BoE "V Shape" recovery scenario

[Freki]

How incompetent are they really?

 

How many of those incompetent dimwits who thought it was okay to directly finance the Treasury, who have not been able to raise rates to match the country's growth rates post 2008, believe in this scenario?

This level of incompetence makes me furious.

The analysis work was to make a trend from 2015-2019, add a dip and return quickly to that trend. Everything will trod along. No F**ing problem!

And I will add that the MSM failing to torpedo this sort of announcement are full on accomplices 

Edited May 7, 2020 by Freki

[zugzwang]

2 minutes ago, Freki said:

How incompetent are they really?

 

How many of those incompetent dimwits who thought it was okay to directly finance the Treasury, who have not been able to raise rates to match the country's growth rates post 2008, believe in this scenario?

This level of incompetence makes me furious.

The analysis work was to make a trend from 2015-2019, add a dip and return quickly to that trend. Everything will trod along. No F**ing problem!

They're scientifically illiterate charlatans. No-one with an economics degree should be let near the national accounts, under any circumstances.

A dart monkey could do a better job. Accountants could do a better job! At least they understand the principles of double-entry bookkeeping.

[crumblingcon]

It's like taking advice from the thickest man down the pub who thinks he is Einstein. From the first few weeks in lockdown I started to think about getting my business going again after post virus and the end to lockdown, I thought about calling old contacts that maybe I had not heard off in a while, taking on the smaller jobs that I normally avoid and even for the first time in years increasing advertising, and if I could get back to 70% of what I was doing pre virus I would be over the moon.

I listened to a caller on BBC 5 live in the last few days who suggested her recovery will not be V shaped, but more bath shaped, and that rang a bell with me and many business owners I am talking to

[Roman Roady]

Well first off, all those of working age have had a practical lesson on the need to have significant savings (2-3 months rent and food at the very least). So I would not expect the consumer to come out of the blocks at the same rate of consumption for a year or so...although there may be a brief spike due to the relief of being able to get out again.

 

This all ignores the threats of successive lockdowns...which are baked into the mix as far as I can see.

[Freki]

8 minutes ago, crumblingcon said:

It's like taking advice from the thickest man down the pub who thinks he is Einstein.

Yes but here we are talking about the freacking BoE. Not Jack the plumber who can have is own opinion about the economy.

We are talking about people who have real consequences on our lives. Impressive how this anger I have in me since I saw this "chart" has only grown further. 

[Freki]

1 minute ago, Roman Roady said:

This all ignores the threats of successive lockdowns...which are baked into the mix as far as I can see.

This ignores the fact that when you cut a limb, it does not instantly regrow

[spyguy]

45 minutes ago, zugzwang said:

They're scientifically illiterate charlatans. No-one with an economics degree should be let near the national accounts, under any circumstances.

A dart monkey could do a better job. Accountants could do a better job! At least they understand the principles of double-entry bookkeeping.

This.

 

[spyguy]

In a few years time, people will look back at Economists having a say so on government like we do at ye olde Kings with Astrologers.

 

[spyguy]

20 minutes ago, Roman Roady said:

Well first off, all those of working age have had a practical lesson on the need to have significant savings (2-3 months rent and food at the very least). So I would not expect the consumer to come out of the blocks at the same rate of consumption for a year or so...although there may be a brief spike due to the relief of being able to get out again.

 

This all ignores the threats of successive lockdowns...which are baked into the mix as far as I can see.

Much more -

Low leverage. MMR's less than 4x household income is a good rule of thumb.

Limited debt, demand on income - no PCP or CCs.

And ~3x months cash at hand.

 

[warrior88]

45 minutes ago, Roman Roady said:

Well first off, all those of working age have had a practical lesson on the need to have significant savings (2-3 months rent and food at the very least). So I would not expect the consumer to come out of the blocks at the same rate of consumption for a year or so...although there may be a brief spike due to the relief of being able to get out again.

 

I was brought up with the fact that I need savings for atleast three months at all times. And I try to make sure I maintain that level of savings at all times... I am in my early 30s

 

Dont think most young people are brought up that way in the developed world.

