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canbuywontbuy

We've been in a de facto recession since 2008

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Yeah I know an economic recession officially means two or more quarters of negative GDP growth, but I am making the case that the UK has been in a de facto recession since October 2008:-

  • Sterling has collapsed compared to many currencies since then - thanks to QE
  • genuine emergency interest rates since March 2009 - interest rates were never below 2% from 1694 to February 2009
  • a doubling of the national debt.  The UK can't afford to pay its bills, so it net borrows anywhere between £5Bn to £10Bn a month, despite the government claiming it would bring the country back to structural surplus
  • mass immigration since 2004 has propped up GDP figures.  3 million+ more consumers - that's a filip to GDP figures, albeit an artificial one. Take those 3 million away, and I'm sure we'd be scraping along 0% growth or by-definition recession
  • per-capita demand has been low across the board for years now - it's the "new normal".  Aggregate GDP is rising, but only because there are more and more people in the UK consuming.  The rise of Aldi/Lidl and poundshops are testimony to the drop in demand, as too is the drop in volumes of property purchases.
  • tax credits have propped up and helped subsidise many companies, to the expensive of the national debt
  • tons of props for the housing market have kept it afloat.  Why on earth do you need props in a ZIRP environment.  Tell anyone paying off a mortgage prior to 2009 that lending rates of 1% to 2% still required government props to help borrowers, and they would be scratching their heads. 
  • energy and housing costs have outpaced wage growth

I would say that even if the UK has escaped official recession only because they use a crude measure to determine how well the country is doing economically. In reality, the vast majority of people have been going through their own personal recession since 2008/2009. 

So the people of the UK are being continually lied to.  They are told the economy is ticking along, all the while they feel like they are "JAM" (just about managing), their savings eroded, their wages not keeping up with basic costs.

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It's the new normal. It works like this:

 - we can kick the can, try some stimulus and hope everything works out OK

 - we can make some tough choices and all lose our jobs

People usually go for the first option.

 

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Global decline in the advanced economies has been occurring since the end of Bretton Woods. Since then debt has gone up whilst gdp growth has steadily declined.

The growth model has stalled.

 

 

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I agree completely.  I was talking to some friends yesterday about their business. It seems like orders have dropped enormously over the past six months BUT their business started to wobble back in the good old Credit Crunch and it has never really picked up enough to stabilise it or build up reserves.  They have ridden out recessions before but this time they are on the edge of throwing the towel in.  Its a decade long depression, its not a recession.

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Just now, dougless said:

I agree completely.  I was talking to some friends yesterday about their business. It seems like orders have dropped enormously over the past six months BUT their business started to wobble back in the good old Credit Crunch and it has never really picked up enough to stabilise it or build up reserves.  They have ridden out recessions before but this time they are on the edge of throwing the towel in.  Its a decade long depression, its not a recession.

This is what has happened yes.They missed out a business cycle with QE etc and in doing so the zombie companies and consumers didnt get cleaned out.If they had the companies that were ran better and survived would of seen demand rise,margins rise,and then invest/take on new people.The QE instead extended this dis-inflation cycle by an extra business cycle.Zombie companies kept afloat on cheap debt price at rates that also drag down the better companies until there is no margin for anyone.I know a lot of small business people.Most earn 80% of their income from tax credits,not profits.

They missed out a business cycle/tightening cycle to save the banker and the banks.In doing so they have made sure this deflation/dis-inflation cycle will go out with a massive bang.There is going to be financial dislocation on a scale not seen since the late 20s.It wont be a depression though,but it will feel like one for 18 months.

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14 minutes ago, Tom82 said:

Google Trends - Key Words "No Money"

 

 

GoogleTrendsNoMoney.JPG

These trends are also interesting:

Mortage Help:
https://trends.google.co.uk/trends/explore?date=all&geo=GB&q=mortgage help

PCP:
https://trends.google.co.uk/trends/explore?date=all&geo=GB&q=pcp

Zero hour contract:
https://trends.google.co.uk/trends/explore?date=all&geo=GB&q=zero hour contract

As many on here have said, all the signs are there.

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A while back, a former poster The Nationalist (apols if you're still out there!) removed housing from the GDP figures to suggest that without imputed rents etc, the UK has been in recession every year this century.

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2 hours ago, canbuywontbuy said:

Yeah I know an economic recession officially means two or more quarters of negative GDP growth, but I am making the case that the UK has been in a de facto recession since October 2008:-

 

If you used real GDP per capita as the main parameter then we've been in recession umpteen times.

Probably a conversation for Shaun Richards blog.

12 minutes ago, rantnrave said:

A while back, a former poster The Nationalist (apols if you're still out there!) removed housing from the GDP figures to suggest that without imputed rents etc, the UK has been in recession every year this century.

Imputed rents roughly constitute about 11% of GDP.Back in the 60's,they were roughly 2% of GDP(hattip iirc Freetrader).

A large chunk of our ability to service our debts is an accounting fiction.

Edited by Sancho Panza

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1 hour ago, Wayward said:

wasn't GDP boosted by including the illegal drugs and sex trade?  No surprise the UK excels in these industries. You can't make this stuff up..we have gone down the rabbit hole....

https://www.theguardian.com/business/2014/jun/10/accounting-drugs-prostitution-uk-economy-gdp-eu-rules

Absolutely - thanks for the reminder! How desperate they are to lie about the economy that they include guesstimates of illegal trades!

