Friday, June 22, 2007

The squeeze is already here

Disposable incomes fall as rise in rates and energy prices take toll

Consumers’ disposable income has fallen by 17% over the past four years, according to a report that highlights the squeeze on homeowners from the increase in mortgage costs, fuel bills and other essential payments.

Posted by confused76 @ 10:25 AM (529 views)
Please complete the required fields.



15 thoughts on “The squeeze is already here

  • dohousescrashinthewoods says:

    I feel that – I guess most of us do.

    The only people I know who don’t feel it are those on the other side of the gulf between rich and middle-class, for them it’s been boom-time.

    Interesting that I don’t see any intentional exploitation there – it’s just been a booming market with plenty of work and money available. One chap I know is rushed off his feet and making a fotune, with no ill will towards those who are suffering.

    Contrary to poular belief, the divide is not inflicted on the poor by the rich, but I too find it frustrating. How can I get some of the action on thee other side?

    Reply
    Please complete the required fields.



  • I do not envy other people for having more money than me… I am happy for them! may they enjoy for 100 years!

    but how about if the slosh of cash causes huge inflation and the basic services are overcrowded and quality of my life deteriorates because of this river of (laundered) money that pours into the country. And in addition, I am paying taxes at 40% rate to subsidize services for people that are far richer than me! Can you believe that? Should the govt do something about it?

    Reply
    Please complete the required fields.



  • Nearlygivin'up says:

    d-h-c-i-t-w’s — I don’t think the issue is that the divide is INFLICTED on the poor by the rich … of course they don’t mean it. But it’s not the people at the bottom telling us that the wealth trickles down is it? (to salve their consciences) George Galloway recently claimed the gap between rich and poor was bigger now than it was when Charles Dickens wrote “Great Expectations”. Just have a hard think about that one. Scandalous.

    By the way I think we’re both on the same side on this one .. 😉

    Reply
    Please complete the required fields.



  • Looks like were heading for nasty deflation in the housing market combined with hyperinflation in consumer prices plus stagnating salaries, goodbye middle class hello slave class.

    Reply
    Please complete the required fields.



  • Retiredbanker` says:

    The benefits of “globalisation” will enrich us all, so any perceived drop in living standards is purely a figment of our imagination.

    So just stop complaining, be pleased that the uber-wealthy from around the World choose to live here virtually tax-free, and are
    buying our most desirable properties ( I have just seen a 6 bedroomed penthouse in Kensington advertised for £25,290,000).

    Once the rest of British industry has been outsourced abroad, you may be lucky enough to gain employment as a servant or gardener,
    this type of work being a major growth sector of the UK economy.

    Reply
    Please complete the required fields.



  • sold 2 rent 1 says:

    “The findings back up research carried out by The Times in January, which found that Britons are in the grip of the tightest squeeze on their disposable income for nearly half a century.”

    The Duesenberry Effect says that debts are increased to maintain living standards when income falls.
    http://cepa.newschool.edu/het/essays/multacc/ratchet.htm

    We know from debt figures from the last debt bubble in the US in 1929-1932 that debt levels increased as a % of GDP (up to 40% more) after the bubble has burst.

    People will MEW until all their equity is gone.

    Reply
    Please complete the required fields.



  • I’m just wondering if the reason that debt levels went up 40% of GDP was because of GDP falling, rather than borrowing increasing.

    Reply
    Please complete the required fields.



  • Contrary to poular belief, the divide is not inflicted on the poor by the rich

    No, it is inflicted upon the poor by free market economics which are supported, subsidised, and lobbied for, by the rich and their representatives. This (IMHO) is pretty much the same thing isn’t it?

    Reply
    Please complete the required fields.



  • sold 2 rent 1 says:

    wageslave,

    probably a bit of both (GDP falling and borrowing increasing)

    Here is an interesting graph.
    http://www.thelongwaveanalyst.ca/downloads/NonPublicDeptPerGDP.doc

    Any guess to where debt as a percentage of GDP will peak. 450-500%???

