'I messed up' - David Cameron

StevieJ

Thrugelmir wrote: »

Yes. As it became obvious that it was margin calls driving global stock markets down, not that companies in general being anyless profitable.

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But they were less profitable easily witnessed by increasing p/e ratios on falling markets, but we were in recession and these things don't last for ever especially when the global governments made it obvious that they were going to do something about it.

Emy1501

StevieJ wrote: »

Tell you what, it looks like we may just have avoided what many were predicting as at least as bad as the 30's recession, along with a total collapse of the financial system

Thats the issue though isn't it. QE failed in Japan and there is no evidence it will work here. GB will go down a hero for saving europe if not the world if it works and I hope it does but if it fails who knows what will happen and I suspect the consequences will be alot worse than if we had gone down the normal route.

We are relying on a man who got it so wrong when he was chancellor. People who make mistakes will always try to do anything to cover up their errors and thats my concerns. I would rather Labour got rid of GB and had a leader who did not have to cover up GB's problems

StevieJ

Emy1501 wrote: »

Thats the issue though isn't it. QE failed in Japan and there is no evidence it will work here. GB will go down a hero for saving europe if not the world if it works and I hope it does but if it fails who knows what will happen and I suspect the consequences will be alot worse than if we had gone down the normal route.
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From what I can gather it was too little too late in Japan .

CLAPTON

Emy1501 wrote: »

Thats the issue though isn't it. QE failed in Japan and there is no evidence it will work here. GB will go down a hero for saving europe if not the world if it works and I hope it does but if it fails who knows what will happen and I suspect the consequences will be alot worse than if we had gone down the normal route.

We are relying on a man who got it so wrong when he was chancellor. People who make mistakes will always try to do anything to cover up their errors and thats my concerns. I would rather Labour got rid of GB and had a leader who did not have to cover up GB's problems

the 'normal' route may well have been a 1930 depression with huge unemployment levels and much of UK businesses wiped out

the success of the policy have been the relative modest unemployment levels and the relatively small number of business bankruptcies

Emy1501

CLAPTON wrote: »

the 'normal' route may well have been a 1930 depression with huge unemployment levels and much of UK businesses wiped out

the success of the policy have been the relative modest unemployment levels and the relatively small number of business bankruptcies

But what if it fails once the money stops being pumped in? You cant pump it in for ever Its success is reliant on the tax generated from the banks, mewing etc being replaced isn't it?

From what I have read there is no signs of a business recovery yet and its unlikely there will be one this year?

I may be being a bit simple but as I said before if I lose my job and borrow loads of money I will seem fine for the next year or so. For QE to work surely the money generated from Banks, Mewing and other companies that went bust will have to be replaced? There seems little evidence of that yet.

I just don't get this we were on the verge of a 1930's depression talk but by printing 200B everythings fine and back to normal without anyone especially in the South East feeling any pain. I just dont get why nobody has got it to work before and how the worse chancellor in living memory is now going to get it work with such ease.

Radiantsoul

Emy1501 wrote: »

Thats the issue though isn't it. QE failed in Japan and there is no evidence it will work here. GB will go down a hero for saving europe if not the world if it works and I hope it does but if it fails who knows what will happen and I suspect the consequences will be alot worse than if we had gone down the normal route.

We are relying on a man who got it so wrong when he was chancellor. People who make mistakes will always try to do anything to cover up their errors and thats my concerns. I would rather Labour got rid of GB and had a leader who did not have to cover up GB's problems

The problems with the British economy were quite structural. I wonder how people would have felt if the government had ramped up interest rates from 2001-2005. With the benefit of hinsight interest rates were probably too low, but the economic orthodoxy was to focus on consumer prices and not asset prices. It would have looked like insanity when prices were low to push up interest rates and stiffle the economy because bankers were busy sending the London property market insane.

I suspect that in future governments and central banks will in future monitor asset prices. But it is hard to see if they are rising whether this is a sign of rising prosperity or just a bubble. Even now there is debate on whether houses are overvalued. Probably this is the sort of thing that can only be known in hindsight and perhaps not until the following decade!

CLAPTON

Emy1501 wrote: »

But what if it fails once the money stops being pumped in? You cant pump it in for ever Its success is reliant on the tax generated from the banks, mewing etc being replaced isn't it?

