Are Uk Economic Fundamentals Really Strong?

[smiffy1967]

Are UK economic fundamentals really strong? Are we really in a strong position to weather an economic slow down?

Last Summer, whilst talking to people, the consensus was house prices where fine and dandy and just latley i have been speaking to people and they dont think we are heading for a recession.

But a couple of elder statesmen although Tories, reckon Brown has lead us towards recession now?

Clearly Darling thinks things will be ok, are they? Would not it be economic suicide to buy a house now? Where are we heading? We have record employment and the boat seems to floating along nicely at the moment?

[castrogtx]

Are UK economic fundamentals really strong? Are we really in a strong position to weather an economic slow down?

Last Summer, whilst talking to people, the consensus was house prices where fine and dandy and just latley i have been speaking to people and they dont think we are heading for a recession.

But a couple of elder statesmen although Tories, reckon Brown has lead us towards recession now?

Clearly Darling thinks things will be ok, are they? Would not it be economic suicide to buy a house now? Where are we heading? We have record employment and the boat seems to floating along nicely at the moment?

In answer to your question - NO.

Our economy has been built on the success of our financial services and a consumer boom built on house price inflation. The credit crunch is crucifying both.

House prices will fall, jobs will be lost and bankruptcies of businesses and citizens will snowball.

[Methinkshe]

Are UK economic fundamentals really strong? Are we really in a strong position to weather an economic slow down?

Last Summer, whilst talking to people, the consensus was house prices where fine and dandy and just latley i have been speaking to people and they dont think we are heading for a recession.

But a couple of elder statesmen although Tories, reckon Brown has lead us towards recession now?

Clearly Darling thinks things will be ok, are they? Would not it be economic suicide to buy a house now? Where are we heading? We have record employment and the boat seems to floating along nicely at the moment?

Are UK funamentals really strong?

Are they, hec?!

We are fed fiddled stats that you'd be daft to believe. Record employment is as untrue as stats that apparently prove that crime is going down, education standards are rising, inflation is 2.1%, hospital and GP patients are seen more quickly than ever before, poverty is being eradicated, etc etc. There is not one government stat that I believe - nor should you. Just use your eyes and ears instead - they are far more reliable. Your eyes and ears don't have a vested interest in being re-elected to your body - they're kinda stuck there; MP's have a vested interest in producing stats to get themselves relected to our governing body where, although they'd like to think otherwise, they have no permanent position. And this bunch of crooks will falsify whatever stats it takes to retain power - that's all they're are interested in. Certainly not in the good of the country and its inhabitants.

[RajD]

Our economy is as steady as a rock - Northern Rock

[alexw]

We have record employment and the boat seems to floating along nicely at the moment?

We have record employment but what in exactly...? The answer to that is in selling foreign made goods and (internal) services to each other. You can't base an economy on this, and results in deficits and/or slowly selling off bits of our economy to pay for what we import. The only growing export industry we have had is financial services, and the current crises have shown how much smoke and mirrors that is. Since financials are based upon underlying industries they can only grow based upon the fundamental growth of these. This has not occurred, and thus I fully expect the financial sector to shrink by a substantial margin. Putting UK up the proverbial creek

[Moo]

For my money, the phrase "strong fundamentals" translates into "some of the numbers, taken as a snapshot, say things are fine". It's a bit like saying "Ant and Dec are not dead". They're not dead. It's true. However, to take their current status as living beings as proof that "And and Dec are dead" is, and shall forever be, an impossibility, is (technical term coming up) a load of old badger bollosk.

Or there's the alternative view, which is...

The "fundamentals" are whichever indicators you think support your case. To take the Ant and Dec example a little further, there will be a period between the point when they keel over and a death certificate is issued. During that time, the "fundamentals" - in this case, the non-existance of a death certificate - will continue to show that they are alive.

Lastly, why are the fundamentals called the fundamentals? Because calling them "just some other figures" doesn't make them sound important enough.

[InternationalRockSuperstar]

The UK economy has been contracting in real terms since at least as far back as 2003. Any growth since then has only been nominal.

[thecrashingisles]

I don't think it's a coincidence that the word contains both 'fund' and 'mental'.

[Nicholas Cage]

New Labour will reveal they just lowered the net debt by £100 billion in the budget, how can we be in a bad shape?

[_w_]

The UK economy has been contracting in real terms since at least as far back as 2003. Any growth since then has only been nominal.

That isn't what I get, at least as far as official figures go. Do you have a reference or is it a gut feel?

