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What Will End The Recession?

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Never mind the causes.... what on earth can put an end to this cycle of job cuts, inflation and tax rises?

I really can't fathom where this will end up. My colleage said there will be riots in the streets.... but what will they (or I) riot for - what do we want? Printing money = inflation; council job cuts = unemployment = knock on problems for retailers and reduced tax income; I'm running out of ideas....

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Never mind the causes.... what on earth can put an end to this cycle of job cuts, inflation and tax rises?

I really can't fathom where this will end up. My colleage said there will be riots in the streets.... but what will they (or I) riot for - what do we want? Printing money = inflation; council job cuts = unemployment = knock on problems for retailers and reduced tax income; I'm running out of ideas....

High interest rates are always going to be the end game. Inflation will have people taking to the streets before high interest rates would.

Everybody I know is getting angry at the cost of living.

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Never mind the causes.... what on earth can put an end to this cycle of job cuts, inflation and tax rises?

I really can't fathom where this will end up. My colleage said there will be riots in the streets.... but what will they (or I) riot for - what do we want? Printing money = inflation; council job cuts = unemployment = knock on problems for retailers and reduced tax income; I'm running out of ideas....

The debt needs to be reduced. Either pay it back or force over indebted into liquidation. Austrian economics shows the way. The bailing out of these overindebted entities is the problem. We are doing exactly the wrong things. We should be cutting debt further as a nation, reducing taxes, and normalising interest rates.

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I can't see any way out, in previous recessions we just had to sit it out knowing that eventually the economy would pick up and everybody would be back in work but there won't be anywhere left for people to work in any time in the foreseeable future, we have permanently lost several million jobs in manufacturing and they will never come back.

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The recession will end when prices (including property costs and the general level of taxation) fall relative to wages to the point that we no longer need to rely on ever-increasing credit to provide demand. This is what happened during the Great Depression: times were grim for the leveraged as they were forced to cut back, but the working man's wage packet went further and further with each passing year.

Unfortunately our politicians and central bankers are obsessed with trying to create demand by pumping the economy full of credit. It worked for 30 years, but it's not working anymore because the destruction of wages means that the ability to repay that credit is now exhausted. There is no point in extending further credit to most people as it simply cannot be repaid given what they earn and their pre-existing debts.

Ask a senior politician/central banker how they feel about wage rises and they will break out into a sweat and start muttering about 'the need to control inflation'. Yet wage inflation, or nominal price falls with stagnant wages, is the only thing that is going to get us out of this mess by replacing the demand that vanished in 2007/8. Property becoming cheaper relative to wages is an essential part of that correction.

Edited by Dorkins

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defaults...that always ends the recession in months, if not weeks.

for example, a bankrupt cleared of his debts is in the clear and able to grow.

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The recession will end when prices (including property costs and the general level of taxation) fall relative to wages to the point that we no longer need to rely on ever-increasing credit to provide demand. This is what happened during the Great Depression: times were grim for the leveraged as they were forced to cut back, but the working man's wage packet went further and further with each passing year.

Unfortunately our politicians and central bankers are obsessed with trying to create demand by pumping the economy full of credit. This is not working because the destruction of wages means that the ability to repay that credit is exhausted. Ask a senior politician/central banker how they feel about wage rises and they will break out into a sweat and start muttering about 'the need to control inflation'. Yet wage inflation, or nominal price falls with stagnant wages, is the only thing that is going to get us out of this mess by replacing the demand that vanished in 2007/8. Property becoming cheaper relative to wages is an essential part of that correction.

+1

Absolutely.

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The recession will end when expectations are reduced, leading to reduced wages and we return to a business environment that is competitive with the rest of the world (less red tape, less reliance on financial services).

For the last century, in the West, it was always presumed that the quality of life / material wealth / etc. of each new generation would exceed the subsequent one. This is changing and it will take a while for people to accept. Some never will.

You are not entitled to own a house because your parents did. You are not entitled to holiday in the Caribbean because celebrity XYZ does. Debt is not the answer, but it has been for the last 10 year and that will slowly have to change.

