Just taking stock

tomterm8

Graham_Devon wrote: »

So say this is the bottom and prices just stagnate and drop tiny fractions each month. My question is, honestly, bulls and bears, please put differences aside for one moment, what will happen once:

- QE stops.
- Interest rates rise.

When America recently started informally reversing QE even a little bit, the economy started plunging a few months latter. For what its worth, I don't think it is possible to reverse QE without a second leg down. Certainly, Japan never managed to do so. At best, all Japan managed to do was stop printing more money.


I don't see much of a route to recovery, I suspect we are in for an L-shaped recession. I don't think there will be significant monetary tightning for years to come. This is against the majority of professional forecasters, but I don't think the fundamental problems have been tackled. There is too much debt. The banks have still got billions of pounds of bad debt on their books. If the government takes the debt onto their balance sheet, then there will be years of high taxation.

I'm feeling gloomy tonight. I hope I'm wrong. I don't think we are much more than a third through this crises. The initial plunge has been stopped, but the fundamental problems have not been fixed. I think it will take years of saving to fix them.

themanbearpig

inspector_monkfish wrote: »

[QUOTE= interest rates this low cannot go on forever.

QUOTE]


been this low in Japan for years now

House prices also crashed by 90%, but I can't see that happening here either!

inspector_monkfish

themanbearpig wrote: »

inspector_monkfish wrote: »

House prices also crashed by 90%, but I can't see that happening here either!

now theres a thought........;)

Graham_Devon

tomterm8 wrote: »

When America recently started informally reversing QE even a little bit, the economy started plunging a few months latter. For what its worth, I don't think it is possible to reverse QE without a second leg down. Certainly, Japan never managed to do so. At best, all Japan managed to do was stop printing more money.


I don't see much of a route to recovery, I suspect we are in for an L-shaped recession. I don't think there will be significant monetary tightning for years to come. This is against the majority of professional forecasters, but I don't think the fundamental problems have been tackled. There is too much debt. The banks have still got billions of pounds of bad debt on their books. If the government takes the debt onto their balance sheet, then there will be years of high taxation.

I'm feeling gloomy tonight. I hope I'm wrong. I don't think we are much more than a third through this crises. The initial plunge has been stopped, but the fundamental problems have not been fixed. I think it will take years of saving to fix them.

Thanks for a thoughtful answer.

I've seen a fair few stating QE can just stop without any problems, as problems are ironed out by then. I'm not keyed up enough to know whether thats true or not, and didnt realise America had had a problem when they stopped QE.

But like you said, the plunge has been stopped, BBC tonight are again reporting green shoots, economy on the way up, markets on the way up, but never ever mention how or why, only that it's good.

I'm a little worried that the recession has been meddled with a bit too much, in other words, stopped for now, but what happens when the bandages have to be taken off.

What happens after the next GE?

Graham_Devon

mrposhman wrote: »

Er no. Stating yet to be made redundant and yet to be made bankrupt indicates that he knows exactly what will happen. No-one knows what is going to occur in the future as to whether or not any more jobs will be lost, or whether or not (and the volume) of bankruptcies that will or won't occur.

The post above has clearly been writtent with one view in hand and is therefore not balanced. I don't claim that my post is balanced either as I clearly have a more bullish view than some on here.

The point I was trying to make, is that even the most bullish are not pretending unemployment will now level off and start going down.

I'm asking for thoughts on this thread, not just someone taking offence to someone elses thoughts. So please do explain why unemployment will just stop rising all of a sudden when growth is negative and getting worse, and then we could talk about it?

Just saying "maybe it wont" in response to someones thoughts isn't really an argument or debating point

mrposhman

Graham_Devon wrote: »

Thanks for a thoughtful answer.

I've seen a fair few stating QE can just stop without any problems, as problems are ironed out by then. I'm not keyed up enough to know whether thats true or not, and didnt realise America had had a problem when they stopped QE.

But like you said, the plunge has been stopped, BBC tonight are again reporting green shoots, economy on the way up, markets on the way up, but never ever mention how or why, only that it's good.

I'm a little worried that the recession has been meddled with a bit too much, in other words, stopped for now, but what happens when the bandages have to be taken off.

What happens after the next GE?

Look, most on this site seem to believe that what you need to do to fix the economy is fix all the problems and then restart the economy.

