Injin Posted September 1, 2008 Share Posted September 1, 2008 http://www.timesonline.co.uk/tol/news/poli...icle4649026.ece When Alistair Darling said that Britain’s economic conditions were “arguably the worst they have been for 60 years”, the initial reaction from the Opposition and media was either to compliment the Chancellor for his “frankness” or to gloat about the way he had “let the cat out of the bag” and thereby embarrassed Gordon Brown.This was understandable, because Mr Darling is indeed an unusually straightforward politician, respected and liked by journalists and politicians across the political spectrum. On closer inspection, the Chancellor’s reputation for frankness makes his political blunder worse, since it reveals a flaw more serious than deviousness: basic ignorance of economic facts and figures. This is a failing that the minister responsible for national finances can never live down. Were there any interpretation of Mr Darling’s comments that tallied with either economic statistics or the realities of British life – or if the Treasury had rushed out a correction, explaining that he had been misquoted or hadn’t meant what he said – this episode might have been forgotten as just another stumble by an accident-prone Government. But sadly for Mr Darling, though luckily for the British economy, there is no way of massaging the facts and figures to make his statement even half-right. The most obvious contrasts – today’s 5 per cent inflation and 5.4 per cent unemployment may feel uncomfortable, but these are just tiny ripples compared with the tidal waves of economic hardship – the 27 per cent inflation and 12 per cent unemployment – that hit Britain in the 1970s and 1980s. A similar conclusion comes from almost any other economic indicator: gross domestic product, personal incomes, government finances, employment growth, repossessions. Only house prices are falling faster than ever before – because they were far higher when this downturn began. And despite all the headlines about a credit crunch, financial conditions are also relatively benign. Homeowners and estate agents may complain about a “mortgage crisis”, because banks charge over 6 per cent for a mortgage and require a 10 per cent deposit from first-time buyers, but in the 1970s and 1980s, mortgage rates repeatedly reached 15 per cent and borrowers typically had to save up deposits of 25 per cent or more. Social and political conditions are now incomparably better than they were 30 years ago. This can be attested by anyone who recalls the three-day weeks and winters of discontent, the petrol rationing and power cuts, the dole queues and miners’ strikes, the credit squeezes and currency restrictions of those days. And other social indicators – child poverty, life expectancy, housing conditions, educational qualifications, pension levels, living standards relative to other countries – are almost all far better today than they were in the 1970s and 1980s, despite the understandable feeling that many of these conditions should be much better, considering the huge tax burdens successive governments have imposed. We've jumped off the cliff, and because we haven't hit the floor yet, everything is just fine. Thanks, Anatole. Quote Link to comment Share on other sites More sharing options...
van hoogstraten Posted September 1, 2008 Share Posted September 1, 2008 If Kaletsky lived in New Orleans he'd be saying to everyone streaming out of town - "why are you all going - its nice and sunny". Quote Link to comment Share on other sites More sharing options...
expatowner Posted September 1, 2008 Share Posted September 1, 2008 If Kaletsky lived in New Orleans he'd be saying to everyone streaming out of town - "why are you all going - its nice and sunny". I cant help it. I think of Kristine Kochanski from Red Dwarf everytime. help! Quote Link to comment Share on other sites More sharing options...
Frank Hovis Posted September 1, 2008 Share Posted September 1, 2008 (edited) This is clearly a man who stares into the rear-view mirror as he drives off a cliff. Even the deniers in the Treasury can see where the economy is headed, but a well-known financial journalist can't. Edited September 1, 2008 by Frank Hovis Quote Link to comment Share on other sites More sharing options...
