lufc Posted May 7, 2011 Share Posted May 7, 2011 Negligable wage growth, High inflation, just borrow more ..... http://budgetresponsibility.independent.gov.uk/wordpress/docs/household%20debt%20paper%20formatted.doc1.pdf .... oh dear. Quote Link to comment Share on other sites More sharing options...
cashinmattress Posted May 7, 2011 Share Posted May 7, 2011 (edited) Yeah, so the average person will be adding roughly 20% more overspend to their already outrageous 60% overspend each month. Not going to work out well for most people. It's a social cancer, this debt. Edit: but it's good for some Edited May 7, 2011 by cashinmattress Quote Link to comment Share on other sites More sharing options...
exiges Posted May 7, 2011 Share Posted May 7, 2011 It's a social cancer, this debt. As per my sig Quote Link to comment Share on other sites More sharing options...
woof Posted May 7, 2011 Share Posted May 7, 2011 We forecast that income growth will be constrained by a relatively weak wage response to higher-than-expected inflation. It's that higher-than-expected again. This time they're expecting it. We're all safe in their hands. Quote Link to comment Share on other sites More sharing options...
interestrateripoff Posted May 7, 2011 Share Posted May 7, 2011 Well it worked well for the US for the past decade. Why wouldn't it work here. Quote Link to comment Share on other sites More sharing options...
leicestersq Posted May 7, 2011 Share Posted May 7, 2011 Are we saying that due to price inflation, but no wage inflation, real incomes will fall, and money left over after taxes and necessities will fall, yet despite this reduction in monies that could be used to repay loans, there will be those willing to borrow more, and banks willing to lend to them? I see a flaw in this line of thinking. Quote Link to comment Share on other sites More sharing options...
onesmallstep Posted May 7, 2011 Share Posted May 7, 2011 thanks for the link here are the key points perhaps their aim is world domination... of debt they are completely mad :angry: Quote Link to comment Share on other sites More sharing options...
libspero Posted May 7, 2011 Share Posted May 7, 2011 (edited) thanks for the link here are the key points Hard to know what to make of that first graph.. it is all referenced to the level of disposable income. They suggest disposable income is going to increase over the next few years.. despite rising cost inflation, but then don't quantify this. They then show house prices (household assets) falling for the next 4 years relative to disposable income.. but since there is no indication of the change in disposable income they are projecting it is impossible to draw any conclusions. Still, I will take comfort from the fact that it looks like house prices are set to drop for 4 years (relative to disposable income).. that's good enough for me as I don't see disposable income increasing much. Edited May 7, 2011 by libspero Quote Link to comment Share on other sites More sharing options...
Democorruptcy Posted May 7, 2011 Share Posted May 7, 2011 They then show house prices (household assets) falling for the next 4 years relative to disposable income.. Are you sure they mean just house prices by household assets? Quote Link to comment Share on other sites More sharing options...
onesmallstep Posted May 7, 2011 Share Posted May 7, 2011 what they are saying is everything you own is going to go down in value while the amount of money you owe is going to go up relative to your disposable income, either because your disposable income is going to reduce, inflation and wages not keeping up or debts increasing. i.e. you're stuffed.. simples doesn't sound like going for growth to me, It's probably wishful thinking in so far as the banks need people to become 500bn more in debt in order to pay their obligations, however if people renege on said commitments then the banks are screwed. Quote Link to comment Share on other sites More sharing options...
libspero Posted May 7, 2011 Share Posted May 7, 2011 Are you sure they mean just house prices by household assets? No, I'm sure they mean "household assets", but I imagine the biggest household asset most people own is the house itself. Hence my conclusion. Happy to be proven wrong Quote Link to comment Share on other sites More sharing options...
DebtFree2011 Posted May 7, 2011 Share Posted May 7, 2011 The policymakers in this country are either mentally ill, sadists, terminally greedy, or ALL THREE :angry: Quote Link to comment Share on other sites More sharing options...
