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Guest consa

Britain's Economy Going, Going ...

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Guest consa
Like the rotten old house in Charles Dickens's Little Dorrit, the British economy is teetering. Last year's speculative frenzy in the housing market was apparently squashed in 2005, so now some are talking of housing prices going on "crabwise" —but this cannot last for long. In reality, the situation is like that unreal morning in Dickens's book, after the great speculator Mr. Merdle's famous bank had already crashed, but none of the victims knew it yet. Now, the housing inflation bubble, the "basis" of the whole crazy structure, is ready to go.

In 2004, U.K. housing prices shot up some 20-22%; this year, prices have just kept with inflation, or fallen outright—depending upon whom you ask. Consumer spending is stagnating, industry is evaporating, and the whole shaky New Labour public spending policy is imploding.

http://www.larouchepub.com/other/2005/3250brit_economy.html

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prety good summary of where we're at

the danger for confirmed bears such as me is that this type of report is what i want to see.

i would be interested to see a well prepared alterntiave view from the bulls.

i dont mean a seies of platitudes such as:

"its different this time"

" house prices always go up"

rather, someone who can show where the genuine growth will come from, how incomes will rise to be abe to repay the morgatge and othe debt etc.

any takers?

the don

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The longer that this weird and unhealthy plateau persists, the longer the bust

is likely to take. This labour government and its policies may have condemned us to a property

slump lasting 10-15 years, with only minor bounces along the way

At the start of this year I was convinced we would be looking at 10% falls by this time.

I've got a feeling that you might be right, seeing little in the way of nominal falls, just a very slow and painful inflationary errosion over a long period.

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Bull arguments tend to be, well, full of bull.

The only one that stcks up for me is teh demographic argument:

Many people are baby boomers at or near peak earnings, and they are splashing out on property,

because they believe as a matter of faith rather than raional deduction that the positive trend of

the past ten years will continue.

There was the same attitude at the Japanese peak in 1990, and teh result was disasterous:

a 15 year slump. The longer that this weird and unhealthy plateau persists, the longer the bust

is likely to take. This labour government and its policies may have condemned us to a property

slump lasting 10-15 years, with only minor bounces along the way

demographic argument (baby boomers) - has anyone got any figures on this (for the uk).

ps if the new fed chief starts taxing savings to force people to spend (strategy to combat deflation) what should the str's do with their spare cash.

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Aren't we seeing the start of something different this time - deflation? People worldwide seem to be up to their necks in debt - surely there comes a point where they can't borrow any more and have to stop spending?

We're hearing the retailers squeal about a dramatic drop in sales (they always seem be be complaining though!), housing sales slowing dramatically, bankruptcies up dramatically, gold shooting up, the Fed hiding the M3 etc etc. Something funny is going on - that's my technical term for it, as I'm a bit of a noob at all this :P

regards,

crude

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This is the simple reality - UK economy has been kept going by:

1. Massive credit boom - be it ipods, toasters, kitchens, TV or houses. People who should not have been allowed credit have been given it and there is a limit, now reached IMPO, by how much credit people can take on.

2. Public Sector spend - i.e. massive growth in Public Sector jobs.

The credit boom is now coming to an end - there are only so many white and brown goods that people can buy and there are now a great many people in the UK with massive credit debt. I believe this Christmas will show an even greater slowdown than last and the reality of this will begin to hit home over the next 3 to 6 months.

Brown cannot keep on creating more and more non-jobs. The UK economy is becoming increasingly uncompetitive as his red tape, attacks on savings, salaries and pensions makes working in the UK private sector, or running a business here, extremely uncompetitive. At the end of the day it is the private sector that creates the wealth for all these public sector jobs and, as we have seen in the run up to Christmas, many companies are now begining to go bust or, as in the case of those closing down pension schemes, are having economic difficulties.

The end result will be a massive slowdown in the UK economy over the next 2 years, retail sales falling through the floor, private sector companies going bust or rellocating overseas, rising unemployment and, ultimately, a big fall in UK house prices.

