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So Much For The Recovery...

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A screenshot from Forex Factory of economic data released this week. Picture says a thousand words and all that. Note how none of this was predicted / expected!

BIsuJtj.png

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Note how none of this was predicted / expected!

Not completely true - I'm sure everyone expected the base rate to stay the same ;)

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A screenshot from Forex Factory of economic data released this week. Picture says a thousand words and all that. Note how none of this was predicted / expected!

BIsuJtj.png

Not quite true. I've been expecting the H2 2014 GDP print to be much lower than H1 and have said so on here repeatedly. Unless Osborne picks up his deficit spending the UK economy will be in serious trouble again by the end of the year.

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Not quite true. I've been expecting the H2 2014 GDP print to be much lower than H1 and have said so on here repeatedly.

Something about a credit impulse? I'm sure I remember reading that!

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Something about a credit impulse? I'm sure I remember reading that!

Correct!

http://www.clearonmoney.com/dw/doku.php?id=public:credit_impulse_background

Spending is a flow, and should be compared with net new lending, a flow, rather than credit outstanding, a stock. Hence changes in spending are dependent on changes in net new lending or, equivalently, on the acceleration of credit.

Michael Biggs, economist at Deutsche Bank, introduced this idea in Nov 2008 and, by analogy with the well known concept of fiscal impulse, defined “credit impulse” as the “the change in new credit issued as a % of GDP”. Since 2008, it has been shown, for many time periods and many countries, that private sector demand is very closely correlated with private sector credit impulse. This explains a number of conundrums missed by those who focus on the credit stock.

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Not quite true. I've been expecting the H2 2014 GDP print to be much lower than H1 and have said so on here repeatedly. Unless Osborne picks up his deficit spending the UK economy will be in serious trouble again by the end of the year.

Came to soon. Been saying it for yonks.

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Not quite true. I've been expecting the H2 2014 GDP print to be much lower than H1 and have said so on here repeatedly. Unless Osborne picks up his deficit spending the UK economy will be in serious trouble again by the end of the year.

Picks up?!

Has it fallen?

US to taper on schedule, as denninger has posted.

Unless the EZ does something stupid (which I admit, is fairly likely, given the clowns at the ECB) osbourne would look fairly silly doing more QE, and spook the markets.

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Picks up?!

Has it fallen?

US to taper on schedule, as denninger has posted.

Unless the EZ does something stupid (which I admit, is fairly likely, given the clowns at the ECB) osbourne would look fairly silly doing more QE, and spook the markets.

Need to see a sharp contraction in output to justify another round of QE, agreed. But when Osborne's echo bubble finally collapses a sharp contraction in output is what we're going to get.

He won't be on his own though. Kuroda will still be printing like a maniac in Japan.

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Came to soon. Been saying it for yonks.

What I don't understand is the way the policies are all so at odds with one another. They are HTB'ing one minute, then restricting mortgage terms the next. It is totally schizo.

They will have a problem politically though trying to stoke the fire. There has been so much talk around lately about housing bubbles I really don't think they can afford to do anything obvious to push up prices even more. On the other hand not doing it could cause a collapse.

Problem with bubbles is that the bigger you blow them the more unstable they get. It comes to a point where the politicians are no longer in charge of when it pops. Bad news for them.

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What I don't understand is the way the policies are all so at odds with one another. They are HTB'ing one minute, then restricting mortgage terms the next. It is totally schizo.

They will have a problem politically though trying to stoke the fire. There has been so much talk around lately about housing bubbles I really don't think they can afford to do anything obvious to push up prices even more. On the other hand not doing it could cause a collapse.

Problem with bubbles is that the bigger you blow them the more unstable they get. It comes to a point where the politicians are no longer in charge of when it pops. Bad news for them.

The central bankers aren't in charge, the market is!

Liquidity conditions still look favourable for stocks until mid- August. I'll be looking for downside momentum thereafter. I think what we've seen this week is a precursor. Welcome, but unlikely to stick.

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What I don't understand is the way the policies are all so at odds with one another. They are HTB'ing one minute, then restricting mortgage terms the next. It is totally schizo.

