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Backseat Economist

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Everything posted by Backseat Economist

  1. Yes, part of the problem, but not the whole solution either. I can't see "Money As Debt" being included as required viewing material for GCSE students But, I do think that some sort of structure needs to be set up and made available for all adults and children alike that takes things from a very simple easy to understand level. Point taken, and this is where people have to take a certain amount of personal responsibility for their own actions. But that has to come from somewhere - the problem is, as I know all too well...that doesn't usually happen until you're knee deep in financial trouble and have nowhere else to go. GT.
  2. Mods - please keep this on the main forum for a while before moving as appropriate.... I think the one thing to come out of all the issues discussed over the last few years, and, one that seems to be ignored sometimes is that that there is no such thing as impartial financial advice - and there never will be. People in general and posters on here criticise the FSA, the government, the Bank Of England for the decisions taken/not taken but, the problem has simply been compounded by peoples' attitudes to money/saving/debt etc. Everyone bangs on about how incompetent and corrupt everyone else is, epecially those in positions of power or influence but it does strike me that if people have the education to make the decisions that they alone should be responsible for we wouldn't be in the position we're all in. What would be useful to have from people is any ideas for how knowledge of economics/finance/advice can be for the benefit of people seeking to make investment decisions in future. I've got my own ideas, but it would be helpful to know everyone else's thoughts, especially from senior posters here. GT.
  3. All I see are two huge ski jump ramps - quite bizarre set against the rest of the buildings.... GT.
  4. Some really good points and plenty of Toynbee baiting which always makes me happy. Agree that now such an article is out there, I think this is a signal that the end of the blame game is here amongst the policy makers and now their beginning to truly understand what's gone wrong. It's taken a while....and about five years too late, but there you go. They've also started thinking about ways to geniunely make sure this doesn't happen again.....as I've kept on saying this was a once in a lifetime credit boom and bust - and the repercussions will last for a good generation. What we need more than anything though and, the one thing that no one has spelled out as yet is the complete overhaul of the tax and benefit system in line with each other (seeing them as separate entities is part of the problem) with the goal of making sure that productive jobs and enterprise are brought back to individuals rather than corporations (i,e; real wealth generating business). After this recession people have to be encouraged, cajoled and frog marched back to work whether they want to or not. CGT from the increase/improvement of private residences makes sense - but what makes far more sense is a land tax where the proceeds go directly back to the councils coffers. What we all need is lower taxes, but with that money going to the right places. GT.
  5. Not one of our favourite columnists, but at least she recognises prices still have a long way to fall. Feel free to add your comments everyone... http://www.guardian.co.uk/commentisfree/20...se-prices-taxes GT.
  6. Well looking at the last credit action stats, an extra million of debt is being created every 10.6 mins, (at one stage in 07 I think it was something like every 4 minutes , which has to be an improvement) and works out at about £5.66m an hour is going in it's place, so as much as being created now is being destroyed. Wonder how long that'll stay the case for? GT.
  7. Shao Kahn - thanks for sharing your experience of the industry and providing us with the proof and anecdotals as to what's really going on. I hope you find what you're looking for - but you're health is more important than any career, and any lifestyle that you wish to ascribe to. Doing something you love as a hobby that then becomes a career is always the best way, and best of luck to you for trying to get there. I'm sure you will. GT.
  8. As EDM explains, the resulting finance from the purchasing of govt bonds and other liquid assets by the BoE will be used for a number of purposes - some, but not all of which, will be to help banks lend again, but this time, at normal rates of income multiples. If we just had a situation where all money is pumped into the banking system and then directly out via the way of 100%+ mortgages, self cert etc, with no strings attached, as in the last few years, then yes, we would go back to the boom times, and end up with the same merry go round eventually, but this time far worse. However, what underpins the value, weath, i.e. debt that's used to buy a house in essential terms, is capital and that is where the majority of money is going, and will continue to go, until all losses are fully realised by the banks and HP's normalise back to their long term price levels. The QE that's now happening (and you can bet that it is) is pushing down the value of the £, causing us to have import and food inflation, which judging by what I've been buying recently, is already happening. The only other way for all this money to go back into the hands of people directly is by way of massive personal allowance tax cuts, and it's more likely that, owing to the growing liabilities of the public sector, that taxes will be raised over the next decade, not cut, to balance the massive deficit we're going to be encountering. So none of what's going on will be highly inflationary. Therefore peoples' wage packets will be severely curtailed, so putting a cap on both wage rises, and the size of resultant mortgages owing to stricter regulating and the size of debts carried by most from the end of the boom. Think of it as a return to normality. GT.
  9. Eventually high inflation will return with avengeance (8-15%). But it's mild deflation for now owing to the devaluation of the pound being offest against grinding unemployment for the next few years. Meanwhile the banks will have to hoard cash until all their losses are realised. This will take some time - everyone says this will be a couple of years.....I tend to disagree. Seven years up, and at least five down. GT.
  10. Funny.... Everything will remain relatively cheap until credit unfreezes, even despite the trashing of the pound - and the way things are going, this will not happen in 2009 and maybe not in 2010 either....especially once the job losses and redundancies impact on the economy proper. These are only just starting - it will take another year for the extra million or so who will end up being unemployed out of this recession to feed through into the figures. Prices will remain on the slide until this point which, judging by the sound the banks are making may not be for another 2-3yrs. From there, stagnation for at least another three years which takes you to about 2014/15. That, compared with where we were back in 01 when the madness started, seems reasonable. GT.
  11. That's made my weekend. And it's also the reason why things will stay as they are. GT.
  12. http://www.telegraph.co.uk/finance/comment...s-extremes.html Uber bear stuff again from Ambrose - quotes Bernanke's helicopter speech, printing presses, QE, Japan, etc etc et bloody cetera. GT.
