The cause of our crises has not gone away

wymondham

Once a year or so has gone by and most people have forgotten the trauma of the last 18 months we'll return to excessive greed, but this won't be curtailed at all despite government retoric as this will be deemed to be prosperity...... when it crashes again it will be a big surprise ....... again!

Thrugelmir

HAMISH_MCTAVISH wrote: »

Presumably from the increased tax revenue generated by the increased wages of the 79% of people who are not..... The same place it always comes from.:rolleyes:

But tax revenues were insufficent to pay the bills during the boom years. :rolleyes:

Emy1501

julieq wrote: »

The application of a defibrillator is a temporary action, but it has a long term effect. That's what stimulus is for. Stimulus is not life support.

If I lose my job and go to parents and ask for enough money to cover my wages for the next year so I don't lose my house they will probably lend it to me. For the next year on the surface everything will look fine as I have the money to cover everything. If I get a job within the next year preferably paying more than I was on then I can pay the money back etc and it would be a win win situation to the economy and even to my parents who may have found themselves housing me and my family etc for sometime! If though I only find a job paying 3/4's of what I was on or I do not find a job in the next year then my problems just get worse as I can't take money from my parents for ever.

The idea of QE is fine as long as you believe that problems over the last couple of years were a blip. The problems though to me are that our main drivers of the economy were finance, services and the public sector. We are not going to see the 6b profits from RBS in the near future. A fair few services are going abroad and we know the public sector will not grow. So where is all this growth going to come from once the QE money runs out? Robert Peston who always seems to be in the know in view of the fact that he first tolds about NR, the bank bailouts and the merger of Lloyds and HBOS says businesses are telling him that things are not going to be great next year so a business lead recovery next year is unlikely.

So where is all this new growth going to come from once the effects of QE wear off? Where is the money which will replace the banks profits, the money people were using from mewing etc going to come from? People can't seriously believe we are going to QE for ever? Alot of economists I see on TV are saying that 2010 will be ok even 2011 maybe but its once all that debt has to start being paid off is where the problems will be and they seem to have concerns.

QE is great if you have a credible plan for the future but at the moment it seems that the only plan of the government is to get back in power and of course QE will mask any problems we have to beyond June.

As you say a defibrillator is a temporary measure but its long term effects will be greater if the reasons why it was needed in the first place were found out and measures were taken to try and make sure it was not needed again. Just like a defibrillator, there may come a time when temporary measure do not work especially if we do not learn from our mistakes

Radiantsoul

purch wrote: »

Depends on how you define FAIL :eek:

No normal savers has lost there money. And people have not, in general, raced down to their bank and withdrawn cash to stash under their matress. Basically from the point of view of their creditors(and shareholders) they have remained solvent.

Radiantsoul

Emy1501 wrote: »

QE is great if you have a credible plan for the future but at the moment it seems that the only plan of the government is to get back in power and of course QE will mask any problems we have to beyond June.

The dominant political ideology(shared by all the major parties) is that it is not really for government to plan the economy - even on a broad level. The assumption is that markets will resolve these issues. And whilst market capitalism is under attack we should be careful not to throw out the baby with the bathwater. Things are tough, but as a society we are rich and priviledged.