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trekking

Armageddon Project.

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"The government’s deficit-reduction plan is critically dependant upon growth returning to pre-crisis levels, and a return to growth is essential anyway if the burden of wider (private as well as public) debt is not to prove too heavy for Britain to carry.

Government and opposition alike base their thinking on the assumption that, by one means or another, growth can be restored.

We see no reason whatever to assume this.

To focus on the deficit is to ignore the fact that the British economy had become debt dependant long before the financial crisis.

Together, private and public borrowing has averaged 11.2% of GDP since 2003.

Over the past decade, borrowing has driven up output in financial services (+123%), construction (+27%) and real estate (+26%), whilst lavish public spending has propelled expansion in health (+35%), education

(+27%) and public administration and defence (+22%).

Real output in all other industries is now 5% lower than it was ten years ago.

Between them, real estate, finance, health, education, construction and public administration are six

of Britain’s eight largest industries, and account for more than 58% of output. Yet the future

prospects for at least five of these six sectors are grim, because:

Public sector spending cuts are modest, but growth is now a thing of the past.

Net mortgage borrowing, critical to the real estate and construction sectors, has crashed, from £113bn in 2007-08 to a derisory £3bn last year.

The aggregate of private (mortgage and credit) borrowing has now turned negative."

Some very interesting graphs in the document.

Linky: http://www.tullettprebon.com/announcements/strategyinsights/notes/2010/SIN20110526.pdf

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It would appear that as an economy we have not only been living off borrowed money, but borrowed time.

An economy so dependent upon debt for 'growth' will be like an oil tanker changing course but heading for the rocks.

And still at the centre of the problem are ludicrously inflated housing costs. (Thanks to a previous PM.)

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Thanks for the link.

You are welcome.

Interestingly, they plan to publish the final report in June.

It doesn't look good for the UK at all. It is starting to feel like the 1970s all over again, but far worse.

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It is interesting to see these kind of sentiments being published. I have been arguing for a long time that almost all the GDP growth between 2000 and 2008 was probably based on debt, probably nearly a third of it (some £500 billion) by 2007.

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You are welcome.

Interestingly, they plan to publish the final report in June.

It doesn't look good for the UK at all. It is starting to feel like the 1970s all over again, but far worse.

I look forward to the final report. The last decade of U.K economic output has been centered around Government spending and sectors which are heavily reliant on both Government and personal debt. We are in trouble.

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"Biggest credit bubble in history."

I'd say that moniker was correct.

Some of those charts are pretty scary, but no more than the ones available on this site.

Going to be a painful landing though, for the next 25 years.

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If this came to pass, what happens in a low-growth, high-debt country?

Presumably the currency tanks against other currencies, so get out of sterling.

What about shares in companies that do most of their business within the UK? I can see how they would be affected, but for some of them (for example, food imports) they will simply be able to raise prices in Sterling to pay the relatively higher import cost.

Wealth-preservation metals such as silver and gold suggest themselves (also, I wanted to say it now to reduce the odds of someone turning up in a minute shouting "BUY GOLD" through a megaphone).

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It'd never happen, but if I ruled the world, someone interesting would present this on tv and it would be compulsory to watch it.

Then you would be given an exam on it, and if you passed only then would you be given the vote

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It'd never happen, but if I ruled the world, someone interesting would present this on tv and it would be compulsory to watch it.

Then you would be given an exam on it, and if you passed only then would you be given the vote

I don't know about the exam part, but yes, It would be excellent to see this reported on by mainstream media (heck, any media, even the Daily Mail).

At the same time, I wish I had a magic bullet that I could use to protect myself from 'the coming storm'. As someone currently employed by the public sector, I'm seriously considering getting out and retraining in one of the more 'worthwhile' professions.

Edited by Mr 0.01%

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It is interesting to see these kind of sentiments being published. I have been arguing for a long time that almost all the GDP growth between 2000 and 2008 was probably based on debt, probably nearly a third of it (some £500 billion) by 2007.

Denningers been posting such charts over the last few weeks...

The United States Economy. If one deducts from GDP debt taken for other than non-residential investment, from 1953 to 1983 the average annualized growth rate was 5.29%. That's good.

From 1983 to 2009 the average annualized growth rate was -4.89%. That is very bad.

Under these metrics George HW Bush had a GDP growth rate of 0.33% during his entire Presidency, Clinton -1.1% and George W. Bush a whopping -11.5%, all annualized.

http://market-ticker.org/akcs-www?post=186623

Should have taken the pain back in 1999-2001...

But of course, no more boom and bust blah blah.

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"Biggest credit bubble in history."

I'd say that moniker was correct.

Some of those charts are pretty scary, but no more than the ones available on this site.

Going to be a painful landing though, for the next 25 years.

That's about how long it took the Wall Street crash of 29 to bottom out.

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If this came to pass, what happens in a low-growth, high-debt country?

you know those post colonial countries we bullied into taking out "development loans" when we pulled out, trapping them with unpayable compound interest?

And we did it to ourselves because of pride, we couldn't admit we were poorer now so we borrowed to keep up the illusion. That's the real root IMO.

edit: and of course we still won't admit it, no sign of it changing even when we clearly have no money, less than no money by quite some margin, and still no sign of anyone realising we're poor.

Edited by athom

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you know those post colonial countries we bullied into taking out "development loans" when we pulled out, trapping them with unpayable compound interest?

And we did it to ourselves because of pride, we couldn't admit we were poorer now so we borrowed to keep up the illusion. That's the real root IMO.

Well, globalisation hasn't really helped, has it?

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And the answer to the problem is? Okay the answer will come next month...

...but I don't think there is an answer other than to hole up and take what's coming.

Well, I don't have the answer either, I'm no smarter than anyone else on here.

I suspect that to have any chance of getting out of this mess the UK needs to concentrate more on wealth creation rather than shopping. If that sound like manufacturing, then yes, adding value to something and selling it. I'm from Birmingham, and the motto there was "If you want it, we can make it" said with a Brummy accent :-)

In order to compete with the rest of the world, wages, benefits, housing costs (including renting) all need to be reduced. If our housing costs are reduced we can still have the same standard of living even though we may be on a lower wage. As others have said on here, the high cost of housing destroys everything. It's a running cost that doesn't create wealth for UK PLC. What ever is done in the near term, I can't see that our standard of living will staying the same or getting better.

Then again, have a look at graph/chart 11 in the document, what does that say about house prices going forward?

edit 4 spelin :-)

Edited by trekking

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Well, globalisation hasn't really helped, has it?

no, but it's our spending abroad that brought in the imports that created the trade deficit. If we are selling less we should have realised our place and bought less. Instead we kept spending like we still had a healthy manufacturing/exporting sector, spending other peoples money when we ran out of our own.

Edited by athom

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One simple thing we could do is abolish our stupid Sunday trading laws. That should add quite a few £billion to annual GDP

The answer to our problems is not going to found by having more time to buy tat from China, besides the interweb is 7/24.

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Should have taken the pain back in 1999-2001...

But of course, no more boom and bust blah blah.

This presumes that 'taking the pain' blah blah would have restored growth.

So it seems you're as guilty of presuming the essential possibility of future growth as the various political positions criticized in the OP and in the linked article.

If that is not your assumption, then it falls upon you to outline what benefit derives from taking the suggested pain, if it is not growth?

In fact, how about presenting what situation we might be in, assuming we take all the pain you are talking about. What is the big picture purpose of the pain, looking forward say 50 years?

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  • 312 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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