Stubble any one?

michaels

I think RP has been reading the board again

http://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/12/a_bubble_or_stubble_of_our_own.html

CloudCuckooLand

"That nagging fear that markets may again be overheating..."


This gels with something I read recently. I was struck by the choice of details on a flyer from Willis Owen;

"Time to Invest? - we've just had the best 3 month period in 25 years of the FTSE, +21%. Better than the dotcom boom, +15%, in the last 3 months of 1999".

Erm!;

1) I'm not sure that it is reassuring news that makes me want to invest now, I should have 3 months ago!!

2) And, if we are accelerating faster than the dotcom bubble, then there must be some concern that the brakes are going to come on, or the wheels are going to come off, like they did for dotcom?

They also go on about NIESR's August's recovery of UK growth, that the "next" government figures will show UK out of recession. Only they forgot to check that September's GDP *was* positive, before issue. Oops.

Trying to get all and sundry to not miss the boat, smacks of something untoward being round the corner - watch the herd then head the other way, and all that?

bernard_shaw

http://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/12/a_bubble_or_stubble_of_our_own.html

Have we reduced the pain caused by the pricking of the mother of all financial bubbles by creating a new financial bubble?

...it represents a bit of a problem for central bankers and finance ministers - who have somehow got to keep the growth going without pumping up the bubble to really dangerous proportions (or may, at some point, have to try to deflate the incipient bubble without tipping us back into recession).

The stubble is non-trivial for businesses and households too. Should they scrimp and save, and batten down the hatches, or borrow to invest as though there's no tomorrow?

Unintended consequences, moral hazard, asset bubbles, stagnation.

Jonbvn

I thought they had put Peston back in his box?

bernard_shaw

Jonbvn wrote: »

I thought they had put Peston back in his box?

It seems he had some 'family issues'. Whatever that means.

Wookster

Interesting article and it seems that there seems to be something of a return to the excesses that brought about the crisis in 2007-8.

How do governments go about trying to encourage cash from speculating in shares (non productive) to innovation and production? Perhaps this really is what the economy needs...

Harry_Powell

Wookster wrote: »

Interesting article and it seems that there seems to be something of a return to the excesses that brought about the crisis in 2007-8.

How do governments go about trying to encourage cash from speculating in shares (non productive) to innovation and production? Perhaps this really is what the economy needs...

The answer is.. they don't (usually). In order to transition from a financial based economy to one based in manufacturing (innovation / production) they would have to make some long-term investments. As governments tend to just look 4 or 5 years ahead, i.e. to the next election, it's unlikely that they will put in place procedures that may finally pay off long after they themselves have left office.

I just can't see it happening.

bernard_shaw

Wookster wrote: »

How do governments go about trying to encourage cash from speculating in shares (non productive) to innovation and production? Perhaps this really is what the economy needs...

Having 'nationalised the commanding heights of the economy' last year state actors must now fully abandon free-market dogma (which is contradictory to the position they now inhabit in any case) and have the balls to actually command the economy.

The political barriers to this are, of course, all but insurmountable. (Although there is a proxy battle being fought at the moment over RBS bonuses.)

neas

peston in his box lol

nearlynew

Peston, along with most mainstream journalists, was bought and paid for a long time ago.

You cannot believe a word they say.

Thrugelmir

nearlynew wrote: »

Peston, along with most mainstream journalists, was bought and paid for a long time ago.

You cannot believe a word they say.

Then I suggest you go along to a literary festival where journo's often guest speak.

Out of their boxes many are extremely knowledgable on given topics. And debate very well with Joe public.

Even if i don't agree with their personal politics, I never come away without learning something of interest or a fact that opens ones eyes to wider issues.