Sunday, August 10, 2008

1990s style recession for 2009.

Inflation heading for 5%, say forecasters

"Hector Sants, chief executive of the Financial Services Authority, meanwhile, has warned Britain’s banks to prepare for a recession on the scale of the early 1990s." I remember the early 90's, I graduated then. I was the last recruit into my company for a good few years...

Posted by voiceofreason @ 09:02 PM (1159 views)
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9 thoughts on “1990s style recession for 2009.

  • A 90’s style recession may end up looking like a walk in the park compared to what’s to come.

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  • Eternal Sceptic says:

    perhaps a blasted heath with three dear little old ladies stirring the tureen in the soup kitchen

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  • Can’t see things getting any better for a few years atleast.

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  • little professor says:

    I’ve started to turn bearish (or should that be bullish) on inflation – I think it may well come down dramatically over the next 24 months.

    We’ve already seen gold, oil and other commodity prices fall way off their peaks. A recession seems a foregone conclusion, and with the destruction of so much global “wealth” we may well see prices dropping to levels people can afford.

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  • “Inflation heading for 5%, say forecasters”

    No sh1t, sherlock……

    It’s amazing that all these chuffin forecasters, experts and economists are finally reading the blog on http://www.housepricecrash.co.uk ! We could have told Hector Sants a full year ago that, even by this shoddy guv’mints fraudulant method of calculating inflation, the figure was gonna rise above 5% by the end of 2008.

    If anyone’s interested (and that means you Kurtsie, Gordy, Alistar (darling!), Hector and anyone else who hasn’t been paying attention) the majority (in my opinion) of the posters here think:

    a. House prices to fall by at least 50% from the peak (august 2007)
    b. The credit crunch is going to take at least 3 years to even approach anything like the levels of credit availablity we have been used to (probably 5 years)
    c. House prices might (just might) stop falling in time for the 2012 olympics.
    d. Kirsty Allsopp will be burnt at the stake sometime in 2010 (Ok, ok, that’s a bit far-fetched, it’ll probably be 2012, they’ll turn her into the olympic flame – she should burn for at least 3 weeks by my reckoning!)

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  • The pound is heading south if inflation breaks 4% – the BoE will be viewed as having all but abandoned their inflation target.

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  • “to prepare for a recession on the scale of the early 1990s.”

    That’s comforting news 8 months into this HPC, only just getting started. What will Hector Sants say at Christmas? “Well, you know I was saying it was possibly going to be as bad as the RECESSION of the early 90’s back in August. Well, I was wrong, as you can see it is far worse than I or anyone could ever have imagined”.

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  • 5% inflation? Yeah in in Gordon Brown cloud cukoo land, try 18% real inflation in the real world (I don’t buy an LCD TV every week but I do buy food and fuel every day)! So 18% is very real to me!!!

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  • Inflation measures the rate of increase of prices, but it also represents a correlation – an increase in the money supply relative to the supply of commodities etc. to buy.
    In the present situation, with a credit crunch going on, with writedowns, balance-sheet recapitalisations, and falling asset prices, the money supply is hardly growing, only being maintained by central banks helicoptering cash. Commodities are in a bubble which now seems to be bursting, and it is these that have driven the current inflation figure so high. Given that labour values have been depressed, in part through the availability of cheap credit over the past decade, surely re-establishing the value of labour should be an aim, not a problem. Higher wage settlements may add short term inflationary pressure on new domestic products and services, but not on existing assets like already-built houses, nor on globalised-market commodities whose value and inflationary potential are exogenous and mostly out of the control of the BoE, save that the BoE can set an interest rate that will strengthen sterling to partly counteract imported inflation. However, real inflation can only occur in the context of runaway money supply expansion (as it did over the past 10 years in house prices), but in a credit crunch that is not going to happen, quite the reverse.

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