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Perhaps An Odd Question

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Many people are talking about the recession we are either seeing happening or which will happen and it reminds me that during the last recession I asked my Dad "When will things get better? How will this recession end?" and he simply didn't know.

The demographics, retirement of the baby boomers, seems to suggest that a recession could be very prolonged this time.

So what usually ends a recession?

How will the retirement of the baby boomers stop this happening, if this factor does influence the boom / bust cycle?

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Many people are talking about the recession we are either seeing happening or which will happen and it reminds me that during the last recession I asked my Dad "When will things get better? How will this recession end?" and he simply didn't know.

The demographics, retirement of the baby boomers, seems to suggest that a recession could be very prolonged this time.

So what usually ends a recession?

How will the retirement of the baby boomers stop this happening, if this factor does influence the boom / bust cycle?

I'm no expert but I should imagine that the baby boomers considerable spending power will begin to have an effect.

More retirement homes businesses? More tailored services - home helps, taxis?

Perhaps even investment advisors to make that pension fund last.

They are now focussing on quality of life products and services - perhaps growth in these sectors would begin to drag an economy out of recession?

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I think its sort of like shares.

When people have confidence is shares that they will grow in future they buy shares this of course triggers the value to raise, people see it start to climb and an upward trend they also buy and it continues.

For an economy I would assume you get a situation where certian sectors bottom out ie. food and the demand has to pick up at some point and these sectors then create jobs eventually leading to a chain affect recovery, this is my own thoery.

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What painfully simple posts.

The standard definition of recession is usually when the economy has entered two consecutive quarters of negative growth.

There is no UK recession at the moment (to original poster). If/when the UK is, it officially emerges when growth returns for 2/3 quarters in a row.

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What painfully simple posts.

The standard definition of recession is usually when the economy has entered two consecutive quarters of negative growth.

There is no UK recession at the moment (to original poster). If/when the UK is, it officially emerges when growth returns for 2/3 quarters in a row.

There are no stupid questions only stupid answers.........

Recessions are caused by public opinion.

When people believe they are rich (think recent property boom), they spend, when they spend we get a lot of money circulating, businesses do well, profits are up, they create more jobs, the stock market goes up, tax returns are high and basically the good times roll.

When public opinion changes negative (people start to worry about stagnant property prices or high levels of debt). People start to pay off debt and save more money, they put off big purchases like houses and cars, less money is circulated, businesses notice falling profits, they also cut investment, they downsize to reduce overheads, the stock market generally starts to trend down, tax returns fall, the tax burden (% of income taken by the tax man) goes up, people fear losing there jobs and notice higher taxes and higher prices and start to spend even less. Basically we have a recession.

It should be obvious to you why people are talking about a possible recession through TTRTR is right if not very tactful that it's 2 quarters of negative growth. But figures are manipulated and governments only announce a recession when they are forced to.

So when does it end? Simple when opinion changes. When unemployment is high yet you still have a job, when new houses/cars look cheap and people start to spend again. Governments often try to kick start it sometimes it works (USA dropping interests rates post 9/11 probably stopped a recession) but others like Japan fail (0.1% interest rates yet 20 years of pain).

But all this is a long long way down the road. Years and years in fact.

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Interesting that more tax is coming from sources that are not directly related to working eg. moved away from income tax to vat, so this can keep tax returns high in times of high unemployment.

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In answer to your question, noone actaully really knows.

Generally there are two theories that I'm aware of,

1) During recessions people save, and during booms they borrow. People however eventually get to a stage where they have enough saved to provide security and then they start spending again - leading to confidence etc. This is essentialay a money theory of economic cycles. Superimpose global capital markets on it and it gets a little more complex, but I think it's quite good as it's driven microeconomically.

2) The economic cycle is drien by capital investment, not consumers. During boom, companies expand very fast and they buy lots of machinery in additon to their replacement of old machinery. During a slump, they buy no new machinery and may not replace obsolete machinery so capital equipment manufacturers get screwed. Basically this knocks on through the economy. Eventually though, we get to the bottom, and demand is stable, machinery is bought to replace and that knocks on through and we go up again.

Hope this helps. Let me know if you want any more info.

Charlie

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Many people are talking about the recession we are either seeing happening or which will happen and it reminds me that during the last recession I asked my Dad "When will things get better? How will this recession end?" and he simply didn't know.

