Test: are there some bubbles in some assets?

[Si1]

Test questions:

1. Is there lots of money sloshing around?

2. Will it end?

 

Any more?

[Giraffe]

3. If all stimulus was removed and interest rates normalised, what would the economy look like?

[Greater Fool]

Easy to imagine 20% unemployment, 50% youth unemployment, masses of newly homeless, huge queues for food banks.

[Greater Fool]

28 minutes ago, Si1 said:

Test questions:

1. Is there lots of money sloshing around?

2. Will it end?

 

Lots of money created form debt sloshing around, how much inflation is needed to wipe it out? What will £10 buy in 10 years time, 4 cans of beans maybe? If HPI carries on its course how will people be able to afford 500k for a 2 up 2 down?

[Si1]

https://www.bloomberg.com/opinion/articles/2021-05-06/fed-stability-report-comes-as-close-as-it-can-to-saying-bubble

 

[TheCountOfNowhere]

22 hours ago, Giraffe said:

3. If all stimulus was removed and interest rates normalised, what would the economy look like?

Read to recover and fair ?

[TheCountOfNowhere]

22 hours ago, Si1 said:

Test questions:

1. Is there lots of money sloshing around?

2. Will it end?

 

Any more?

1. If there is a lot of money sloshing about why are all the professionals I know complaining about being skint ?

2. It will end, just not in the way many people here hope.

[TheCountOfNowhere]

22 hours ago, Tiger131 said:

Easy to imagine 20% unemployment, 50% youth unemployment, masses of newly homeless, huge queues for food banks.

I find that hard to imagine.

 

That's why I rely on this photo

[Si1]

1 minute ago, TheCountOfNowhere said:

1. If there is a lot of money sloshing about why are all the professionals I know complaining about being skint ?

Oh fair enough. Tell me more??

1 minute ago, TheCountOfNowhere said:

2. It will end, just not in the way many people here hope.

 

[TheCountOfNowhere]

22 hours ago, Tiger131 said:

Lots of money created 

The other side of the coin that no one is bandying about is that there has been a lot of money destroyed and more is coming.

 

[Si1]

Just now, TheCountOfNowhere said:

The other side of the coin that no one is bandying about is that there has been a lot of money destroyed and more is coming.

 

Oh yeah. Centrally important. Like ripples in a wave.

[TheCountOfNowhere]

5 minutes ago, Si1 said:

Oh fair enough. Tell me more??

 

1. Millionaire property owner ( the property being the millionaire not the person ) can't afford to do their kitchen up

2. Bloke who works for the police, looks like a tramp, holidays in a caravan, smokes roll ups cause he's skint

3. Pilot, 20% pay cut, keeps shouting at his missus everytime she talks about buying something

4. Finance bloke, all he says is..."Have you see how expensive this is".

5. ex-Finance bloke, lost his job, will never work again, looks like an alky now

6. Bloke in advertising, seems to be doing well but was about to lose his job till the corovavirus propaganda channels saved his bacon.

7. Me, can't afford a house.

8. Job agent, was worried about their job a month ago, now leasing a new car.

Only people I know who are doing well are the trolls on this site.

The list goes on.  The underlying theme is, normal, working people all seem to be skint.

 

Edited May 7, 2021 by TheCountOfNowhere

[crescent]

22 hours ago, Tiger131 said:

Easy to imagine 20% unemployment, 50% youth unemployment, masses of newly homeless, huge queues for food banks.

Yes that is happening all over the EU 

21 minutes ago, TheCountOfNowhere said:

Only people I know who are doing well are the trolls on this site

Nonsense - try to get a builder in - good luck they are inundated - try to buy a new car - crazy busy

22 minutes ago, TheCountOfNowhere said:

The underlying theme is, normal, working people all seem to be skint.

My local pub is busy every night with working people outside. 

[fuzzy_bear]

Too much anecdote on here - the real figures speak for themselves - £180bn in savings amassed by Brits during the pandemic. Of course there will be winners & losers with those in the hospitality industry worst hit but many are much better off than before the pandemic

Household savings on average increased significantly & assets of virtually all classes have rocketed in value from last March.

