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Realistbear

R E A L Inflation Is Twice Gordon's Fantasy Rate

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http://www.telegraph.co.uk/money/main.jhtm...16/cninfl16.xml

Families stretched by inflation
By Edmund Conway, Economics Editor
Last Updated: 8:14am BST 16/05/2007
# Comment: Headline inflation down but the pain is getting worse
# Brown farts again in Parliament
# Official: inflation figure isn't trusted
# Work out your own inflation rate [Excel file]
Many families are experiencing inflation of more than twice the official rate published by the Government, according to figures produced for The Daily Telegraph by Capital Economics.
There is a massive disparity between the living costs experienced by different types of households, with pensioners and middle-class families facing price rises of more than
7pc
, the figures show.

NuLabour are only doing themselves more harm by continuing to publish fantasy data. Far better, IMO, to come clean and admit they have contributed to the inflation problem by maintaining accommodative IR policy too long. The BoE are going to have a reality check sooner rather than later and unless Merv is allowed to hike AHEAD of the inflation trend it will be a much bigger problem to deal with later on.

Gordon is just going to have to face up to the fact that his HPI-MEW miracle was never going to last. He has got 2 years in No. 10 sown up and he should be grateful for that because he deserves to have his ears pulled for what he has done to the economy and to a huge segment of priced out Britons.

Edited by Realistbear

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The truth is leaking out.

The crooks cannot lie about 2% ish inflation for much longer.

http://www.thisishampshire.net/news/gazett...rastructure.php

Inflation threat to infrastructure

By John Boyman

Comment

PLANS to make improvements to south east England's transport network could be at risk unless the Government becomes more realistic about inflationary costs.

The South East England Regional Transport Board is warning that while building costs are rising by between five per cent and seven per cent a year, Government only allows for 2.25 per cent inflation in the annual budget it gives the board.

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it's really irritating to see how the government is taking the mickey.

real inflation is at 7% or so. at least

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Guest wrongmove

I would be interested in posters views on what "real" inflation is. Everyone spends their money on different things - some even save some, so everyone's personal inflation is different.

Taking extremes - if you spend all your money on mortgage payments, your PI is very high. However, if you save all your money (spend it on investments) you are seeing decent deflation at the moment.

What is "real" inflation in this context? As a frugal saver on a reasonable income, my PI is actually very low.

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Can someone explain in a real basic way for thick people what will happen to inflation in the following senarios:

1. BoE keep interest rates very low

2. BoE keep incresing rates but behind inflation

3. BoE gets tough and raises interest rates a lot

What sort of time scales are we looking at for problems to manifest?

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The truth is leaking out.

The crooks cannot lie about 2% ish inflation for much longer.

http://www.thisishampshire.net/news/gazett...rastructure.php

Inflation threat to infrastructure

By John Boyman

Comment

PLANS to make improvements to south east England's transport network could be at risk unless the Government becomes more realistic about inflationary costs.

The South East England Regional Transport Board is warning that while building costs are rising by between five per cent and seven per cent a year, Government only allows for 2.25 per cent inflation in the annual budget it gives the board.

It's the same in Devon. The cost of raw materials is impacting councils and their Highways departments disproportionately.

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At 2% inflation the 2012 Olympics will be ready around 2025!

Posties not happy.

http://business.guardian.co.uk/story/0,,2098195,00.html

However, Mr Leighton said the company had to press ahead with its modernisation plans. "If we don't modernise, we'll fail and we'll end up in the 'race to the bottom' that the CWU say they are against. So our position remains: we can't afford to pay any more right now and we certainly can't afford to put all our future in danger by putting off the need to change and modernise."

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Can someone explain in a real basic way for thick people what will happen to inflation in the following senarios:

1. BoE keep interest rates very low

2. BoE keep incresing rates but behind inflation

3. BoE gets tough and raises interest rates a lot

What sort of time scales are we looking at for problems to manifest?

No-one can actually know, with any certainty, what inflation will do. My personal opinion is that in all these situations, inflation will spiral out of control.

Realistically it's too late for the BoE to kill off the inflationary pressures in the economy by fiddling around with interest rates. There are too many externalities (e.g. energy costs) and there is simply too much liquidity all over the world. Keep rates low, and the UK borrowing binge will continue. Hike them up, and there'll be a huge influx of foreign money seeking high yields in UK accounts.

The Great Crash, I believe, will take the form of a massive plummet in real house prices as nominal prices stagnate and rent/wage/price inflation catches up over the next few years...

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No-one can actually know, with any certainty, what inflation will do. My personal opinion is that in all these situations, inflation will spiral out of control.

