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Realistbear

The Times: Recovery In Doubt As New Year Sales Slump

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http://business.timesonline.co.uk/article/...2043345,00.html

A shock fall in the retail sales last month
has cast doubt on the analysis of the Bank of England, which yesterday predicted renewed consumer confidence would support economic growth this year.
The Office of National Statistics reported that seasonally adjusted retail sales fell by 1.3 per cent in January compared with the previous month, the first decline since July last year, and the biggest fall since December 2004 when sales slumpe by 1.8 per cent.
"This is a really stunning retreat in retail sales," Howard Archer, chief UK economist at Global Insight, said. "It reinforces our belief that the Bank of England is too optimistic about consumer spending."

What a shock indeed--The Times going bearish. Perhaps their need to retain a semblance of journalistic credibility is causing them to report reality.

2006 is shaping up nicely for a continuation in the downward trajectory of inflated house prices.

HPC 2006.

Guardian just in:

http://business.guardian.co.uk/story/0,,1711131,00.html

Mervyn King, the Bank's governor, yesterday indicated that its monetary policy committee (MPC) was in no rush to cut interest rates, citing a pickup in consumer spending, a firming of house prices and strong share prices.

Couldn's have got it much more wrong?

Edited by Realistbear

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Time to lower interest rates then?

Lower the rates and sterling will crash. Sterling is already off 1/2 cent this morning on the retail data. It held up yesrday because of Mervyn's Hawkish tone on IR. If Sterling tanks it will fuel inflation and that, according to Gordon's new advisor, is to be avoided at all costs. Catch-22 time.

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Lower the rates and sterling will crash. Sterling is already off 1/2 cent this morning on the retail data. It held up yesrday because of Mervyn's Hawkish tone on IR. If Sterling tanks it will fuel inflation and that, according to Gordon's new advisor, is to be avoided at all costs. Catch-22 time.

I agree also with the US in a rates rise cycle this will put more pressure on the pound lowering its value, adding inflation.

I really think we are being sold down the river here my worry is that the BoE, goverment are milking every last drop out of it they can they are not facing up to the responsibility entrusted on them....making the inevitable worse for all concerned.

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Lower the rates and sterling will crash. Sterling is already off 1/2 cent this morning on the retail data. It held up yesrday because of Mervyn's Hawkish tone on IR. If Sterling tanks it will fuel inflation and that, according to Gordon's new advisor, is to be avoided at all costs. Catch-22 time.

I’m not sure about this – in September BOE lowered IR’s and the pound did not crash - I just had a look through the different currencies and you could not see anything that actually showed the IR change point (well nothing out of the ordinary).

The BOE want to lower the £ anyway – so I don’t think a couple of reductions will actually crash the pound more than a high street crash would

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I’m not sure about this – in September BOE lowered IR’s and the pound did not crash - I just had a look through the different currencies and you could not see anything that actually showed the IR change point (well nothing out of the ordinary).

The BOE want to lower the £ anyway – so I don’t think a couple of reductions will actually crash the pound more than a high street crash would

The FX seems to have reacted quite strongly on the retail sales figures:

http://www.dailyfx.com/story/dailyfx_finan...keyword=article

An IR drop will be seen as a fundamental weakness and loss of confidence in the economy's ability to grow. Many must be wondering if HPI, the most significant underpinner of the UK economy, can really hang on much longer. The US is already in free-fall on the West Coast and some parts of New England and there is more reason for the UK property market to collapse given the much weaker GDP forecasts.

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Lower the rates and sterling will crash. Sterling is already off 1/2 cent this morning on the retail data. It held up yesrday because of Mervyn's Hawkish tone on IR. If Sterling tanks it will fuel inflation and that, according to Gordon's new advisor, is to be avoided at all costs. Catch-22 time.

Inflation is under control though. I cant see a cut in interest rates having that much of an effect on inflation at the moment. Is a bit of inflation not a good thing? After all the target is 2% not 0%.

The only danger I see is that it fuels the asset / debt bubble which ressults in a more painfull correction later on. Should the bank really be involved in controling this though?

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Inflation is under control though.

ROTFLMAO. The US government is continually raising rates because of inflation and will probably pass us next month, the ECB is raising rates, the Canadians are raising rates, even the Swedes are raising rates, yet the UK is somehow magically immune?

Is a bit of inflation not a good thing?

Only to governments who hate savers. Even 2% inflation doubles prices over about 30 years, and real inflation in the UK is more like 6-8%.

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I think we might be on the verge of a recession.

Every housing boom has been followed by a recession, ususally after prices have been dropping for about a year to two years..

it feels that way to me to, and if history repeats itself it seems that people won't spend as much if they have too much debt

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I think we might be on the verge of a recession.

I think we're in the early stages of one NOW.

Also the fallout from this decade of excess is going to dwarf the hardship of the early 90s.