The demographics, retirement of the baby boomers, seems to suggest that a recession could be very prolonged this time.

So what usually ends a recession?

How will the retirement of the baby boomers stop this happening, if this factor does influence the boom / bust cycle?

not necessarily prolonged at all....depends what pre-emptive action a government takes to stifle a boom.

...the US are doing the right thing by pumping up IR's.....it's painful NOW,but when the boomer retire and the earning capacity of US goes down,they will have some ammo in the bank to ease the pain of the recession.

if the spending is not curbed NOW,then when the recession really bites it will be a frikkin lot worse,AND there will be very little the government can do about it.

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boom ends with bust and bust ends with boom.

a recession ends when your nejbour finds a new job

a depression ends when you find a new job.

for an economist a recession ends in a quarter of positve GDP growth.

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A recession ends when economic growth starts again.

Each period of economic growth is fuelled by innovation of some kind. All meaningful economic growth is from innovation Population growth, may create negative economic growth as prices rise for scarce resources. However, more people may mean more innovation if the right skills are imported.

Within the past 20 years, there are now a number of fashionable thoeries about competition and economic growth.

Generally, within a competitive enviroment, firms invest capital to innovate - to secure an edge over the market and thier competitiors. This raises the standard of living of the population as a whole.

It is the access to education of the population which can be generally said to contribute most to economic growth as they are the invested human capital (raw materials) to the innovation process.

Capital investment requires either savings or borrowings - i.e. a claim over finite existing resources.

That is why an economy with a low rate of saving and a high rate of consumption like the UK has to borrow to invest, to achieve a higher growth rate now.

An economy with a high rate of savings and a lower rate of consuming them - like the much smaller economy of Singapore, has a higher growth rate.

To tie this all together, the most innovatative economy will generally have the higher economic growth rate.

When economic growth is negative, but economic growth is recorded higher by nominal inflation - claims over finite resources are transferred to debtors, corporations and government.

This eventually creates a land economy - a sort of economic black hole, with massive wealth held by a few who have benefitted from the negative interest rates, and a crony buerocracy. The vast majority of workers are pinned down and 'owned' by the above.

Eg;

France - the 3 estates after John Laws inflation (before the peoples revolution) - people were owned by aristocratic title.

China - The ming dynasty, peasents and gentlemen elite - people owned by thier landlord.

Roman Empire - People owned by the buerocracy of the state - ID cards and population register.

Japan - Only the Samari in sevice to a lord had proper names every other worker was owned and only named by the job he did. Whole villages with the right to kill everyone in them were given to Samari from other military leaders.

Russia pre 1919 etc... the list goes on and on...

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This eventually creates a land economy - a sort of economic black hole, with massive wealth held by a few who have benefitted from the negative interest rates, and a crony buerocracy. The vast majority of workers are pinned down and 'owned' by the above.

Eg;

France - the 3 estates after John Laws inflation (before the peoples revolution) - people were owned by aristocratic title.

China - The ming dynasty, peasents and gentlemen elite - people owned by thier landlord.

Roman Empire - People owned by the buerocracy of the state - ID cards and population register.

Japan - Only the Samari in sevice to a lord had proper names every other worker was owned and only named by the job he did. Whole villages with the right to kill everyone in them were given to Samari from other military leaders.

Russia pre 1919 etc... the list goes on and on...

Brainclamp, you appear to be labouring under the misapprehension that the landlords in the UK are the people who have recently borrowed millions off the bank to temporarily own a few piles of breezeblocks. I beg you to read the book in my signature - You're correct about the landlords owning the country, but you don't become one of these landlords by borrowing off the bank - You only become one of the real landlords if you marry into the aristocracy. One of their most brilliant tricks is fooling people such as yourself that you can join them through enriching their banker friends. The land economy in the UK you're talking about happened a long time ago.

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Yes, it is a very odd question and displays your ignorance and stupidity. Go back to school and learn some economics you idiot.

Before I respond to this post, would anyone mind if I called Trees a self-indulgent *****? I know he's a troll and all, and in all probability is actually a fifteen year old boy with too much free time and no idea of how to talk to girls, but it'll make me feel good.

Edited by JJJ

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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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