Realistically it's too late for the BoE to kill off the inflationary pressures in the economy by fiddling around with interest rates. There are too many externalities (e.g. energy costs) and there is simply too much liquidity all over the world. Keep rates low, and the UK borrowing binge will continue. Hike them up, and there'll be a huge influx of foreign money seeking high yields in UK accounts.

The Great Crash, I believe, will take the form of a massive plummet in real house prices as nominal prices stagnate and rent/wage/price inflation catches up over the next few years...

UK companies cannot afford to pay their staff even more to keep up with BOE encouraged inflation. They will go to the wall in increasing numbers.

It is too late, the damage has already been done.

Well done Mervyn you useless plank, got your gong sorted yet with Gordon?

Edited by OnlyMe

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Keep rates low, and the UK borrowing binge will continue.

I'm not so sure about that. I think with £1.3T debt mountain, the banks have probably

satiated the lending market for years to come. There just aren't any more credit worthy people to lend to.

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Well done Mervyn you useless plank, got your gong sorted yet with Gordon?

Very accurate :lol:

But is it Merv's fault, can you blame Gordon, i for one did blame Gordon rather than Merv. But i have a gut feeling this thing goes higher up the food chain?

These decisions are far too critical to be made by:

1) A bunch of accademics

2) An ex history graduate from up North somewhere

These decisions are a global economic decision, made by i do not know who?

But Ed Balls, Ken Clarke, and George Osborne were all guests at the Transatlantic power élite's secret Bilderberg conferences in Istanbul.

Maybe they were getting their instructions for the coming year????

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Panda,

Word is getting out, slowly. they are all in it together.

http://boards.fool.co.uk/Message.asp?mid=1...&recscode=2

The people at the top (the inflation hawks, Mervyn King) and friends (like Gordon Brown)are the inflationists.

They are putting on a show, they are constantly telling lies!

In 2006 May, Mervyn King publicly announced that he will take strict measures to tackle inlfation. Hence, he got labelled as the inflation hawk. It's been over a year, and there's no sign of inflation slowing down. If anything, inflation is raging higher.

The cause of inflation is the money supply. And the money supply is running at historically higher levels (+12%).

Do not get phased by interest rate levels! Although interest rates have gone up steadily in small increments of 1/4%, the money supply has continued to expand at higher rates over the last 5 years.

Who controls the money supply???? well, these are the guys who are pumping up house prices.

History says that "Those who call themselves inflation hawks, are often the inflationists themselves".

Dont beleive or listen to politicians and never take any investment advice from Gordon Brown. They only care about their own security, they dont care about us. We get taxed, they take our money. End of story.

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When "they", not Merv or Gordon, but "they" decide the party is over, .i.e.

Stop printing this annual +12% money supply, agreed deep root cause of inflation?

Or

Start to fight inflation by reducing the monetry expansion, and tightening this credit expansion by raising interest rates globally, not just in the UK.

Then we might just get our HPC.

Because this interest rate/credit expansion thing is not a UK process, this has happened in every civilised country throught the world over the past ten years?

So does anyone really believe that things would have been different under the Tories, not a chance?

This was going to happen whether the Tories, Labour or even the Raving Bloody Lunatics Party was in power?

When the rug is to be pulled, it will be pulled, there will be losers and winners, just like there was over the past ten years.

But the front men and women, like Gordon and Merv, who face the public are answerable to the money masters, so blaming Gordon and Merv could be a little harsh. But i agree, do not put any trust in the statements these guys make, because they have a pre-prepared script. The lyrics of the tune they sing has been written by the song writer?

But just who is the song writer? And i am not a fan of Gordon or Merv!

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So does anyone really believe that things would have been different under the Tories, not a chance?

This was going to happen whether the Tories, Labour or even the Raving Bloody Lunatics Party was in power?

When the rug is to be pulled, it will be pulled, there will be losers and winners, just like there was over the past ten years.

But the front men and women, like Gordon and Merv, who face the public are answerable to the money masters, so blaming Gordon and Merv could be a little harsh. But i agree, do not put any trust in the statements these guys make, because they have a pre-prepared script. The lyrics of the tune they sing has been written by the song writer?

But just who is the song writer? And i am not a fan of Gordon or Merv!

yep, the families controlling the worlds central banks are the ones running the show - globally - not just in the uk

still, wonder if the justice system would have fallen apart under the tories?

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http://www.telegraph.co.uk/money/main.jhtm.../cnrates108.xml

Michael Saunders, chief UK economist at Citigroup, said: "Given the repeated overshoots of inflation over the past two years, and signs that inflation expectations are not well anchored on the target, the MPC should not, in our view, currently keep rates below the level it believes consistent with the inflation target.

