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is there going to be a crash in the standard of living


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Can we stop this 1% talk. 

As you can see from this article, most Brits are in the 1%: 

https://www.investopedia.com/articles/personal-finance/050615/are-you-top-one-percent-world.asp

It's the Billionaires we need to bring to heal! 

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Absolutely there is going to be a drop in the standard of living.

But it has all been built on excess credit  obscene mortgage multiples,car loans,phone loans,credit cards etc etc

All only barely serviceable when we we’re at the peak.Peak of what I don’t know as wages have not kept pace with the cost of living.Possibly the peak of borrowing.

Now is the day of reckoning.

 

 

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"Crash" is the wrong word; deterioration is more like it because there are secular trends now that are affecting the standard of living and have been for some time.

Energy costs are rising and have been for at least the last twenty years and energy feeds into everything. We're already seeing an undelying deterioration in the standard of living because of this.

Robert Gordon;s hypothesis is that we've come to the end of the great nineteenth century innovations and nothing has come along to take their place o this is another cause of deteriorsting living standards. See this:

https://www.amazon.co.uk/Rise-Fall-American-Growth-Princeton/dp/0691175802/ref=sr_1_1?crid=399L94SOEYIPI&dchild=1&keywords=robert+gordon&qid=1590780983&sprefix=robert+gordon%2Caps%2C157&sr=8-1

Demographics means societies are aging and after 55 people don't spend as much as in earlier periods of their lives. This doesn't necessarily affect living standards directly but it may mean lower growth rates in future and lower spending by the old.

Also, as has been mentioned debt levels are now much higher and debt service costs are already pre-empting discretionary income far more than prviously and are only alleviated by low rates. However, on the assumption that we will not get negative rates this factor will now weigh more and more on discretionary spending.

Climate change also means more cost and less discretionary income so this is already with us.

So the answer is that there may be a "crash" due to cyclical factors but there is already a reduction in the standard of living due to adverse seculare trends.

 

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This has been going on for years, hasn't it? My parents lived through decade after decade of living standards improving.  My generation (unless technology is all you care about), not so much. 

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51 minutes ago, crouch said:

"Crash" is the wrong word; deterioration is more like it because there are secular trends now that are affecting the standard of living and have been for some time.

Energy costs are rising and have been for at least the last twenty years and energy feeds into everything. We're already seeing an undelying deterioration in the standard of living because of this.

...

Demographics means societies are aging and after 55 people don't spend as much as in earlier periods of their lives. This doesn't necessarily affect living standards directly but it may mean lower growth rates in future and lower spending by the old.

...

Climate change also means more cost and less discretionary income so this is already with us.

So the answer is that there may be a "crash" due to cyclical factors but there is already a reduction in the standard of living due to adverse seculare trends.

I agree with this, and would add (for people in the West) that there will also be a gradual "levelling out" of living standards between West and East over the next 100-200 years, so that the discrepancy between rich Europe/US and poor India/China levels off a lot more.  Given all the factors you name above also affect them, the total pie may shrink - but for the West it's a double whammy as we end up with the East gaining a bigger share too.

So whereas today you might have a resource pie of 1,000 shared 800 West 200 East, in 50 years time it might only be 900 total, shared 500 West 300 East.  So the East sees a big rise in living standards despite all of the above, whilst the West sees a big fall.

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1 hour ago, crumblingcon said:

Depends how much debt you was carrying February 2020

Exactly.  When the music stopped, at that point, everything you had in your hands; debt or credit, is yours to keep.

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6 minutes ago, xxxx said:

Exactly.  When the music stopped, at that point, everything you had in your hands; debt or credit, is yours to keep.

Thanks for that, I seriously think that was the best post I have put up on HPC,  only you have picked up on it ? 

 

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2 hours ago, shlomo said:

 

 

We keep talking about a house price crash, BUT is the real question are we going to have a big crash in the standard of living?

No. I know because my newly sacked neighbour tells me. She lost her job two weeks ago, hubby is self employed, also not doing any work.

Income = zero pounds.

They are living it up, BUT he has stopped the internal works in his house (trying to copy my wonderful downstairs new shower room using the coat storage cupboard). 

It hasn't sunk in yet. I can't bring myself to tell them. I do fear for such people. 

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With higher and higher inflation will come higher borrowing rates. Add on 2m extra unemployment.

You could say std of living will fall.

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Depends on how you define 'standards'. The recent consumer based recovery is gone.  Any one on a median level wage will lose :

x6 Salary house paid with a sub 2% mortgage - gone

PCP car deals for top end cars sub £300/ month - gone

Credit cards and 0% balance transfers - gone

 

However, I think if you remain employed you will have food on the table, shelter, and warmth.  I can't see Landlords jacking rents up as the number of 'quality' tenants will shrink.  You can cut your cloth - knowing you are dong that whilst other lord up free money will build up resentment in the future.