Cedit booms can only be sustained for so long. When the party is over the hang over is extremely painful. This will be the mother of all financial hang overs!

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Aren't we seeing the start of something different this time - deflation?

Only if all your spending goes on cheap Chinese DVD players. As I see it, we're getting wage deflation and cheap tat deflation, combined with commodity inflation: not a nice place to be.

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Guest Charlie The Tramp

A well known High Street supermarket has sold a very big distribution depot of theirs to an international distribution company. The employees of long term service refused to accept the new contracts whereas they would lose their present pension rights and considerable drops in salaries. The vast majority of staff accepted redundancy and early paid up pensions. The new company now employs East European immigrants at half the cost. This is the start of many more to come as we enter a very nasty recession.

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.... This is the start of many more to come as we enter a very nasty recession.

A recession or a depression?

With wages capped by "low" inflation and cheaper foreign workers, those with huge mortgages / loans are going be very poor for a long, long time - presuming they've still got jobs with which to service those debts...

crude

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Depression, IMHO. The only way forward is to massively cut back on red tape and taxes to lower the cost of working in the UK and encourage development of new technologies that cheaper nations can't currently produce... and the government will never do that without an economic catastrophe to force change.

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Depression, IMHO. The only way forward is to massively cut back on red tape and taxes to lower the cost of working in the UK and encourage development of new technologies that cheaper nations can't currently produce... and the government will never do that without an economic catastrophe to force change.

I don't know if even that would succeed.

it's the right way to go but the wage differential between the west and most of asia/africa/eastern europe is massive.

I have a feeling this period of "exhaustion" is only going to be avoided by "teching up" and releasing some of our most cutting edge,patent protected stuff onto the market.That way we could get our productivity level up....and get some high margin manufacturing back.

...the downside to this is most of our kids have been studying leisure degrees rather than science.....so haven't designed it!I don't hold out much hope for those in retail etc.

Edited by oracle

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I think the British economy is being boosted by all the immigrants that have come from eastern europe,every job that can be filled by them is being filled.They have to spend money to live ,pay rent ,they pay tax and national insurance.In my line of work construction ,most building sites in London are dominated by eastern europeans.The goverment likes to make out that they don,t really want them,but the truth is they are encouraging them to come here and I think they are making a big contribution to the economy of this country,so they are having an effect on house prices indirectly by keeping the economy going,if they were not here we would probably be in a deep recession by now with high unemployment and crashing house prices.

Depression, IMHO. The only way forward is to massively cut back on red tape and taxes to lower the cost of working in the UK and encourage development of new technologies that cheaper nations can't currently produce... and the government will never do that without an economic catastrophe to force change.

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I think the British economy is being boosted by all the immigrants that have come from eastern europe,every job that can be filled by them is being filled.

How is taking jobs that unemployed British people could do 'boosting the economy'? It's not as though Britain has such a lack of people who could be cleaning offices that we need to import Eastern Europeans to do so: and I think it's unlikely that the British people who used to do those jobs have given them up to move into better-paid jobs elsewhere.

I guess you could claim it's a boost to individual companies from reducing costs, but increased welfare payments aren't exactly going to be a boost to the economy as a whole.

They have to spend money to live ,pay rent ,they pay tax and national insurance.

And it would seem that most of them spend as little as possible so they can send most of the money back home where it's worth far more... unskilled British workers, on the other hand, can't do the same.

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I think the British economy is being boosted by all the immigrants that have come from eastern europe,every job that can be filled by them is being filled.They have to spend money to live ,pay rent ,they pay tax and national insurance.In my line of work construction ,most building sites in London are dominated by eastern europeans.The goverment likes to make out that they don,t really want them,but the truth is they are encouraging them to come here and I think they are making a big contribution to the economy of this country,so they are having an effect on house prices indirectly by keeping the economy going,if they were not here we would probably be in a deep recession by now with high unemployment and crashing house prices.

it's boosting the profits for british companies sure,but at the expense of living standards for the general population.

the population voted for it didn't they???