Thats a ridiculous view to have. The more logical view is to stem the downturn first and foremost. Once this has occurred then the real hard work begins which should lead to policies occurring both politically and regulatorily (if thats a word ) in order to ensure that these problems will not happen again.

This is by far the best approach, rather than letting the country go completely going to the dogs and starting again.

If we can get to the position where we can stem the negative effects then we can start rebuilding and ensuring that business models of all businesses (not just banks) and personal finances never see the level of leverage that we have seen over the last 10 years again.

Companies will either have to learn or be forced to learn through regulation that debt is not king but cash and equity can match whatever debt can. Only then can we signal a recovery.

My posts above were not to state that a recovery is in place and we are going through it but to state that things may not be as bad as everyone says.

The first move towards gaining recovery in our economic system is ensuring that it doesn't collapse completely and that we have a stable footing for the future. We may well be moving closer to that and many companies are paying down debts which is all good but looked on unfavourably by many on here.

treliac

Graham_Devon wrote: »

I'm asking for thoughts on this thread, not just someone taking offence to someone elses thoughts.

Just saying "maybe it wont" in response to someones thoughts isn't really an argument or debating point

Thanks Graham.

I don't know whether to laugh or be taken aback by mrp's reply - I'll put in a short answer though.

mrposhman

Graham_Devon wrote: »

The point I was trying to make, is that even the most bullish are not pretending unemployment will now level off and start going down.

I'm asking for thoughts on this thread, not just someone taking offence to someone elses thoughts. So please do explain why unemployment will just stop rising all of a sudden when growth is negative and getting worse, and then we could talk about it?

Just saying "maybe it wont" in response to someones thoughts isn't really an argument or debating point

I see your point but it won't continue to decrease at such a fast rate. It will level off, just like house prices. The post above states some good points and it is likely that unemployment will continue to rise but not guaranteed but as stated in my thread, generally the good points are lost when people state such ridiculous things mentioning people continuing to struggle with mortgages as this just isn't happening.

A lot of the stuff on this forum seems to read like a textbook even if its not happening just because people want to see it happening (I don't know why). I've sat on the sidelines for a while and maybe its the frustration of continuing to see rubbish (and the post above is not all rubbish at all, as I stated some good points) or maybe its the beer in me thats just wound me up, who knows, but there are always other sides to a story that don't seem to be heard on this forum. Its all one way, or posters will shout you down till you just couldn't be bothered to keep going.

I personally think we are somewhere near the bottom, but that doesn't mean that jobs will not continue to be lost, it doesn't mean that they won't but whichever way it goes we have some strengths in this economy. Whether that was by accident on behalf of the govt I will let you make your own mind up on, but frankly this forum is far too negative and never seems to get a positive spin before the usual suspects come in and turn whatever is said against people.

I probably should have just ignored the point about unemployment above but my statement that mortgage holders are effectively a weakness is not the right view, they are a strength and that is due to lower mortgage rates than before. We have already seen growing amounts of finance coming back to the market and hopefully we should continue to seen more green shoots. (Yes they are there you non-believers - not necessarily aimed at you Graham).

sabretoothtigger

Quick thoughts would be house prices should recover or turn around slower then stocks and on stocks I would think twice tbh

Its like an oil tanker, its going to take a while after the engines shut off for it to actually stop. We might slow but its not about to turn around just like that whoever might be captain

A house has a use though, I'd rather own something then stay in cash long term so buy on the way down I reckon

chucky

sabretoothtigger wrote: »

Quick thoughts would be house prices should recover or turn around slower then stocks and on stocks I would think twice tbh

Its like an oil tanker, its going to take a while after the engines shut off for it to actually stop. We might slow but its not about to turn around just like that whoever might be captain

A house has a use though, I'd rather own something then stay in cash long term so buy on the way down I reckon

a lot of people like to compare the way house prices came out of the 1990s recession - it took 4 to 5 years to get back to the peak before the recession.

during the early 80s recession it took only 26 months to get back to peak prices from before the recession.

it suits peoples agenda to always refer back to the early 1990s house prices plateau.

i don't know which it will be like but people need to open their minds and look at it from other angles rather than the way it is painted on this forum to suit their own agenda.

good thread Graham!! :beer: