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Maybe Things Are Worse Than We Thought

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Reading this article in the Busines News Source about the CPI - it quotes an article in the Telegraph and other sources that say the CPI is 10% not 2.4% - this certainly makes me feel a lot better - though it's bad news, I was beginning to think I was the only one feeling poorer day by day. So if inflation and prices are creeping up at very much higher rates for the middleclass (ie the majority of House owners) how does that affect much of the stuff we see written on these boards?

The article is at:

Critics attack CPI

http://www.invbiznews.com/wordpress/?p=425

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Reading this article in the Busines News Source about the CPI - it quotes an article in the Telegraph and other sources that say the CPI is 10% not 2.4% - this certainly makes me feel a lot better - though it's bad news, I was beginning to think I was the only one feeling poorer day by day. So if inflation and prices are creeping up at very much higher rates for the middleclass (ie the majority of House owners) how does that affect much of the stuff we see written on these boards?

The article is at:

Critics attack CPI

http://www.invbiznews.com/wordpress/?p=425

If there are 'real' figures and 'published' figures that are different, then the higher 'real' figures will play to the arguments of the bears on these boards and against many of the bulls (many of whom think the economy is in fine shape).

If these costs are rising quickly, then people are going to see their disposable incomes crushed and this could push the economy into recession. At the same time there will be huge pressures on wage inflation and 'public' employees are likely to start striking as their frozen pay rise packages will start to hurt the public sector and they will be the first to take action through the unions battling for pay deal with the government.

Light and nice big cigar and sit back in a big comfy chair, the shows just getting started :ph34r:

AFP

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INFLATION =

growth in money supply (14%) -

growth in goods & services (2.5%) -

growth in population (0.5%)

= 11%

Sounds about right to me

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If there are 'real' figures and 'published' figures that are different, then the higher 'real' figures will play to the arguments of the bears on these boards and against many of the bulls (many of whom think the economy is in fine shape).

If these costs are rising quickly, then people are going to see their disposable incomes crushed and this could push the economy into recession. At the same time there will be huge pressures on wage inflation and 'public' employees are likely to start striking as their frozen pay rise packages will start to hurt the public sector and they will be the first to take action through the unions battling for pay deal with the government.

Light and nice big cigar and sit back in a big comfy chair, the shows just getting started :ph34r:

AFP

Could not agree more!!! batten down the hatches !! a big sale is about to begin.

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If inflation is really 10% then the traditional "safe havens" are property and gold.

What better strategy than to buy a reasonably priced property on a long term fixed rate?

Sooner or later wages will have to rise. Just like in the 70s.

Big gamble as to whether you stay employed is about the only downside. But then very few sheeple have the mindset, yet, that they will lose their jobs.

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What better strategy than to buy a reasonably priced property on a long term fixed rate?

All you have to do is find a reasonably priced property ;) When you've managed, let me know how you did it :lol:

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Sooner or later wages will have to rise. Just like in the 70s.

Not in a globalised economy they won't have to, the jobs willl just get replaced, just like people are being given their marching orders and being replaced by min wage (or lower) replacements.

Of course at the top its a different matter, but then that sector is humming on levels of cheap debt that have never before been seen in history, that party will have to come to an end too.

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Sooner or later wages will have to rise. Just like in the 70s.

Not in a globalised economy they won't have to, the jobs willl just get replaced, just like people are being given their marching orders and being replaced by min wage (or lower) replacements.

Of course at the top its a different matter, but then that sector is humming on levels of cheap debt that have never before been seen in history, that party will have to come to an end too.

We clearly differ in our optimism for the future.

But I agree it's a 2 tier society now. Whether the top end has to come to an end is a point worthy of debate.

All you have to do is find a reasonably priced property ;) When you've managed, let me know how you did it :lol:

Funnily enough most London property was relatively reasonably priced early to mid last year.

Not so much now of course.

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If inflation is really 10% then the traditional "safe havens" are property and gold.

What better strategy than to buy a reasonably priced property on a long term fixed rate?

Sooner or later wages will have to rise. Just like in the 70s.

Big gamble as to whether you stay employed is about the only downside. But then very few sheeple have the mindset, yet, that they will lose their jobs.

Our exports are only 29% OF OUR GDP AS IT IS AND IF WAGES RISE BY THAT AMOUNT OUR COMPETIVNESS WILL GO.

Only 15 % of our economy is manufacturing so a string of phone shops , Mcdonalds, coffee shops and estate agents in our high street will not hold up our economy. I am sorry but I see the mother of all slumps around the corner.

Edited by faloos

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We clearly differ in our optimism for the future.

But I agree it's a 2 tier society now. Whether the top end has to come to an end is a point worthy of debate.

What do you think will happen to a capitalist economy - i.e. one where overall consumer spending and "growth" is based on ever larger numbers of people participating in the consumption boom if this trend continues? I think it is doomed - the top tiers simply will not spend enough in their native economy to keep the overall spend up whilst greater numbers at the bottom (already lumbered by huge debt) default, clam up and reduce their spendng to essentials only.

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All you have to do is find a reasonably priced property ;) When you've managed, let me know how you did it :lol:

BB that is brilliant! How could anyone dispute it?

This whole bub-bull is nothing but Gordon's "Special introductory offer for the first 9 years". Now the sh*t kicks in.

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What do you think will happen to a capitalist economy - i.e. one where overall consumer spending and "growth" is based on ever larger numbers of people participating in the consumption boom if this trend continues? I think it is doomed - the top tiers simply will not spend enough in their native economy to keep the overall spend up whilst greater numbers at the bottom (already lumbered by huge debt) default, clam up and reduce their spendng to essentials only.

I believe that, yes, we in the UK will dip a bit. Hence why there will be a 2 tier economy. Overall the global economy will create greater demands for all branded goods than ever before.

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We clearly differ in our optimism for the future.

But I agree it's a 2 tier society now. Whether the top end has to come to an end is a point worthy of debate.

Funnily enough most London property was relatively reasonably priced early to mid last year.

Not so much now of course.

No, Steve London property hasnt been reasonably-priced since 1996

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What do you think will happen to a capitalist economy - i.e. one where overall consumer spending and "growth" is based on ever larger numbers of people participating in the consumption boom if this trend continues? I think it is doomed - the top tiers simply will not spend enough in their native economy to keep the overall spend up whilst greater numbers at the bottom (already lumbered by huge debt) default, clam up and reduce their spendng to essentials only.

But wait! It could be even worse... the majority of the tax take comes from the low and middle income earners. The captains of industry are actually paying less tax due to a variety of reasons (good accountants mainly, but ruses like offshore companies, trusts and super complex corporate structures help).

When they replace the middle and low earners who are paying tax now with offshore jobs in a far flung country that is supplying services through some non-UK registered company, they will have less coming in... and need to pay more out for the ever increasing number of unemployed. Gordon has spent his piggy bank on the war in Iraq so it's gonna take more than a couple of Chelsea players buying bling-bling Bentleys and Mayfair flats to keep the economy afloat!

a string of phone shops , Mcdonalds, coffee shops and estate agents in our high street will not hold up our economy.

I couldn't agree more. I had my doubts about the long term feasability of the UK economy in the mid 90s. Everytime I returned from London to visit my native Newcastle I kept seeing more and more shops with more and more people buying expensive stuff. 'Where are people getting all this money?', I thought, 'there are fewer decent jobs than when I left in the early 90s, the only new jobs seem to be in retail and call centres'. Hmmm, now we know the magic money was coming from credit cards and remortgaging!

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No, Steve London property hasnt been reasonably-priced since 1996

1994 - 1996 was the trough in London, bears always claim markets undershoot so they were arguably under priced. Prices then rose inexorably til approx mid 2002 (plus or minus 1 year) depending on area and then broadly stagnated.

Hence why there was a huge increase in demand after the rate cut. People had had 2 annual wage increases (and a few had more bonuses), global demand for prime properties had continued increasing.

I tried to sell (and failed) in 2004. I sold at above asking price in mid 2005. There was a completely different feel to the market in early 2005.

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I believe that, yes, we in the UK will dip a bit. Hence why there will be a 2 tier economy. Overall the global economy will create greater demands for all branded goods than ever before.

And where are most branded goods made these days... China! How will increasing imports from China made my companies generally outside the UK keep the UK economy afloat?

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And where are most branded goods made these days... China! How will increasing imports from China made my companies generally outside the UK keep the UK economy afloat?

I think you need to understand who owns the "Chinese companies" and where the tax on profits is paid.

Also think forward 5 years. How big will the economies of Germany, East Europe, Russia, China, Brazil, Venezuela etc be? They will all start to buy consumer goods traditionally only available to western consumers.

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Guest Bart of Darkness
Sooner or later wages will have to rise. Just like in the 70s.

Did they have outsourcing to India in the 70s?

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Did they have outsourcing to India in the 70s?

Nope.

But that's my point. India is yet another huge economy growing fast producing yet more demand for luxury consumer goods, infrastructure, power stations, dams etc etc etc.

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I think you need to understand who owns the "Chinese companies" and where the tax on profits is paid.

Also think forward 5 years. How big will the economies of Germany, East Europe, Russia, China, Brazil, Venezuela etc be? They will all start to buy consumer goods traditionally only available to western consumers.