Nelly Posted September 1, 2008 Share Posted September 1, 2008 Darling said a bit back that things were fine and we are well equiped to ride it out! At least he has the guts and honesty to change that to the truth, most people in a position of power (even w@nky middle managers) can never admit they are, or were, wrong. They let their ego get in the way of their job. Quote Link to comment Share on other sites More sharing options...
interestrateripoff Posted September 1, 2008 Share Posted September 1, 2008 The European economy is slowing and it may well sink into a mild recession – but, this has not happened yet. Developing countries are still growing strongly and even the global banking system, despite all the hysteria, has so far suffered smaller losses in relation to its total capital than it did in the Third World debt crisis of the 1980s.In short, it is literally impossible to tally Mr Darling’s comments with anything that has happened to the British and international economies so far. Could it be, however, that he meant to offer a forecast? Predictions are, by their nature, a matter of opinion, which means that Mr Darling’s comments, if they refer to the future, cannot be refuted by objective statistical evidence even though there is now no respectable economic model pointing to anything like the apocalyptic conditions Mr Darling described. Suppose, then, that the Treasury decides to spin his comments not as a description of what has already happened but as a prediction that Britain will suffer its worst economic crisis since 1948 in the year or two ahead. If this was what Mr Darling meant, will anybody believe any economic forecast he presents in his next Budget if this is less than catastrophic? And if Mr Darling does present a catastrophic forecast in a preelection Budget, what will this do to Gordon Brown’s chances of survival? These questions can yield only one answer: the next Budget will be presented by a new chancellor. The reason why no economic model points to the apocalyptic conditions is that they are all flawed, the models are always too optimistic which is why we constantly see the IMF, BoE etc.... continually revise the growth figures down. The models can't cope with negativity. Fine in a boom but they are exposed in a downturn. None of the respectable models predicted the "credit crunch" either? Quote Link to comment Share on other sites More sharing options...
okaycuckoo Posted September 1, 2008 Share Posted September 1, 2008 At some point last month Kaletsky claimed that house prices in the US were actually rising - a couple of days later the Case Schiller index results were released. Quote Link to comment Share on other sites More sharing options...
1929crash Posted September 1, 2008 Share Posted September 1, 2008 (edited) http://www.timesonline.co.uk/tol/news/poli...icle4649026.eceWe've jumped off the cliff, and because we haven't hit the floor yet, everything is just fine. Thanks, Anatole. Good post Injin. As usual, I disagree with virtually everything Mr K says but he does have a good point about the pre-election Budget forecast. If AD does paint a catastrophic picture, what will that do to Brown and Labour's election chances, already vanishingly small? And if he paints a rosy picture, what will that do to Darling's credibility? Alistair has either boxed himself into a corner or knew when he said it that Brown was about to ditch him. Edited September 1, 2008 by 1929crash Quote Link to comment Share on other sites More sharing options...
Als Posted September 1, 2008 Share Posted September 1, 2008 http://www.timesonline.co.uk/tol/news/poli...icle4649026.eceWe've jumped off the cliff, and because we haven't hit the floor yet, everything is just fine. Thanks, Anatole. You got to admit though, the pessimism is running far ahead of the reality at the moment. That's not to say it won't get bad. But there is a long way to go yet to sink to the level of the 1980s. On the BBC this morning they were telling people how to forage for food. I had to laugh...there is no way anyone is that skint yet. Quote Link to comment Share on other sites More sharing options...
1929crash Posted September 1, 2008 Share Posted September 1, 2008 You got to admit though, the pessimism is running far ahead of the reality at the moment. That's not to say it won't get bad. But there is a long way to go yet to sink to the level of the 1980s. On the BBC this morning they were telling people how to forage for food. I had to laugh...there is no way anyone is that skint yet. No? Seen the latest BOE data yet? Quote Link to comment Share on other sites More sharing options...
Meerkat Posted September 1, 2008 Share Posted September 1, 2008 I actually bought Sunday Times yesterday. Wanted to puke after going thru their money/property section: so irritating it was! Despite having a wonderful graph showing how much Halifax index has underperformed equities during the past 25 years (yet another confo that real estate's long term average yield is very mild), there was a page long on property porn including a smiley couple from Newcastle holding onto their 13 BtL properties, backed by interest only mortgages amounting to 2.7M. The couple was not sh1t scared at all: we have good relationship with lenders, they know we are in for the long term, so sure thing we will get a good deal. Oh, and yes, it's for their retirement . They have that great graph showing what equities & real estate have done in the UK since 1983 yet they (The Times) still manage to fall short of making a bloody obvious and truthful conclusion: real estate (on its own*) is a very poor long term investment. * Diversified real estate exposure of about 10% of one's total investment portfolio is in turn something that makes perfect sense (statistically, a smal allocation into real estate increases the expected return and decreases the risk (volatility, default) of a portfolio consisting of only equities and fixed income. Quote Link to comment Share on other sites More sharing options...