From what I have read there is no signs of a business recovery yet and its unlikely there will be one this year?

I may be being a bit simple but as I said before if I lose my job and borrow loads of money I will seem fine for the next year or so. For QE to work surely the money generated from Banks, Mewing and other companies that went bust will have to be replaced? There seems little evidence of that yet.

Excluding the front paper political writers, virtually every serious commentator including CBI, Times, Telegraph, Economist, most of the economic observers both acedemic and business, rightwing and left wing all support QE because without it they saw the thirties being repeated.

Nearly every recent report predicts that we are about to come out of the recession (in its technical definition) and there will be a weak recovery (unemployment will continue to grow a bit but its generally agreed to be a trailing indicator)

So the art will be to withdraw QE whilst not killing off the recovery.
No-one is saying it is easy but the realistic alternative was probably 25% unemployment and 10 years of deep recession.

sabretoothtigger

Most of what QE did this year was to delay government spending cuts and create false dynamics that we cannot sustain. The real active effect would be the low rates I think which is backed by the QE keeping gilt yields low.

I dont think we've left recession yet so drawing any conclusions on QE effects is premature, the bill will come after the election and I suspect that stage will be the worst part as the damage goes unnoticed just now

On the other hand you have $400bn owed by the government sponsored enterprises in the US after their decades long artificial warping of the property market thanks to government regulation.

Half of the total USA mortgage market is government backed. 95% of lending in the last year was done by government.

Americans can mortgage a house for 30 years backed at 5% fixed interest which seems totally unrealistic to me.
Sooner or later thats going to blow up, only a government could force a one sided market like that, capitalism works to destroy inefficiency and the whole system is full of it.

UK is way better off in this regard at least and we should avoid relying on american policies as a good idea

http://en.wikipedia.org/wiki/Fannie_Mae

Emy1501

CLAPTON wrote: »

Excluding the front paper political writers, virtually every serious commentator including CBI, Times, Telegraph, Economist, most of the economic observers both acedemic and business, rightwing and left wing all support QE because without it they saw the thirties being repeated.

Nearly every recent report predicts that we are about to come out of the recession (in its technical definition) and there will be a weak recovery (unemployment will continue to grow a bit but its generally agreed to be a trailing indicator)

So the art will be to withdraw QE whilst not killing off the recovery.
No-one is saying it is easy but the realistic alternative was probably 25% unemployment and 10 years of deep recession.

I am not doubting that but if you find yourself in deadly trouble you will try anything to get out of it whether its likely to be successful or not. As I say there is no evidence so far QE will work but if you believe many on here you would think its a simple as pumping 200B in and the UK is fixed and we will back to 2007 as if the credit crunch never happened. People talking about 50 year mortgages etc.

As I say if getting out of recession is as simple as being suggested on here why has it taken so long to work out? I just can't see how we go from a 30's style depression to it was like nothing ever happened. Life is not that simple. As they say no pain no gain.

I hope you are all right but I just don't see someone as incompentent as Brown has been over the last 12 years pulling this off and the fact that it seems QE was mainly his idea across the world is my real concern

CLAPTON

Emy1501 wrote: »

I am not doubting that but if you find yourself in deadly trouble you will try anything to get out of it whether its likely to be successful or not. As I say there is no evidence so far QE will work but if you believe many on here you would think its a simple as pumping 200B in and the UK is fixed and we will back to 2007 as if the credit crunch never happened. People talking about 50 year mortgages etc.

As I say if getting out of recession is as simple as being suggested on here why has it taken so long to work out? I just can't see how we go from a 30's style depression to it was like nothing ever happened. Life is not that simple. As they say no pain no gain.

I hope you are all right but I just don't see someone as incompentent as Brown has been over the last 12 years pulling this off and the fact that it seems QE was mainly his idea across the world is my real concern

The 30's depression lasted 10 years and was only finally 'resolved' by a world war that killed 10s of millions of people.
The idea of no pain no gain was very prevalent in the 30s too and that lead to the mis-guided policies at that time.

I don't believe that QE will make it all better but it has and is working and means we have avoided the huge mistakes of the 30s.

I take it you don't like Brown but that doesn't of itself make the policies of most of the western world incorrect and indeed in your interest.