  13. Well all I can do is report back and say that you can have a comfortable quality of life on your own for around £17K a year - provided that you save as well and don't go overboard on some of the finer things in life, or at least, the supposed finer things. I probably put away about 200-250 a month of that into savings and, I'm lucky in that my employer still has a final salary pension scheme that gives me that same amount again in contributions (yes, I'm in the private sector), which is not to be sniffed at. However, as always, that will only remain the case should I stay on, which won't be forever. Granted, I'm not married or have kids....yet, but since I reached 30 my whole outlook has changed and I've now officially stopped giving a s*** about what people really think about me. Well, I do care about it, but it just doesn't seem to be the same driver it was a number of years ago. Once things had gone wrong for me financially in my late 20's I went into a hole for six months, which proved difficult to extricate myself from - but, what saved me was the memories of being a kid, and my parents being very strict with me about the amount of money I could have or borrow. I didn't actually get pocket money, at all - EVER - just money from Christmases and Birthdays. Apart from the odd car magazine from my father, well, that was it. Slowly it dawned on me that I'd been caught up in this credit boom with no safety net to back me up in case everything went sour - when I made some wrong decisions and spent a bit too much money, I'd left myself in a hole that was almost impossible to get out of. I was speaking to a guy in his 50's who does cognitive behavioural therapy a few weeks ago, and he said to me that once you get past 40, your whole perception of the world changes, and the things that meant so much to you before no longer have the same relevance, and I'm beginning to see that with friends who are approaching that age too. In some ways, I'm glad I had the childhood I did now, because I've seen things from both sides of the fence. You can either be ultra cautious or loose with money - but neither way is the right way to be as it doesn't enable you to experience or learn properly what the role, or importance that money should play. The fact that I've saved the equivalent of two years' gross' salary in my pocket in the last four years if needed, and no debt makes me feel great and also a lot more secure than I ever felt before. Saving and generating wealth for your future should be made into an art form, but neither should it be done to compromise on your general quality of life in the present. It's a difficult balance to get right, but it can be done. GT.
  14. There have been many days over the last six months which have made me feel incredibly lucky to have found this forum and be aware of what was about to unfold. Today I think was when the BoE woke up and realised that things really ARE that bad. Regardless of whether we agree of disagree with their motives, their mandate or the way they fix interest rates - today sent one very clear unambiguous message - PANIC!!! Yes, the inflation target has been thrown out the window, but it's all over now - they also now know the banks will be taking losses from the housing market for the next 4/5 years. Therefore, no credit availability = no inflation = no HPI, very simple. It will be back - but only after everything gets reset in the meantime. GT.
  15. Can someone please explain what this is in layman's terms? I've heard it mentioned before - is this what Japan tried after cutting to zero? Clearly it didn't work...once this is tried are all the weapons of debt destruction out of commission? GT.
  16. The question is not will we get inflation or deflation now, that's been answered, the question is, when we will have the next round of inflation going into either equities, commodities, bonds, cash, houses etc, over the medium-long term. That's what most of us are wondering here - the answer is simply, not for a good while - and, while it's still happening, no one needs to panic.....that much. The M3 stats are just that - stats. They don't really tell us how money is being transported around the economy, or it's velocity. If there's no incentive to lend, then, all roads, as they currently do - lead to deflation. The banks are hoarding and, until all their losses are realised and they have a chance to increase their capital base, we'll stay like this for the forseeble future. And if you think this is going to happen overnight, then be prepared to sit on your hands. Inflation will happen - again, at some point - but the rules on lending, risk management and capital adequacy ratios will be changed and so anyone now predicting things going hyper should firstly consider if this will happen in a new regulatory regime. And none of us know how things will pan out in the years ahead. As a sidenote - the price of platinum is supposed to be an even better indicator of future inflationary, or deflationary effects than gold, pre-dating the effects to the real economy by 16 months. If you look at how that's been behaving over the last year, then you'll know what happens next regardless of how much money is being created in the meantime. GT.
  17. Thanks; all makes sense. Excellent thread BTW - to me having a reasonable undestanding of what's going on from a layman's point of view, it seems obvious that managed deflation is what the authorities are trying to guide us into. Maybe a milder version of what happened to Japan is the template for this and is what's being aimed for. GT.
  18. Sorry Bloo Loo - that passed me by - can you explain? Surely assets add to a balance sheet even if their not loaned out and add to the capital base from which to lend or am i getting confused? How can they be seen as a liability? GT.
  19. You are Jim Mellon and I claim my 5....ahem....pieces of gold/silver/pounds/euros/toilet paper/tokens/beads* *delete as appropriate. GT.
  20. I bought the book that he and Al Chalabi wrote in the wake of finding HPC. It attempted to put a worst case scenario for what was seen to be unfolding at the time. War with Iran, the decline of the dollar and financial tensions with China were all predicted. A good, not great read, but it turns out they were spot on about a lot of things, not least house prices halving - well, that's the way it looks at the moment doesn't it? What they don't say is whether this is real or nominal. http://www.amazon.co.uk/Wake-Up-Survive-Pr...d_rhf_f_i_k2a_2 GT.
  21. It's not silly if you then lose your job and can't pay the mortgage - no job = no money. If you've still get a job when we're at the end of the recession, that's when you buy - not now. We've got further falls and unemployment to come. GT.
  22. OK - now go to mortgage << rent and you'll be onto a winner. Sounds like a good discount, but if most HP's have had a run up of 200% since the last recession, then going in at £150K seems just about right. Best of luck! GT.
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