Jump to content
House Price Crash Forum

Recommended Posts

The hyperinflation event has never happened ( except to london house prices :lol: ).

However, it looks like european deflation is a cert.

http://www.telegraph.co.uk/finance/economics/11029679/Crisis-stalks-Europe-again-as-deflation-deepens-Germany-stalls.html

"Portugal has crashed into deep deflation and Italy’s inflation rate has fallen to zero as the eurozone flirts with recession, automatically pushing these countries further towards a debt compound spiral."

And this is bad because:

"“Deflation pushes up the debt ratios in the southern countries and makes their task even more insurmountable."

So the problem is debtors and the lenders want an easy way out. That;s the long and short of it.

The debtors want the ECB to print money so they can avoid bankruptcy or having to pay it back and the bankers want it so they dont collapse when the debtors can't pay them back. The solution is 15 years too late....BANK REGULATION AND LESS DEBT.

It's criminal really when you think about it.

Edited by TheCountOfNowhere

Share this post


Link to post
Share on other sites

Awful thing that prices of goods and services we consume are getting cheaper against wages! I will remember that next month whilst sipping my €2 beers on the beech in Portugal!

Last time I went to Portimão the cheapest beer was €1, I will report back if prices have deflated below the €1 level. Self catering apartment still only £10 per night each! Awful thing that the hotel isn't as expensive at the UK, I would love to pay more.

Share this post


Link to post
Share on other sites

Creditors wont be paid.

i.e. savers.

The crime here is that interest rates should reflect the risk, but here we have central banks who manipulate interest rates down to hide risk.

If there were no central banks, then no only these dodgy loans wouldn't have been made because interest rates would have made the malinvestment uneconomical.

All the central banks have done is hide risk which is ultimately leading to bankrupt everyone.

[edit]

For example, London property at 2% interest rates and record high prices which have inflated 50% in a few years! You couldn't make it up. The interest rates should be nearer to 15% to reflect the risk of default.

Edited by Wurzel Of Highbridge

Share this post


Link to post
Share on other sites

Awful thing that prices of goods and services we consume are getting cheaper against wages! I will remember that next month whilst sipping my €2 beers on the beech in Portugal!

Last time I went to Portimão the cheapest beer was €1, I will report back if prices have deflated below the €1 level. Self catering apartment still only £10 per night each! Awful thing that the hotel isn't as expensive at the UK, I would love to pay more.

Last time I went to Greece on holiday was 21 years ago. Back then, everything was cheap as chips. Even as a penniless student, things were so cheap that we lived like kings for a couple of months.

Has the eurozone kiboshed EU regional price differences?

Share this post


Link to post
Share on other sites

Last time I went to Greece on holiday was 21 years ago. Back then, everything was cheap as chips. Even as a penniless student, things were so cheap that we lived like kings for a couple of months.

Has the eurozone kiboshed EU regional price differences?

Since most good are imported from China with a 50% markup I would think all imprted 'crap' would be about the same price. Maybey cheaper here in the UK as we import 'crap' in bulk.

Locally produced stuff should be cheaper than in the UK as people in the UK have massive overheads compares to those living in Portugal / Greece.

The market should equalise the price, but then there are transportation costs.

Share this post


Link to post
Share on other sites

Since most good are imported from China with a 50% markup I would think all imprted 'crap' would be about the same price. Maybey cheaper here in the UK as we import 'crap' in bulk.

Locally produced stuff should be cheaper than in the UK as people in the UK have massive overheads compares to those living in Portugal / Greece.

The market should equalise the price, but then there are transportation costs.

Price of labour bubble. Crashing hard now.

Share this post


Link to post
Share on other sites

............. and the Russians are coming

Meanwhile the fact that the Russians are suddenly viewed as an unreliable Medieval dictatorship who want to hold Europe to ransom has had a reverse effect on oil prices.....down. The last two months European countries have been stocking up like their lives depended on it....we have a glut of stock...the oil price tanks.

Edited by crashmonitor

Share this post


Link to post
Share on other sites

I. E. Older people who are more likely to have savings.

Of course. Or FTBs with savings for a deposit, or STR with large cash balances and so on.