[domo]

When the credit crunch hits consumerland and unemployment rises, defaults will erupt like a tsunami and the banking system will collapse, NO MONEY WILL BE LENT TO CONSUMER ANYMORE. And you'll see houses, BMWs, plasma TVs ect all being pushed for 10 pence or less on the pound so someone can fill the tank or buy some food. This debt deflation will erupts like an avalanche, theres very few people who are really financially secure enough to see a recession through.

Edited March 8, 2008 by domo

[Nicholas Cage]

That isn't what I get, at least as far as official figures go. Do you have a reference or is it a gut feel?

It's not GDP which is a bit outdated but there is total net worth

Total net worth of the UK

http://www.statistics.gov.uk/CCI/nugget.as...=2&Rank=224

Only increase in UK PLC net worth is housing, 60% of the entire UKs portfolio is residential property at the end of 2006, I don't know where the last 12 months are. (Edit: The next Blue Book isn't out until October 2008 i think, this is 2007 publication)

NPISHs = non-profit organisations sector

Edited March 8, 2008 by maxwell

[Errol]

Are UK economic fundamentals really strong? Are we really in a strong position to weather an economic slow down?

You've posted 407 times and you even have to ask the question?

[microbe]

It's not GDP which is a bit outdated but there is total net worth

Nice stat. I think the whole way we are being sold on GDP as THE way of assessing our economy is plain stupid. GDP measures activity, it doesn't measure the creation of wealth. It is a hamster wheel.

EDIT: Horrifying how little the UK is worth leaving aside housing - I would love to see the same figures for other countries - might give some idea what sound fundamentals really look like.

Edited March 8, 2008 by microbe

[Wad]

Take financial services, public sector and property out of the GDP growth figures of the last ten years and I suspect you would be lucky to see the remainder of the economy flat lining. We know for a fact that the majority of growth in employment has been imigrant labour and much of that will be at minumum wage - which says it all really.

What worries me constantly is that once you get outside the South East there is very little real economic activity going on. My wife comes from Newcastle, a place I have known well for the last 25 years and can say for sure that without Northern Rock, the massive building of new flats and growth in employment in DSS, tax offices and the local authority there would be very high local unemployment.

Similarly, I now spend quite a bit of my time in the West Midlands and the same goes there too - lots of new build flats, estate agents and local authority jobs - but very little else going once you get out of Birmingham.

Lots of rapidly aging post industrial populations in the Northeast East and West Midlands areas that are effectively marooned on Government handouts along with poorly educated who have little chance of getting more than a minimum wage job. These people are not part of the South East financial services job market and effectively are closed out of the economy.

In this environment the it sis hard ot say that the UK has a strong economy - it is tissue paper thin in most places outside London and will be blown away by a global recession.

[Prophet_of_Pwnage]

Are UK economic fundamentals really strong? Are we really in a strong position to weather an economic slow down?

<gruff Broone scottish accent> Of course. We have a low inflation economy, low interest rates, low unemployment and 10 years of strong economic growth.

[domo]

Lets put it this way:

Fundamentals strong: 1929, late 60s, late 80s, 2000, 2007

Fundamentals bad: 1940s, late 70s, early/mid 90s, early 2000s

[smiffy1967]

You've posted 407 times and you even have to ask the question?

I know, but i was bored. And i just wanted to gauge when the tsunami was gonna hit big time, or what other tricks this government will pull to try and postpones the inevitable. I was checking out rightmove in my area, and i am shocked at the delusional tens of thousands whom think that there ex council house on a council estate with all the Agro and violence that goes along with it, is worth 130K?????

And what will it take to make these people except that there house is not worth 40 to 50K more than they paid for it?

I think a lot of them will just sit on there property and not sell because they will simply refuse to except that it can fall so much. I have some numpty lives near me in Ironbridge, his ex council house on an interest only mortgage is on the market for 160K. It has been on the market for 2 years. He even has a picture of the house and asking price on the back of his car, an advert in the local news agents, im sure it wont be long before he gets a T Shirt printed with it on!

And as soon as they finnish the new road in front of the house, he is gonna put the price up by 10K. Un -friggin believable.

So how is he gonna bring his price down? He aint! He simply wont except he has purchased a liability that as an asset class will fall and fall in real terms and that he is stuck in it for another ten years unless he gets real with the price!

[smiffy1967]

And what will it take to make these people except that there house is not worth 40 to 50K more than they paid for it?

I think a lot of them will just sit on there property and not sell because they will simply refuse to except that it can fall so much. I have some numpty lives near me in Ironbridge, his ex council house on an interest only mortgage is on the market for 160K. It has been on the market for 2 years. He even has a picture of the house and asking price on the back of his car, an advert in the local news agents, im sure it wont be long before he gets a T Shirt printed with it on!