So even if you are of the house price crash mentality, provided your money is invested in virtually anything but cash, the average person is in a better position than last year. 

https://www.ft.com/content/5e7b5c88-937c-445f-859c-2f9653332afe 

https://www.bbc.co.uk/news/business-56210579 

 

[fuzzy_bear]

6 hours ago, TheCountOfNowhere said:

1. Millionaire property owner ( the property being the millionaire not the person ) can't afford to do their kitchen up

2. Bloke who works for the police, looks like a tramp, holidays in a caravan, smokes roll ups cause he's skint

3. Pilot, 20% pay cut, keeps shouting at his missus everytime she talks about buying something

4. Finance bloke, all he says is..."Have you see how expensive this is".

5. ex-Finance bloke, lost his job, will never work again, looks like an alky now

6. Bloke in advertising, seems to be doing well but was about to lose his job till the corovavirus propaganda channels saved his bacon.

7. Me, can't afford a house.

8. Job agent, was worried about their job a month ago, now leasing a new car.

Only people I know who are doing well are the trolls on this site.

The list goes on.  The underlying theme is, normal, working people all seem to be skint.

 

Do you consider there might be an element of observation & recall bias in these anecdotes? 

[Greater Fool]

16 hours ago, fuzzy_bear said:

Too much anecdote on here - the real figures speak for themselves - £180bn in savings amassed by Brits during the pandemic. Of course there will be winners & losers with those in the hospitality industry worst hit but many are much better off than before the pandemic

Household savings on average increased significantly & assets of virtually all classes have rocketed in value from last March.

So even if you are of the house price crash mentality, provided your money is invested in virtually anything but cash, the average person is in a better position than last year. 

https://www.ft.com/content/5e7b5c88-937c-445f-859c-2f9653332afe 

https://www.bbc.co.uk/news/business-56210579 

 

But it's all been put onto the national credit card. In any traditional economic theory a global pandemic should have destroyed wealth not created it, and the majority in the UK now seem to be better off than before? Yes there have been losers, but this is fantasy economics. Now why can't we all retire at 60 like in France, work 4 days a week, double the state pension, have a universal income etc. etc. Government just pays for it by adding to the balance sheet, we all live happily ever after the most prosperous nation on Earth.

Now the public have had a taste of it the next election will be fought on how much largesse the government can provide.

Edited May 8, 2021 by Tiger131

[Si1]

14 minutes ago, Tiger131 said:

But it's all been put onto the national credit card. In any traditional economic theory a global pandemic should have destroyed wealth not created it, and the majority in the UK now seem to be better off than before? Yes there have been losers, but this is fantasy economics. Now why can't we all retire at 60 like in France, work 4 days a week, double the state pension, have a universal income etc. etc. Government just pays for it by adding to the balance sheet, we all live happily ever after the most prosperous nation on Earth.

Now the public have had a taste of it the next election will be fought on how much largesse the government can provide.

The reason this won't happen is because there is no practical political opposition right now so the govt don't need to make daft promises.

[fuzzy_bear]

6 hours ago, Tiger131 said:

But it's all been put onto the national credit card. In any traditional economic theory a global pandemic should have destroyed wealth not created it, and the majority in the UK now seem to be better off than before? Yes there have been losers, but this is fantasy economics. Now why can't we all retire at 60 like in France, work 4 days a week, double the state pension, have a universal income etc. etc. Government just pays for it by adding to the balance sheet, we all live happily ever after the most prosperous nation on Earth.

Now the public have had a taste of it the next election will be fought on how much largesse the government can provide.

