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History Tells Us That A Surge In Fuel Costs Makes A Us Recession Likely

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http://www.telegraph.co.uk/finance/comment/liamhalligan/8349612/History-tells-us-that-a-surge-in-fuel-costs-makes-a-US-recession-likely.html

Economics is not a science. There are no laws or cast iron relationships – as there are in "pure sciences", such as physics or chemistry. Throughout recent history, though, there have been a handful of economic variables between which the links have been pretty solid.

Ever since the early 1970s, every single time oil prices have spiked sharply (rising by 80pc or more), regular as clockwork the US has entered recession. Given America's massive influence on worldwide economic sentiment, the past five global recessions have all come in the wake of sharp jumps in the price of crude.

Only 8 months ago, oil was trading close to $65 a barrel. Last Thursday, Brent crude momentarily skimmed $120, up 17pc in a week, before stabilising at $112. If oil climbs above $120 again, and stays there, it would be 80pc above where it was in June 2010. We'd then have a bona fide oil-price spike, the sixth since the early 1970s, which suggests a US recession would follow.

No wonder US stocks are now under pressure. The S&P500, having enjoyed three straight weeks of gains, fell 2pc on Tuesday alone, contributing to the sharpest weekly drop in three months. This happened despite surveys showing American consumer confidence at its highest since early 2008 and the Federal Reserve's recent 2011 growth forecast upgrade suggesting the US could expand by a very respectable 3.9pc.

In Asia, stocks also suffered in recent days on fears that expensive oil will derail the global economic recovery. In Japan, stocks shed more than 3pc last week. Toyota, the world's biggest car maker, lost almost 4pc of its value.

More at the link.

Looks like the pseudo recovery is over.

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We're entering the Death Zone.

Quick, raise rates 100 million % - That'll sort it!

Did they ever agree on how they were going to implement negative base rates last time btw? (QE apart) - Coz that's where we're heading...........

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We're entering the Death Zone.

Quick, raise rates 100 million % - That'll sort it!

Did they ever agree on how they were going to implement negative base rates last time btw? (QE apart) - Coz that's where we're heading...........

Your full of the joys of spring :)

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Your full of the joys of spring :)

Looks like a re-run of '08 to me. Even Halligan seems to be suggesting a perceived (or maybe real) supply shock will lead us back into recession. One has to remember this is against a backdrop of the most severe (planned at least) fiscal tightening in the UK in our lifetimes. The options of remortgaging, personal loans,credit cards to cover any temp. shortfall have evaporated for most people.

I suspect this is one moment in time when the markets are mispricing the risk of inflation and within the next 6 months or so they'll wake up to this. It's only the prospect of middle east conflagration keeping oil UP at the moment imo.

AEP had it right I think just before Ben talked up a rather timid plan for QE2 last August.

Incidentally sterling has strengthened aroudn 6% v USD since then, so the difference in inflation between the US and UK would appear not to be currency related over this timeframe. Answers on a postcard please...................

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7933235/Commodity-spike-queers-the-pitch-for-Bernankes-QE2.html

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Looks like a re-run of '08 to me. Even Halligan seems to be suggesting a perceived (or maybe real) supply shock will lead us back into recession. One has to remember this is against a backdrop of the most severe (planned at least) fiscal tightening in the UK in our lifetimes. The options of remortgaging, personal loans,credit cards to cover any temp. shortfall have evaporated for most people.

I suspect this is one moment in time when the markets are mispricing the risk of inflation and within the next 6 months or so they'll wake up to this. It's only the prospect of middle east conflagration keeping oil UP at the moment imo.

AEP had it right I think just before Ben talked up a rather timid plan for QE2 last August.

Incidentally sterling has strengthened aroudn 6% v USD since then, so the difference in inflation between the US and UK would appear not to be currency related over this timeframe. Answers on a postcard please...................

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7933235/Commodity-spike-queers-the-pitch-for-Bernankes-QE2.html

So we can expect another major banking collapse somewhere along the lines of Lehman, HBoS. Or will we see a sovereign default?

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  • 311 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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