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Cardiff Uni Prof Says Economy Is Built On Sand

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I don't know who "Mike" is, but he's just been promoted to Bear (First Class).

I've done my sums (I'm a Cardiff Uni professor in the field), and I personally don't see how we won't be in another mini recession within the next year.

Osborne has fallen into the trap of the majority of tory chancellors of the past.

He's got himself stuck in the inflation trap.

What I'm saying is, he can't keep interest rates at basically 0% for ever, as the markets simply won't let him. They won't even go another 6 months without a demand for a hike.

And the market demands for interest rate hikes, to ease inflation, will almost certainly demolish growth.

What Osborne underestimated, in my opinion, is the amount of business, and growth that is based on debt, and loans.

He may be trying to set good foundations, but he didn't realize that cutting won't achieve it. As the entire economy is built on a house of sand.

What I'm saying is, the UK economy, in truth, is reliant on debt. People borrowing money they can't afford.

Growth at the minute is fictional, as it's allowing these people and these businesses to rebuild with more debt.

The problem Osborne has is this is not sustainable. And sooner or later, he's going to have to ask this recovery, which is superficial, to start paying interest on their debt, and assets.

What I'm saying is, he has a bit of a Catch 22 situation.

He won't be allowed to keep interest at 0% for much longer, as the markets, corporations, and those with wealth, are being stifled, and are not being allowed to grow.

But the minute he raises interest rates, to appease the markets, he's probably going to bankrupt small business, entrepreneurs, and middle England.

Definite recession forumulae.

...of course he forgot to mention the MEW and BTL brigades will also be bankrupted, unless he counts those under "middle England". ;)

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If this bloke is a professor then it is no surprise why yoof unemployment is so high.

It is a pile of borroxs.

UK business is basically flush with cash including the small business sector which has net cash held on deposit in the banks. It is the private equity buy outs like EMI, debenhams, etc that got stuffed with loads of debt by banksters because they got a tax break by paying out the cash raised to themselves as dividends. They are going bust and at least causing losses to banksters, eg Citi with EMI. But the robber banksters are long gone with their loot.

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He's right :)

Back in 2006, my piss was boiling. I was sick of the Faux Middle Class boasting about property prices, their "wealth", and their vile optimism about making even more money .... for nothing :angry:. ITN News presenters almost glowed with smugness over house price gains. I knew something would give ......

The UK economy is built on debt ... make no mistake. The previous administration allowed things to get out of control.

short-termism

— n

the tendency to focus attention on short-term gains, often at the expense of long-term success or stability

Sound familiar?

Short-termism has destroyed the economy. "Why should we save, when we can borrow?". "Why should we recruit an inexperienced member of staff ..... let's recruit one with experience.". This dire short-term mindset is why this country is in the mire. Businesses are woefully equipped for saving versus borrowing. Their business models are focused on short-term solutions! And as for the blinkered world of recruitment ... try getting a job without experience! Virtually NOBODY recruits such people. To highlight how foolish businesses have been re: experience, they bemoan the lack of experienced candidates ... :rolleyes:. Where the hell are candidates going to get experience, when NOBODY has taken he time to nurture new talent?

Short-termism will be the downfall of the UK ....

"The rich rule over the poor, and the borrower is servant to the lender"

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There are three Professor Mikes at Cardiff - Mike Peel http://www.cardiff.ac.uk/carbs/faculty/peel/index.html, Mike Reed http://www.cardiff.ac.uk/carbs/faculty/reedm/index.html and Mike Wickens http://www.cardiff.ac.uk/carbs/faculty/wickensm1/index.html

My fiver's on Prof Wickens.

Well done, you've outed him...

wickensm1.jpg

Steph can go round and duff him up!

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Debt is the issue - inflation and interest rates aren't the issue.

In 2007 the public passed the debt problem to the banks, in 2008 the banks passed it to the government, in 2011 the government is handing it back to the people.

Not until the debt is either paid off or defaulted can we sensibly begin to think about a true recovery. We are still collectively living on borrowed means on borrowed time.

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Cardiff Uni Prof is almost right.

The economy is actually built on quicksand.

Yes, and it is only our really large companies that have caused any of the economy to partly feel like it might be recovering. Medium and small enterprise are mostly still struggling. The pound shop is not though! People cannot manage on the paltry wages they mostly receive with inflation ramping up and all help being cut. Not that there is much choice. We are just going to have the recession Brown bought off in a pre-election mamoth damaging borrowing for which we shall now all pay. Today my car tax bill arrived. It has gone up 14.3%. I bet that's not in the cost of living index. My income is also continuing to fall, although at least I have one.

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He is correct, it is all illusionary. We are still working off the effects of the last, desperate throws of Brown prior to the election.

And to my amazement the media and public end up believing that we are in 'recovereh' with the recession behind us. What we have was the banking system going into shock, a starter to the mammouth main course of soveriegn and personal debt.

During 2010 apart from this site and maybe Halligan and Hendry, everyone seemed to think we could go through an 'uncomfortable' 2 years and that is it, no more pain and we can 'lock in' to those 'green shoots'. Sums up the bovine mentality of the general public and media in the UK.

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I don't know who "Mike" is, but he's just been promoted to Bear (First Class).

...of course he forgot to mention the MEW and BTL brigades will also be bankrupted, unless he counts those under "middle England". ;)

Did this wise professor have a professorial go at Brown/Darling while Labour were in power? Or has he only found a voice now it's the other lot?

Just asking.

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Did this wise professor have a professorial go at Brown/Darling while Labour were in power? Or has he only found a voice now it's the other lot?

Just asking.

blimey, has there been a change of management in the uk, when did that happen? i must have missed it

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Did this wise professor have a professorial go at Brown/Darling while Labour were in power? Or has he only found a voice now it's the other lot?

Just asking.

Professors don't give opinion especially is it might be controversial. We don't do academic debate.

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He's not mentioned peak tax?

He's almost sound like an Austrian. Although I note he states we are in a catch 22 but offers no solution to the problem.

That's the problem with catch 22's - there is no solution ! :blink:

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He's right :)

Back in 2006, my piss was boiling. I was sick of the Faux Middle Class boasting about property prices, their "wealth", and their vile optimism about making even more money .... for nothing :angry:. ITN News presenters almost glowed with smugness over house price gains. I knew something would give ......

The UK economy is built on debt ... make no mistake. The previous administration allowed things to get out of control.

Sound familiar?

Short-termism has destroyed the economy. "Why should we save, when we can borrow?". "Why should we recruit an inexperienced member of staff ..... let's recruit one with experience.". This dire short-term mindset is why this country is in the mire. Businesses are woefully equipped for saving versus borrowing. Their business models are focused on short-term solutions! And as for the blinkered world of recruitment ... try getting a job without experience! Virtually NOBODY recruits such people. To highlight how foolish businesses have been re: experience, they bemoan the lack of experienced candidates ... :rolleyes:. Where the hell are candidates going to get experience, when NOBODY has taken he time to nurture new talent?

Short-termism will be the downfall of the UK ....

"The rich rule over the poor, and the borrower is servant to the lender"

Great post.

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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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