[Monkey]

1 hour ago, Roman Roady said:

This all ignores the threats of successive lockdowns...which are baked into the mix as far as I can see.

This is something i've not thought about, if we need to back into a lockdown type scenario...

I think most of the public would ignore it, but if businesses had to close again, that would kill alot more businesses than this initial period of lockdown.

[Fromage Frais]

1 hour ago, crumblingcon said:

It's like taking advice from the thickest man down the pub who thinks he is Einstein. From the first few weeks in lockdown I started to think about getting my business going again after post virus and the end to lockdown, I thought about calling old contacts that maybe I had not heard off in a while, taking on the smaller jobs that I normally avoid and even for the first time in years increasing advertising, and if I could get back to 70% of what I was doing pre virus I would be over the moon.

I listened to a caller on BBC 5 live in the last few days who suggested her recovery will not be V shaped, but more bath shaped, and that rang a bell with me and many business owners I am talking to

I understand that all businesses are not the same but if you are in the hospitality, entertainment, sports, events etc etc game it's going to take a while to get back.

My business is seasonal and the profitable months are March > October in the main.

So instead of hypothetically making £X00,000 profit over the summer I am - £80,000 and rising.  

This money has had to come from CVBIL and personal savings so.

A)  I am not going to buy a house unless they fall by the amount of deposit I have lost = less money for someone
b)  Next year or more likely next two years profits are going to be needed to return me to the cash/balance position i was start of this summer.
c)  Most of my contemporaries rent and/or are screwed if this is not waived in some ways.

18/24 months for whole economy to return to where we were pre corona virus.

I can only speak of my business but its like an old steam engine you can stop it but starting it requires a lot more effort.  The longer you leave it still the harder it will be and it takes time to pickup speed..... if you where hanging on before corona I would guess many will not bother.


 

Edited May 7, 2020 by Fromage Frais

[Fromage Frais]

41 minutes ago, warrior88 said:

I was brought up with the fact that I need savings for atleast three months at all times. And I try to make sure I maintain that level of savings at all times... I am in my early 30s

 

Dont think most young people are brought up that way in the developed world.

Not just young people.

Vast swathes of business cannot take one step back to take two forward.  

I have been watching that rather good Dirty money series on Netflix and its quite amazing how many "genius" investors have been bailed out over the years.

 

Edited May 7, 2020 by Fromage Frais

[Roman Roady]

Saving has been actively discouraged because it is under consumption....and we dont want that in an economy that is based on debt and consumption!

Remember the talk of people "hording" cash in 2009/10??

I myself have been told by a financial advisor in the past that I am "significantly under borrowed"...whatever the hell that is.

So the point is that this under consumption will not help the figures back to "normal".

Just one fly in their ointment.

[Burbujista]

What matters is that house prices are going down. There is not a single line in the Bank of England report suggesting the opposite. In fact, they talk about the “risk of House price falls” and that the number of mortgage products hasn’t been increased after their sharp fall after the begginging of the lockdown.

Edited May 7, 2020 by Burbujista

[mattyboy1973]

55 minutes ago, Fromage Frais said:

I understand that all businesses are not the same but if you are in the hospitality, entertainment, sports, events etc etc game it's going to take a while to get back.

Hospitality in particular is screwed, I think. The idea that low margin businesses like restaurants are going to come back to profitability when they have pay back whatever loans they took on to get them through this and operate at 25-50% capacity is laughable. And the lower capacity is just going to be what the government mandates - I would think that, after perhaps a "relief rally" when lock down ends, that a lot of people will continue to avoid pubs and restaurants until they feel safer. This probably applies especially so to older demographics, who just happen to be the ones with the money and the time to support hotels, decent restaurants etc. Many of the smart operators will already have seen the writing on the wall. Better to stop pissing money away as soon as possible and try and get into a position to open something new when the time is right - and premises lease costs are probably on the floor, to boot.