"Its task is to set rates to stabilise inflation, not to wait until markets are convinced it is time to move."

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If it was inevitable, how have the Germans successfully avoided a crazy credit expansion and property/asset bubble? Maybe their committment to working and producing decent material goods has been a sounder way to national prosperity than financial engineering. What happened here was never inevitable it was just easy - much easier than getting to grips with making the UK industrious and productive.

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If it was inevitable, how have the Germans successfully avoided a crazy credit expansion and property/asset bubble? Maybe their committment to working and producing decent material goods has been a sounder way to national prosperity than financial engineering. What happened here was never inevitable it was just easy - much easier than getting to grips with making the UK industrious and productive.

don't forget what germany went through in the 1920's

anybody got exchange rate figures for the german currency over the last 6 years?

Edited by dnd

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Maybe their committment to working and producing decent material goods has been a sounder way to national prosperity than financial engineering.

You're crazy! Craaaaazzzyyyyyy! :P

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The Great Crash, I believe, will take the form of a massive plummet in real house prices as nominal prices stagnate and rent/wage/price inflation catches up over the next few years...

I think that this will be what happens for 'decent' or good properties. For the rubbish I think they will see nominal falls as well.

The effect, like the personal inflation rate, will vary depending on your circumstances. For the less well off, this will be a crushing experience as their wages are 'globalised'. For the better off people whose labour retains pricing power under globalisation, they may still increase their living standards.

Back in 2000 I was concerned that as an IT professional with 25 years experience, I would see my pricing power diminish as globalisation kicked in and I had to compete with foreign workers. What I have learnt is that my 25 years experience actually places me in a very strong position. The people this will hit hardest is the younger people without the experience as they have less competitive strength.

In this scenario homeowners will do relatively well out of a scenario of real price drops if they have a high LTV, as their real outstanding loans will decrease in value proportionally more than their capital.

The fact that this scenario seems as likely to me as any other (actually more likely than most other ones) is why I have thrown in the towel and am buying a house after 3 years of STR'ing. It's also why I am borrowing as much money as possible as I think that the loan size will be eaten away by inflation over the next 10 years.

Edited by 2MeterBear

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Guest grumpy-old-man
i wish 'casual observer' was still around....

no chance, he knows it's game over now. :D

& we have just started strike season, postal workers soon, binmen next I reckon & a lot more to follow suit this year & next.

How are the government going to fund high wage inflation to erode all this debt away?? They have managed to cook balance the NHS books by closing wards down, not funding new wards, cutting back on staff & outsourcing in order to do this. The NHS is in ruins as are the vast majority of the UK's services. Inflation is rampant in every area of our life, well apart from ipods & plasmas :rolleyes:

High wage inflation my ar$e, the countries bankrupt, financially & morally!! :ph34r:

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Higher product/services inflation with lower wage inflation = A reduced stadard of living.

We are now in this stituation.

By inflating the debt away, we must see an increase in wage inflation, and along with this wage increase inflation will be higher interest rates.

Higher interest rates will most definately bring an asset class crash (Houses)

Something must give, and we are now at breaking point!

Higher wages will be demanded or strikes across the board, (NOW) so look forward to higher interest rates, and in turn a HPC. Because there is no way this current level of Costs associated to houses can withstand much of an increase in the cost of firstly borrowing the initial lump sum and secondly and more importantly servicing this loan while product/services inflation is rising (NOW) and wage inflation is running at such a low level among the people who have not got 25 years experience in their proffesions to demand high levels of wage increase demands?

They also do not have large amounts of equity in the currently mortgaged properties, and these people are the lifeblood of the property market?

BTL is not a viable business model, not now, BTL is dead until sanity comes back to the cost of buying the asset class and running it as a business rather than subsidising it with earned wages?

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High wage inflation my ar$e, the countries bankrupt, financially & morally!! :ph34r:

The party is over, have you prepared yourself?

You can enjoy the good times some of the time, but it can't continue for all of the time, we have reached the point of pay back.

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Guest grumpy-old-man
The party is over, have you prepared yourself?

You can enjoy the good times some of the time, but it can't continue for all of the time, we have reached the point of pay back.

yes I think so. I am changing my career because of the coming recession (not just for this reason, but it is a major driver for me)

I think it will be very bad in the coming decade or more, if I am wrong then so be it, but I'd rather be over prepared for this one. :ph34r:

what about you winkie ??

edited - I am not cash/asset rich like many on here though. I have a modest place in France & that's it, no hoards of gold or stocks for me.

Edited by grumpy-old-man

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