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The same thing that ended the great depression...Total War, Total destruction, 100 Million deal and everyone employed rebuilding the mess.

I think you mean 'dead'. If so, bring it on.

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Never mind the causes.... what on earth can put an end to this cycle of job cuts, inflation and tax rises?

I really can't fathom where this will end up. My colleage said there will be riots in the streets.... but what will they (or I) riot for - what do we want? Printing money = inflation; council job cuts = unemployment = knock on problems for retailers and reduced tax income; I'm running out of ideas....

Never mind the causes.... what on earth can put an end to this cycle of job cuts, inflation and tax rises?

A Labour government??

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The recession will end when expectations are reduced, leading to reduced wages and we return to a business environment that is competitive with the rest of the world (less red tape, less reliance on financial services).

For the last century, in the West, it was always presumed that the quality of life / material wealth / etc. of each new generation would exceed the subsequent one. This is changing and it will take a while for people to accept. Some never will.

You are not entitled to own a house because your parents did. You are not entitled to holiday in the Caribbean because celebrity XYZ does. Debt is not the answer, but it has been for the last 10 year and that will slowly have to change.

I'm not convinced by the "the next generation is going to have a worse quality of life, suck it up" argument. When prices change there are winners and losers. The UK has a very good housing stock of over 20 million plumbed and electrified brick buildings. They are not about to disappear, but if their prices fall then the losers will be the current owners (or their descendants) and the winners will be young people hoping to buy them with wages. Equally if imports become more expensive, that will create employment in domestic production as it becomes economically viable to employ Britons to make shoes again. Again, the winners will mostly be young workers.

Young people already had their drop in quality of life, and it happened during the boom years with worsening employment prospects and more expensive housing. Compare the lifestyle of the average 25-30 year old Briton today with his equivalent 10, 20, or 30 years ago. Life already got worse for the young. Even if consumer prices rise relative to wages in the future, better employment prospects and a dramatic fall in the cost of housing will probably more than outweigh that.

To generalise: if the boom favoured asset owners (mostly old) over workers (mostly young), then the bust will eventually do precisely the reverse. This is how the economy returns to equilibrium again, where consumption, investment, wages and profits are all at sustainable levels without the great wedge of ever-increasing credit being forced between them.

I think there is a separate argument about energy costs, which are probably going to rise if fossil fuel production falls. If that happens, I'm sure people will do what they have always done and adapt by using less energy. I'm not even sure it would be a bad thing overall: quieter skies and roads, slower pace of life, less ability to make and acquire tat.

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Young people already had their drop in quality of life, and it happened during the boom years with worsening employment prospects and more expensive housing. Compare the lifestyle of the average 25-30 year old Briton today with his equivalent 10, 20, or 30 years ago. Life already got worse for the young. Even if consumer prices rise relative to wages in the future, better employment prospects and a dramatic fall in the cost of housing will probably more than outweigh that.

But that's just the point. The drop in quality of life didn't happen. They used credit to borrow their way to a better life. Credit cards, student loans, IO mortgages, consolidation loans, etc, etc. Of course, it's not just the young doing this, it's everyone, but it's masked a reduction in purchasing power over the last 20-odd years.

Back in the 70s and 80s 2 car families and foreign holidays were the exception, not the rule, but today, quite a few families have 3 or 4 cars - one for each parent, and one for each kid. I wonder, do you think they have that in China or India?

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I thought it was one quarter's figures showing positive GDP growth.

Technically the recession ended last year.

I nearly put "never mind the statistics" in the OP... it feels like a recession (depression?).... and it can only be a matter of time before the stats reflect that. How can the economy possibly be growing at a time like this?

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All of the above + a war/civil war to shake this house of cards to the ground.

It is very surreal that we are able to step off a plane after 5 hours in the air and be in the thick of the action (IEDs, Mortars, Ambushes etc etc) and be home for tea time. All this false economy has made us very insular and my gut feeling is that we as a country are awaking from a dreamy sleep.

:ph34r:

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But that's just the point. The drop in quality of life didn't happen. They used credit to borrow their way to a better life. Credit cards, student loans, IO mortgages, consolidation loans, etc, etc. Of course, it's not just the young doing this, it's everyone, but it's masked a reduction in purchasing power over the last 20-odd years.

