Jump to content
House Price Crash Forum
Sign in to follow this  
bubbleturbo

Uk Economy At Downturn

Recommended Posts

http://www.platinax.co.uk/news/08-05-2006/...my-at-downturn/

SPECIAL REPORT

The UK economy faces a turning point, after a decade of growth trends across various indicators.

Key areas of weakness include a housing market that is over-valued, rising unemployment, and high energy prices.

Property

It’s already been a frequent point of warning in global economic reports that the housing market is over-valued in many countries, and the UK has especially been indicated as dangerously over-valued, by groups such as the IMF.

Although the housing market has seen periodic spurts of growth over the past year, the general consensus is that the second-half will see property inflation go flat or even begin a process of deflation.

The property market has been an instrumental engine behind the consumer boom of the past few years, as homeowners took second mortgages out against their increased property value, encouraged by low rates from the Bank of England.

But now the UK housing market is both saturated and at a point of near exhaustion - and now very susceptible to any kind of adverse conditions.

Unemployment

Unemployment is traditionally seen as linked to consumer spending - with more people out of work, people have less money to spend on non-essential goods and items.

While the UK economy does currently show a strong labour market, it also shows that it’s cracking.

Hundreds of jobs are being axed by smaller companies, especially due to relocation or simming down on production, and large corporations such as NTL, Orange, and ICI have also announced that thousands of staff will go.

This is on top of a continuing NHS employment crisis that is seeing debt-ridden hospitals chase job cuts as a way to reduce running costs, with almost 10,000 job losses already announced, with more to come.

It looks likely that as economic factors become less favourable, we are going to see companies shedding jobs on an even larger scale, in an attempt to retain profitability in global markets.

Energy Prices

The rise in oil prices has been compounded by gas supply problems to the UK, resulting in energy bills facing a 40% increase over last year.

There are continued concerns that demand for oil now outstrips available supply, and that existing reserves cannot serve still growing markets in the West, China, and India.

Additional political tensions between Iran and the USA mean that unless a resolution is found, America could launch air-strikes on one of the most important oil producers in the work - an action that can only panic oil futures markets.

And, of course, high energy costs will serve as an engine to increase inflation - the absolute key danger factor that the Bank of England is focused on controlling.

Overall

Short-term surprises have kept the traditionally cautious and slow-reacting Bank of England even more guarded about further moves.

Current economic indicators continue to be mixed, and without a clear trend to follow, the BoE is maintaining a wait-and-see policy.

In the meantime, economic factors such as property, employment, and energy, are likely to be a key set of criteria to watch, as they directly influence consumer spending over the coming year.

These are all the more important because of the alarming amount of consumer debt that has powered recent prosperity - a debt that is already being paid in a sudden surge of bankruptcies.

However, the likelihood is that the boom days are over, and that an inevitable bust end of the economic cycle will demand its time.

While the cautious have been warning of an adverse economic future since 2003, it looks as if the economic realities are finally indicating the economic correction for the last decade’s prosperity is now on our doorstep.

The UK economy is finally showing up the fact we are now almost certainly at a crossing point - a downturn in economic conditions, prosperity, and growth.

Share this post


Link to post
Share on other sites

:lol::lol:

So it's lower rates then!!

Yippeeeeee....

Just the opposite MAY be the path we travel.

The BOE may be forced to protect the pound. Who said the economy is not cruell.

It may be time to raise the rates.

Share this post


Link to post
Share on other sites

Just the opposite MAY be the path we travel.

The BOE may be forced to protect the pound. Who said the economy is not cruell.

It may be time to raise the rates.

Lucky we have a floating exchange rate. Expectations seem to do better at protecting the pound than interest rates these days.

Share this post


Link to post
Share on other sites

Indeed: the only thing supporting the pound is the expectation of rate rises. If actual rate rises don't appear soon, then the pound will be in deep shit: who would want a currency issued by morons?

Share this post


Link to post
Share on other sites

Lucky we have a floating exchange rate. Expectations seem to do better at protecting the pound than interest rates these days.

Those expectations are, IMO, wrong.

But you are right, the expectation of a sound economy and rising asset prices (read houses) / belief in seriously flawed inflationary measures are propping the pound.

Once ANY of these illusions are revealed then it's time to raise the rates.

Well done TTRTT - You have answered your own question. You need to get out of your leveraged property position whilst you still can.

Share this post


Link to post
Share on other sites

just had a great text message.....

"the labour party have today changed their emblem from a rose to a condom as it more accurately reflects the labour governments political stance. A condom allows for inflation, halts production, protects a bunch of pricks, and gives you a sense of security while you are actually being fuc*ed"

:lol::lol::lol::lol::lol:

Share this post


Link to post
Share on other sites

just had a great text message.....

"the labour party have today changed their emblem from a rose to a condom as it more accurately reflects the labour governments political stance. A condom allows for inflation, halts production, protects a bunch of pricks, and gives you a sense of security while you are actually being fuc*ed"

:lol::lol::lol::lol::lol:

:lol::lol::lol:

Nice one.

Share this post


Link to post
Share on other sites

:lol::lol:

So it's lower rates then!!

Yippeeeeee....

Not sure I follow your logic. I should imagine IRs will be forced up and won't come down for a long time.

Share this post


Link to post
Share on other sites

Not sure I follow your logic. I should imagine IRs will be forced up and won't come down for a long time.

I think TTRTT is expecting the BOE to lower rates to protect the "economy". As the Fed/BOE tried in 2001/2, IMO, to protect asset prices / economy.

Fine in theory, but we have already tried that. We would "import" a ruck of inflation and the BOE (at face level) only has ONE target - 2% "inflation". It HAS to raise rates to meet this target, the market has already decided as much looking at bond yields.

TTRTT time to wave goodbye to your remaining equity.

It's time for you to pay my "boring" bond yields with your "profits".

Edited by vinny

Share this post


Link to post
Share on other sites

I think TTRTT is expecting the BOE to lower rates to protect the "economy". As the Fed/BOE tried in 2001/2, IMO, to protect asset prices / economy.

Fine in theory, but we have already tried that. We would "import" a ruck of inflation and the BOE (at face level) only has ONE target - 2% "inflation". It HAS to raise rates to meet this target, the market has already decided as much looking at bond yields.

TTRTT time to wave goodbye to your remaining equity.

It's time for you to pay my "boring" bond yields with your "profits".

So you're prdicting higher rates & you're in bonds.

Wise. :blink:

Share this post


Link to post
Share on other sites

So you're prdicting higher rates & you're in bonds.

Wise. :blink:

They are fixed price. B)

(Cash equivalent UK government bonds - buying gold with the proceeds).

Edited by vinny

Share this post


Link to post
Share on other sites

Indeed: the only thing supporting the pound is the expectation of rate rises. If actual rate rises don't appear soon, then the pound will be in deep shit: who would want a currency issued by morons?

and then this problem would get worse;

Import price inflation rose to its highest rate for five years,

reflecting both the impact of higher energy prices and

increased global capacity pressures. If oil prices stabilise, then

import price inflation can be expected to fall back.

...which would feed into our inflation figures.

Share this post


Link to post
Share on other sites

just had a great text message.....

"the labour party have today changed their emblem from a rose to a condom as it more accurately reflects the labour governments political stance. A condom allows for inflation, halts production, protects a bunch of pricks, and gives you a sense of security while you are actually being fuc*ed"

:lol::lol::lol::lol::lol:

And it gives protection to a bunch of p***ks. In the late 1980's, the joke was that labour changed from the red rose to a red letter. The punchline was the one I've just given.

Everything, it seems, is cyclical.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 302 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.