[Fromage Frais]

35 minutes ago, mattyboy1973 said:

Hospitality in particular is screwed, I think. The idea that low margin businesses like restaurants are going to come back to profitability when they have pay back whatever loans they took on to get them through this and operate at 25-50% capacity is laughable. And the lower capacity is just going to be what the government mandates - I would think that, after perhaps a "relief rally" when lock down ends, that a lot of people will continue to avoid pubs and restaurants until they feel safer. This probably applies especially so to older demographics, who just happen to be the ones with the money and the time to support hotels, decent restaurants etc. Many of the smart operators will already have seen the writing on the wall. Better to stop pissing money away as soon as possible and try and get into a position to open something new when the time is right - and premises lease costs are probably on the floor, to boot.

And with Hospitality a top 6 employer in every region of the UK along with £70 billion direct (161 billion indirect) then its going to take down a good chunk of the other parts of the economy.

Add sports and events to that and I just cannot see a V

  

[zugzwang]

1 hour ago, Burbujista said:

What matters is that house prices are going down. There is not a single line in the Bank of England report suggesting the opposite. In fact, they talk about the “risk of House price falls” and that the number of mortgage products hasn’t been increased after their sharp fall after the begginging of the lockdown.

Having spent the last twenty years facilitating back-to-back housing bubbles for first Gordon Brown and then Osborne/Hammond it's supremely unlikely that the career dunces at the Bank of England would recognise a house price correction as anything other than a threat.

[winkie]

Who said....."it's only because of their stupidity (or saying what others want to hear) that they're able to be so sure of themselves."

....things change, people change, so the future will surely change....people don't always do what they used to do, buy what they used to buy, go where they used to go....old models vs new models......old is the past, new is the future.....all they can do, like everyone else is guess, guess work.

[Burbujista]

12 minutes ago, zugzwang said:

Having spent the last twenty years facilitating back-to-back housing bubbles for first Gordon Brown and then Osborne/Hammond it's supremely unlikely that the career dunces at the Bank of England would recognise a house price correction as anything other than a threat.

Exactly my point. They remain silent about the topic and it only appears as a risk. In the post Brexit referendum analysis there were lots more references to house prices.

[winkie]

Planing more easing to prop up asset prices.....how long can confidence in money creation continue?

[Aidan Ap Word]

2 minutes ago, winkie said:

Planing more easing to prop up asset prices.....how long can confidence in money creation continue?

This has to be - IMO - one of the biggest questions in all this, if not the biggest.

[Freki]

19 minutes ago, Aidan Ap Word said:

This has to be - IMO - one of the biggest questions in all this, if not the biggest.

And the biggest consequences will derive from that

[Warlord]

2 hours ago, Fromage Frais said:

Not just young people.

Vast swathes of business cannot take one step back to take two forward.  

I have been watching that rather good Dirty money series on Netflix and its quite amazing how many "genius" investors have been bailed out over the years.

 

I have built and sold 2 businesses from scratch and I would never ask for a bailout. In fact I would find it embarrassing! 

A sound business will have no problem raising money from private sources. Even a distressed business can raise capital at the right price.

These people are SCUM...

Check out the Branson thread where we have discussed this recently:

 

Edited May 7, 2020 by Warlord

[Biggus]

The incompetence is magnificent. It is truly spectacular.

To knowingly lie is one thing. But to lie and then believe your own lies takes a special kind of person. The mental contortions behind this process are simply beyond me.

For example, they will decide to take housing out of the inflation figures as the price of housing is rocketing up. They argue that houses don't really affect overall price levels. They then stuff what's left iof the index with electronics and media that they know will fall in value, making the index incredibly low,. The intent is to justify for their political aims. But they actually believe the index is correct, despite having deliberately falsified the thing.

Then, when house prices fall, they cry 'Look! look! deflation!' Despite their index not changing and earier claims of housing not affecting price levels. This is then used to justify more actions towards their politcal agenda. And they will believe it, too.

The whole of their system of economics was developed to justify big government and money printing. It's a great big pile of garbage and they know it. Yet they use it to formulate policy. It wouldn't be so bad if they didn't convince themselves that they were doing the right thing. But they know they are wrong and yet also believe themselves to be doing the right thing at the same time!