'Is the economic cataclysm over?' blog discussion 16 October 2009 at 3:24PM in Martin's blogs & appearances & MoneySavingExpert in the news 4 replies 1.4K views

Former_MSE_Lawrence

This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.

Read Martin's "Is the economic cataclysm over?" Blog.

Please click reply to discuss below.

crl_3

I don't think it's over.

The UK Government has printed money (QE) that appears to have discounted the stock market from the real economy. So, while unemployment rises and GDP is low we're having one of the biggest stockmarket booms we've known. This is counter intuitive and smells of "this time the recovery is different" in a similar vein to "this time this boom is different".

When you see markets rallying when the real economy is shrinking doesn't that tell us that this "recovery" is not going to endure.

A stockmarket crash/realignment (call it what you want) must be required to re-connect stockmarkets with the companies they represent. How can another conclusion be drawn?

456789

It is not over.

The government has dealt with the problem by borrowing vast sums (which we will be paying off for a long time) and asset protection schemes etc. rather than dealing with the underlying problems.

The banks are paying big bonuses again and not lending enough. The government has failed to use its controlling share in RBS and LBG to support the public.

And now we are stuck with the 'moral hazard' - i.e. that whatever the banks do we have no choice but to save them or end up in an even bigger mess if the financial system collapses - so bankers will take more risks because they know they will get bailed out.

Gordon Brown still thinks he has brought an end to 'boom and bust'

I think it is a matter of when the second 'dip' comes not if

edit: Meanwhile Man City need not be bothered by the state of the economy - the Sheikh has very deep pockets

WelshGandalf

Not over yet - the causes have been dealt with, not the symptoms, still way too much debt for example - putting interest rates so low does help with that debt being serviced, but the government and the media at large are still putting out the message that more lending is required to pull us out of the recession - so what's going to happen when rates eventually go up, as they must...?

Brown's actions have merely postponed most of the pain until after the election (he hopes), and made the pain worse.

cityfan123

I can't help thinking there's a pattern emerging here. Anyone with an ounce of common sense is not convinced we're out of trouble.

Take the housing market. It's finite. House prices cannot continually go up in real terms without reaching a point where people can't afford to buy, which is what we've seen, and thus demand drops and prices have to fall, which is exactly what happened.

It's the same in any other market.

There are no posts on here (so far) that indicate that we're out of the mess, and I agree with them. So why is it politicians are continually talking about green shoots of recovery etc. on one hand and raised taxes on the other?

We are all aware this in't going to go away overnight, and if you have to borrow money, at some point you have to pay it back.