...as for the contribution made......well if all the money made by the immigrants is spent in UK and we get their services for consumer goods as well as construction then that would be a contribution.

....as a great deal of money immigrants make is sent back home to give their families a better life then the deal the UK gets is not as great as is being made out.

I can't blame an immigrant for doing that.....if I was in their shoes I would do the same.All anybody ever wants is to improve their quality of life......but if UK wakes up and smells the coffee when the unemployment kicks in then you could easily see a repeat of brixton/toxteth.

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I think the British economy is being boosted by all the immigrants that have come from eastern europe,every job that can be filled by them is being filled.They have to spend money to live ,pay rent ,they pay tax and national insurance.In my line of work construction ,most building sites in London are dominated by eastern europeans.The goverment likes to make out that they don,t really want them,but the truth is they are encouraging them to come here and I think they are making a big contribution to the economy of this country,so they are having an effect on house prices indirectly by keeping the economy going,if they were not here we would probably be in a deep recession by now with high unemployment and crashing house prices.

It's great that Eastern Europeans come here and do lots of hard work for small amounts of money. However they do this by living 5 to a room and working 12 hour days. Is this really the kind of society we want to create?

Sounds a bit Dickensien to me.

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It's great that Eastern Europeans come here and do lots of hard work for small amounts of money. However they do this by living 5 to a room and working 12 hour days. Is this really the kind of society we want to create?

Sounds a bit Dickensien to me.

we ain't called GRUEL BRITANNIA for nothing!!

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An excellent article. It clearly shows where Britain is heading to, But do Gordon and party have a clue as to what is happening here? It gives me creeps even to think of living in a society that I see in Dickens stories :(

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Absolutely !!

A reform of taxation should be done ASAP ...... and the simplest system would be a straight forward, across the board.... Income Tax !!

Get rid of VAT, NI, Corporation Tax, Inheritance Tax, Council Tax, Road Tax, Stamp Duty, Rip Off Tax, Stealth Tax etc etc and replace with just one (accepted, quite high) Income Tax .....

ie ..... the first £10,000 is tax free and everything over that is taxed at say ...... 50% ..... ?? !!

Or whatever percentage the Treasury needs to maintain its present receipts - this way the red tape, government departments and loopholes would be reduced to virtually nil .....

Somebody who earns £20,000 a year pays 5K tax ..... Somebody who earns £200,000 pays 95K ..... Somebody who earsn £2,000,000 pays 995K ...... seems fair to me :D

Edited by Perfectionist

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the first £10,000 is tax free and everything over that is taxed at say ...... 50%

A great idea if you want to see the vast majority of the productive members of society emigrate.

There is simply no reason why the government should be sucking up close to 50% of the entire country's income: sack 90% of the government employees and roll taxes back to 5-10% and we'll all be better off (well, except the ex-government-employees who no-one would hire in the real world).

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IMO a lot of the jobs done by immigrants are the type of job a Brit does not want,we have about 1,000,000 unemployed,I would say a lot of them are Brits that don,t work won,t work.I know for a fact that a lot of youngsters don,t want to do construction because it is hard and dirty,the same could be said of a lot of other jobs.I still think immigrants are fuelling the economy and making this present boom last longer than it should thus making this house price bubble last longer.

How is taking jobs that unemployed British people could do 'boosting the economy'? It's not as though Britain has such a lack of people who could be cleaning offices that we need to import Eastern Europeans to do so: and I think it's unlikely that the British people who used to do those jobs have given them up to move into better-paid jobs elsewhere.

I guess you could claim it's a boost to individual companies from reducing costs, but increased welfare payments aren't exactly going to be a boost to the economy as a whole.

And it would seem that most of them spend as little as possible so they can send most of the money back home where it's worth far more... unskilled British workers, on the other hand, can't do the same.

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  • 301 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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