You're more familiar with the real effects of deflation on an economy, nominal wages, unemployment, youth unemployment, suicide rates, despair, availability of goods/healthcare and so on from the petri dish which is Greece. From the 'outside' it doesn't look like the Utopia painted by the OP.

Share this post


Link to post
Share on other sites

The crime here is that interest rates should reflect the risk

They do. That's why they're ZIP across the developed world.

The 'crime' would be paying 5% interest on savings when there's little demand for savings, and no profitable productive investment that could justify it.

It's blindlingly obvious that what needs to happen (in the absence of increased demand) is destruction of savings. It doesn't really matter how you destroy savings, but destroy them you must.

For example, London property at 2% interest rates and record high prices which have inflated 50% in a few years! You couldn't make it up. The interest rates should be nearer to 15% to reflect the risk of default.

? Given we've had serial recessions and now low growth, it's more likely that interest rates have been too tight not too loose. If they were too loose we'd have had 15% inflation as per 70s.

Edited by R K

Share this post


Link to post
Share on other sites

Of course. Or FTBs with savings for a deposit, or STR with large cash balances and so on.

You're more familiar with the real effects of deflation on an economy, nominal wages, unemployment, youth unemployment, suicide rates, despair, availability of goods/healthcare and so on from the petri dish which is Greece. From the 'outside' it doesn't look like the Utopia painted by the OP.

You don't need to open the link in the OP to know its an AEP article.

As for Greece, I've just seen people with assets get away scot-free, no different to here. My wife is thinking of using our deposit to open a designer clothes shop.

What depression?

Share this post


Link to post
Share on other sites

Last time I went to Greece on holiday was 21 years ago. Back then, everything was cheap as chips. Even as a penniless student, things were so cheap that we lived like kings for a couple of months.

Has the eurozone kiboshed EU regional price differences?

It certainly has.

The transition period to the Euro a lot of comapnies and shops took that situation to up their prices, substantially, that initial burst of inflation plus the effect or pumping debt into the system by the banks to enrich primarily themselves has caused wave after wave of inflation on top. Manipulating the figures to disguise the the level of inflation has helped save a few political skins nd allowed the banking cartel to carry on with their game for longer but now the situation is unstable / untenable, hence reducing prices.

Share this post


Link to post
Share on other sites

They do. That's why they're ZIP across the developed world.

The 'crime' would be paying 5% interest on savings when there's little demand for savings, and no profitable productive investment that could justify it.

It's blindlingly obvious that what needs to happen (in the absence of increased demand) is destruction of savings. It doesn't really matter how you destroy savings, but destroy them you must.

They did before ZIRP when dodgy countries bond prices were rocketing.

EI-CG790_GKBOND_G_20140410062408.jpg

The risk was priced in then came ZIRP to hide the risk. Has rick gone away? No, it's compounding over time due to zombie companies strangling productive ones.

You can see the effect of the Zombies here in the UK with 'workers productivity' (companies productivity) dropping every year!

Share this post


Link to post
Share on other sites

Creditors wont be paid.

i.e. savers.

The UK RPI was the same in 1950 as 1920...during those 30 years we had bouts of serious deflation but no creditors lost their money in banks or building societies.

Share this post


Link to post
Share on other sites

They did before ZIRP when dodgy countries bond prices were rocketing.

EI-CG790_GKBOND_G_20140410062408.jpg

The risk was priced in then came ZIRP to hide the risk. Has rick gone away? No, it's compounding over time due to zombie companies strangling productive ones.

You can see the effect of the Zombies here in the UK with 'workers productivity' (companies productivity) dropping every year!

You are going to have to change your Avatar, I can;t stop laughing when I see it for some reason.

It's hard to take your posts seriously man.

Share this post


Link to post
Share on other sites


Portugal has crashed into deep deflation and Italy’s inflation rate has fallen to zero as the eurozone flirts with recession, automatically pushing these countries further towards a debt compound spiral.

...


“The European Central Bank has to act now,” said Andrew Roberts, credit chief at RBS.

It's not so long ago that TPTB were calling for the inflation measurement to be lower to match Germany's to help the UK to rebalance the economy and to compete with Germany.

Sacrifices would have to be made to achieve that.

Now the inflation measurement is low it's suddenly become a bad thing.

Sacrifices will have to made to increase inflation.

High inflation or low inflation they continue to fail to rebalance the economy.

