Jump to content
House Price Crash Forum
Sign in to follow this  
bears all

Are The Economists All Wrong?

Recommended Posts

Just been reading David Smith's Shadow MPC forum posts (see the link on yesterday's news blog). This month they've voted mostly for no change. Fair enough. Interesting to read the individual views though. When I read the posts on HPC the overwhelming view is that Brown is in trouble and we are in for a significant downturn. And yet Smith's people - professional economists, generally - don't take the same view. Neither do people in the real MPC. Their attitude seems to be that manipulation of growth and demand in the economy is within their power. If inflation goes up, it'll only be temporary because of oil price hikes and can be discounted; if demand falls they can lower rates and consumers will start spending again. Sure, there are reservations about Brown's overspending, but the apocalyptic tone of HPC is nowhere to be seen. I'm not saying I agree with them; but why do we on this site think we know better than them?

Share this post


Link to post
Share on other sites
I agree with that. It does not feel nor look apocalyptic from where I'm sitting. And no we don't know better than them. But it's ingrained in our Culture to question experts..... I call it "healthy" scepticism. Just look at the obsession with criticising any England managers!

Me too. The HPC reality and Real reality need to be reconciled and so I propose a new "Of the Week" competition for HPC Apocalipt (?) of the week.

This week I nominate 'durch'

But truthfully, I think we will have a gradually accelerating catastrophic HP crash (up to 90% real terms) with a global deflationary depression, leading eventually to a hyperinflationary rout and a cleaning out of debt and false wealth

http://www.housepricecrash.co.uk/forum/ind...ndpost&p=206346

nb as a Scot I just love the obsessively negative way you crucify and eventually kill your managers. Please don't stop. Betrie Vogts for Engerland!

Edited by BoredTrainBuilder

Share this post


Link to post
Share on other sites

If we take all reports from all economists.. I think the ballence has been leaning toward the recession/fall back of the economy.

remember, if experts never got it wrong there would be no boom/bust cycles..

For the MPC to declare economic disaster, economic disaster would follow.

They have the level of influence for what they say is going to happen to happen as a result..

(hisenbergs uncertainty principle.. (spell))

and don't forget.. head of the bank of England warned that "House prices are a matter of opinion, debt is real"

If you stop and think about how much this bloke is allowed to say.... that went further toward declaring the crash then anything else..

If he said "Your paying too much for your houses... you are getting into debt.. I think house prices can fall..." the market would have collapsed..

Did he say anything different? could he have said any more?

Share this post


Link to post
Share on other sites

Reading the Shadow MPC forum posts, I'd say these economists are not very optimistic at all. Some were calling the previous 0.25% cut a mistake. And we have some economist voring for a cut with others voting for a rise. Seems to show the quandary the real MPC is in.

Edited by leemo

Share this post


Link to post
Share on other sites
Just been reading David Smith's Shadow MPC forum posts (see the link on yesterday's news blog). This month they've voted mostly for no change. Fair enough. Interesting to read the individual views though. When I read the posts on HPC the overwhelming view is that Brown is in trouble and we are in for a significant downturn. And yet Smith's people - professional economists, generally - don't take the same view. Neither do people in the real MPC. Their attitude seems to be that manipulation of growth and demand in the economy is within their power. If inflation goes up, it'll only be temporary because of oil price hikes and can be discounted; if demand falls they can lower rates and consumers will start spending again. Sure, there are reservations about Brown's overspending, but the apocalyptic tone of HPC is nowhere to be seen. I'm not saying I agree with them; but why do we on this site think we know better than them?

Just my usual cynicism here, but you have read what has been minuted not necissarily everything that was said or thought, the minutes are in effect an oblique press release and as such are highly spinnable, the BOE committie are well aware that these minutes will be widely poured over. Now can you imagine them saying "well it's buggered isn't it, the economy is going to go off the rails with all of this debt and taxes rising etc etc" no neither can I.

Share this post


Link to post
Share on other sites

I'd recommend anyone to read "The Structure of Scientific Revolutions" by Thomas Kuhn who created the phrase "paradigm shift" - it describes why and how a whole community of academics refuse to accept new theories or facts which don't fit into their world view (paradigm).

I was lucky enough to be taught by one the world's greatest living geologists who told me first hand how this happened when plate techtonics started to become accepted in the '60s (the idea dates back to the '20s BTW). All the students were convinced this was a real thing, all the professors thought it was nonsense, and those who did any research in the area were laughed at, ignored etc.

Share this post


Link to post
Share on other sites

Agree that HPC is a tad apocalyptic at times. The general assumption here appears to be that Gordon Brown, Tony Blair, the MPC, in fact practically everyone outside this site is stupid.

