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mattyfc

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Everything posted by mattyfc

  1. The UK has plenty of problems However, the ONS construction figures are a bit of a joke, both output and new orders seem to be utter garbage. They do not correlate with any survey data (EU or Markit) or the results from listed construction companies or suppliers. For example Travis Perkins & Grafton, or anyone else you care to look up in the sector. The figures are being manipulated either through the incompetence of the ONS or possibly deliberate sabotage.
  2. No way out of this recession I’m afraid. Simultaneous austerity throughout Europe and US consumer confidence falling off a cliff. There is nothing UK policy makers can do about it. Debt levels are too high and are crushing the global economy. The only way out of this spiral is massive debt write offs and a deflationary bust or print/ helicopter and stealth default via inflation. The Eurozone looks set to go first in to the bust, the rest of the world will follow. Like watching a rerun of the 1930’s. Good to see we learned a lot in the last 80 years.
  3. No chance of QE3 tomorrow, QE3 will arrive eventually though, the global economic outlook is pretty awful. Another "2008" style bust with its epicentre in Europe seems pretty certain. QE3 will come after this event takes place.
  4. It is a certainty, probably not till next year though. They will wait for the Eurozone to collapse and the deflationary bust that follows. Despite our current high inflation it looks rather likely that we will see a 2008 redux with commodity prices falling off a cliff as global demand collapses. I would guess the first six months of next year, although at this rate it could be even sooner.
  5. Really? Despite the start of Q3 being much stronger than Q2, with the bulk of the economy expanding at it's fastest pace since March?
  6. What good would us printing do? QE2 seems to have done wonders for the US economy which has barely grown since it's inception. There is nothing we can do in the UK / USA to fix this situation. The reasons equities are selling off is because Italy, Spain etc are going to default. The ECB and Germany need to find the solution to the insolvent half of the eurozone. Easiest solution is for Germany / Northern Europe to abandon the Euro and change the mandate of the ECB so it can monetize the debt of Italy, Spain etc. Massive dislocation problems for a few years, but at least recovery would be in sight.
  7. Italy and Spain are insolvent. Italy is the most obvious due to the massive public debt burden, Spain has hidden it's problems but once the property market reaches bottom it will also restructure, the losses will mirror those in Ireland scaled for size. There are not really any options here. It will never fly politically in Germany or France to transfer 30%+ of GDP to support southern Europe and keep the euro together. Even if it was attempted it could not be sustained. This leaves ECB printing ( Which is also impossible with Germany in the zone) The only solution is for Germany etc, and probably France to bring back there own currencies cut the south loose with the Euro which will then crash, enabling the south to recover. The only real question is how long it takes to get to this point.
  8. Exactly. Print and spend is the exit strategy of choice, reset via inflation. Even if this requires the dissolution of current world currencies and the issuing of new ones. This is the only way the bubble debt will ever be repaid, no other solution for the entire western world, US, UK, EU etc. The debt was built up in anticipation of infinite economic growth which is simply impossible. Fiat money is not tangible and can be created at will, no need to get too hung up on the trillions of debt built up. Hard assets / productive capacity are what is really important. Clearly this is not a painless solution, savers and those on fixed incomes are wiped out and there would be rioting and political upheaval and things would get real ugly for a few years. This is easiest / least bad solution and we are already seeing the start of it.
  9. As predicted which makes a nice change. A descent performance considering there was a day missing and North Sea output was hammered by maintenance issues (20% y/y decline in may). Could easily have been negative, saved by a strong service sector performance. There has been negative growth in industrial production growth this year despite record growth in manufacturing. The construction figures are also utter garbage and are almost certainly not measuring “output”. Once Buzzard comes back up to 200,000 BPD and the North Sea output recovers in Q3 and Q4 Industrial production should grow more normally.
  10. Investment managers have nightmares thinking about the €2 trn of Italian debt. They need inflation, nominal GDP growth needs to rocket for the debt to be manageable. Deflation / recession seem likely currently; a debt spiral will result if massive austerity is enacted. Austerity would be the worst idea ever, they need to print, simple as. Massive panic selling is the result of current policy. Spain has its banking problems coming to the fore. The losses in Ireland should provide a guide to how bad the property / developer and land loans will go in Spain. Prices will plummet as interest rates rise, total losses from the property bust will be €500bn to 1.5trn. Things looking pretty grim currently.
  11. The total failure of Greek austerity was revealed in the 1st half budget deficit figures on Monday. Ironically if Italy cuts too hard and fast it will do a lot more harm than good. Fundamentals are already going south fast, massive austerity you may as well bail them out now. Italy needs inflation and devaluation to survive. There is a reason the lira had a large amount of 0’s to other currencies. Italy should abandon the € immediately. The budget is not in to bad a state, they have a real economy, in the north at least. Forcefully convert bonds back to Lira, devaluation v the euro would be limited as it would plunge also.
  12. In the short term perhaps. It would probably violate the German constitution. Assuming Germany agreed to it in the first place (not likely). Germany does not seem to be keen to subsidise southern Europe. They will probably have to choose between a euro transfer union or bringing back the DM eventually. I think a similar situation to Yugoslavia would develop over the longer term with euro bonds. Germany would be earning and southern Europe spending. Not going to work and would probably explode violently eventually.
