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Hsbc Stephen King, The Uk Has Just Had One Lost Decade, And Is About To Enter A Second

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http://www.telegraph.co.uk/finance/economics/10065143/The-UK-has-just-had-one-lost-decade-and-is-about-to-enter-a-second.html

Bleak does not begin to describe the latest tome on the economic crisis by Stephen King, the HSBC chief global economist who appropriately shares a name with the best-selling horror writer.

When the Money Runs Out is the economic equivalent of post-apocalyptic fiction, charting “the end of Western affluence”, and gives the author of The Shining a run for his money when it comes to filling readers with dread.

Published this week, the chapter headings alone are enough to make you tremble; The Pain of Stagnation, From Economic Disappointment to Political Instability, Dystopia.

If anyone in Britain was labouring under the misapprehension that 0.3pc GDP growth in the first quarter of the year and signs of a manufacturing revival were something to cheer – and that includes the other King, Bank of England Governor Sir Mervyn – HSBC’s King puts them right.

Those aren’t green shoots, they are “bumps along bottom”. The country has just completed one “lost decade”, measured on growth per person, he says, and is about to enter a second.

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..he is stating the obvious...the High Street Banks and Labour government trashed the system ...and HSBC didn't do much better in the US...there will not be an easy resolution and maybe never a resolution (if Labour get back in which is likely)...there are no new industries growing up to employ the unemployed..and the short term gains including the deceitful bonuses and commissions of the these financial trawlers and a now forgotten feckless government have presented us with the long term and in many cases irretrievable losses of today...there is not much to offer but 'austerity' which should be renamed 'reality' ..... :rolleyes:

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One tried and tested mechanism [of reducing debt] is inflation, as it redistributes from creditors to debtors,” he says. QE keeps government borrowing costs below inflation, ensuring that it’s only the creditors who suffer. It’s what’s known as “financial repression”.

So if financial repression is the way it is - and it certainly seems to be the plan - and government is obsessed with not allowing a HPC, since house prices are "too big to fail" for the UK, then (forgive me) but why not just max out as much as possible on debt and mortgages? All of my instincts tell me that is stupid, but we seem to be in cuckoo land where everything is the opposite of what you know to be correct. Like when the first pilots hit the sound barrier and the only way to keep control was to reverse the control inputs. Based on another thread on here, it seems time to get a job in a charity, and wear my pants inside-out (that one's not from an HPC thread ;) )

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So if financial repression is the way it is - and it certainly seems to be the plan - and government is obsessed with not allowing a HPC, since house prices are "too big to fail" for the UK, then (forgive me) but why not just max out as much as possible on debt and mortgages? All of my instincts tell me that is stupid, but we seem to be in cuckoo land where everything is the opposite of what you know to be correct. Like when the first pilots hit the sound barrier and the only way to keep control was to reverse the control inputs. Based on another thread on here, it seems time to get a job in a charity, and wear my pants inside-out (that one's not from an HPC thread ;) )

Just make sure you have as little skin in the game and don't pay it back. Those seem to be the rules nowadays and the way they want to run the system. Cerrtainly don;t do anything productive or anything that is likely to put your own finances at risk.

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It's not really a big surprise. I can't think of a single example in history of a bubble in anything that has not caused a crash. It does not matter what the bubble was, stocks, houses, tulips or anything else. The price of the bubble asset does not reflect real demand and is bound to fall. The state pouring all the nation's resources into propping up the price of the bubble asset is sure to lead to stagnation. Everyone's money goes into a black hole, so they get poorer. The crash will still happen one way or another. It is inevitable

How long the state impoverishes us by propping up prices all is anybody's guess. The US government stretched the great depression out from 1929 to 1946. The recession of 1968 was dragged out until 1983. Japan's necessary economic correction has been prevented for more than twenty years. This could go on for decades. The crash will still happen, though. There is no way to prevent it.

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The crash will still happen, though. There is no way to prevent it.

Too right. There's no way of avoiding paying for the excess of the early Noughties. What the governments are trying to do is engineer what section of society gets the bill.

Edited by Eddie_George

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The crash IS happening.

What is also happening is the plunge protection...which is protecting some bubble values...but there are losses and declines everywhere else.

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It's impossible to sort this out. The banks are all insolvent and the markets rigged, we are past the point of no return. I think 2010 was the moment we went over the cliff or rather with the election a last chance to sort the mess out over a 5 year period. Sadly the coalition was the wrong one and the opportunity missed. Now the only end result will be destruction of the currency and hyper inflation. Confiscation of assets and poverty, mass unemployment and social unrest.

