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Less to smile about in Brown's day job

By Bill Jamieson

THERE are limits to a Chancellor's good luck, even Gordon Brown's. And when that luck looks to be running out, it is a compelling reason by itself to push for a new job.

Brown has had exceptional luck. That is not to detract from the three founding pillars of his nine-year chancellorship: granting independence to an interest rate-setting Bank of England; keeping Britain out of the euro - this against the full headwinds of his pro-euro Prime Minister Tony Blair; and bringing about an extraordinary and sustained growth in public expenditure.

But many of his economic 'achievements' - those long trills of statistics at the start of Budget speeches - owe a great deal to an exceptional combination of favourable external circumstances: the China-driven falling prices of imported semi-manufactured and manufactured goods; low interest rates and expansionary monetary policies, particularly in the wake of 9/11; persistent low inflation; and an extended willingness of foreign central banks, particularly Asian, to keep financing America's twin deficits.

In GDP terms, Britain's economy has been able to hold up well. But now comes gathering evidence of external slowdown. Few now doubt a testing sea change is under way that should keep Brown or his successor fully occupied.

I won't post the entire article, but it's well worth a read as it clearly explains why Gordo's Miracle Economy has been based on more than a little luck, luck which is rapidly running out.

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Boom-bust.

Recession comes knocking on the door.

The "Miracle Econmy" was nothing more than a wild inflationary ride on the wave of cheap credit and irrational exhuberance.

All bad things comne to an end and Gordon's orgy of borrow and spend was a bad thing.

The bottom line of the article sums it up, IMO:

This would suggest there are few cards left for the Chancellor to play and little prospect of being able to spend his way out of a downturn. For the moment the risks of a painful descent are low. But that now critically depends on those benign global mega trends moderating to plan. Bitter experience suggests that when approaching a 'soft landing', never assume it goes to plan.

The chances of a soft landing after almost 10 years of borrow and spend coupled with irrational exhuberance that has pushed house prices beyond the limits of all but a few are zero. The US thought they would have a soft landing but they were mistaken as recent data points out. A global recession is on the cards and as the UK is more dependent on a single asset class (houses) than most we are in more trouble than most.

Edited by Realistbear

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Boom-bust.

Recession comes knocking on the door.

The "Miracle Econmy" was nothing more than a wild inflationary ride on the wave of cheap credit and irrational exhuberance.

All bad things comne to an end and Gordon's orgy of borrow and spend was a bad thing.

The bottom line of the article sums it up, IMO:

This would suggest there are few cards left for the Chancellor to play and little prospect of being able to spend his way out of a downturn. For the moment the risks of a painful descent are low. But that now critically depends on those benign global mega trends moderating to plan. Bitter experience suggests that when approaching a 'soft landing', never assume it goes to plan.

The chances of a soft landing after almost 10 years of borrow and spend coupled with irrational exhuberance that has pushed house prices beyond the limits of all but a few are zero. The US thought they would have a soft landing but they were mistaken as recent data points out. A global recession is on the cards and as the UK is more dependent on a single asset class (houses) than most we are in more trouble than most.

Holy sherbert - the incompetence is beyond belief. This article, from a housing crash perspective, is about as bearish as a Highland Steed. It's practically the GSD blue print.

let me explain - if you are looking for a house price crash, you need IRs to go up, not down. And you need oil prices to go higher, not lower. Complicated stuff, I know.

This article is suggesting we are near the peak of the IR cycle, and is practically a blueprint for GSD!!!

Remains to be seen if things unfold this way, but if this article is correct, a crash in the near term is, quite simply, very unlikley.

The joke is, there are some lunatics on this board who think that during the last two years of reasonably strong economic growth combined with low interest rates, it is only the power of the medja that has prevented a crash!!! Now it appears that they are incapable of understanding the very articles that presumably are keeping the "sheeple" from selling up and taking to the hills.

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Its a pity someone didnt tell the Japanese that cutting interest rates was the solution to their decade and a half property meltdown. Whats that you say? they have negative interest rates?. Well they must have a massive trade deficit then, What? they have surpluses? Well they must have a vast nation with no restrictions on the supply of land?,

etc. etc. :blink:

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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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