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boom_and_bust

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Everything posted by boom_and_bust

  1. Hi, Inflation is not very nice, much harder to avert than deflation and socially destructive as well. The second half of the 1970's was a pretty unpleasant era. In the last crash, less than 1% of the population with mortgages had their properties repocessed and most were looking at a doubling in valuation five years after it. It has always been very possible to get another mortgage if you have been repocessed before. Politically, don't think for a moment the government won't sacrifice a percentage point of the population to an HPC if it averts bigger problems. Governments are like that, your friend when they are pumping up prices for votes and taxation, conveniently able to blame external forces if it all goes wrong. And land issues are about the easiest tool of manipulation available to governments. Anyone else feel a shift in sentiment in the past few months about the 'miracle economy'? Are we finally falling in line with the US, Australia, Canada, New Zealand, Japan and the EU?
  2. Hi, Sure, we can hold on. I am guessing you are referring either Bernanke's comments on indices yesterday or the OECD report this week. Ta
  3. Hi, HeHe! I did it on altavista as well but it came back with "1066 Conquered British Isles"
  4. Hi, There is a section called 'off topic' located at the bottom of the forum. Boomer
  5. Hi, All things are possible. One thing though, that does simplify some very complex economic issues, there are rumblings in the world economy, the stock market falls this week in the UK were a reacion to market perceptions of UK future inflation, future UK interest rate rises and pressures excerted on the UK economy by the path of the dollar and the US defecit. It really is a lot more complicated a picture than that. Just be aware that the recent past has been deceptively good in the UK at the cost of record personal debt and government and trade defecits. The wider markets this week have suggested that there are concerns out there, you have to trust that the current government and UK business can handle it and that events in places across the world, like the US, China and Japan will not adversely affect you personally. Do you? I admire your self assuredness and confidence, maybe you are correct but on the other hand, night always follow day, we have just had a continued boom with recent signs of wobbling. Neither of us has a crystal ball but the fact remains it is a far riskier decision now to take on large debt levels than it has been for a very, very, very long time.
  6. Hi, The question is partly rheotorical. In the longer run, markets decide interest rates, exchange rates and inflation. The bigger picture is that the government can only juggle the figures in the short term and maybe make a knee jerk reaction when something like inflation rockets, the currency collapses or such like. There are a lot of warning signals out there now if you take a look at the US defecit, Japanese liquidity, recent treasury activity in the gilts market, long term bond yields and so on..,, with very little slack in personal finances for many people in this economy stepping onto the ladder (those that can. Most are genuinely priced out, both FTB's and those stepping up the ladder maybe for faimlies etc.,). Nothing's nailed down but the risks in the world economy are there. The recent stock market falls were partly in response to market expectations of future interest rate rises. The money markets have already priced it in. For the very few who could step on or trade up, you make the decision knowing it is riskier now than it has been for a very long time. That's all the message you need to be aware of because the the mortage sellers, banks and estate agencies have a deep reach into the media. If you stumble across this site you have maybe one small voice against the thousands reaching at you from Television, newspapers and radio every day telling you it's all ok and just sign here like a nice little chap ........ Don't get too worked up about it. The discenting viewpoint is tiny in comparison to barrages of buy-now advice you receive daily. One last thing to consider. The UK has had, for about the last half century, one of the most volatile property markets in the world. Do you really want to place your trust in the hands of a group of politicians who have very little real control over financial markets anyway? Was it Greenspan who said "No one rings a bell at the top of a market".?
  7. Hi, For house prices to be sustained at current levels would require an-across-the-board hike (doubling) of wages across the economy. The BoE and Treasury have repeatedly stated that they will continously act to keep general wage level increases at a level around pervailing inflation, lower infact that annual HPI if we believe the figures. Infact, the government is proud to boast how the open door labour policy with the EU and the rest of the world limits UK wage inflation. So that is not going to work for most people. What do you suggest then?