Edited by shermanator

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Guest Charlie The Tramp

ROTFLMAO. The US government is continually raising rates because of inflation and will probably pass us next month, the ECB is raising rates, the Canadians are raising rates, even the Swedes are raising rates, yet the UK is somehow magically immune?

Watching the webcast on the BoE inflation report a journalist ask Mervyn about long term rates as global rates were rising. Mervyn replied in words to the effect that these CBs appear to be heading to their neutral rates. No wonder they are concerned and hopefully we are immune when our neutral rate is around 6%. :unsure:

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I think we're in the early stages of one NOW.

Also the fallout from this decade of excess is going to dwarf the hardship of the early 90s.

Only the stats will tell. When do the GDP quarterly growth figures come out, and where from?? :unsure:

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Only the stats will tell. When do the GDP quarterly growth figures come out, and where from?? :unsure:

Don't know. But what I can tell you is three things have propped up the British economy over the past decade - government spending (all those non-jobs), 'cheap' money and consumer spending. The last two have gone, so it's only the former which is propping up the house of cards.

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I’m not sure about this – in September BOE lowered IR’s and the pound did not crash - I just had a look through the different currencies and you could not see anything that actually showed the IR change point (well nothing out of the ordinary).

The BOE want to lower the £ anyway – so I don’t think a couple of reductions will actually crash the pound more than a high street crash would

Sky's lunch time news were spinning on the latest high street figures, suggesting that it's now more likely for the BoE to cut rates to keep consumer confidence high.

If Brown's men in the BoE do force a cut.. I wouldn't be suprised if Merv walks away.. I know I will (leave sterling)

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Similar to this news, Sweden raised their rate last month, then released news on tuesday that spelled out they intend to raise them again next week.

The news out this morning however, makes that seem a strange position to take (as Mervs position may seem strange too), inflation in Sweden was announced today and has fallen from 0.9% to 0.6%, way off their target of 2%.

How on earth can they be hawkish at times like these?

As I asked a couple of days ago, are the BOE and maybe other central banks letting you, the potential borrowers, down by not making house payments cheap enough for you & not allowing your wages to rise fast enough?

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Similar to this news, Sweden raised their rate last month, then released news on tuesday that spelled out they intend to raise them again next week.

The news out this morning however, makes that seem a strange position to take (as Mervs position may seem strange too), inflation in Sweden was announced today and has fallen from 0.9% to 0.6%, way off their target of 2%.

How on earth can they be hawkish at times like these?

As I asked a couple of days ago, are the BOE and maybe other central banks letting you, the potential borrowers, down by not making house payments cheap enough for you & not allowing your wages to rise fast enough?

I suspect Al Greenspan is advising Gordon and Mervyn to purge the froth out of the property market. The correction is underway in the US and they are still raising the rates (see Bay Area's posts today on the state of the US market.). A crash in property values is inevitable and they may want to think they can deflate the market in an orderly fashion through interest rate hikes--Just as Al achieved in the US (at the expense of the froth markets on the coasts).

One thing is certain, that HPI has created an unacceptable level of personal debt which is the opposite that Gordon hoped to achieve (his goal was more wealth through HPI). HPI is now draining the economy of liquidity as homeowners have nothing left to spend in the economy.

Gordon must ***** the bubble with a couple more IR hikes and hope that the ensuing crash can be contained to around 20% off the 2005 median selling price. If he lowers rates the fall in the pound, loss of confidence and ensuing inflation will be far more damaging than a short sharp correction in house prices.

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Similar to this news, Sweden raised their rate last month, then released news on tuesday that spelled out they intend to raise them again next week.

The news out this morning however, makes that seem a strange position to take (as Mervs position may seem strange too), inflation in Sweden was announced today and has fallen from 0.9% to 0.6%, way off their target of 2%.

How on earth can they be hawkish at times like these?

As I asked a couple of days ago, are the BOE and maybe other central banks letting you, the potential borrowers, down by not making house payments cheap enough for you & not allowing your wages to rise fast enough?

No.

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Don't know. But what I can tell you is three things have propped up the British economy over the past decade - government spending (all those non-jobs), 'cheap' money and consumer spending. The last two have gone, so it's only the former which is propping up the house of cards.

This is very interesting. http://www.bankofengland.co.uk/education/t..._and_output.xls

Check out domestic demand, investment by sector, goverment tops it.

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I cannot get to grips with the rate of conflicting information in circulation at present.

House prices are rising at their fastest rate for months but strangely falling at the same time.

Everyone agrees that an interest rate cut is inevitable but external economic pressures infer imminent rises.

Consumer spending rampages on but actually reaches lower levels than have been seen for years.

Etc. Etc.

What do all these reports tell us? Without a clear indication of a consensus direction of financial indicators, I would suggest that this period (Q1 2006) is a watershed.

This is a turning point. We've 'lived the dream' for 10 years. What happens now, do we live the dream for another 10 years or do the wheels come off in the most spectacular fashion?

How the hell can the BOE predict CPI to remain at 2% for the next two years (link). What level of arrogance do you need to make that sort of forecast?

Xil.

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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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