King warns of too-low inflation

dopester

!!!!!!? wrote: »

IMO this whole 'deflation of consumer prices' scare is a complete red herring designed to cover up an attempt to inflate the debts away and get people back on the credit/consume bandwagon.

People need to buy consumables like food and even for the more expensive luxury class of goods they aren't going to hold out forever for the sake of saving a few quid. As a certain point of cheapness is reached, you'll find that lots of luxury goods like tellies and such become unviable to import/sell anyway so there would be a cut off point as supply restricts itself and a baseline price from the new supply:demand ratio is established.

If we followed the same logic then we'd say that houses will eventually go to zero unless someone does something - it's nonsensical. There will be a baseline price and when we hit it, prices will scrape along the bottom until confidance returns and demand increases thanks to increased wages/ ability to borrow more etc.

There will be no increased wages. Look on other forums. People are getting pay-cuts. See what happens if you push for a wage increase.

If you want to do your part, go buy the Audi for top-whack from the stealers. I'm seeing great deals at car auctions which would have been unthinkable 2 years ago.

On the whole, apart from in a few sectors, you can't blackmail employers to pay you more than your market worth; more than a company can afford to pay you. We live in a world where there are many competitors in many sectors, not just in the UK, but worldwide.

You said it yourself a few posts back in either this thread or another - it isn't about consumer psychology but the fact the consumer is mostly spent out.. consumer liquidity, which isn't going to be solved by banks just chucking money at poor credit risks.

People have had their 11 years consuming already, much of it on the back of ever increasing house prices, and now with banks guarded about lending... as bankruptcies increase, and job prospects worsen, and incomes fall. The lower interest rates are in no way going to kick start any big consuming binge.

For me, I'm even more reluctant to spend more than ever, seeing as my savings are not generating as high a return as 3 months ago, and I think the same is true for many who could be in a position to spend if they chose. All the weapons they try to counter deflation are doomed imo.

The death of wage inflation
Posted By: Edmund Conway at Nov 19, 2008 at 17:50:00 [General]

wolvoman

Really2 wrote: »

I don't mean it in a conspiracy way, but there are so many ones it is hard to see whic is the most accurate.
I just find it mad to include TAX in an inflation index. I know it effects the consumers wallet but in real terms as somone who runs a B2B company VAT could be anything it does not affect our purchase prices or sales prices.

It's simple. You run a B2B business so therefore CPI and RPI are of less relevance to you anyway (I don't need to tell you what the C and R stand for in the acronyms). You should be far more interested in producer prices, factory gate prices and so on. These are pre-tax price measurements that you should focus on.

Stop worrying about CPI and RPI. The simple fact is that a VAT reduction will lower CPI/RPI. Just like fuel duty rises and Air Passenger Duty have increased CPI/RPI. It does not get seasonally adjusted out.

But, just because it lowers CPI does not mean it is inflationary - as you say it is temporary.

dopester

Dithering_Dad wrote: »

He'll be saying "Rampant deflation will be followed by rampant inflation" next with poor old Dopester nodding along with him like Graham Taylor's stooge "yes boss, no boss"

If you mean the 1993 England campaign in the qualifiers for the 1994 World Cup in USA... that would be.. Phil Someone... ex-Coventry player/manager IIRC.

Remember that campaign well. The 2-2 at home to Holland. John Barnes early free kick goal, then David Platt's... before allowing Holland to get back into the game with a great move which finished in Dennis Berkamp strike, and then Des Walker pulling his shirt repeatedly to concede late penalty.

Torn apart in Norway.. Gazza winding up the locals by saying "FO Norway" on live local TV. Des Walker throwing a strop and quick free kick with his back turned saw Norway score. Then again... Taylor "stand up stand up" as Chris (?) the goalkeeper concedes another goal. Sun turnips Taylor next day.

Good game in Holland... 2-1 or 2-2.. but not enough. Koomans should have been sent off but sends Taylor mental... "that blonde fella" - "do I not like that"... seeing Koomans bend in a free kick to break English hearts.

Sorry, but Taylor and his sidekick were way out of their depth in Norway, stubbornly refusing to change formation. That 3-4-1-2 formation Taylor used had Norway run riot over us. So if I was his sidekick, or anything like it, why was I feeling so much fury during that match at their long-ball - begging that the team would mutiny and revert to 4-4-2 by their own accord, as the bench did nothing.