At the moment it's like early 1940, before the first raid. There have been the ups and downs for the British on foreign shores, however that's in the past and many have left the Costas and beaches of Cyprus to return to the UK and some safety; for now. The enemy is about to select it's targets, initially the small weaker central european states, before moving to France and Britian. However this time there are no Spitfires, (they were sold to the Americans in Oct 2010).

I really don't understand what is keeping the ball in the air? how are we paying to import fuel wholesale? who is lending us money? when does it move over to outright printing? when will the ration books be handed out? I suspect the delay to the inevitable is because of the Euro, Yen and Dollar Issues (printing) so therefore investors consider the Pound to have value in a least worst market. Does that mean that any recovery in the other currency areas, pushes the Pound down and out? are we really in a knife's edge.

Best luck to Carney.!

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I think it's inevitable that there will be a price to pay for the excesses of the (debt / house-price / cheap-credit / <other name>) bubble and that they cannot delay the consequences forever.

However, they seem to be following a different strategy:- that of redirecting the crash into other areas (e.g. low or no wage growth, price inflation, savings errosion through low interest rates, currency devaluation, etc). In effect, the price is being paid by people who played no part in inflating the bubble.

What can a person do to protect themself from this massive injustice?

My own strategy currently is to live as cheaply as I can (old car, no foreign holidays, staying in most nights, drinking cheap beer at home instead of expensive drinks in pubs) to save as much money as I can and investing that money into my stocks & shares ISA (FTSE All-share index tracker fund).

Cheers,

Amateur Idiot

Disclaimer: I'm not an expert. The above comments are just my opinions only and they may not be factually correct. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.

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It's impossible to sort this out.

Abolishing the ability of private banks to lend money and charge interest would be a good start. Usury has been considered an evil since the time of Jesus for a very good reason. It distorts the economy and consolidates immense power and wealth in the hands of private banks.

I really don't understand what is keeping the ball in the air?

The debt (and as a result the amount of money in the economy) is continuing to increase as the UK government is maintaining a budget deficit. Additionally house prices are still inflated and therefore the amount being borrowed to purchase houses remains high. This is unsustainable but works over the short term.

when does it move over to outright printing?

The Treasury doesn't need to print money anymore it is all electronic. And remember it is the banks, not the government, that controls the money supply and dictates who is allowed to have money an where that money can be invested.

Does that mean that any recovery in the other currency areas, pushes the Pound down and out? are we really in a knife's edge.

As long as all the currencies fall at the same time people do not notice. Like if you jump in an elevator.

In my opinion the next big sector to fall will be the pension companies. They were in a bad shape anyway and QE has reduced their return on government gilts. I believe that is why the government has introduced the workplace pension schemes, to prop up the pension companies for a little while longer.

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So if financial repression is the way it is - and it certainly seems to be the plan - and government is obsessed with not allowing a HPC, since house prices are "too big to fail" for the UK, then (forgive me) but why not just max out as much as possible on debt and mortgages? All of my instincts tell me that is stupid, but we seem to be in cuckoo land where everything is the opposite of what you know to be correct. Like when the first pilots hit the sound barrier and the only way to keep control was to reverse the control inputs. Based on another thread on here, it seems time to get a job in a charity, and wear my pants inside-out (that one's not from an HPC thread ;) )

My landlord recently told me he wants to sell, and "could break even, or more likely lose money", this being on a purchase 11 years ago. He is in the group of buyers who can afford to drop their price and torpedo price expectations for everything similar in the postcode. The government can`t stop that kind of crash, when people have other commitments/debts/fed up with low yields, and have the flexibility to take low prices to get out. In fact as I have said many times I believe that the government and banks want this kind of crash, where the low or no mortgage/bought long time ago brigade take the hit, thereby allowing the banks to make mortgage loans at safer multiples. This is how they are trying to unwind it IMO, the cuts to HB in conjunction with schemes to encourage FTB`ers is designed to keep votes, but also shake some BTL out of the game. The fly in the ointment is if everyone starts to panic at once, which they will, bringing the whole lot down quite quickly.

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Main concern is that there is more than a suspicion that many are wealthy because they are debtors

#waitingforMYbailout

No, many think they're wealthy because they are creditors.

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No, many think they're wealthy because they are creditors.

Yes- there is a flipside to this problem that is virtually never mentioned.

I'm sure that most people in the UK by now are fully aware that the UK is heavily in debt- but ask a random sample of people on the street who the UK's creditors are and I suspect very few could name even one- which is kind of strange when you think about it.

To simply say that the problem is 'too much debt' makes no sense because that debt shows up somewhere as an asset- by definition there has to be a asset for every debt.

So is the problem too much debt- or it is the failure of the asset rich to reinvest their wealth into genuine wealth creating activity?

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So is the problem too much debt- or it is the failure of the asset rich to reinvest their wealth into genuine wealth creating activity?