And as soon as they finnish the new road in front of the house, he is gonna put the price up by 10K. Un -friggin believable.

So how is he gonna bring his price down? He aint! He simply wont except he has purchased a liability that as an asset class will fall and fall in real terms and that he is stuck in it for another ten years unless he gets real with the price!

[domo]

Yep, and when everyone suddenly decides to get real and sell their house... well thats a crash

Were just the early birds.

[domo]

<gruff Broone scottish accent> Of course. We have a low inflation economy, low interest rates, low unemployment and 10 years of strong economic growth.

heh I like your avatar.

<See why.

[smiffy1967]

Yep, and when everyone suddenly decides to get real and sell their house... well thats a crash

Were just the early birds.

But that is my point, they just wont get real and sell it. They will continue to live in it and pay for it, hoping that the market will pick up in a year or two and that they will be able to sell it at an even more inflated price. Have you ever tried talking to some of the idiots out there, when you mention recession, they attack you for helping to talk us into one. The credit crunch means nothing to them, it is like the far east Tsunami and they feel it is something happening far far away.

They dont understand our economy nor do they except our energy reality and they are all blist full fools.

[mew too]

Are UK economic fundamentals really strong? Are we really in a strong position to weather an economic slow down?

Last Summer, whilst talking to people, the consensus was house prices where fine and dandy and just latley i have been speaking to people and they dont think we are heading for a recession.

But a couple of elder statesmen although Tories, reckon Brown has lead us towards recession now?

Clearly Darling thinks things will be ok, are they? Would not it be economic suicide to buy a house now? Where are we heading? We have record employment and the boat seems to floating along nicely at the moment?

The powers that be absolutely know what is happening, Alistair Darling knows things are NOT ok, he is powerless to what is happening in the money markets and to our economy, his vain attempts to ramp the economy are merely a stalling tactic, soothing words are useless here. We will follow the US down the path of least resistance as the massive credit bubble unwinds, and the government will throw more money into the black hole to try to prolong the inevitable, it will be lost or spent. To sum things up - the money is disappearing, we now need to unwind the excess to bring things back to fairer values in order for the cycle to then start again - it is self fulfilling, preserve cash and do not get in debt will be the order of the day, the party is most definetly drawing to a close, asset class deflation on a grand scale here we come.

[mew too]

I know, but i was bored. And i just wanted to gauge when the tsunami was gonna hit big time, or what other tricks this government will pull to try and postpones the inevitable. I was checking out rightmove in my area, and i am shocked at the delusional tens of thousands whom think that there ex council house on a council estate with all the Agro and violence that goes along with it, is worth 130K?????

And what will it take to make these people except that there house is not worth 40 to 50K more than they paid for it?

I think a lot of them will just sit on there property and not sell because they will simply refuse to except that it can fall so much. I have some numpty lives near me in Ironbridge, his ex council house on an interest only mortgage is on the market for 160K. It has been on the market for 2 years. He even has a picture of the house and asking price on the back of his car, an advert in the local news agents, im sure it wont be long before he gets a T Shirt printed with it on!

And as soon as they finnish the new road in front of the house, he is gonna put the price up by 10K. Un -friggin believable.

So how is he gonna bring his price down? He aint! He simply wont except he has purchased a liability that as an asset class will fall and fall in real terms and that he is stuck in it for another ten years unless he gets real with the price!

Ahh mr rhetoric, imo when the numbers hit YoY negative realisation will dawn and the move down will be swift, I have seen a 2 bed flat near me go on the market this week for 380k, they all sold 2005 for approx 225k, they certainly have not gone up this much, it's a buy-to-letter chancing his luck in an area that hasn't dropped yet, he hasn't got a hope in hell of selling it, it's pure bubble head mentality, the party is over and can only end one way now, I just laugh now when I see things like this - the time to get out with ease was 2006/start2007, now it's too late to be greedy, just laugh at the desperation, it really is quite funny!

[MarkG]

To sum things up - the money is disappearing, we now need to unwind the excess to bring things back to fairer values in order for the cycle to then start again - it is self fulfilling, preserve cash and do not get in debt will be the order of the day, the party is most definetly drawing to a close, asset class deflation on a grand scale here we come.

No, I think it's worse than that. The governments are lowering interest rates but the bankers are raising the rates at which they lend money to the plebs, so house prices are deflating and the 'free money' is going into commodity speculation instead; which means people are losing vast amounts of 'equity' on their houses and, at the same time, the price of the things they have to buy to live is inflating rapidly.

So by cutting rates to 'help the indebted', they're making things much worse... high price inflation in raw materials, high deflation in housing, and low wage inflation (except in commodities, anyway).