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Who Else Has A Feeling The Next Big Leg Down Is Coming

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Guest Steve Cook

Just reading the Times this morning. National debt rising at £18k per second.

More borrowed last month than the entire 2012 olympics spend.

Sterling currently diving on the above news.

Unemployment now starting to really kick in.

Anecdotal evidence from my own home town is that asking prices on houses are suddenly starting to drop.

I can feel it in me water

Or maybe, Ive just got water on the brain......

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Just reading the Times this morning. National debt rising at £18k per second.

More borrowed last month than the entire 2012 olympics spend.

Sterling currently diving on the above news.

Unemployment now starting to really kick in.

Anecdotal evidence from my own home town is that asking prices on houses are suddenly starting to drop.

I can feel it in me water

Or maybe, Ive just got water on the brain......

things are booming here up on the moon, our executive luxury craters only ever go up in value

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Guest UK Debt Slave
Just reading the Times this morning. National debt rising at £18k per second.

More borrowed last month than the entire 2012 olympics spend.

Sterling currently diving on the above news.

Unemployment now starting to really kick in.

Anecdotal evidence from my own home town is that asking prices on houses are suddenly starting to drop.

I can feel it in me water

Or maybe, Ive just got water on the brain......

As long as people continue to believe the fairy tale of Keynesian economics, the madness will continue.

Keynesian economics is a like a religion. It is a faith based system. It is sustained only by spin, manipulation, half truths and the ignorance of the people.

If the faith runs out, so does the system

Interesting times ;)

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Its just a re-balancing from all the talk of recovery.

Slow grinding decline continues.

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Anecdotal evidence from my own home town is that asking prices on houses are suddenly starting to drop.

Was reading in Moneyweek yesterday that prices achieved on house sales at auction has just taken a big fall in the last month after recovering through 2009. Apparently it's a good leading indicator on future house prices.

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Now this is scary:

http://www.bloomberg.com/apps/news?pid=206...id=a8wiCA9.CbZ0

Fidelity, Vanguard Said to Plan Emergency Bank for Money Market

Share | Email | Print | A A A

By Christopher Condon

Sept. 19 (Bloomberg) -- Fidelity Investments and Vanguard Group Inc. are among firms planning to set up an emergency pool of cash aimed at preventing a repeat of the run on money-market funds a year ago, said two people familiar with the plan.

Seems they are planning for another BIG leg down in the SMs as the bailouts begin to wear off. There could be some very heavy sh*t approaching the fan.

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Guest Steve Cook
Now this is scary:

http://www.bloomberg.com/apps/news?pid=206...id=a8wiCA9.CbZ0

Fidelity, Vanguard Said to Plan Emergency Bank for Money Market

Share | Email | Print | A A A

By Christopher Condon

Sept. 19 (Bloomberg) -- Fidelity Investments and Vanguard Group Inc. are among firms planning to set up an emergency pool of cash aimed at preventing a repeat of the run on money-market funds a year ago, said two people familiar with the plan.

Seems they are planning for another BIG leg down in the SMs as the bailouts begin to wear off. There could be some very heavy sh*t approaching the fan.

Agree with this RB

Edited by Steve Cook

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Guest Steve Cook
Was reading in Moneyweek yesterday that prices achieved on house sales at auction has just taken a big fall in the last month after recovering through 2009. Apparently it's a good leading indicator on future house prices.

i live in york

In mid 2007 you couldn't get a shoe-box in this town for less than 140k.

we are now getting a significant number of houses coming on to the market for less than 100k and at least one coming on for less than 70k. Sure enough, they are at the bottom end and they need some remedial work doing. But, the prices now showing represent massive falls from the peak.

http://www.rightmove.co.uk/property-for-sa...ncludeSSTC%3Don

http://www.rightmove.co.uk/property-for-sa...on%26index%3D10

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I think a serious shift in public sentiment is beginning, the media have become more bearish since Sauron Brown addressed the TUC and began talking about public spending cuts. Midweek, a poll was mentioned on Newsnight in which 50% of the public expected the economy to improve, 25% expected things to get worse leaving the other 25% thought that things would stay the same. If those figures are correct I think that 50% of the public are unbelievably optimistic with huge budget deficits, rising unemployment, spending cuts and tax rises on the way, but its to be expected because the reporting by the media over the past couple of years does give the impression that the boom was normality and this recession is some sort of temporary nightmare we are suffering.

Edited by enrieb

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But what if you guys are wrong?

I still can't follow this money is debt thing. Money has no intrinsic value, even gold has limited uses, its value as a token lies in its durability and scarcity. The real things haven't changed a jot: night turns to day, winter turns to spring. The token is a confidence trick to regulate and control us. How can the £bn's and $bn's talked about in the global economy have any real meaning. The numbers are so huge they are beyond my comprehension.

