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Sinking Feeling

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Everything posted by Sinking Feeling

  1. Just a passing thought really. Higher IRs are usually used to reduce inflation, however, is it possible that the opposite may happen. 1) Consider this, since the rate cut in 2000 asset prices (houses etc) have continued to rise as supply has not been able to keep up with demand. For consumer durables (electronics etc) the opposite has generally been true as higher demand has meant that greater quantities can produced at ever lower unit costs- hence, why we import so much stuff from China. If interest rates rise, people begin to tighten their belts and stop buying so many of these items which means lower demand. The importers can not order such large quantities from China so there's an increased unit cost which will be passed on to the consumer- this would then feed through into the CPI. 2) The pound is a good reserve currency for foreign banks at the moment, if inflation rises then surely it will look less attractive if it consistently buys less goods and services. If demand for the pound falls so to will its price on exchange markets, meaning that the cheap imports are no longer as cheap as they once were. Again, greater costs means higher prices, means higher CPI. Just a couple of thoughts really! Any (kind) comments as to why this might be a load of rubbish are welcome.
  2. I don't think that there is any one solution, but there are several. Biodiesel, bio-ethanol, methane from general waste and there are companies who can produce diesel from waste plastic.
  3. There seems to be something missing from each of those adverts. An advert such as that should read: upto 125K plus backhanders. The private sector can pay well, but if you screw up there's a chance you'll get fired. In the public sector if you screw up and a project overruns you just increase council tax to pay for it!!
  4. I agree, I was listening to the radio at the biginning of the week and there was an advert for a company who will buy your house off you, let you rent it from them and even buy it back again when you feel you can afford it again. It seems like the sharks are back and ready to take chunks out of unwitting suckers!
  5. There's one key difference between the Asians of the 50s and 60s and the Poles, and that's the fact that a large chunk of EU money is heading East so builders etc will be in high demand in Poland over the coming years. Sadly, the same probably isn't true in the UK which is looking excedingly likely to slump. With the pound riding high, I suspect many Poles find that they can work here even on poor wages and send money home for their future. If they have any sense they should work here and get a mortgage in Poland and watch the price fly upwards.
  6. It seems to me that the types of housing affected through HPI by city bonuses are not the type of houses most live in. Does it really make much difference to the average Londoner if a house rises from £1.5m to £1.8m due to the payouts- I doubt it!
  7. Well it's not like he's never made a mistake, or acted against advice. Many (such as myself) warned that invading Iraq would most likely lead to political instability and sectarian violence. Nobody believed me when I predicted that daily suicide bombings would follow any invasion (this was in late 2002 at a time when Iraq had no real history of this).
  8. The main problem as I see it that we have had what most commentators describe as an "economic boom". Generally one might expect people in a boom to have a high disposable income and low debt. Then when the economy falls into recession debt levels should rise. However, the "boom" over the last few years has been serviced not by real economic growth, but through a credit explosion. As interest rates fall there is an disincentive to save and an incentive to borrow. The effects of this have been that the supply of extra money generates higher demand for assets, thereby pushing up prices. As asset prices increase, the demand for money increases and over it rolls again producing higher and higher prices. Those who have bought earlier pat themselves on the back for being clever and release the equity from their assets (in this case houses, spending it on electronic goods, cars etc, driving down the CPI as supply of these goods can usually be increased to meet demand. Also GDP grows so everything looks rosey, but at each level risk is increased. What will cause asset price deflation? One of the first things I learnt in economics was that what drives markets is human psychology and people are fickle.When people lose confidence they will do so en masse, leaving many people with debts much higher than the present value of thei assets!
  9. So 25% of £800 is £200 £800 -£550 = £250 Surely then she would have been better off putting £250 in to a high interest deposit account, rather than something that is probably going to drop in value under an arrangement that would seem like a rip off to a person who has just sent the last of his savings to Amsterdam to cover the admin fees for the lottery that he won (but mysteriously never entered).
  10. LOL I have to say that even a few years ago the mention of a "miracle economy" made me cringe. By implication what they were saying was "I don't know what the hell is going on so it must be like divine intervention or something"- and that was some of the top economic reporters, reduced to the explanations of a creationist bible basher- "God did it!" Well I've got news for them. Raising the dead, healing the sick and turning water into wine are all miracles, lose credit and asset price inflation are not, however!
  11. Yup, 1.3 trillion, not billion. If the author was that worried about 1.3 billion pounds I guess he will fall off his chair when he finds out it's a thousand times worse! It doesn't seem long since we crossed the trillion landmark, the jump of 0.3 doesn't seem that much until you think about it with all its figures.
  12. In one sense I'm always angered by the government's response, that the economy is booming and we need these extra immigrants to fill our jobs. Then in the next column of the newspaper there are the unemployment + inactive figures. It seems to me that the government has created 2 things- crap jobs and a generation who thinks the government should support them for nothing. I can't really blame the Poles, in their shoes I would do the same and with the pound riding high what wages they get no doubt go a long way when they send money back home. I wouldn't be at all surprised if they bugger off when the pound drops in value, recession hits and EU money is diverted in truckloads to the eastern bloc!
  13. That's been my point too for some time, though people just refuse to believe it- "15%" they say, "that's 3 times what the IR is today".
  14. Still no where near as bad as the US. I'm sure the news last weekend said there were 1.2 million repos last year- and no one saw that coming either.
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