I understand only too well and I think you'll find that many are owned by US originated corporations. Corporations that are now free from any real association with the 'mother' country that spawned them and as for where they pay tax, it is usually in the country with the lowest corporate tax rate and the slackest regulatory environment (which was us in the mid 90s)!

Thinking forward 5 years Germany will probably have an economy the same size as it is now, Russia will have more people in poverty and ill health, with probably 100-200 more teenage millionaires. Brazil and Venezuela are likely to be worse off than now due to a failing US economy that they depend upon and China will be in a dominant global position, making about 50% of all manufactured goods consumed in the west and lending the US and UK the money they need to service their debts and stay afloat. Hardly sounds like a utopia for the UK!!

Branded products are the very things that have allowed companies to move manufacturing out of their traditional areas and into third and second world countries, but still retain first world prices. When you previously bought a watch that was 'Swiss made', or a German car, that gave some expectation of quality due to a history of craftsmanship associated with those countries. Now your £3000 Swiss watch comprising of 200 components is essentially made in China and shipped to Switzerland for final assembly (they leave it in 4 big parts for some 'craftsman' to bolt together. However, the price is still set at the level when they were assembled by trained craftsmen with 30 years of service under their belt. Now, where does the extra money go? Not to the UK economy in most cases, of that much you can be sure. German cars... how many are 'made' in Germany, very, very few. Most have final assembly in Germany (some don't even have this) and can be made in places are far away as Mexico. The quality of German cars has reduced steadily over the last 8-10 years but they still command a premium price. Don't even think about branded clothing or electronics, all made super-cheap and shipped over to the good old UK buyers who pay over the odds. The offshore corporation that does the making, marketing and sells to the wholesalers coin in the difference.

Branded products, they'll save us. Right!

Edited by redalert

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1994 - 1996 was the trough in London, bears always claim markets undershoot so they were arguably under priced. Prices then rose inexorably til approx mid 2002 (plus or minus 1 year) depending on area and then broadly stagnated.

I agree with Ignoramous Steve :o

I'd say around 1999-2000 was the time that house prices were neither under or over valued.

(not offay with London).

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Thinking forward 5 years Germany will probably have an economy the same size as it is now, Russia will have more people in poverty and ill health, with probably 100-200 more teenage millionaires. Brazil and Venezuela are likely to be worse off than now due to a failing US economy that they depend upon and China will be in a dominant global position, making about 50% of all manufactured goods consumed in the west and lending the US and UK the money they need to service their debts and stay afloat. Hardly sounds like a utopia for the UK!!

But the glass is half full, right? :lol:

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I agree with Ignoramous Steve :o

You agree with me most of the time. You just don't realise it!

I understand only too well and I think you'll find that many are owned by US originated corporations. Corporations that are now free from any real association with the 'mother' country that spawned them and as for where they pay tax, it is usually in the country with the lowest corporate tax rate and the slackest regulatory environment (which was us in the mid 90s)!

Thinking forward 5 years Germany will probably have an economy the same size as it is now, Russia will have more people in poverty and ill health, with probably 100-200 more teenage millionaires. Brazil and Venezuela are likely to be worse off than now due to a failing US economy that they depend upon and China will be in a dominant global position, making about 50% of all manufactured goods consumed in the west and lending the US and UK the money they need to service their debts and stay afloat. Hardly sounds like a utopia for the UK!!

Branded products are the very things that have allowed companies to move manufacturing out of their traditional areas and into third and second world countries, but still retain first world prices. When you previously bought a watch that was 'Swiss made', or a German car, that gave some expectation of quality due to a history of craftsmanship associated with those countries. Now your £3000 Swiss watch comprising of 200 components is essentially made in China and shipped to Switzerland for final assembly (they leave it in 4 big parts for some 'craftsman' to bolt together. However, the price is still set at the level when they were assembled by trained craftsmen with 30 years of service under their belt. Now, where does the extra money go? Not to the UK economy in most cases, of that much you can be sure. German cars... how many are 'made' in Germany, very, very few. Most have final assembly in Germany (some don't even have this) and can be made in places are far away as Mexico. The quality of German cars has reduced steadily over the last 8-10 years but they still command a premium price. Don't even think about branded clothing or electronics, all made super-cheap and shipped over to the good old UK buyers who pay over the odds. The offshore corporation that does the making, marketing and sells to the wholesalers coin in the difference.

Branded products, they'll save us. Right!

You've thought it through, you've arrived at your conclusions.

We disagree.

I still believe that global growth will be good for everyone including UK. I'm not saying we'll remain top 5. But we'll see growth nonetheless.

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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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