  8. Hi, I am a triple homeowner. Just the one in the Uk but if prices fell I guess, on paper, I would lose money. My daughters earn far above avearge wages and are struggling to potentially afford even the most basic of anything in any area and for which, if I am honest, I would be worrying for their safety. This was a poltically motivated property boom in many respects. You can attempt to tug at heart strings on either side of the debate but it is politicians, lax bank lending and personal clambering of property speculation that has bought us to an unsustainable situation. There just is no way the current situation can survive indefinitely, the biggest planks of support in the past decade - the dollar and the BoJ interest rate are wobbling already. Things should have been better handled, easy to say but the fact of the matter is that other nations have handled asset prices better than the people we pay and elect to perform the role here. Boomer
  9. Hi, Depends how bad the recession is and how high interest rates go. Conceivably, you could shave your head regularly with electric-clippers or for longer hair, a bowl-style haircut can be adopted until more bouyant economic activity returns. Is it really a coincidence that the bowl-style cut was so popular in the 1970's at a time of often hard, economic times? Boomer
  10. Hi, I don't think owning a few homes itself is so bad. Particularly for the professional landlord. The issue is at this time is a problem because it was a politically engineered move favouring in the main part one group and at grave cost to other areas of the economy. I can't really think of too many others places around the world that would openly encourage rank-amateur investors en masse to borrow reckless amounts of money with no experience or commitment to housing as a business or profession, just to become a 'have-a-go-landlord' with the obvious instability and social problems this causes within the private renting sector, just so voters can be indulged in property flipping. OK, if you had to pay full council tax, be properly regulated as a landlord or even be subject to capital gains, it would calm things down and leave the field clear to the professional developers and landlords or those who really are making a long term investment choise other than 'fad' buying or 'quick bucks'. And let us say this is a small island (ok, we know that is rubbish since the vast majority of land isn't permitted building regulation and we cram most of the economy into the South East at the same time), you would think those kinds of initiatives in key areas would already be in place to assist business in keeping wage costs competitve and maybe to encourage more younger Britons to breed. Anyway, I'll leave it there before I go into a NuLabour-Gordon Brown-rant. Boomer
  11. Hi, It does confirm yet again the links and articles I have been posting for nearly a year about the accidental discovery, in the anglo-saxon economies particularly - of a private sector keynesianism, 70's style demand management using private citizen debt as the channel with house prices as the catalyst. A DELIBERATE policy used for economic and poltical means by the chancellor. Our government has no clue where it's going, how it will end, life after HPI funded consumption....... The long and short of it is that it is not a neatly orchestrated, planned monetary policy by the treasury, they are making it up as they go along. It is not a new paradigm, a solution to boom and bust as we would be lead to believe. Many of the artciles that emerged in the recent past, on this subject, have originated from the academic circles, Warwick and Cambridge Universities in particular have produced excellent articles. Seems at last the commercial world may be waking up to the dangers of a rudderless ship out on the open ocean. Boomer
  12. Hi, Go to the Bank of England website, they have the figures going back in the stats. section for download as spreadsheets. M4 used to be called M3.
  13. Hi, Au contraire mon vieux. This has been THE active topic of discontention between the UK treasury and, well, the rest of the world over the past few years (reminds me a bit of that episode of black adder where Tom Baker, the legless sea captain, says to Edmund that the need for a ship crew on a voyage was a matter of contention. All the other captains say you do need a crew, I say you don't, his reply). Particularly with the head of the European Central Bank, Mr Issing, and Gordy. The inflation targeting policy that NuLabour hijacked (but didn't fully implement) from the Tory treasury in the early ninetees dispensed with broad money (M3, M4 now) targeting via interest rates and instead used M0 narrow money and headline inflation (inflation that the government compile and modify themselves....humm.....). For various reasons, this was considered better, partly due to some problems with broad money targeting that became quite unreliable, especially around the time of ERM. However, the key point is that the relationship between M4 and inflation can be proved to exist across history and nations from the discovery of Inca Gold 500 years ago in the spanish empire to the modern day US economy. Broad money goes up, a year or three later, inflation goes up. Always happens. That is why the ECB, FeD and BoJ have been raising central bank lending rates in the recent past to head off present and future inflation, they believe M4 is important and that preventative raising of rates will ward off a lot of future problems now, M4 targeting is an active - albeit secondary - plank of monetary policy. The Treasury under Gordy have been smug to say that broad money matters not and is too crude, as long as M0 is controlled and inflation is held. (Even if that inflation level is politically doctored). The BoE has now seen broad money rising and - surprise, surprise, something we have known for 500+ years - inflation is rising. Infact, worse than that, the extra liquidity and signals from the rate cut last year, that Mervin was against - has done nothing to assist personal indebtedness, industry or trade and has squarley gone into house price speculation, further underpinning general inflation within the economy. (Even Bootle in the Telegraph today was spouting off about inflation locked into the UK economy ) Boomer
  14. Hi, And don't forget that Gordon took 3Bn pounds of tax payer money that was classified for road and rail construction so he could offset it against the public spending defecit when he reclassified the 'Golden Rule' timescale for public spending and debt, in the recent past.
  15. Hi, It was actually a report compiled by the national professional body for statisticians and was presented at the statics commision by Lord Moser, himself one of the senior, professional statisticians in the UK and a former head of the ONS for a decade. He wasn't just critising the current figures but also the planned 'independence of the ONS', the thing the BoE has called for. He believes Brown is creating a similar situation to the independent BoE whereby the ONS will still be 'subject to the usual political pressures' and is little more than spin. It is worth reading in depth. All spin as usual by NuLabour, a conclusion by an independent professional body, on the back of the BoE's mistrust of headline inflation., etc., Can't wait to see how Gordy will parcel wrap the Nuclear Energy contracts with his borther's firm EDF in the near future, will be another master stroke of spin no doubt, maybe he'll use another hacked, misqouted Thesis off the internet just like Iraq. Boomer
  16. Hi, That is an eiry post, that was me as well, same time, same story, saw many peers around me capitulate. You get through it though. The big factor this time, with the UK catching the tail of the US boom over the past decade, is that there are a whole group of people who have gone through the whole of their adult life never experiencing anything else but easy credit and property booms. Look at the tides, the seasons, the fortunes of your favourite football club - the universe just doesn't work like that.
  17. HI, Exactly! Current UK monetary thinking dismisses now the direct, cause-affect relationship between broad (M4) money supply and inflation as a throw back to problems associated with monetarist, fine-tuning policy in the previous couple of decades. The ECB and now the FeD does not, the latter becoming alarmed a while back at the surges in broad money measures and commencing rapid rate rises, albeit a little too late. The ECB have stayed steady all along with the policy of keeping an eye on broad money while tartgeting the headline inflation rate on a month-to-month basis. M4 has been surging in the UK for a while now and has really gone into overdrive in the past year (election time feel good factor?). The one thing most central banks around the world agree - and so have been quick to act on rate rises in the recent past - is that, however crude the relationship between money supply and inflation, it definitely does exist in almost every historical or international comparison you wish to make, within a 1-2 year time scale. I have some sympathy for Mervin King last year when he urged against the rate reduction, it did not seem to make a lot of sense apart from throwing more speculative money into property prices but doing little to halt the malaise of industry into this year and the increases in consumer debt, bankruptcies and repocessions.
  18. Hi, And I will just reiterate, Gordon Brown will soon be Prime Minister. He is getting very involved in 'green issues' just recently and particularly the problems of carbon emmisions and global warming (drought alerts, instability of gas and oil supplies, blah, blah,). Wholesale, mass investment into the nuclear industry here in the UK is on the table. Despite very sketchy details of current and future, public and private records and funding for this industry. EDF is about the largest Nuclear Energy concern in Europe and has been a front running consultant to the changes afoot. Gordon Brown's brother is a senior figure in that company. You do the maths...... Boomer
  19. Hi, Have you been wondering about the sudden focus of NuLabour in recent times on the issue of nuclear energy and the environment? Is it a coincidence that Gordon Brown has become so 'green' recently, even becoming a spokesman just recently for the UK at a global warming conference? We have had a continous barage of warnings in the past year or so about the drought and global warming, the instability of gas and oil supplies, the need to cut emmisions of CO2 caused by convential power. Gordon Brown is prime minister elect. His Brother, Andrew Brown, is one of the bosses of Europe's largest Nuclear energy supplier, EDF. He is also a media (spin) mogul by profession. His other brother has a professional relationship high up in the BBC. http://www.edf.fr/12025i/Homefr/EDFEnergie...clearpower.html http://politics.guardian.co.uk/labour/stor...1755758,00.html http://society.guardian.co.uk/societyguard...1741299,00.html http://en.wikipedia.org/wiki/Gordon_Brown I guess now that the love affair with property booms has shifted focus, nuclear energy funding within the Brown clan is the next scam to be inflicted upon the Brits. The really sad thing is that the Brits will just bend over and smile through it all. Don't get me wrong, there is a very strong case for nuclear energy but if this doesn't stink of sleaze, I guess nothing does. Still don't believe the property boom was partly a politically engineered phenomena? Boomer
  20. Hi, Ahh, now you're talking, this is the age old debate about the UK economy, does housing drive the economy or does the economy drive housing? I quite like this old synposis by the UK economist James Ferguson ;
  21. Hi, I know some nations attach a different importance to some special cases - things like food, clean water, medical assistance and shelter, some of the more basic necessities of existence that ensure society doesn't breakdown.
  22. Hi, And this is where the UK and the US, EU and Japan have diverged. Fear over longer term inflation, displayed in ballooning broad growth money supply, housing bubbles and rising commodities, have prompted those nations to act earlier, in a preventive manner. Particularly the EU, their more preventative approach - the ECB have used the term 'sustainable consumption' in context of economic restraint policy - have allowed the current UK treasury to crow about 'slow coach europe' while watching house prices spiral into orbit, fuelled by loose credit and borrowing. Very naughty. Even the US have hit back hard against inflationary pressures. Everyone, internationally, seems to have. Given the recent rises in sterling today and yesterdays inflation figures (the coming months figures are likely to absorb the ever increasing commodities rises), looks like it's TTRTRates at long last by our 'independent' BoE. 4.5% is just not a neutral interest rate for the UK economy, estimimates are put more around 5.5-5.75% on that score. It's a little worrying if a reflationary interest rate has to be maintained to try to prop up the economy when all it's really doing is sucking more speculative credit into house prices with very little reflationary affect into industry and the high street (beyond encouragement of greater consumer indebtedness). We seem to be seeing every week now a major industrial or business closure or relocation. The speculative housing market in the UK is indirectly and slowly sucking the life out of industry and business. Can we pin this thread in the economics section later on? Since this is one of those running threads? http://www.statistics.gov.uk/cci/nugget.asp?id=19
  23. Hi, Remember how Enron were cutting power supplies in Calafornia and telling customers to cut back on supply beacuse they were drawing too much power, how the exceptionally hot summers were causing unusual amounts strains on the infrastucture........later we found out they were infact deliberatly restricting supply, among other things, and also failing to invest in replacing and maintiang the grid infrastructure. Miracle economy UK my hairy ass! To add to the failing housing, health service, road, trains and Gas supplies, we are now told for the seventh consecutive year that our (desert like?!?!?) climate is causing drought. Funny that, you seldom hear about droughts in southern spain. Labour ARE hell bent in recreating the glory of the seventees and the winter of discontent. Where did you say you can pick up one of those river water filtration systems, again? Boomer
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