I think it is just the rich's inability to spend fast enough. There are no wealth creating activity's out there because they already have all the money and nobody else wants to borrow.

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So is the problem too much debt- or it is the failure of the asset rich to reinvest their wealth into genuine wealth creating activity?

I find the attack on savers quite funny, when it comes from people who dismiss the idea of 'saver' riff-raff moving into their desirable areas, where house prices are at the most extreme, and who say they can't see them falling in value..

The core of savers money was/is very small compared to the value of hyperinflated property and other assets. Savers will spend when there is value about for purchases, which means forcing the hyper-inflated house prices down, and same for other commercial assets.

The dynamics of value expansion and contraction explain why a bear market can bankrupt millions of people. At the peak of a credit expansion or a bull market, assets have been valued upward, and all participants are wealthy - both the people who sold the assets and the people who hold the assets.

The latter group is far larger than the former, because the total supply of money has been relatively stable while the total value of financial assets has ballooned. When the market turns down, the dynamic goes into reverse.

Only a very few owners of a collapsing financial asset trade it for money at 90 percent of peak value. Some others may get out at 80 percent, 50 percent or 30 percent of peak value. In each case, sellers are simply transforming the remaining future value losses to someone else.

Edited by Venger

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I find the attack on savers quite funny, when it comes from people who dismiss the idea of 'saver' riff-raff moving into their desirable areas, where house prices are at the most extreme, and who say they can't see them falling in value..

The core of savers money was/is very small compared to the value of hyperinflated property and other assets. Savers will spend when there is value about for purchases, which means forcing the hyper-inflated house prices down, and same for other commercial assets.

don't take it personally, you're not a creditor of note.

Fun begins when the wealthy have spent their capital and STILL can't find a yield. My footballer would need to own £10m+ worth of houses to gross even £10k a week.

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Yes- there is a flipside to this problem that is virtually never mentioned.

I'm sure that most people in the UK by now are fully aware that the UK is heavily in debt- but ask a random sample of people on the street who the UK's creditors are and I suspect very few could name even one- which is kind of strange when you think about it.

To simply say that the problem is 'too much debt' makes no sense because that debt shows up somewhere as an asset- by definition there has to be a asset for every debt.

So is the problem too much debt- or it is the failure of the asset rich to reinvest their wealth into genuine wealth creating activity?

Every asset has a debt but the collateral behind that asset may be ultimately worth less than par. Wealth is just a legal claim on an income stream. Asset holders will remain rich only as long as borrowers can continue to service their debts.

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Stephen King just been on R4 today. It was a recorded interview I think. I and a small number of my friends agree with him that this is the new norm, and that the recent decadesjhave been the blip.

His points about the emancipation of women, globalisation and other factors being one-off 'false' boosts to Western GDP growth are good ones. I may read my first ever book about 'finances.'

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Stephen King just been on R4 today. It was a recorded interview I think. I and a small number of my friends agree with him that this is the new norm, and that the recent decadesjhave been the blip.

His points about the emancipation of women, globalisation and other factors being one-off 'false' boosts to Western GDP growth are good ones. I may read my first ever book about 'finances.'

Last decade the biggest blip of all? So much money (credit) in the hands of the masses will never happen again in our lifetimes IMO.

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What can a person do to protect themself from this massive injustice?

My own strategy currently is to live as cheaply as I can (old car, no foreign holidays, staying in most nights, drinking cheap beer at home instead of expensive drinks in pubs) to save as much money as I can and investing that money into my stocks & shares ISA (FTSE All-share index tracker fund).

Yes to everything except that I have highlighted in bold, and to which I say No, No NO.

Get out and about, it doesn't involve any expense except shoe leather.

You only have your senses for a short time

It is terrible if the situation shuts people inside too.

Walk, breathe the air, watch the birds, say hello, speak to people - better than talking to the converted on here

etc

Edited by LiveinHope

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Well, even Stephen King notes all the problems and then recommends carrying on with qe and the like and doesn't really seem to make any radical suggestions to improve things except accepting one's fate. Pathetic VI nonsense.

Yes.

Something happening on here. This thread got little interest, likewise Frances Coppela and neither has anyone posted the Polly Toynbee piece. People outside of here are piecing together that things are kaput have we given up noticing?

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Yes.

Something happening on here. This thread got little interest, likewise Frances Coppela and neither has anyone posted the Polly Toynbee piece. People outside of here are piecing together that things are kaput have we given up noticing?

The Polly Toynbee piece is up. I was a bit surprised that the Frances Coppela piece didn't get more, though it does exemplify what many of us must fear - they are going to keep prices up by any means possible, because the alternative is just too bad (and when it does come, as it will, no one will be worrying about house prices),

Peter.

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  • 238 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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