Myth-Busting. Proving Bears Wrong, again.

nearlynew

dopester wrote: »

Keep hoping. Really2's accountant's mind shines through here. The QE isn't really getting out and is a spit in the debt ocean anyway.

Also the Government doesn't have enough firepower to defeat the market, unless they deliberate choose economic destruction and total breakdown.

Inflationary depression would wipe out the financial economy and most likely lead to overthrow of the government. Because all of society's bad debts would be the bad debts of the government, there would be a growing temptation to repudiate the debts by repudiating the government. Law and order, commerce... all at risk of halting. Not some magic solution to the problems. You might have to hold on to your home and property by force, and see or experience things which may turn your hair white overnight, if it isn't already.

There comes a point when attempts at further inflation are self-defeating and it makes more sense to take the bad-tasting medicine required. We've had decades of inflation and have reached a peak-point in the cycle. The printing-press cure for deflation is worse than the disease.

Deflationary depression would write down that value of tangible assets that are the collateral for many loans in the banking system, but it would increase the value of sound financial assets, including the value of government debt. Deflationary depression would expose all the social conflicts that are currently kept indulged by welfare spending.

I'm not sure any of the above will happen, but I will agree that it's possible.

Wicked post.

Tin-foil hattery at its best.

StevieJ

nearlynew wrote: »

I'm not sure any of the above will happen, but I will agree that it's possible.

Wicked post.

Tin-foil hattery at its best.

I think Dopester manufactures them on the quiet

Cleaver

dopester wrote: »

The QE isn't really getting out and is a spit in the debt ocean anyway.

Also the Government doesn't have enough firepower to defeat the market, unless they deliberate choose economic destruction and total breakdown.

Inflationary depression would wipe out the financial economy and most likely lead to overthrow of the government. Because all of society's bad debts would be the bad debts of the government, there would be a growing temptation to repudiate the debts by repudiating the government. Law and order, commerce... all at risk of halting. Not some magic solution to the problems. You might have to hold on to your home and property by force, and see or experience things which may turn your hair white overnight, if it isn't already.

There comes a point when attempts at further inflation are self-defeating and it makes more sense to take the bad-tasting medicine required. We've had decades of inflation and have reached a peak-point in the cycle. The printing-press cure for deflation is worse than the disease.

Deflationary depression would write down that value of tangible assets that are the collateral for many loans in the banking system, but it would increase the value of sound financial assets, including the value of government debt. Deflationary depression would expose all the social conflicts that are currently kept indulged by welfare spending.

All very valid dooming. Although you know I like to always give an alternative, more happy view of the news. So...

• Football season starts again this weekend
• Sun was out today
• I had a chinese for dinner. Haven't had one in ages and it was lovely. I think the key is to get one without a gloopy sauce and you feel much better afterwards.
• Mrs C is getting over her swine flu and is starting to not resemble the girl from The Exorcist at long last.
• I got a funny letter from Hazel Blears today (long story)
• I thought I had a flat tire earlier, but looks like it's okay
• I did that cracking thing tonight of finding a tenner in the back pocket of a pair of jeans I didn't know was there. Hence the chinese.

All keeping me chipper in the face of a deflationary vortex.

nearlynew

Cleaver wrote: »

All very valid dooming. Although you know I like to always give an alternative, more happy view of the news. So...

• I thought I had a flat tire earlier, but looks like it's okay

Bl00dy yanks.


They get everywhere.

bluey890

Not the bloomin football season ... now I am really depressed.
We can all look forward to endless conversations over whether someone was offside or a foul was deliberate.

Get video replays !!!!!!!

Really2

dopester wrote: »

Keep hoping. Really2's accountant's mind shines through here. The QE isn't really getting out and is a spit in the debt ocean anyway.

Also the Government doesn't have enough firepower to defeat the market, unless they deliberate choose economic destruction and total breakdown.

Inflationary depression would wipe out the financial economy and most likely lead to overthrow of the government. Because all of society's bad debts would be the bad debts of the government, there would be a growing temptation to repudiate the debts by repudiating the government. Law and order, commerce... all at risk of halting. Not some magic solution to the problems. You might have to hold on to your home and property by force, and see or experience things which may turn your hair white overnight, if it isn't already.

There comes a point when attempts at further inflation are self-defeating and it makes more sense to take the bad-tasting medicine required. We've had decades of inflation and have reached a peak-point in the cycle. The printing-press cure for deflation is worse than the disease.

Deflationary depression would write down that value of tangible assets that are the collateral for many loans in the banking system, but it would increase the value of sound financial assets, including the value of government debt. Deflationary depression would expose all the social conflicts that are currently kept indulged by welfare spending.

Although I would not go as far as Dopester (I can't I am a bull, apparently), There is still a big debt black hole to fill.

That will have to be met some how and how ever it is met it will not be a cause of inflation.

debt being paid back causes deflation (spending withdrawn to pay back debt)
the best I see it is marginal growth and static wage or perhaps an increase in working hours for the same wage (that is already happening)

The current situation will be painfull for some those that react latest will be the worst hit. It was on the wall last year but no one believed it The current IR validates it.

(now step back in to bull)

But for some it will be the greatest opertunity to pay back debt in modern history.

nearlynew

Really2 wrote: »

But for some it will be the greatest opertunity to pay back debt in modern history.

And if house prices keep falling, it will be a great opportunity for FTBs not to get into so much debt in the first place.

the_ash_and_the_oak

Entertainer wrote: »

Whilst I don't wish to feed the bulls any more than necessary, it is true that the "seven years" fall in house prices in the last slump is a complete misconception. In fact, most of the falls took place over just 1 1/4 years between Q3 1989 and the end of 1990. 1991 was virtually the same and 1992 would have been as well were it not for the couple of rogue months due to White Wednesday. It could be argued that this crash is following a similar path.

In addition, interest rates were ridiculously high last time due to the ERM. Today's surprising recovery just shows, yet again, the power of monetary policy.

agree w a lot of this tho its worth pointing out that the rates were only ridiculously high compared to today. and their level compared to the 5 or 6 years prior (when the most affected borrowers would have taken on their loans) wasn't particularly high. borrowing at 10% which then rises to 15% is less onerous than borrowing at 3.5% which then rises to 5.5% imo

Thrugelmir

Really2 wrote: »

(now step back in to bull)

But for some it will be the greatest opertunity to pay back debt in modern history.

But thats repayment of debt on the back of inflated purchase asset values. :rolleyes:

Buying some assets classes more recently is a once in 20 year opportunity. :cool:

Entertainer

the_ash_and_the_oak wrote: »

agree w a lot of this tho its worth pointing out that the rates were only ridiculously high compared to today. and their level compared to the 5 or 6 years prior (when the most affected borrowers would have taken on their loans) wasn't particularly high. borrowing at 10% which then rises to 15% is less onerous than borrowing at 3.5% which then rises to 5.5% imo

Real interest rates were very high though- 7% in the middle of 1992. Base rate was 10%, inflation was 3%, due to the idiocy of the ERM. They were much higher than they are today.