Jump to content
House Price Crash Forum
Sign in to follow this  
interestrateripoff

Obr Chairman Warns Over Stagnant Wage Growth

Recommended Posts

http://www.bbc.co.uk/news/business-25310367

Wage growth in the UK is not expected to return to the historic norm of around 2% for a "couple of years", according to the chairman of the Office for Budget Responsibility (OBR).

Robert Chote was giving evidence at a Treasury Select Committee hearing examining last week's Autumn Statement.

He said the economic recovery had not yet lifted living standards.

Mr Chote also said rising house prices and falling wages were eroding people's savings.

"In terms of real earnings, we don't get the sort of 2% a year real growth in wages and salaries that people would have been used to on past historical experience for a couple of years still.

"So we have consumption rising faster than that, leading to a relatively modest fall in the savings ratio," Mr Chote said.

Great news for discretionary spending in the economy and of course propping up house prices. Stagnant wages can only mean higher house prices as people seek income from somewhere....

Share this post


Link to post
Share on other sites

http://www.bbc.co.uk...siness-25310367

Great news for discretionary spending in the economy and of course propping up house prices. Stagnant wages can only mean higher house prices as people seek income from somewhere....

Excellent. Chote warned about wages last week too. Stagnant wages imply lower house prices, or an inflationary bust.

Or conceivably both.

Your call, George. :)

Share this post


Link to post
Share on other sites
historic norm

So in world of interest rates running at 300 year lows- where the Central Banks are pumping trillions in QE these idiots blabber about historic norms? :lol:

There's nothing historically normal about the post 08 world- it's a frankenstien monster assembled by desperate men with no real idea if their creation will ever be capable of independent life.

Share this post


Link to post
Share on other sites

So in world of interest rates running at 300 year lows- where the Central Banks are pumping trillions in QE these idiots blabber about historic norms? :lol:

There's nothing historically normal about the post 08 world- it's a frankenstien monster assembled by desperate men with no real idea if their creation will ever be capable of independent life.

we live in interesting times no doubt

i smell smoke

Edited by workingatthepyramid

Share this post


Link to post
Share on other sites

Here's a sketch written by Simon Carr, appearing under the "Gallery Guido" tag, from OBR's performance at the Treasury Select Committee concerning household debt levels and house prices:

http://order-order.com/2013/12/09/sketch-the-office-of-budget-********-at-the-treasury-committee/#more-156180

SKETCH: The Office of Budget ******** at the Treasury Committee

A sketch based on pride, prejudice, assumptions, speculation, incomplete information, wild data and carried off with unsubstantiated assertions of professional expertise.

No different from its subject, then, the Office of Budget Responsibility. Its senior management were up before the Treasury select committee to discuss their response to the Autumn Statement.

At the table three economists.

In medieval times they’d have been consumed by burning faggots. Now they are employed by the Treasury to say things John Dee would have thought far-fetched.

For one thing, they have a description, or forecast or projection of the economy 50 years hence.

The gluteal mass on which you sit, reader, knows as much about our 50-year future as the OBR. That is the only absolutely true and useful fact in this sketch.

Some committee members wanted the OBR to talk about the dangers, difficulties and desirability of a fast growth in house prices. Mark Garnier asked the OBR’s Robert Chote if he had a view on what the ratio of household debt to income should be.

Chote: (Pertly). No. (Pause for laughter. It didn’t come.) If you have an increasing housing market. More transactions. More expensive houses, you’ll see a debt-to-income ratio rising as a consequence of that. You won’t necessarily be seeing a big change in the household net asset. Which we haven’t.

Please note the lack of answer in that reply, rendered verbatim.

Robert Chote has a haircut which is (seasonally-adjusted and regionally-weighted) unforgiveable. It’s a thick crew cut with a closer trim at the sides. He has a long, sharp nose which you want to grab and use his head as a brush to remove lint from your cardigan.

Then it was Stephen Nickell’s turn to patronise the committee with his scruffy condescensions. Garnier had mentioned a household balance sheet, and wanted to know if things were getting out of hand in the property market, what with the surge in house prices. Nickell addressed this member (a former fund manager) saying: “A balance sheet has assets and liabilities. You can’t describe a balance sheet by describing liabilities.”

That is like saying to a bespoke tailor: “You can’t put your trousers on before your underpants.”

Garnier’s point is that household debt was soaring to levels we’ve never seen before. In the 80s it went up a modest 10 or 12 per cent and funded that boom. In the decade before the crash it went from 100 to 170 per cent. It walloped away. And the OBR, Garnier suggested, was saying that was absolutely fine.

“We’re not describing it as fine or not fine,” Nickell said with an expert touch of high table weariness, to suggest he was addressing his intellectual inferiors. He went on to deploy 180 words of this and that – perhaps a massive anagram – to disparage the question without engaging with the substance of it.

Is our economy dependent on house prices for growth? And will it come back to demolish us if interest rates soar (what with QE)?

These are very pertinent questions. But economists are the least-best placed people to answer them. Philosophers and anthropologists can tell us more than these dismal ning-nongs.

PS: Stephen Nickell was one of the 364 economists who signed the catastrophic letter to the Times in 1981. That letter said that there is “no basis in economic theory or supporting evidence” for the budget Howe had produced. And the recession promptly turned into the famous boom. Nickell issued an on-the-one-hand-but-on-the-other clarification of his position.

These highly-paid professionals are, essentially, gutless astrologers and need to be – what’s the modern equivalent? – humbled.

Share this post


Link to post
Share on other sites

Thankfully Chancellor Balls will rectify this on taking office by printing more money which will, like the last few hundred billion, most certainly end up in the hands of the poor and definitely not end up being used by the banks to speculate and inflate house prices.

We're F*cK£D.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   211 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

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.