
22. Hotairmail said...
"The estimated $200bn hit taken by firms was the equivalent to a 1.5% fall in the US stock market, he added."
Oh that's alright then...or is it?
The Dow trades on a trailing p/e of 16. That means he is forecasting a fall in profits of 24% across corporate America! (Bad debts will be written off against the bottom line).
Wind yourself forwards 12 months. You probably wouldn't rate the profits from these companies any higher than this year given their performance. If they are still rated at the same level as now, the trailing p/e is still 16...but the market worth has fallen 24% !!!
It is more likely that investors would downgrade these companies...if you go to a p/e of 8 for instance then the stock market has fallen 48%.
It wouldn't take a much higher than currently forecast fall in US house prices to double the write offs per loan foreclosure.
If that happens, the stock market would have fallen nearly 3/4 !
Oh and add in an overshoot.
It may not happen, but you can see how it easily could.
23. drewster said...
Matt-the-hat, you're spot on with your analysis: "don't let yourselves be victims again through inflation, devaluation of the £ etc."
P4ac: "How do you hedge against stagflation?"
Very good question! Googling for "hedge against stagflation" yields a miserable six results. The inflation component of stagflation is largely due (1) depreciating currency making imports expensive, and (2) cost of basics (food, heating, etc.) increasing.
Options include:
- Move to a growth country (China, Dubai)
- Move to a country with a lot of natural resources (Dubai [oil], Australia [wheat and coal], Canada)
- Become a farmer (rising food prices to benefit)
- Move to the coast, buy a fishing boat, and live off the sea for a few years
Anyone else have ideas?
24. Marvin said...
@Drewster;- I may be wrong but I thought Dubai has no oil, just alot of sand and a lot of shrewd buisness men. The UAE are suppliers and middle men for people with money (oil) and people with stuff (mercs and F15s) to sell to them. The fact that they are interested in our borse should concern us, not least because they could easily surplant us as the leading world market place when the merry go round has stopped. But I agree, it's a place to invest, these guys are no amateurs.
How the once mighty are fallen, we used to be the industrial envy of the world now we are in danger of becoming a nation of car booters (Napoleon was closer to the British psyche than we give him credit for).
Life don't talk to me about life
25. the northerner living in oz said...
2. planning4acrash said...
How do you hedge against stagflation?! Certainly not houses, any ideas?!
Buy gold but do not wait to long
26. wiltshire said...
Strap yourselves in, it looks like we're in for a bumpy ride.
It's only a few weeks since the Northern Rock fiasco and now the biggest monthly drop in prices in 12 years - not just 2 or 4, 12 YEARS!!!. Many on this board have suspected that when this bubble popped it wouldn't be with a whimper and it looks like it's going to be Krakotoa-esque! I think the headlines we're going to be reading over the next couple of years are going to be off the scale in terms of impact. The housing market is primed to fall off a cliff and drag the rest of the economy down with it.
I can see one particular person in this country hearing the mocking phrase "No more boom and bust" ringing in his ears till his dying day.