I've worked with Ministers reasonably regularly and I can say that, whether you agree with their views or not, very few of them are stupid. You just don't get to those positions by being dense. Opinionated, obstinate, maybe, but not stupid.

I don't hear many economists denying that UK Plc is about to go through a sticky patch along with USA inc. and perhaps even World Economy Ltd, but the assumption prevailing on this site is that policymakers are generally too stupid to take any corrective action once imbalances start triggering instability.

I'm not saying that I don't think we will have a sharp correction in UK house prices - I think that will happen and has begun to happen already - but I don't think armageddon is on its way either.

There will always be doom-mongers - read Malthus from the 19th Century and Meadows et al and the 'Limits to Growth' from back in 1976. They weren't right because they underestimated the capacity of thinking people to respond to negative trends.

Share this post


Link to post
Share on other sites
Agree that HPC is a tad apocalyptic at times. The general assumption here appears to be that Gordon Brown, Tony Blair, the MPC, in fact practically everyone outside this site is stupid.

I've worked with Ministers reasonably regularly and I can say that, whether you agree with their views or not, very few of them are stupid. You just don't get to those positions by being dense. Opinionated, obstinate, maybe, but not stupid.

I don't hear many economists denying that UK Plc is about to go through a sticky patch along with USA inc. and perhaps even World Economy Ltd, but the assumption prevailing on this site is that policymakers are generally too stupid to take any corrective action once imbalances start triggering instability.

I'm not saying that I don't think we will have a sharp correction in UK house prices - I think that will happen and has begun to happen already - but I don't think armageddon is on its way either.

There will always be doom-mongers - read Malthus from the 19th Century and Meadows et al and the 'Limits to Growth' from back in 1976. They weren't right because they underestimated the capacity of thinking people to respond to negative trends.

Exactly so.

Share this post


Link to post
Share on other sites
There will always be doom-mongers - read Malthus from the 19th Century and Meadows et al and the 'Limits to Growth' from back in 1976. They weren't right because they underestimated the capacity of thinking people to respond to negative trends.

Malthus was wrong because both his assumptions were wrong (ie that population growth is geometric and food supply growth is arithmetic; neither have turned out to be correct). I fail to see how the Limits to Growth wasn't right as they only outlined resource depletion given a certain rate of increase in consumption; this is a dark art at best and obviously the historical rate of depletion differed from that postulated in LTG. Can YOU predict the future with 100% accuracy? No, thought not. :rolleyes:

http://en.wikipedia.org/wiki/Limits_to_growth

The exponential index has often been misquoted, for example, The Skeptical Environmentalist states: "Limits to Growth showed us that we would have run out of oil before 1992" (page 121) [in fact it showed nothing of the sort]. What Limits to Growth actually has is the above table which has the current reserves (that is no new sources of oil are found) for oil running out in 1992 assuming constant exponential growth.

So your attack on "doom-mongers", as you call them, is something of a straw man target.

Share this post


Link to post
Share on other sites
Agree that HPC is a tad apocalyptic at times. The general assumption here appears to be that Gordon Brown, Tony Blair, the MPC, in fact practically everyone outside this site is stupid.

I've worked with Ministers reasonably regularly and I can say that, whether you agree with their views or not, very few of them are stupid. You just don't get to those positions by being dense. Opinionated, obstinate, maybe, but not stupid.

I don't hear many economists denying that UK Plc is about to go through a sticky patch along with USA inc. and perhaps even World Economy Ltd, but the assumption prevailing on this site is that policymakers are generally too stupid to take any corrective action once imbalances start triggering instability.

I'm not saying that I don't think we will have a sharp correction in UK house prices - I think that will happen and has begun to happen already - but I don't think armageddon is on its way either.

There will always be doom-mongers - read Malthus from the 19th Century and Meadows et al and the 'Limits to Growth' from back in 1976. They weren't right because they underestimated the capacity of thinking people to respond to negative trends.

Generally agreed but I must point out that the "Limits to Growth" was referring to the future and indeed to a time that is still in front of us and did NOT refer to what would happen in the 1970's as many seem to falsely believe. They haven't been proven wrong (or right) simply because the time hasn't arrived yet. Much like tomorrow's weather forecast can't be proven wrong or right until tomorrow has actually been and gone. We can only prove these things in hindsight.

Share this post


Link to post
Share on other sites

Just remember who these people socialise with.

Within their social groups they will generally talk to ABC1s, who have good jobs are intelligent and are generally wealthy. Most will have a nice regular comfortable income coming in and few will be at the short hard end of where the actual money is generated and where they can experience the real economy. They will currently be quite comfortable and reasonably divorced from the reality of what the economy means for most.