Lotus-eater

Really2 wrote: »

But it is clearing a nice big area for rates cuts now.
Perhaps the drop was to cause further rate cuts. That will possibly bring more "free cash" for a good few more people.
Unfortunatly at the expense of savers etc,

PS increse in fuel duty should cause those affected to inflate their prices, most business's work on a %margin so if COGS go up so does the sale price.

Would that be true

Maybe in your business, we haven't been able to raise our prices to cover the fuel increase over the last year, let alone this one, we're fighting hard for work, but so is everyone else.
I started feeling it a few months ago, but in the last 2 weeks its just gone mental. Everyone I speak to in business is in the same spot, there just is no work, everyone has stopped spending. I have well off customers who last year wouldn't even have queried a £2K bill, now they won't even sign off a £20 invoice.

Good job I was prudent in the good years.

Really2

neverdespairgirl wrote: »

SImple answer - no. I haven't been to one in the last 6 years. I don't like Tesco, an ethical stance made easier by the fact that there isn't one near here, apart from one of the city-centre-corner-shop-type ones near Tottenham Court Road.

They are now argos brocures with grocerys.;)

Really2

Lotus-eater wrote: »

Would that be true

Maybe in your business, we haven't been able to raise our prices to cover the fuel increase over the last year, let alone this one, we're fighting hard for work, but so is everyone else.
I started feeling it a few months ago, but in the last 2 weeks its just gone mental. Everyone I speak to in business is in the same spot, there just is no work, everyone has stopped spending. I have well off customers who last year wouldn't even have queried a £2K bill, now they won't even sign off a £20 invoice.

Good job I was prudent in the good years.

Depends on who you sell too I suppose.
Do you have service contracts or somthing? why are they not paying invoices.
If you are worried about their solvency and time to pay an invoice take a look at factoring.

Lotus-eater

Really2 wrote: »

Depends on who you sell too I suppose.
Do you have service contracts or somthing? why are they not paying invoices.
If you are worried about their solvency and time to pay an invoice take a look at factoring.

No I'm alright, everyone is still paying atm. But I have never been so worried about customers going bust.
Atm I just have one customer with large outstanding invoices and I am pretty certain they will be OK, at least for the next few months. (because I know their workings very well)
Anyone else from now on, it will be a large deposit before any work is done, or any equipment ordered. This will hurt my chances of getting the work, but I only need one large job to go wrong and that's my profit for the year wiped out.
I shall have to look into factoring, but I'm not sure I like the idea.

Really2

Lotus-eater wrote: »

No I'm alright, everyone is still paying atm. But I have never been so worried about customers going bust.
Atm I just have one customer with large outstanding invoices and I am pretty certain they will be OK, at least for the next few months. (because I know their workings very well)
Anyone else from now on, it will be a large deposit before any work is done, or any equipment ordered. This will hurt my chances of getting the work, but I only need one large job to go wrong and that's my profit for the year wiped out.
I shall have to look into factoring, but I'm not sure I like the idea.

We don't (use factoring) but we have cutomers who can't go bust.;)
It depends on what you supply, if you make a decent margin and can afford to sacrefice a few % it would be the way to go for you.
You get paid in a few days for a few % margin and don't have to worry about constant credit checking and the customer going bump.
The factoring company will cover all that for you.

JACKBLACK

Lotus-eater wrote: »

No I'm alright, everyone is still paying atm. But I have never been so worried about customers going bust.
Atm I just have one customer with large outstanding invoices and I am pretty certain they will be OK, at least for the next few months. (because I know their workings very well)
Anyone else from now on, it will be a large deposit before any work is done, or any equipment ordered. This will hurt my chances of getting the work, but I only need one large job to go wrong and that's my profit for the year wiped out.
I shall have to look into factoring, but I'm not sure I like the idea.

Same worries here. Having been prudent in good times my company's debts are not a worry. But other large customers ( our potential bad debts from our customers ) not paying is a worry. All our potential bad debt is factored but at the moment all our customers are saying they will pay (eventually). In the mean time this effects are cash flow. Nightmare.

purch

that would be.. Phil Someone... ex-Coventry player/manager IIRC

Phil Neal ex Liverpool rightback from their European Cup winning teams and also ex England rightback too.