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Longtermrenter

Surplus Energy Economics - Dr Tim Morgan's Blog - Formerly Tullet Prebon

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I have mentioned this blog before but just wanted to try and bring it to further attention:

https://surplusenergyeconomics.wordpress.com/

It really is a good read full of bear food such as:

"Debt acts as a terrible drag on growth. For a start, it tends to be channelled into building capacity that nobody needs, which in turns drives down returns on existing capacity.

Excessive debt can make people cautious, which is bad, or it can make them reckless, which is even worse. If caution takes over, activity shrinks, and prices can start falling – no bad thing, you might think, except that it makes debt grow even bigger in real terms, triggering a vicious circle.

If recklessness prevails, asset prices (including capital markets and property) can soar. Bonds and equities can correct this by slumping, but it is failure to come to grips with property price inflation that is really damaging, because it prompts people to buy property and sit on it for easy profit, rather than innovating and investing in new products and services.

This, incidentally, is one reason why only an idiot would shackle the fortunes of a country’s economy to its property market."

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I'm a big fan. After about 5 years of reading him, both on his blog and his reports at Tullet Pembron some of his predictions seem to be coming true.

His whole thesis is "the end of growth"

Interestingly Adair Turner was promoting his book on the same topic a few days ago (only 6 or 7 years too late)

Edited by reddog

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I have mentioned this blog before but just wanted to try and bring it to further attention:

https://surplusenergyeconomics.wordpress.com/

It really is a good read full of bear food such as:

His answer is debt forgiveness?

We can accept the likelihood of a downturn, and make the best of it, and we can start reducing debt, accepting that overvalued asset markets would thereby be subjected to the law of gravity and the fate of bubbles. Much of the debt mountain could be converted to equity and, after all, if the value of your home has to plunge, it might help if your mortgage was written down at the same time.

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Much of the debt mountain could be converted to equity and, after all, if the value of your home has to plunge, it might help if your mortgage was written down at the same time

Eff that.

And the moral hazard is avoided. Repeat and rinse and we'll be back at the same point within 20yrs.

Edited by Agentimmo

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