Because what they are doing makes no sense. Borrowing must be affordable to be financially responsible, and yet prices must rise for the boomer vote and for short term feel good. The banks are told to lend more and yet also told not to lend irresponsibly and to keep more in reserve.

The whole thing is a mess.

We need leadership. There is none in sight.

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The US can taper because the exchange rate job is done.

The genius at the BOE has for ideological reasons decided to talk up the pound. This directly causes a double whammi, imports get cheaper and exports get more expensive.

Meanwhile Osborne says we need to export more.

More QE will cause a run on the pound and a collapse.

This would cause inflation and with out wage rises to match bad dents galore.

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Because what they are doing makes no sense. Borrowing must be affordable to be financially responsible, and yet prices must rise for the boomer vote and for short term feel good. The banks are told to lend more and yet also told not to lend irresponsibly and to keep more in reserve.

The whole thing is a mess.

We need leadership. There is none in sight.

+1 Politics was once described as being the art of the possible- now it seems to be about keeping the impossible going for as long as possible.

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Another miss.

Analysts were expecting a 1.0% annual rise in like-for-like sales in June as measured by the KPMG/British Retail Consortium Sales Monitor. Instead the survey recorded a 0.8% drop.

Overall sales were up 0.6%, and ignoring the distortions due to the timing of Easter, this was the weakest reading for three years.

Reuters - Retail sales growth slows sharply in June

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Another miss.

Analysts were expecting a 1.0% annual rise in like-for-like sales in June as measured by the KPMG/British Retail Consortium Sales Monitor. Instead the survey recorded a 0.8% drop.

Overall sales were up 0.6%, and ignoring the distortions due to the timing of Easter, this was the weakest reading for three years.

Reuters - Retail sales growth slows sharply in June

Wow. They've shot their bolt too early. Wheels are coming off. Should have introduced HTB2 just about now. Premature overexcited politicians. Just getting into position to ride this economy right into the election and.... splat, it's all over.

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Well, recessions do tend to come in roughly seven year cycles. The last one kicked off in 2007-2008, so seeing a new one in 2014-2015 is entirely plausible.

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Well, recessions do tend to come in roughly seven year cycles. The last one kicked off in 2007-2008, so seeing a new one in 2014-2015 is entirely plausible.

Agreed - However the crazy thing is that most people and politicians seem to think that the last one was a one-off unexpected event, never to be repeated! I'm not sure how the government will cope with the next recession.

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Another miss.

Analysts were expecting a 1.0% annual rise in like-for-like sales in June as measured by the KPMG/British Retail Consortium Sales Monitor. Instead the survey recorded a 0.8% drop.

Overall sales were up 0.6%, and ignoring the distortions due to the timing of Easter, this was the weakest reading for three years.

Reuters - Retail sales growth slows sharply in June

Interesting that it is another off expectations.

Will we see pressure on cpi as shops heavily discount to maintain sales volumes ? In the past the MPC would be talking about more QE. Carney has boxed himself into a corner but I suppose they can say the data has changed.

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"Even sales of home accessories and furniture flatlined,

which is surprising given the UK is reportedly in the midst of a

housing boom."

Well I don't see how houses being more expensive is going to lead to lots of money to spend on furniture. When people are servicing housing debt then consumer spending must fall.

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"Even sales of home accessories and furniture flatlined,

which is surprising given the UK is reportedly in the midst of a

housing boom."

Well I don't see how houses being more expensive is going to lead to lots of money to spend on furniture. When people are servicing housing debt then consumer spending must fall.

Exactly....how can a finite pot of money along with a saturated pot of debt pay for everything.....lower home prices and rents can only enable more spending for more people with less, not less....anyway good furniture is better bought secondhand, the good stuff lasts for generations...home accessories they can't give it away....more stuff than people have the storage for, recycle give it a new home, you may never want/need to replace it. ;)

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Agreed - However the crazy thing is that most people and politicians seem to think that the last one was a one-off unexpected event, never to be repeated! I'm not sure how the government will cope with the next recession.

Easy - even more money printing, massive handouts (to their chums in the private sector and select voter demographics), continued interest rate repression and the enlargement of the structural deficit.

This crap will only stop when the wheels come off totally, a la Argentina.

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