DebtFree2011 Posted May 7, 2011 Share Posted May 7, 2011 The policymakers in this country are either mentally ill, sadists, terminally greedy, or ALL THREE :angry: Correction: this country really is a basket case. I think the key word here is "apathy", from all parties. Quote Link to comment Share on other sites More sharing options...
lufc Posted May 7, 2011 Author Share Posted May 7, 2011 FWIW I can't see how UK banks are going to come up with £500 bn to lend without ye olde securitization markets some how miraculously coming back to life. Unless of course the Government are going to "create it" whilst hoping that no one else notices. Quote Link to comment Share on other sites More sharing options...
Krackersdave Posted May 8, 2011 Share Posted May 8, 2011 Quote Link to comment Share on other sites More sharing options...
_w_ Posted May 8, 2011 Share Posted May 8, 2011 (edited) They then show house prices (household assets) falling for the next 4 years relative to disposable income.. but since there is no indication of the change in disposable income they are projecting it is impossible to draw any conclusions. Wasn't it Merv who said people should expect falling disposable income? Falling disposable income is to be expected IMO, and it fits nicely with falling physical assets (houses) relative to falling disposable income. The rise in debt to disposable income is one that I have trouble accepting; perhaps they expect people will have to borrow just to keep their heads above water? Edited May 8, 2011 by _w_ Quote Link to comment Share on other sites More sharing options...
porca misèria Posted May 8, 2011 Share Posted May 8, 2011 No, I'm sure they mean "household assets", but I imagine the biggest household asset most people own is the house itself. Hence my conclusion. Happy to be proven wrong Physical assets vs Financial assets? Could the former be houses and the latter savings+investments+pensions? Quote Link to comment Share on other sites More sharing options...
porca misèria Posted May 8, 2011 Share Posted May 8, 2011 Wasn't it Merv who said people should expect falling disposable income? Falling disposable income is to be expected IMO, and it fits nicely with falling physical assets (houses) relative to falling disposable income. The rise in debt to disposable income is one that I have trouble accepting; perhaps they expect people will have to borrow just to keep their heads above water? Um, if debt is falling but disposable income is falling faster, then you have a rise in debt to disposable income. Quote Link to comment Share on other sites More sharing options...
winkie Posted May 8, 2011 Share Posted May 8, 2011 Office For Budget Responsibility Forecasts The Uk Consumer To Borrow Another £500 Bn Over The Next Four Years. .....but, but the people they want to lend it to don't want it. Quote Link to comment Share on other sites More sharing options...
onesmallstep Posted May 8, 2011 Share Posted May 8, 2011 Office For Budget Responsibility Forecasts The Uk Consumer To Borrow Another £500 Bn Over The Next Four Years. .....but, but the people they want to lend it to don't want it. I think you'll find the great economic 5 year plan relies on consumer spending increasing by 500bn, it's part of the assumptions for growth. they really are very clever you know. Quote Link to comment Share on other sites More sharing options...
libspero Posted May 8, 2011 Share Posted May 8, 2011 (edited) Physical assets vs Financial assets? I do beg you pardon.. they even split it clearly as such on the chart once you understand the terminology. Which paints an even more damning picture of the housing market going forward Interestingly, upon closer inspection the OBR doesn't seem to include living costs before disposable income: Household disposable income consists of earnings, income from property, benefit payments and other transfers, less direct taxation and employee pension contributions So essentially, higher food prices, higher petrol costs, higher indirect taxation.. apparently none of these are included in the calculation of how much disposable income you have or effect your ability to make debt interest payments.. Edited May 8, 2011 by libspero Quote Link to comment Share on other sites More sharing options...
eightiesgirly Posted May 8, 2011 Share Posted May 8, 2011 I do beg you pardon.. they even split it clearly as such on the chart once you understand the terminology. Which paints an even more damning picture of the housing market going forward Interestingly, upon closer inspection the OBR doesn't seem to include living costs before disposable income: So essentially, higher food prices, higher petrol costs, higher indirect taxation.. apparently none of these are included in the calculation of how much disposable income you have or effect your ability to make debt interest payments.. Yep, you got it, they are smoking crack! People can't afford to fill up the car but they are going to borrow like mad for the next 5 years???. Quote Link to comment Share on other sites More sharing options...
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