    We are in big trouble

    Reply
    Please complete the required fields.



  • I’m not particularly short of cash (job + no mortgage + no kids = plenty of disposable income) but even someone in my circumstances can see it happening. My pay rise this year was a measly 2.5% but my house insurance has gone up by about 15%. I’m sure restaraunt prices and drinks have gone up as well. I hardly ever eat out any more because it is such a rip off.

    Reply
    Please complete the required fields.



  • sold 2 rent 1 says:

    More thoughts on the debt graph
    http://www.thelongwaveanalyst.ca/downloads/NonPublicDeptPerGDP.doc

    It looks like there could be an even bigger cycle outside the standard 70 year k-cycle.

    The last 3 k-cycles have debt peaking much higher each time.
    1880 100pc GDP
    1932 270pc GDP
    2010 450pc GDP???

    Are we in for an even bigger depression than the 1930s?

    Will the next debt bubble in 2070 be 700pc of GDP?
    Or is this bubble part of a 200 year cycle that ends in complete armageddon? – and the cycle starts from the beginning again.

    Don’t shoot the messenger.

    Reply
    Please complete the required fields.



  • S2R1,

    http://www.thelongwaveanalyst.ca/downloads/NonPublicDeptPerGDP.doc

    I take your point. The divergance of Debt / GDP is staggering.

    As debt and GDP seem to track each other then this suggests we must be in for a huge contaction of money supply at some point soon.

    Reply
    Please complete the required fields.



  • dohousescrashinthewoods says:

    Interesting thoughts. Here’s one to add to the barrel:

    Those who are wealthy have private health insurance, live in rural areas where there is scant public transport and don’t take any state benefits, so what tax they do pay is largely subsidising the rest of society.

    Playing devil’s advocate by painting a pastiche: probably small wonder those who work damned hard to earn what they do, and make sacrifices along the way, resent paying more than half of their earnings (at full whack) to subsidise the lives of those who who are inept, incompetent or, at the extreme, maliciously lazy. I guess that’s the weight on the shoulders of the middle classes, whilst the truly wealthy are able to get more creative in reducing Gordon’s salivating, sweatty-palmed grab for their earnings. If you were paying more tax in a year than some will earn in a lifetime, I can see how it could get quite galling.

    It smacks of “hey you, rich boy, go earn some money so I can Buy To Let some houses, go bankrupt, get my mortgage paid for by your tax and then boast about it to you while you’re still renting.” (ok, the truly wealthy actually can afford houses). I accept the arguments above and I believe social justice is fundamental, but is there any point at which you have paid “enough tax” – paid your dues to society and are free to go ahead and earn, rather than being pumped like some cash cow by a greedy exchequer which haemorrhaging cash left, right and center to incompetents because of its own incompetence?

    Lastly, apparently tax was voted in by ordinary people because it would only hit the rich, but as inflation and fiscal drag did their inexorable political and mathematical work, governments found that they could now tax those very same poor who voted it in.

    Reply
    Please complete the required fields.



  • sold 2 rent 1 says:

    If the graph continues its trend – debt will crash to around 200pc of GDP (from 450pc) and we will have a major depression (as opposed to a normal depression).
    This is the best we can hope for

    But there is a worse case scenario than this.
    If we really have pushed debt to its absolute breaking limit (550pc of GDP) then it may have to collapse to 50pc of GDP (the same as in 1830).
    This means 90pc of all debt will be destroyed.

    Unfortunately it won’t be like “Gangs of New York” – but Nukes of New York.

    Have a nice weekend.

    Reply
    Please complete the required fields.



  • sold 2 rent 1 says:

    One last thing.

    Maybe the China effect will tip the scales for the 90pc drop in asset values and wages.
    If the average wage in Birtian went from £500pw to £50pw then we would actually be able to compete with China.

    With millions of professional jobs to be offshored in the next 20 years – maybe I am not so barking mad after all.

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>