Guest An Bearin Bui Posted September 1, 2008 Share Posted September 1, 2008 The reason why no economic model points to the apocalyptic conditions is that they are all flawed, the models are always too optimistic which is why we constantly see the IMF, BoE etc.... continually revise the growth figures down. The models can't cope with negativity. Fine in a boom but they are exposed in a downturn.None of the respectable models predicted the "credit crunch" either? Fred Harrison's 18-year land value cycle was accurate in predicting 2008 as the year that the HPC would begin in earnest and he predicts 2010 as the trough year of what will be a depression (rather than mere recession) in the UK. When I first read about his model in 2005, I remember thinking 'NO!! Not another 3 years of HPI!!" but he turned out to be correct, more than many housing bears who had predicted 2005 as the year of the crash. His 18 year cycle plotted back from 2008 would take us back to 1954, not to far off Darling's 'worst crisis in 60 years' comment. I'm reading Harrison's Boom-Bust book now and it is sounding eerily prescient - he really is the only commentator that I know of who pinpointed the downturn exactly. Quote Link to comment Share on other sites More sharing options...
1929crash Posted September 1, 2008 Share Posted September 1, 2008 You got to admit though, the pessimism is running far ahead of the reality at the moment. That's not to say it won't get bad. But there is a long way to go yet to sink to the level of the 1980s. On the BBC this morning they were telling people how to forage for food. I had to laugh...there is no way anyone is that skint yet. Oh No? Read this article about hunger in Massachussets: http://www.boston.com/news/local/articles/..._side_troubles/ Quote Link to comment Share on other sites More sharing options...
ParticleMan Posted September 1, 2008 Share Posted September 1, 2008 Harrison's Boom-Bust book[/url] now and it is sounding eerily prescient - he really is the only commentator that I know of who pinpointed the downturn exactly. Let me play Devil's advocate here for two seconds. So you have a temple filled with prognosticators. All forecasters have examined the entrails of the same fish and have produced differing outlooks from them. And now, like a man with fifteen watches on his arm you're choosing the one that appears to correlate most closely with present reality. But what's to say that it's not luck? None of your watches agree, you're still none the wiser as to how fast or slow each run, or what time it is one minute to the next. What's to say that one of the (now discarded) models won't more accurately represent reality an hour, a day, a week hence? False profits derive from marketable truths. Quote Link to comment Share on other sites More sharing options...
Injin Posted September 1, 2008 Author Share Posted September 1, 2008 Let me play Devil's advocate here for two seconds.So you have a temple filled with prognosticators. All forecasters have examined the entrails of the same fish and have produced differing outlooks from them. And now, like a man with fifteen watches on his arm you're choosing the one that appears to correlate most closely with present reality. But what's to say that it's not luck? None of your watches agree, you're still none the wiser as to how fast or slow each run, or what time it is one minute to the next. What's to say that one of the (now discarded) models won't more accurately represent reality an hour, a day, a week hence? False profits derive from marketable truths. I agree completely with particleman. Quote Link to comment Share on other sites More sharing options...
interestrateripoff Posted September 1, 2008 Share Posted September 1, 2008 At some point last month Kaletsky claimed that house prices in the US were actually rising - a couple of days later the Case Schiller index results were released. Kaletsky This post here I think. Quote Link to comment Share on other sites More sharing options...