It's exceptionally crazy now as there's both low inflation and there's high inflation at the same time but they don't measure the high inflation items because they want low interest rates to help to try to create high inflation.

As for asking someone from the failed RBS for their opinion on how to run the economy - how crazy is that, just do the opposite.

Edited by billybong

Share this post


Link to post
Share on other sites

Perhaps this chart below explains why the MPC are suddenly changing their message to '''Don't worry you can forget about interest rate rises for the foreseeable future'' yesterday. Basically food collapsing in price, oil collapsing in price, goods collapsing in price. Well if CPI does fall to lower ones, then 2.5% on savings isn't exactly diddly squat anymore, and suddenly £400,000 for a s**t hole place in London looks like a life sentence with near zero inflation.

https://www.investec.co.za/content/dam/investec/investec-international/documents/EconomicReportsPDFs/2014/CPI%20Outlook_Q32014.pdf

Share this post


Link to post
Share on other sites

Perhaps this chart below explains why the MPC are suddenly changing their message to '''Don't worry you can forget about interest rate rises for the foreseeable future'' yesterday. Basically food collapsing in price, oil collapsing in price, goods collapsing in price. Well if CPI does fall to lower ones, then 2.5% on savings isn't exactly diddly squat anymore, and suddenly £400,000 for a s**t hole place in London looks like a life sentence with near zero inflation.

https://www.investec.co.za/content/dam/investec/investec-international/documents/EconomicReportsPDFs/2014/CPI%20Outlook_Q32014.pdf

Where are you getting 2.5% on savings? I agree about the 400k house BTW, that price is going to look increasingly silly as we move forward.

Edited by dances with sheeple

Share this post


Link to post
Share on other sites

Where are you getting 2.5% on savings?

Well my NSI index linkers + are still getting circa 3%, I recently did the 15k 5 year ISA with Virgin at 3%...even got a generous 90 day early maturity option penalty. Nationwide 5 year is 2.5% with a year penalty get out clause. got quite a few unexpired fixes over 3%. if you have a reasonable spread of building societies they usually come up with loyalty bonds around the 3% now and then.

As for income tax... some savers will have a 15.5 k tax free band plus the ISAs exemption from 5th April 2016, when the 5k O% savers band comes in so long as your earnings from other sources are low.

Edited by crashmonitor

Share this post


Link to post
Share on other sites

Well my NSI index linkers + are still getting circa 3%, I recently did the 15k 5 year ISA with Virgin at 3%...even got a generous 90 day early maturity option penalty. Nationwide 5 year is 2.5% with a year penalty get out clause. got quite a few unexpired fixes over 3%. if you have a reasonable spread of building societies they usually come up with loyalty bonds around the 3% now and then.

As for income tax... some savers will have a 15.5 k tax free band plus the ISAs exemption from 5th April 2016, when the 5k O% savers band comes in so long as your earnings from other sources are low.

Cheers. I have gone all instant access, but maybe it`s worth re-thinking that policy?

Share this post


Link to post
Share on other sites

Cheers. I have gone all instant access, but maybe it`s worth re-thinking that policy?

Always think its best to go for a fix with a get out clause....2.5% for 2 years and then take a 1 year hit is still better than 1% for two years on instant. Though my old Virgin instant is still paying 1.51%... a closed issue.

Edited by crashmonitor

Share this post


Link to post
Share on other sites

Last time I went to Greece on holiday was 21 years ago. Back then, everything was cheap as chips. Even as a penniless student, things were so cheap that we lived like kings for a couple of months.

Has the eurozone kiboshed EU regional price differences?

NO

Share this post


Link to post
Share on other sites

It's blindlingly obvious that what needs to happen (in the absence of increased demand) is destruction of savings. It doesn't really matter how you destroy savings, but destroy them you must.

They have done everything conceivable to achieve this short of actual confiscation. They have made saving almost pointless in this society. If they go further towards confiscation what do you think will happen? The bedrock of the economy is trust and confidence. If you shake these then the whole thing comes tumbling down. Saving is an essential part of a healthy economy (I'm talking about for your average person not rich oligarchs hoarding cash and assets with umpteen off-shore tax havens) and if you destroy this then the rest will follow.

Edited by EMac

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

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   210 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.