The credit card analogy needs to be put to bed

That isn't how the government borrows

[Greater Fool]

14 hours ago, fuzzy_bear said:

The credit card analogy needs to be put to bed

That isn't how the government borrows

This is probably too simplistic yes, but the way I see it the national "debt" either has to be "paid back" or doesn't. If it doesn't because it's not a "credit card" and the government isn't like a 1950's housewife balancing the family budget and there is no theoretical limit to the debt to GDP then why do we need "austerity", the raising of the retirement age, lowest state pension etc. etc. Why is Hartlepool poor and voted the conservative because they blame Labour for doing nothing? Just print and spend and there could be money and jobs for all.

[Si1]

Just now, Tiger131 said:

. If it doesn't because it's not a "credit card" and the government isn't like a 1950's housewife balancing the family budget

 

Above and below here aren't really connected

Just now, Tiger131 said:

 

and there is no theoretical limit to the debt to GDP then why do we need "austerity", the raising of the retirement age, lowest state pension etc. etc. Why is Hartlepool poor and voted the conservative because they blame Labour for doing nothing? Just print and spend and there could be money and jobs for all.

It's not like a domestic balance sheet because although it's better if the debts lower, there isn't a timescale over which it needs to be paid back. Whereas with a household they can't realistically sustain long term debts because they might not be economically productive forever. Whereas an economy can be, we think.

[andrewwk]

On 06/05/2021 at 15:17, Giraffe said:

3. If all stimulus was removed and interest rates normalised, what would the economy look like?

http://gph.is/1jswRUV

[andrewwk]

On 07/05/2021 at 19:58, fuzzy_bear said:

Too much anecdote on here - the real figures speak for themselves - £180bn in savings amassed by Brits during the pandemic. Of course there will be winners & losers with those in the hospitality industry worst hit but many are much better off than before the pandemic

Household savings on average increased significantly & assets of virtually all classes have rocketed in value from last March.

So even if you are of the house price crash mentality, provided your money is invested in virtually anything but cash, the average person is in a better position than last year. 

https://www.ft.com/content/5e7b5c88-937c-445f-859c-2f9653332afe 

https://www.bbc.co.uk/news/business-56210579 

 

really? ftse100/250 only just recovered to pre-pandemic levels. really it is just a few tech stocks that have boomed. and as far housing assets go, I think it is far too early to draw a conclusion. the current situation is very far removed from any sort of sanity.

[satsuma]

So there is a lot of money sloshing about, both because people have been handed wedges of cash by Richi Rich and BJ and because they have been at home for over a year saving.  However, it’s all relative, I went out for a day shopping a while back, Sainsbury’s shop for family, trip to get new household items (utensils, bit of shelving, bedding) then trip to get a few items for sports.  Came to almost a grand and all items were basic, nothing flash or big brands.  Hard to believe.  The wife thinks it’s funny that we can afford it but I think it’s not good.  In about 12 months the penny will drop that many many people will have to cut their cloth and not have enough to cover their gonads.  

[zugzwang]

1 hour ago, Tiger131 said:

This is probably too simplistic yes, but the way I see it the national "debt" either has to be "paid back" or doesn't. If it doesn't because it's not a "credit card" and the government isn't like a 1950's housewife balancing the family budget and there is no theoretical limit to the debt to GDP then why do we need "austerity", the raising of the retirement age, lowest state pension etc. etc. Why is Hartlepool poor and voted the conservative because they blame Labour for doing nothing? Just print and spend and there could be money and jobs for all.

 

Taking things to the end of logic, why not print enough to buy everything in the world?

Obviously, there are practical limits to the rate at which you can increase the national debt relative to GDP if you want to retain the confidence of the markets. And the absolute number surely counts too, though that's going to be different from country to country. The Japanese national debt has risen as high as 240% without it materially impacting the yen or the price of yen denominated bonds but Japan has one of the world's biggest industrial export economies and a trillion dollars of US treasuries to defend itself against speculative attacks.

Govt debt never has to be repaid btw. it's inflated away by economic growth. Naturally, that depends on it being used productively. The alternative is a sovereign debt default a la Argentina.

[TheCountOfNowhere]

On 07/05/2021 at 20:10, fuzzy_bear said:

Do you consider there might be an element of observation & recall bias in these anecdotes? 

No.