Guest An Bearin Bui Posted September 1, 2008 Share Posted September 1, 2008 Let me play Devil's advocate here for two seconds.So you have a temple filled with prognosticators. All forecasters have examined the entrails of the same fish and have produced differing outlooks from them. And now, like a man with fifteen watches on his arm you're choosing the one that appears to correlate most closely with present reality. But what's to say that it's not luck? None of your watches agree, you're still none the wiser as to how fast or slow each run, or what time it is one minute to the next. What's to say that one of the (now discarded) models won't more accurately represent reality an hour, a day, a week hence? False profits derive from marketable truths. Who are you playing devil's advocate with, exactly? I'm not some land value tax acolyte if that's what your suggesting although most of your post is rambling incoherence - prognosticators? Entrails? Watches? What are you talking about? My post was just suggesting that people look at the theory of a land value tax and think for themselves whether Harrison's policy suggestions are of interest. I find it interesting - if you don't, then great, maybe you have other opinions you could put forward? If you are interested (or anyone else is), Harrison has written a number of books over the past 25 years that put forward policy suggestions that he believes will flatten out the relentless boom-bust cycle. His theory is based on aspects of Ricardian economics and Adam Smith's suggestion of a land tax rather than an income tax. Harrison traces the importance of land values in producing an 18-year economic cycle prone to boom and bust. He has mapped this 18 year cycle over 200+ years, ever since the late 1700s when the income tax system was introduced thus taxing earned income from labour or capital rather than unearned income from land rents. Harrison's argument is that we should reform the tax system to mitigate the impact of land speculation on the economy and thus flatten out the ever-increasing cycles of 18-year boom/bust. His first book on the subject was The Power in the Land in 1983. The idea of a land value tax and reform to the income-based taxation system is not a new one - Georgism has been around for over a century. I have no intention to put this guy forward as some oracle or whatever you're seeking to imply - I'm talking about economics and policy with real solutions that may or may not improve society but nonetheless give an interesting insight into the way wealth is taxed in society, whether ther predictions are right or wrong. Why not try to post something genuinely interesting and challenging rather than some self-indulgent post? You're making some vast assumptions about what I believe just because I posted up a ponter to a book I happen to find interesting!?! This is just a typical example of the childish point-scoring and arguemtn for the sake of argument that plagues this site. Quote Link to comment Share on other sites More sharing options...
ParticleMan Posted September 1, 2008 Share Posted September 1, 2008 (edited) Who are you playing devil's advocate with, exactly? I'm not some land value tax acolyte if that's what your suggesting although most of your post is rambling incoherence - prognosticators? Entrails? Watches? What are you talking about? Not sure what triggered the rest of the rant, but to address the question - it's of no great consequence that he "predicted" the current mess. Given the range of predictions on offer, at least one would have been correct regardless. In short, a correct prediction neither reinforces nor detracts from his (or his work's) credibility (only ennumerating all the conditions necessary for any refutation can do this). And leveraging the correctness of a prediction (which may as well have been a chance outcome) feels like sales patter, to me - but I've learned to approach gospel with all due cynicism, your mileage probably has varied. Edited September 1, 2008 by ParticleMan Quote Link to comment Share on other sites More sharing options...
Joey Buttafueco Jr Posted September 1, 2008 Share Posted September 1, 2008 Let me play Devil's advocate here for two seconds.So you have a temple filled with prognosticators. All forecasters have examined the entrails of the same fish and have produced differing outlooks from them. And now, like a man with fifteen watches on his arm you're choosing the one that appears to correlate most closely with present reality. But what's to say that it's not luck? None of your watches agree, you're still none the wiser as to how fast or slow each run, or what time it is one minute to the next. What's to say that one of the (now discarded) models won't more accurately represent reality an hour, a day, a week hence? False profits derive from marketable truths. Couldn't have put it better myself. People tend to listen to others that make a guess that quite by chance turns out to be correct. Very strange Quote Link to comment Share on other sites More sharing options...
JonoP Posted September 1, 2008 Share Posted September 1, 2008 I actually bought Sunday Times yesterday. Wanted to puke after going thru their money/property section: so irritating it was! Despite having a wonderful graph showing how much Halifax index has underperformed equities during the past 25 years (yet another confo that real estate's long term average yield is very mild), there was a page long on property porn including a smiley couple from Newcastle holding onto their 13 BtL properties, backed by interest only mortgages amounting to 2.7M. The couple was not sh1t scared at all: we have good relationship with lenders, they know we are in for the long term, so sure thing we will get a good deal. Oh, and yes, it's for their retirement . I saw this and chuckled. £2.3M on 13 flats - which are new build. Soooooo, that is nearly £200K per flat...in NEWCASTLE???? And they had converted 2 bed new builds in to 3 bed? The bedrooms must be about 4ft square. Let me guess what happens.....new build flats drop sharply in price, so investors can now easily offer a 2 bed for the same price this happy couple are trying to get for a 3 bed.... tennants opt for two bed option, happy couple has no tennants and goes bust..... It is quite darwinian really. Quote Link to comment Share on other sites More sharing options...
