Friday, Feb 15, 2008
We are so stuffed
The Telegraph: Recession would threaten borrowing rules
The report said a major downturn in the coming months, with the economy shrinking by 1pc, "could see public borrowing rise as high as £100bn or even £150bn per annum, blowing the fiscal framework to smithereens and perhaps even leading to some rise in the Government's relative cost of borrowing".
Posted by sold 2 rent 1 @ 10:27 AM (674 views) Add Comment
13 Comments
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1. mark wadsworth said...
£100 bn seems about right, they're already borrowing £50 bn a year or something.
2. sold 2 rent 1 said...
What if the economy contracts by 2pc in 2009 and 3pc in 2010. That would make a defecit of 300-400bn.
US GDP collapsed by 45pc in the 1930s - see graph
http://www.thelongwaveanalyst.ca/downloads.html
This is a 60 year debt bubble bursting here that doesn't even take into account the additional factors of peak oil, peak food or climate change.
The government has no choice, it has to try to hyperinflate.
I am not sure there is enough time to get inflation to 100pc before a deflationary depression sets in.
3. theboltonfury said...
s2r - I'm not sure I agree with your carte-blanche doom mongering. I'm sure the government (cretinous as it may be) will not see your suggestion as it's best option. Whilst it may feel like it at time, we aren't a banana republic.
4. cornishman said...
I think the problem is that the government has been 'spinning' the facts/data for so long that it doesn't actually know what the hell is going on. Quite how anyone can insist that we have a 'strong economy' and keep a straight face is beyond me.
Going forward, with the baby boomers all retiring with indexed final salary pensions, with PFI payments to use hospitals and schools - and with the economy on its knees and unemployment booming, things are about to change quite drastically IMO.
5. sold 2 rent 1 said...
theboltonfury,
Whilst my views are extreme, I always back them up with data.
There is a long wave debt cycle that has previously ended in a depression (1830s and 1930s)
The main differences this time are:
1. Debt is a global phenomenon (not just a US one)
2. US debt levels are much higher (350pc GDP) than in 1930s (270pc GDP) and 1830s (150pc GDP)
3. US was the biggest creditor in the world in 1930, now it is the biggest debtor
4. Peak Oil. According to The Oil Drum 95pc of all preditions for peak oil fall between 2008-2010
5. Peak food. World-wide around 852 million men, women and children are chronically hungry due to extreme poverty; while up to 2 billion people lack food security intermittently due to varying degrees of poverty (source: FAO, 2003).
6. Unkown costs of dealing with climate change
6. theboltonfury said...
i just think that just because it's a bleaker outlook right now it's all too easy to jump on the armageddon bandwagon.
@cornish - the economy is not on it's knees (yet) and unemployment is not booming. i'm not saying that it won't happen but I guess anyone (even that fool greenbay) can chuck in a load of data to illustrate a view.
I personally think talk of 'hyperinfaltion' and 'this is the end of life as we know it' is futile, scaremongering and without concrete foundation.
I respect your opinions completely and agree these are uncertain times, but sometimes after 30 minutes on this site not only am I pleading for a house price correction but also for a dose of cyanide to deal with the prospect of living in a shoebox until i'm 42 (probably the average life expectancy according to some)
please, someone lift the gloom?
7. handle_it said...
"please, someone lift the gloom?" Things will have to change and quite quickly. I'm sure we'll adapt, but life as we know it, will change. No point in worrying about it. But denying it's happening won't help either.
8. theboltonfury said...
i don't have my head in the sand, but what's happening exactly as we stand. Some greedy buggers are getting their come uppance and people living beyond their means are getting reeled in.
Saying 'i'm sure we'll adapt' makes it sound like we'll soon be crawling around in sewers looking for scraps, probably having also evolved gills because of hyperinflation and a new kind of palsy brought on by high IR\s' - Let's try to keep calm than fall into the trap of sensationalism
I don't doubt things will become much more stringent, but even amidst all of todays obvious credit crunch, tighter lending etc I am not noticing any significant change in mood, trading conditions or standard of life.
9. sold 2 rent 1 said...
"please, someone lift the gloom?"
Despite forecasting economic chaos, I am very optimistic about the future.
Unfortunately my optimistic views are even more extreme than my economic chaos views and you guys will have to wait until I really understand them myself.
A year ago I was saying buy gold.
Many accused me of being a gold dealer pumping the market.
Last May I was talking about a forthcoming depression, and all but lvmreader rejected it.
The future is bright (hopefully), but just like economic cycles, the green shoots of hope only emerge from the darkness of despair.
If you look in the right places then there are optimistic signs, but you won't find any if you are focussing only on the negative stuff..
As contrarians we were right about HPC and the masses are being proved wrong.
Slowly our view is becoming mainstream.
Now it might pay to be a contrarian about what happens after the chaos
10. handle_it said...
I'm pretty new here, yes sometimes it's a bit depressing. The truth of the matter, for me at least, is that perpetual growth year on year is clearly unsustainable. To what extent we will "have to adapt" (and I'm talking long term and not in my lifetime) of course remains to be seen. I have a affirmation "whatever happens, I'll handle it".
11. sold 2 rent 1 said...
"To what extent we will "have to adapt" (and I'm talking long term and not in my lifetime) of course remains to be seen"
Why is everything always our chidren's problem?
What is becoming clear to me is that we are the children at the end of the line.
There is no-one to pass the buck to now.
It is our problem to solve.
12. handle_it said...
I'm not suggesting that we shouldn't do more. I just think that right now, we are so far from where we have to be, that we can't even perceive it.
13. sold 2 rent 1 said...
"I'm not suggesting that we shouldn't do more. I just think that right now, we are so far from where we have to be, that we can't even perceive it."
Just because we can't perceive it, it doesn't mean that timewise it is a lifetime away.
As change, that has been and is still is on an exponential curve since the big bang, goes vertical, the point at which action can no longer be deferred into the future will arrive sooner than anyone can imagine.