Monday, March 16, 2009

So much for high house prices.

Britain showing signs of heading towards 1930s-style depression, says Bank

The country is displaying early symptoms of being trapped in a so-called “debt deflation trap” where families find themselves pushed further and further into the red every month, according to a Bank report published today. The stark warning will cause serious concerns, since it was this combination of falling prices and soaring debt burdens that plagued the US in the 1930s. The Bank is using its Quarterly Bulletin to highlight the threat posed to the economy by deflation – where prices fall each year rather than rise.

Posted by charlie brooker @ 06:51 AM (1556 views)
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8 thoughts on “So much for high house prices.

  • Still not really seeing any of this deflation in prices on the high street, apart from small pockets of it in closing down sales. Any one point me in the direction of some?

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  • Quarterly Bulletin?

    There’s at least 4 wasted letters there.

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  • Thanks to the way banks have sold the lifestyle of debt is good that we are in this position.

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  • Inbreda – they’re not wasted – they’re just not the right 4 letters. Well, 2 of them aren’t.

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  • It looks as if QE hasn’t been the runaway success the BoE first thought. I suspect that’s because the appetite for new debt just isn’t there.

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  • japanese uncle says:

    I received a few phone calls from banks, trying to push ‘semi-guaranteed’ type of investments, ie half of the investment is fully guaranteed savings, but the other half will be invested in the stock market.

    I gave them rather nasty answers, telling them about those poor punters who had to jump from the skyscrapers in Wall Street, who in the belief that the initial crash in 1929 provided the chance of their lifetime, heavily invested in stocks and that by borrowing money from banks. I could almost see the their faces quickly becoming pale at the other end of the phone.

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  • paul – (as you say the demand may not be there anyway but…) I think the main aim of QE is actually to keep banks solvent rather than to get them lending, don’t believe all the media hype! Even if it were, I don’t think much QE has been done yet (£75bn has been allocated for QE, but how much of this has been allocated to central bank accounts?). Furthermore if it has been placed, I don’t think the banks are going to rush to lend it out even if the demand is there – they are still going to pick and choose if the loan has to stay on their books.

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