  13. This seems like some kind of 2007/8 redux. Fundamentals are going south fast, once it becomes clear there is no path to growth for Portugal, Greece, Spain and Italy things will turn very nasty indeed. The periphery is insolvent and the current strategy of papering over the cracks and hoping for the best will not work. Austerity alone will crush the periphery economies and risks disaster. A plan to get the periphery back to growth and recapitalise the insolvent core European banks is needed fast. Not looking likely anytime soon. Interested to see if Trichet raises rates on Thursday and gives the whole thing a nice shove towards the precipice. My guess would be the EU elite will only realise the entire EU EZ project has failed once the whole thing has collapsed around them.
  14. Greece is doomed with its current policy mix. Austerity + Rising Interest Rates + Currency trading 20% over PPP = government overthrow / disorderly default. How could anything else be expected? Absolutely no chance of economic recovery in this environment. The only politically acceptable solution is for Greece to leave the € default, the ECB to QE 1 or 2 €trn give a huge boost to the Greek economy / rampant inflation and get them growing again, at the same time as the structural reforms already in progress by the IMF. Portugal and Spain will almost certainly need similar treatment, possibly Italy. Unless Germany is prepared to change its constitution and form a fiscal union with these countries the € will have to be restructured. Expect to see the new DM / Euro coming in Germany in the near future. The least bad option I can see.
  15. The debt can't be made sustainable. The deficit will be impossible to close whilst Greece is in the €. The chances of uncontrolled default rise every day. The EZ needs to be restructured, southern Europe can't survive in a currency Union with Germany. Surely this is obvious? A completely new strategy is needed from Germany, France or there will eventually be a EZ day of reckoning and the whole thing will collapse.
  16. Apparently Trichet is going to signal a rise in July. I would be rather surprised if he does considering the € is already very strong and the massive debt issues in the periphery. Does anyone outside of the ECB / EU really believe Greece, Spain, Portugal will ever grow enough not to go bust whilst inside the eurozone?
  17. http://www.reuters.com/article/2011/06/09/greece-idUSLDE7580I620110609 Fairly massive revision can’t do credibility much good. Where can Greece go from here?
  18. Does this mean it will be profitable for Centrica to start producing Gas at Morecombe? At least it won't be imported...
  19. Anyone wonder why oil is $100 / $115 despite clear signs the global economy is slowing fast? As soon as more QE is announced oil will start heading for $150+. Very simple, who will hold dollars when the fed seems determined to print $600bn every 6 months? Money from the real economy is drained in to petrol stations plenty of inflation is produced but growth and jobs are damaged heavily. Hopefully the fed will have realised the rather obvious conclusion. QE will damage retail sales here the same way it has in the US.
  20. I also have had enough of the BRC. The y/y figures they release are utterly useless and provide absolutely no useful information. They only serve to attempt to pressure the MPC to prevent IR rises and keep house prices up. Last time I checked there was a world cup last year and there was a large boost in retail sales in May in the lead up to it. Comparing this year’s figures to last may is utterly ridiculous. (http://www.guardian.co.uk/business/2010/jun/17/world-cup-retail-sales-boost) Just as last month’s +5.2% and the month before -3.2% were also utterly useless and completely nonsensical. 0 It will give the BBC etc a nice excuse to campaign for no IR rises and high house prices. CBI realized sales was above expectations again for May, the m/m figures from the ONS will provide a better insight without the huge distortion of the world cup last year.
  21. I also have had enough of the BRC. The y/y figures they release are utterly useless and provide absolutely no useful information. They only serve to attempt to pressure the MPC to prevent IR rises and keep house prices up. Last time I checked there was a world cup last year and there was a large boost in retail sales in May in the lead up to it. Comparing this year’s figures to last may is utterly ridiculous. (http://www.guardian.co.uk/business/2010/jun/17/world-cup-retail-sales-boost) Just as last month’s +5.2% and the month before -3.2% were also utterly useless and completely nonsensical. It will give the BBC etc a nice excuse to campaign for no IR rises and high house prices. CBI realized sales was above expectations again for May, the m/m figures from the ONS will provide a better insight without the huge distortion of the world cup last year.
  22. Nominal GDP growth is running at 8.8% p/a (2.2% in Q1) National debt will be inflated away in no time at this rate. Nominal GDP will increase by £1trn~ in 6 years if these figures were maintained. (http://www.moneymarketing.co.uk/investments/obsr-net-exports-save-struggling-uk-economy/1032289.article). These ONS figures look like total garbage to me not even slightly plausible. I suspect there will be massive revisions to the last 6 months data over the next decade.
  23. What where they going to say? We don't have any choice no matter what Geroge and Ed say. The political point scoring is ridiculous between Labour and the Coalition. Their policies are almost identical, I am convinced that had we had a labour government the budget would have been the same. The only difference is Osborne saying they are cuts and Labour saying they are investing more slowly. You couldn't make it up.
  24. http://www.businessinsider.com/no-money-to-pay-70000-state-workers-in-spains-castilla-la-mancha-situation-a-total-failure-2011-6 Plenty more where this came from (Murcia, Valencia etc). Looks like the PP are trying to force these debt issues to the surface before the election next year so they can pin the blame on the outgoing PSOE. I wonder if they will have the balls to audit the national accounts properly?
  25. Manufacturing PMI very strange this month. Output down, Level of new orders falling yet manufactures increased staffing levels apparently. The rather obvious conclusion from this is that the firms surveyed consider the fall in output to be temporary and are expecting production to rise in the future.. Good excuse to keep IR down of course.. Furthermore there is virtually no other evidence of the weak domestic demand shown in the manufacturing PMI. Retail sales have surprised to the upside all year, Next, M&S, John Lewis, Sainsbury's and many more have all reported descent y/y growth all year.
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