Fascism didn't come about with mustachioed demagogue. It came from a feeling that your own efforts were being sabotaged by some 'other'. That is what scares me.

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10 hours ago, poohbear said:

Absolutely there is going to be a drop in the standard of living.

But it has all been built on excess credit  obscene mortgage multiples,car loans,phone loans,credit cards etc etc

All only barely serviceable when we we’re at the peak.Peak of what I don’t know as wages have not kept pace with the cost of living.Possibly the peak of borrowing.

Now is the day of reckoning.

 

 

You have said it all . as my old Mother used to say "it will all come out in the wash son"

Another by Warren Buffett " when the tide goes out we will see who has any clothes on"

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The main thing is retired boomers will keep the triple lock pension. Well done them for all the hard graft they put in saving the country in their tiny houses.

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Up until this point it's all been about borrowing to look successful.  Now those will little or no debt and a job will be successful.

Material posessions mean f**k all.  I'd rather drive a 20 year old Merc that is paid for, than a new Merc on a £400 a month funny money deal.  I'd rather live in a small house that is paid for, than a mansion with a 10x mortgage.

Most people don't think like this though and now they will pay the price.

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Some will do very well out of it, others will ride it through by spending less money but still having an acceptable standard of living, they will find many things that are free give a better quality of life or standard of life than some stuff they used to buy that used to reduce the standard of living.......we will have fewer freedoms and choices, not so many items able to buy, many goods and services will disappear, new ones will emerge that will be of poor standard, poor quality, poor customer service......new products and services of a better standard will be available to buy, but only available to those that can afford the price or the debt......many will fall out of the middle class to working class from white to blue collar workers, from secure work to insecure unstable erratic work, a safety net with holes in it more will fall through......because of automation replacing people's labour many of us will have more time so less money a few more time and more money..... the growing gap of inequality will become more visible.?

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Agree with other poster: those that keep their jobs will be sitting pretty (subject to debt levels they carried in).

For the 4 million long term unemployed, it will be total collapse (but there will be a benefits baby boom for half of them I guess) 

A clear class division opening up, depending entirely on whether you're lucky enough to keep your job. 

High streets all becoming charity shops and pound shops... oh dear,  5 years of gloom and doom...

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Charity shops are a good thing......many wouldn't have the things they do have if it wasn't for others forever wanting new upgraded stuff, replacing good stuff with more stuff, getting bored with perfectly adequate stuff to get a 'feel good' factor shopping for something new.......there will be an influx of new Preloved quality items flowing into charity shops over the next few months, lots of clearing out being done over lockdown.....after that the quality and amount will decline as more will tighten their belts to, make do and mend.?

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5 minutes ago, winkie said:

Charity shops are a good thing......many wouldn't have the things they do have if it wasn't for others forever wanting new upgraded stuff, replacing good stuff with more stuff, getting bored with perfectly adequate stuff to get a 'feel good' factor shopping for something new.......there will be an influx of new Preloved quality items flowing into charity shops over the next few months, lots of clearing out being done over lockdown.....after that the quality and amount will decline as more will tighten their belts to, make do and mend.?

I'm suspect the high streets will just be boarded up, with no shops at all.

Last recession it was charity shops, estate agents, bookies and pound shops. 

But in the period since, charity shops have moved to ebay ( as a national market gets better prices) and bookies all moved online, and to Gibraltar.  

So I can't see anyone wanting to take on a long lease. Maybe just pound shops and rotating pop up seasonal shops; rest boarded up. 

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47 minutes ago, Social Justice League said:

Up until this point it's all been about borrowing to look successful.  Now those will little or no debt and a job will be successful.

Material posessions mean f**k all.  I'd rather drive a 20 year old Merc that is paid for, than a new Merc on a £400 a month funny money deal.  I'd rather live in a small house that is paid for, than a mansion with a 10x mortgage.

Most people don't think like this though and now they will pay the price.

You have said it all.

Its time for the chickens to come home to roost.

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9 hours ago, Killer Bunny said:

With higher and higher inflation will come higher borrowing rates. Add on 2m extra unemployment.

You could say std of living will fall.

Mainly due to Brexit and a weak Pound. COVID is toast.

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9 hours ago, Killer Bunny said:

With higher and higher inflation will come higher borrowing rates. Add on 2m extra unemployment.

You could say std of living will fall.

A good dose of inflation, including wage inflation is probably the only way out.

The trouble is, the fat idiot in number 10 Downsizing Street has committed to the triple lock. 

The who point of inflation is to destroy the liabilities from the state pension and also wholly public sector pension schemes.

Bin men on £100k and boomer pensioners without  private provision on £7200 PA. A loaf of bread also needs to be £8.

 

Edited by Mikhail Liebenstein
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  • 415 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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