How often will they come across the small builder, mechanic, shopkeeper who is struggling to make ends meet.

For this reason I think their commentry lacks one vital feature, what is actually going on in the real world.

In the real world people are finding it more difficult to make a decent profit and are working harder and harder to stay still. They have seen council tax rises, stealth tax rises, petrol prices rise, costs of mortgages rise etc etc.

Over the last couple of years these could be concealed by increases in their personal wealth, or in most cases, increased property prices leading to higher %ages of eqiuity and MEWing.

Property is no longer increasing in value and the feelgood factor is evaporating fast.

People are now only realising how drunk they were on all this paper wealth and reality is only just setting in. Once negative sentiment sets in, and confidence drops, then let's see what they tell us then.

Share this post


Link to post
Share on other sites
Generally agreed but I must point out that the "Limits to Growth" was referring to the future and indeed to a time that is still in front of us and did NOT refer to what would happen in the 1970's as many seem to falsely believe. They haven't been proven wrong (or right) simply because the time hasn't arrived yet. Much like tomorrow's weather forecast can't be proven wrong or right until tomorrow has actually been and gone. We can only prove these things in hindsight.

And you could even add that the Limits to Growth people wanted to be proved wrong, since there analysis was along the lines of: this is what will happen if we don't change things, so start changing now.

Peter.

Share this post


Link to post
Share on other sites
Agree that HPC is a tad apocalyptic at times. The general assumption here appears to be that Gordon Brown, Tony Blair, the MPC, in fact practically everyone outside this site is stupid.

I've worked with Ministers reasonably regularly and I can say that, whether you agree with their views or not, very few of them are stupid. You just don't get to those positions by being dense. Opinionated, obstinate, maybe, but not stupid.

I don't hear many economists denying that UK Plc is about to go through a sticky patch along with USA inc. and perhaps even World Economy Ltd, but the assumption prevailing on this site is that policymakers are generally too stupid to take any corrective action once imbalances start triggering instability.

I'm not saying that I don't think we will have a sharp correction in UK house prices - I think that will happen and has begun to happen already - but I don't think armageddon is on its way either.

There will always be doom-mongers - read Malthus from the 19th Century and Meadows et al and the 'Limits to Growth' from back in 1976. They weren't right because they underestimated the capacity of thinking people to respond to negative trends.

The whole point of HPC is the decimation of stupidly high house prices!

It affects all the Generations below 'those' who already own.

Do these people realise they are killing off their own country?

Lack of indigenous births and future monetary enslavement of the said Generations to fund future Taxes/Pensions/NHS etc

I can see down-trodden generations telling them to stuff it in the future - one way or another!

The ever increasing profitability ratio calls(by investors) of Western Capitalist business is unsustainable. It will all peak!

I would call that an apocalyptic scenario!

Share this post


Link to post
Share on other sites

Once Bitten x2 Shy,

Bravo, it is not rocket science to look at the general pattern of costs and to put 2 and 2 together.

About 70 shops locally are empty, reason - costs are too high and there is not enough money to be earnt make their running profitable, simple as that. Economists have been sleepwalking whilst the economy has been compromised by very real uplift in costs just as technology has allowed access to cheaper markets to open up. We have been running in entirely the wrong direction for far too long now for their to be a soft end to all this - costs need to radically reduce, if they don't people's spending power will be gradually (or even rapidly) reduced and it is goodnight to the consumer driven economy.

Share this post


Link to post
Share on other sites

The leaders are just throwing parties for the rich. We're waking up with their hangover but they're going to remain confident because everything's still great in the world they live in.

Share this post


Link to post
Share on other sites
The OP in this thread seems to smack of a "The experts aren't forecasting a crash, how dare you question their sacred authority?" type of sentiment. Lest we indulge in too much expert-worshipping, let us remind ourselves of their performance in the last crash:

http://www.telegraph.co.uk/property/main.j.../17/prosy17.xml

great link, but don't forget - its 'different this time'!!

Share this post


Link to post
Share on other sites
I'd recommend anyone to read "The Structure of Scientific Revolutions" by Thomas Kuhn who created the phrase "paradigm shift" - it describes why and how a whole community of academics refuse to accept new theories or facts which don't fit into their world view (paradigm).

I was lucky enough to be taught by one the world's greatest living geologists who told me first hand how this happened when plate techtonics started to become accepted in the '60s (the idea dates back to the '20s BTW). All the students were convinced this was a real thing, all the professors thought it was nonsense, and those who did any research in the area were laughed at, ignored etc.

Never forget this. Herds are everywhere. All have their conventions. To challenge is hard.

But we, mostly, learn from those who challenge.

Share this post


Link to post
Share on other sites
This board suffers from herd mentality sometimes, don't you think?