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1 hour ago, Wayward said:

wasn't GDP boosted by including the illegal drugs and sex trade?  No surprise the UK excels in these industries. You can't make this stuff up..we have gone down the rabbit hole....

https://www.theguardian.com/business/2014/jun/10/accounting-drugs-prostitution-uk-economy-gdp-eu-rules

 

 

And not to forget 'imputed rents' bumping up GDP figures

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1 hour ago, pmgdawau said:

no, it's a depression

I actually wanted to use that word (but felt it was too....heavy....still).  There's absolutely no doubt that things have changed since 2008.  It's like there was a massive divergence from that point on between actual economic reality, and what we've been told by the MSM and the government.  This has caused many people to feel isolated because they think "how come the economy's doing OK, but I've been struggling for years now?" - nobody really talks about it that much - they just borrow more, have less disposable income, shop at Aldi and pound shops ("new normal"), and wonder why things never ever pick up. 

 

Edited by canbuywontbuy

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41 minutes ago, durhamborn said:

This is what has happened yes.They missed out a business cycle with QE etc and in doing so the zombie companies and consumers didnt get cleaned out.If they had the companies that were ran better and survived would of seen demand rise,margins rise,and then invest/take on new people.The QE instead extended this dis-inflation cycle by an extra business cycle.Zombie companies kept afloat on cheap debt price at rates that also drag down the better companies until there is no margin for anyone.I know a lot of small business people.Most earn 80% of their income from tax credits,not profits.

They missed out a business cycle/tightening cycle to save the banker and the banks.In doing so they have made sure this deflation/dis-inflation cycle will go out with a massive bang.There is going to be financial dislocation on a scale not seen since the late 20s.It wont be a depression though,but it will feel like one for 18 months.

No creative destruction has been allowed to happen.  No turning over of the soil.  Instead, as you say, both zombie companies AND households have been allowed to survive - while the national debt has ballooned to pay for the triaging.  Not only have we limped along, but we've cannibalised the future with all this borrowing.  The younger generations have really been shafted by all of this.

Edited by canbuywontbuy

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I've always considered the UK to be effectively in real recession (not some dodgy self serving official definition of recession) since the economic collapse of the late 1980s/early to mid 1990s.  That's reflected in the profile of base rates since then and has been hidden by more debt and increasing manipulation of the official statistics including gdp.  Plus political and media hype.  It's reflected in the relentless decline in real living standards over that period.  For example more and more people in a household needing to fund a house purchase and the peculiar work contracts increasingly introduced etc etc.   

Some might say even longer.

Indeed there's no doubt there's been no real recovery since 2007/2008 - just more and more debt and manipulation of the official stats plus political and media hype etc.  Since 2008 the pre-existing underlying recessionary trend just ratcheted up several notches after the start of that economic collapse then.

.

Edited by billybong

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Something pretty major is going to have to happen between now and 2030. Perfect storm of one or two lost decades of falling real wages, collapsing homeownership and crippling student debts for the young, about 10 million of the comfortably housed older generation no longer with us. This is not a stable plateau.

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23 minutes ago, Dorkins said:

Something pretty major is going to have to happen between now and 2030. Perfect storm of one or two lost decades of falling real wages, collapsing homeownership and crippling student debts for the young, about 10 million of the comfortably housed older generation no longer with us. This is not a stable plateau.

This is it.  Japan took a fundamental turn for the worse in the early 90s.  It's now in a quagmire that's just getting worse and worse.  That I think is the best case scenario for the UK.  It could get a lot lot uglier than that - especially given that the Japanese are willing to put up with a (frankly) shitty life working long hours just to return home to a tiny apartment.  The British have been spoiled rotten with benefits and excessive borrowing.  I can see perpetual rioting and a police state.

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It's the way 'they' talk about the 'current tough economic climate'... as if it's just a temporary situation that's somehow going to substantially improve at some indeterminate time in the future.

 

Incidentally, during the Great Depression most people weren't even actually aware they were in an economic depression, it wasn't until some years after that the phrase 'Great Depression' became used to describe that period of time.

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47 minutes ago, Dorkins said:

Something pretty major is going to have to happen between now and 2030. Perfect storm of one or two lost decades of falling real wages, collapsing homeownership and crippling student debts for the young, about 10 million of the comfortably housed older generation no longer with us. This is not a stable plateau.

Is a World War and potential nuclear holocaust major enough for you?

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47 minutes ago, Dorkins said:

Something pretty major is going to have to happen between now and 2030. Perfect storm of one or two lost decades of falling real wages, collapsing homeownership and crippling student debts for the young, about 10 million of the comfortably housed older generation no longer with us. This is not a stable plateau.

Exactly. The only prediction I have any faith in is that the 2020s are going to be an awful decade. Either due to a slow and painful continuation of current trends that will see living standards falling further along with economic activity, inequality increasing, mini recessions (based on GDP). Or there will be an 'unexpected' trigger to cause the mother of all recessions. I see no hope of genuine improvement until the system can shake itself out. Governments since 2008 have failed to manage the situation, instead choosing to stick their heads in the sand until the business cycle comes and kicks them in them ass.

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