Guest An Bearin Bui Posted September 1, 2008 Share Posted September 1, 2008 Not sure what triggered the rest of the rant, but to address the question - it's of no great consequence that he "predicted" the current mess. Given the range of predictions on offer, at least one would have been correct regardless. In short, a correct prediction neither reinforces nor detracts from his (or his work's) credibility (only ennumerating all the conditions necessary for any refutation can do this). And leveraging the correctness of a prediction (which may as well have been a chance outcome) feels like sales patter, to me - but I've learned to approach gospel with all due cynicism, your mileage probably has varied. Where exactly am I "leveraging the correctness of a prediction" as 'sales patter'? I never said that because Fred Harrison was correct in pinpointing the date of the downturn that this implies his entire theory and suggestion for a land value tax is valid and should be absorbed as 'gospel'. That's just the interpretation you've chosen to put on my post for some unknown reason that I can't fathom. If you think that pointing out a theory as being of interest and unique in some way is the same as promulgating it to be the gospel truth then you really must need to be as cynical as you claim to withstand the onslaught of so much perceived proselytising. Ever had a recommendation from a friend to see a good film or read a good book? Do you laugh cynically and play devil's advocate with them too? People can exchange opinions and insights without preaching. I've no idea why you've interpreted my post as being the views of an acolyte pushing gospel and sales patter - it's truly a bizarre interpretation of what I wrote. Quote Link to comment Share on other sites More sharing options...
Guest An Bearin Bui Posted September 1, 2008 Share Posted September 1, 2008 Couldn't have put it better myself. People tend to listen to others that make a guess that quite by chance turns out to be correct. Very strange Yes, those dumb sheeple are such fools - imagine reading someone's book and considering the research in it to be an interesting policy suggestion with some accurate predictions and then posting a link to it on a forum! Really some people are just so naive... So if I post a link to Fahrenheit 911 here, noting that Michael Moore was one of the first to expose how Bush allowed the safe passage of the bin Laden family out of the USA after September 11th, that makes me a Michael Moore acolyte who unquestioningly takes every word of his for gospel, does it? Quote Link to comment Share on other sites More sharing options...
Joey Buttafueco Jr Posted September 1, 2008 Share Posted September 1, 2008 Yes, those dumb sheeple are such fools - imagine reading someone's book and considering the research in it to be an interesting policy suggestion with some accurate predictions and then posting a link to it on a forum! Really some people are just so naive... So if I post a link to Fahrenheit 911 here, noting that Michael Moore was one of the first to expose how Bush allowed the safe passage of the bin Laden family out of the USA after September 11th, that makes me a Michael Moore acolyte who unquestioningly takes every word of his for gospel, does it? "Yes, those dumb sheeple are such fools - imagine reading someone's book and considering the research in it to be an interesting policy suggestion with some accurate predictions and then posting a link to it on a forum! Really some people are just so naive... " Agreed "So if I post a link to Fahrenheit 911 here, noting that Michael Moore was one of the first to expose how Bush allowed the safe passage of the bin Laden family out of the USA after September 11th, that makes me a Michael Moore acolyte who unquestioningly takes every word of his for gospel, does it?" What does that have to do with predicting the future? Quote Link to comment Share on other sites More sharing options...
@contradevian Posted September 1, 2008 Share Posted September 1, 2008 I believe the Times has discounted offer on a forthcoming Kaletsky "event." Don't know why people go unless its time off work, or for a good laugh. Be nice to get some HPC'ers along to heckle! Quote Link to comment Share on other sites More sharing options...
1929crash Posted September 1, 2008 Share Posted September 1, 2008 I believe the Times has discounted offer on a forthcoming Kaletsky "event." Don't know why people go unless its time off work, or for a good laugh. Be nice to get some HPC'ers along to heckle! I like the idea of making an "HPC Heckle" a sort of direct action political event. Shame I don't live anywhwere near London. But what a bad day for him to publish an article like this - bad mortgage date, poor manufacturing stats, pound at record low against euro . . . Quote Link to comment Share on other sites More sharing options...
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