It has to, in the sense that there has to be some common ground for anything to function.

Then most, when they join something, want to fit in with the others more than not.

Then the conventions of thought and action get established, not for nothing do we refer to "The Establishment" as a byword for accepted behaviour and a lack of imagination.

Then those who defy convention appear, argue their case and if it's accepted we progress a bit. Or not.

What is true is that if we all conformed to the conventions, mores, norms, call them what you will, of our groups, we'd still be in the caves or extinct.

Which is why I hate anyone telling me what to do or what to think.

Which is why I hate all politicians.

Never mind it's only life.

Share this post


Link to post
Share on other sites
Guest muttley
This board suffers from herd mentality sometimes, don't you think?

Undoubtably,but sometimes the herd is right.

Share this post


Link to post
Share on other sites
Guest
This board suffers from herd mentality sometimes, don't you think?

Maybe, but then we're all in the same boat, so there is always going to be a little bit of mutual back patting going on. But then, there's a fair amount of facts presented as well. Particularly re: SIPPs. I've even downloaded the doc myself to check it out :D

In your case, Apollo, I can't help reading between the lines of your sig:

Apollo1966 likes to [think he is capable of] bring[ing] some [of what he considers to be] realism into discussions before the arguments get lost into [what he considers to be] irrelevance.

I'd change that if I were you.

Share this post


Link to post
Share on other sites
This board suffers from herd mentality sometimes, don't you think?

Most on here act as a dumb herd. The trait revealed by most of the herd is 'fear'.

Essentially the HPC herd suscribe to the view that world Stock Markets are on the brink of doom, UK plc is about to go bust in large part due to loss of manufactuirng, oil spells catastrophe, demograpghics point to trouble, BBC is biased (I kind of agree here), ALL national real estate markets (even Japans!) are on the brink.

I, as one of the few optimists challenge these little theories, but the HPC herd has well and truly cemented its ideas in stone. The oil doom and gloom scenarios are pure comedy for anyone with 1/2 a brain.

"Needs must, when the Devil vommits into your kettle". In other words energy alternative will become available as soon as the market demands them and well before any rioters hit the streets.

What you neg - heads fail to recognise is it is your negativity that kept you out of the UK boom. Now youre acting the same way when other opportunities arise such as Japan, Germany or SM investing.

Im glad Im not part of the HPC herd so proud of thier graphs and links.

I do accept UK property values have dropped and remain sloshy. A crash? Im not so sure.

Share this post


Link to post
Share on other sites
Guest magnoliawalls
My take is it is a type of group think. I notice on this forum that whenever I say anything extreme (by group standards) a lot of people try and embarrass me into shutting up. I don't think they are doing anything wrong. I often find myself tempted to say similar things to other people, even if I don't believe them. I just think it's how groups operate.

If they all hung out on HPC all day, the tone of the reports would change.

(Also remember, if you didn't believe in a centrally planned financial economy, why would you become a central planner?)

Great post

Every expert is a vested interest...

Share this post


Link to post
Share on other sites
Just been reading David Smith's Shadow MPC forum posts (see the link on yesterday's news blog). This month they've voted mostly for no change. Fair enough. Interesting to read the individual views though. When I read the posts on HPC the overwhelming view is that Brown is in trouble and we are in for a significant downturn. And yet Smith's people - professional economists, generally - don't take the same view. Neither do people in the real MPC. Their attitude seems to be that manipulation of growth and demand in the economy is within their power. If inflation goes up, it'll only be temporary because of oil price hikes and can be discounted; if demand falls they can lower rates and consumers will start spending again. Sure, there are reservations about Brown's overspending, but the apocalyptic tone of HPC is nowhere to be seen. I'm not saying I agree with them; but why do we on this site think we know better than them?

The posts on HPC regarding that Brown is in trouble may be entirely in keeping with the BOEs decision to keep rates on hold. the bank is in a quandary. Inflation is up growth is down. the problem is that the bank of england's remit is not growth. not that they dont want growth. hey who doesn't want growth? I do. but the bank of england has a very precise important remit. that of price stability. Inflation is heading up all across the developed world. but the BOE target is 2% period. This looks like stagflation.

http://www.j-bradford-delong.net/multimedia/ASAD1.html

increasing rates will slaughter the average mortgaged to the eyeballs Greedy BTLer but keeping rates on hold or heaven forbid cutting them will unleash a world of high prices and further bankrupcy/unemployment = misery on the UK

Imagine the Monetry policy commitee toss a fair coin... if its heads you loose. if its tails you loose. who cares.

for this reason Im going to bet the Consevatives led by Ken Clarke win the next general election. after all "its the economy stupid".

debt free wannabee FTB

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 301 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.