Economists urge us to invest in productive capacity. But the only point of producing is to consume. If we didn't consume we wouldn't need to produce.

By reducing interest rates to such low levels the capacity of banks to exert their control over us has diminished. I for one think that is a good thing. Confidence returned in the late spring and summer, there was far less pessimism and I welcomed the change I perceived.

Isn't that better than being downbeat?

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But what if you guys are wrong?

I still can't follow this money is debt thing. Money has no intrinsic value, even gold has limited uses, its value as a token lies in its durability and scarcity. The real things haven't changed a jot: night turns to day, winter turns to spring. The token is a confidence trick to regulate and control us. How can the £bn's and $bn's talked about in the global economy have any real meaning. The numbers are so huge they are beyond my comprehension.

Economists urge us to invest in productive capacity. But the only point of producing is to consume. If we didn't consume we wouldn't need to produce.

By reducing interest rates to such low levels the capacity of banks to exert their control over us has diminished. I for one think that is a good thing. Confidence returned in the late spring and summer, there was far less pessimism and I welcomed the change I perceived.

Isn't that better than being downbeat?

I agree the token has to control us and the VI`s need to get more value from the token than us, that is why they are not giving loans at base rate? The system has weakened though, people need to stop using credit, stop consuming stuff they don`t need and maybe barter more, I dig your garden if you fix my taps sort of thing, the authorities can`t cope with wide-scale peaceful communion of the masses?

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Guest Steve Cook
But what if you guys are wrong?

I still can't follow this money is debt thing. Money has no intrinsic value, even gold has limited uses, its value as a token lies in its durability and scarcity. The real things haven't changed a jot: night turns to day, winter turns to spring. The token is a confidence trick to regulate and control us. How can the £bn's and $bn's talked about in the global economy have any real meaning. The numbers are so huge they are beyond my comprehension.

Economists urge us to invest in productive capacity. But the only point of producing is to consume. If we didn't consume we wouldn't need to produce.

By reducing interest rates to such low levels the capacity of banks to exert their control over us has diminished. I for one think that is a good thing. Confidence returned in the late spring and summer, there was far less pessimism and I welcomed the change I perceived.

Isn't that better than being downbeat?

Money's "value" is as a proxy for things that do have value. In any complex economy, the use of money is essential due to the complexity of economic activities. If it wasn't forced on us, we would invent it.

However, the money we do use (fiat) is forced on us by the state. With deadly force if necessary. Since fiat is brought into existence as debt, debt can be regarded in our system as having monetary value.

As long as that force is in operation, fiat money does indeed have value whether we like it or not.

Edited by Steve Cook

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Remember, the Great Depression was ended by WW II.

This time it's worse. I fully expect war/revolution/civil unrest in the next 3-5 years.

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... The numbers are so huge they are beyond my comprehension.

....

I think, chatting to a friend this week about housing, that this is the case with residential real estate prices. Two hundred thousand pounds is now bandied about as if it were nothing (try buying in the south east and you will find it is nothing - in London it's a garage). However, for most normal people its a hell of a lot of money, even on 40 grand a year its a lot of money. Try saving up 20% of it at 500 quid a month, with the odd month off when the car broke down or the TV blew up.

People take 30 grand fluctuations as if they were nothing, but then grizzle about 1p on a litre of petrol.

Supermarkets understand this mentality. That's how loss leaders work. You know the price of a handful of items (e.g. bread, cat food, baked beans) but don't notice that the cold pressed extra virgin olive oil has gone up 40p so buy it anyway.

We have over the last 15 years become used to housing at telephone number prices. People accept it and don't question it.

Now, for the first time in ages, hoards of middle class people are having to pay back their debts as opposed to la-la land MEW and re-finance. 200 grand really is a lot of money and that realisation is scaring people.

I agree the billions/trillions are too much to really grasp. Probably just as well.

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Guest Steve Cook
Remember, the Great Depression was ended by WW II.

This time it's worse. I fully expect war/revolution/civil unrest in the next 3-5 years.

yes.

I'm less clear on the timescale of events. however, I am very confident of their trajectory.

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Nothing has been fixed, time is running out and the problem veiled, disguised and shifted.

Just the sock and adjustment to pay for the largesse, waste, misallocation of capital from intervention of the last 12 months is going to cause real anguish, let alone heaped onto top of the previous 10 years' excesses.

Bailing out countries is going to be a lot harder than bailing out banks.

http://www.leap2020.eu/GEAB-N-37-is-availa...very_a3797.html

GEAB N°37 is available! Global systemic crisis: In pursuit of the impossible recovery

- Public announcement GEAB N°37 (Septembre 16, 2009) -

GEAB N°37 is available! Global systemic crisis: In pursuit of the impossible recovery

Before this summer, LEAP/E2020's team announced that there would be no recovery in sight in September 2009, and not until summer 2010 in any event. Well indeed, contrary to the claims of the media, and financial and political circles, we confirm our anticipation.