Back in the 70s and 80s 2 car families and foreign holidays were the exception, not the rule, but today, quite a few families have 3 or 4 cars - one for each parent, and one for each kid. I wonder, do you think they have that in China or India?

The drop in quality of life most certainly did happen. I am in my late 20s and am still friends with many people I knew at school. Our collective CV does not make for pleasant reading: frequent periods of unemployment and nearly a decade of unstable houseshares or staying with parents. Some of us have iPhones, but none of us have houses (or are even the sole rent-payer in a flat). One guy bought a new build flat where he needs a tenant to live with him so he can pay the mortgage. He is currently sh1tting bricks. Compare that to our parents who with similar backgrounds, education etc were able to buy houses (not flats) before they were 25 on a single income and were very rarely unemployed. On the plus side, the level of indebtedness among my cohort is usually pretty low. Yes, we had 5 figure student debts and maybe some of us have credit card debts, but we don't have 6 figure mortgages.

The other side of the coin is the generation now in its 40s, which MEWed its way into consumption and BTLed its way to a pension. They have been using 5 or 6 figure debts to do the consuming that should have been ours. Of course, that pwoperdee pension will never pay out, and people who took that strategy are likely to be as poor in old age as they were 'rich' in middle age. Oh well.

Edited by Dorkins

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We're in a depression. Everyone here knows that. Everyone out there knows that too but nobody wants to / can admit it because it's not statistically accurate. The government and media don't want to upset "the public". This "recovery" is no more real than the "boom" that preceded it. In fact, it's exactly the same thing we've had for the past 10+ years. Nothing fundamental has changed.

New money has been printed. Interest rates are at 0.5% and have been for almost 2 years. Inflation is at 3.7% and unemployment is rising too.

We have stagflation and it's only just begun.

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Sadly with the increase in tuition fees, scrapping of EMA, no jobs for the young would be to save themselves and start a new life in more exotic lands. Let the boomers rot in their big houses and drown in their own debt. If you have no stake in the UK just move out.

Yeah, I know this doesn't answer the question of the recession will end. We're not even half way to the bottom yet. Once we do hit rock bottom and can't go any lower we will remain there. We're going to have a couple of lost decades until we able to produce goods and services the world needs and we're able to pay this impossible national debt back.

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Compare that to our parents who with similar backgrounds, education etc were able to buy houses (not flats) before they were 25 on a single income and were very rarely unemployed.

The other side of the coin is the generation now in its 40s, which MEWed its way into consumption and BTLed its way to a pension. They have been using 5 or 6 figure debts to do the consuming that should have been ours.

As someone in their 40s, unemployment was a fact of life for all of my peers in their teens/early twenties during the 1980s. I remember in 1988 the desperation of people trying to buy before Miras was abolished and thinking I would never be able to buy. The whole situation led to me working in mainland Europe. When I returned, prices had fallen and after having made a fair amout of money I was able to buy, but I was nearly 30 at that point and paying 10% interest. The only people I knew who bought before 25 did so thanks to the Bank of Mum & Dad. My sister only bought six years ago and she was nearing 40.

It is more difficult now and doubtless those in their 40s/50s have had advantages. It's criminal that we got free university with grants and soon it will cost £30K just for fees.

The world has changed because of globalisation, but looking back things weren't looking so great when I was in my early twenties either.

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Sadly with the increase in tuition fees, scrapping of EMA, no jobs for the young would be to save themselves and start a new life in more exotic lands. Let the boomers rot in their big houses and drown in their own debt. If you have no stake in the UK just move out.

Yeah, I know this doesn't answer the question of the recession will end. We're not even half way to the bottom yet. Once we do hit rock bottom and can't go any lower we will remain there. We're going to have a couple of lost decades until we able to produce goods and services the world needs and we're able to pay this impossible national debt back.

you need a degree to pull a pint these days...3 months H&S, 6 months adding up and taking away, 3 months learning to smile, all spread over a four year course.

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  • 285 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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