The slowdown in the speed of collapse of the global economy, at the origin of all the « good news » (1), is only due to the world's enormous public financial effort of the last twelve months (2). But the « time saved » using taxpayers' money around the world should have been dedicated to redesigning the international monetary system at the heart of the current systemic crisis (3). Yet, besides a few cosmetic considerations (4) and huge gifts to US and European banks, nothing serious has been undertaken, and, when it comes to the future, the « every man for himself » rule prevails (5).

Now, as summer 2009 comes to a close, and as the three rogue waves start impacting the global economy hard (unemployment (6), bankruptcies (7) and monetary shocks (8)), the time to mend the system, or to prepare for a soft transition towards a new global system, is over (9). The first signs of a major decoupling (10) are beginning to appear: the rest of the world is rapidly moving away from the Dollar zone. As shown by the chart below, there is a 95 percent chance that 1,000 billion new USDs will be printed in a very near future... not very attractive for the Dollar zone.

Inconsistent statistics reflect a chaotic world economy

We are heading straight to the phase of geopolitical dislocation expected to begin in the fourth quarter of 2009 (11). In this issue of the GEAB, our team analyses the trends at work (real estate market, srategic issues…) within the current chaos resulting from a flood of unchecked public expenditure and a persistently uncontrolled financial system in a context of growingly inconsistent statistics. Paradoxically, dislocation has become, according to our researchers, the only way to economic recovery (a recovery that will take place around a global architecture and interaction between economic, social and financial spheres profoundly different from anything we knew in past decades. Our team believes that the first features of the “post-crisis world†should begin to appear by summer 2010 and, in the coming months, they will dedicate themselves to their identification.

Meanwhile, as anticipated in the previous editions of the GEAB, no one can now construct a true picture of today’s global economic situation as macroeconomic figures are more and more contradictory or simply absurd (12). Measurement data and instruments have been so manipulated (13) and limited to a volatile US Dollar as sole benchmark (14), that no government, international organisation or bank (15) can now tell in which direction the global system is heading. The media reflect this chaos and contribute to their readers’/auditors’/viewers’ bewilderment: depending on the day, or even the hour, that they give contradictory news on finance, economy or currency. Policy makers, entrepreneurs, employees,… economists or analysts… are reduced to Pascal’s wager (16) to assess what will happen in future months.

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Who Else Has A Feeling The Next Big Leg Down Is Coming

Steve, you are ruining the fun for me.

I was just watching the UK being "better-placed than other countries"

& unemployment & house prices uniquely rising in tandem thxs to govt. initiatives & innovation (more please)

Then you arrive, put the boot in & the whole charade falls apart <_<

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Just reading the Times this morning. National debt rising at £18k per second.

More borrowed last month than the entire 2012 olympics spend.

Sterling currently diving on the above news.

Unemployment now starting to really kick in.

Anecdotal evidence from my own home town is that asking prices on houses are suddenly starting to drop.

I can feel it in me water

Or maybe, Ive just got water on the brain......

When the performance of and the prospects for the UK economy start to diverge from other economies then the really bad news will start. I share your instincts that we might have at last reached that point and we have started the next leg down. It appears that many countries will not take further steps to increase government spending which will leave Britain exposed should she continue with more QE. It appears that the government has finally faced the reality of the situation and we are now facing a period of public expenditure cutbacks the like of which we have not seen for a few generations. The cuts will probably be mild under Labour and the Conservatives will be left to to finish off the job. It will take several years to bring the finances under control.

As unemployment increases which it will as government spending falls then so will aggregate demand. The difficulty for the UK will be avoiding a serious deflation. It is difficult to see personal debt making up the shortfall in demand when it is actually is falling at the lowest level of base rates in 350 years. It is also difficult to see the UK government being able to borrow money without raising interest rates. Yes it could keep on printing, but the UK is not the US and will fool nobody - the signals appear that action is being taken to prevent a currency collapse.

I remain an unabashed bear and still think on balance we are heading for deflation.

As for house prices it's still 60-70% down from the peak in my view. I have noticed some bears getting twitchy and even one or two others turning bull, but house price crashes play out over a long time and you have to adjust your game to suit. Mrs STA and I are now mortgage and debt free and building up our savings. We might be looking to buy around 2013-15 - we're happy to bide our time.

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A question I have never felt has been satisfactorily addressed is how other countries have survived for so long with much larger debt/GDP. For example Japan, Spain, Italy to name a few. I cant imagine others such as Russia are shining lights of fiscal stability either.

My gut feeling is that this status can be rolled over almost indefinatley if the illusion maintains and financial markets remain big and liquid enough to cope. With QE and all kinds of other tricks this can be done with relative ease. Hence the preference for having the mountains of debt on public sector balance sheets rather than the private banks. There seems to be less oversight and requirements to keep neat looking accounts in the public sector.

After all, how, or if at all are public accounts audited? It appeasr to me nobody really knows ( the fiasco over the feds transparency is a good example) I have my suspicions much much funny business takes place and a great deal of smoke and mirrors.

Edited by desertorchid

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Guest Steve Cook
When the performance of and the prospects for the UK economy start to diverge from other economies then the really bad news will start. I share your instincts that we might have at last reached that point and we have started the next leg down. It appears that many countries will not take further steps to increase government spending which will leave Britain exposed should she continue with more QE. It appears that the government has finally faced the reality of the situation and we are now facing a period of public expenditure cutbacks the like of which we have not seen for a few generations. The cuts will probably be mild under Labour and the Conservatives will be left to to finish off the job. It will take several years to bring the finances under control.

As unemployment increases which it will as government spending falls then so will aggregate demand. The difficulty for the UK will be avoiding a serious deflation. It is difficult to see personal debt making up the shortfall in demand when it is actually is falling at the lowest level of base rates in 350 years. It is also difficult to see the UK government being able to borrow money without raising interest rates. Yes it could keep on printing, but the UK is not the US and will fool nobody - the signals appear that action is being taken to prevent a currency collapse.

I remain an unabashed bear and still think on balance we are heading for deflation.

As for house prices it's still 60-70% down from the peak in my view. I have noticed some bears getting twitchy and even one or two others turning bull, but house price crashes play out over a long time and you have to adjust your game to suit. Mrs STA and I are now mortgage and debt free and building up our savings. We might be looking to buy around 2013-15 - we're happy to bide our time.

ditto

Though I am looking for land. This may force my hand somewhat as I think that we maybe heading for massive price rises in essentials (arable land included) alongside continued price falls in all non-essentials (including residential housing debt).

Essential purchases that can/must be paid for by cash........prices up

Non-essential purchases that can/must be paid for by debt......prices down

I am less clear on essential purchases that must be paid for by debt by the majority of people (arable land, for example). My guess is still that they will go up in price. They will just end up being the preserve of the very cash rich.

One way or another (inflationary or deflationary outcome), the majority of us (who hitherto have funded a significant portion of our lifestyles on the back of debt), are about to get a lot poorer.

Edited by Steve Cook

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I think a serious shift in public sentiment is beginning, the media have become more bearish since Sauron Brown addressed the TUC and began talking about public spending cuts. Midweek, a poll was mentioned on Newsnight in which 50% of the public expected the economy to improve, 25% expected things to get worse leaving the other 25% thought that things would stay the same. If those figures are correct I think that 50% of the public are unbelievably optimistic with huge budget deficits, rising unemployment, spending cuts and tax rises on the way, but its to be expected because the reporting by the media over the past couple of years does give the impression that the boom was normality and this recession is some sort of temporary nightmare we are suffering.

I wouldn't read too much into that. Lots of people get asked a question that's irrelevant to what they're doing or thinking about.

"Is the economy going to improve, or get worse, or stay the same?"

"Huh? Oh yeah, whatever. Right, and a bag of plain flour ... George, don't do that!"

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I think, chatting to a friend this week about housing, that this is the case with residential real estate prices. Two hundred thousand pounds is now bandied about as if it were nothing (try buying in the south east and you will find it is nothing - in London it's a garage). However, for most normal people its a hell of a lot of money, even on 40 grand a year its a lot of money. Try saving up 20% of it at 500 quid a month, with the odd month off when the car broke down or the TV blew up.

Snip

Great summary.

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I dig your garden if you fix my taps sort of thing, the authorities can`t cope with wide-scale peaceful communion of the masses

But neither can the masses organise it on a big enough scale - which is why they end up allowing authorities to exist. Can peaceful communion of the masses work up national defences?

People take 30 grand fluctuations as if they were nothing, but then grizzle about 1p on a litre of petrol.

Humans - gotta love em!

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But what if you guys are wrong?

I still can't follow this money is debt thing. Money has no intrinsic value, even gold has limited uses, its value as a token lies in its durability and scarcity. The real things haven't changed a jot: night turns to day, winter turns to spring. The token is a confidence trick to regulate and control us. How can the £bn's and $bn's talked about in the global economy have any real meaning. The numbers are so huge they are beyond my comprehension.

Economists urge us to invest in productive capacity. But the only point of producing is to consume. If we didn't consume we wouldn't need to produce.

By reducing interest rates to such low levels the capacity of banks to exert their control over us has diminished. I for one think that is a good thing. Confidence returned in the late spring and summer, there was far less pessimism and I welcomed the change I perceived.

Isn't that better than being downbeat?

Point me to the bit where tha bankstas are taking ANY notice of the base rate.

Fail.

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