Does it always go Boom-bust-boom-bust.

vivatifosi

Yes, boom follows bust and bust follows boom, unless of course you are Gordon Brown.

However it is worth bearing in mind that not all booms are the same and the duration of the cycles changes. If boom followed boom, that would be the Basil Brush school of economics (I'll get me coat).

abaxas

Linton wrote: »

As an oldie I have seen several booms and busts.

Some of the busts of the past were a lot more unpleasant than the current one, and with much slower recoveries. Look at the unemployment and inflation levels of the late seventies/early eighties. During that period major industries collapsed with parts of the country facing mass unemployment. So I am somewhat amused by the "end of the world" views of so many of the contributors.

The reason it is different is due to the number of current dependants in the system.

The working populace needs to not only feed themselves but provide for greater and greater numbers of people who cant.

ManAtHome

I suppose the govt overspend of £150 billionish a year has made this bust 'more pleasant' - not as if the invented/borrowed cash will have to repaid by future taxpayers or anything...

Doesn't sound a lot does it - only the net cost of 10 million people on £18k a year!! (or about 8 million on national average, or 15 million on minimum wage). Makes you wonder where it's all going doesn't it? (or if you're a 'doomster', where it's all coming from sometime sooner or later).

DervProf

ManAtHome wrote: »

I suppose the govt overspend of £150 billionish a year has made this bust 'more pleasant' - not as if the invented/borrowed cash will have to repaid by future taxpayers or anything...

Doesn't sound a lot does it - only the net cost of 10 million people on £18k a year!! (or about 8 million on national average, or 15 million on minimum wage). Makes you wonder where it's all going doesn't it? (or if you're a 'doomster', where it's all coming from sometime sooner or later).

Nah, you worry too much. All the government has to do is get the economy growing, then we'll pay off the debt. No need for such drastic spending cuts now, as that would hamper the growth we need to pay off the debt. Just like we did when the economy was doing well before those pesky Americans ruined it for us.......... erm, the government did reduce borrowing 2001 - 2007, didn't they ?

Buy now, pay later. Much later (preferably never).

ManAtHome

Cheers Derv, I shall sleep better tonight now.

westv

It can also sometimes go Boom Bang a Bang.

Davesnave

westv wrote: »

It can also sometimes go Boom Bang a Bang.

That was 1969. I remember it well, though I was into something a little heavier at the time..... Julie Tugwell, where are you now? :cool:

http://www.youtube.com/watch?v=96MqgsGy-lk

alexlyne

Are the booms and subsequent busts becoming realtively smaller (taking into account inflation, population etc)? I would like to think that each time at least *some* lessons are learnt for next time such that booms don't boom quite so much and busts stay relatively small (nothing wrong with small busts). So 70s bust was bad, late 80s were not quite as bad, this one is not quite as bad again.. on a general, average scale that is.

mbga9pgf

to the OP, look what happened to Japan in 1991 and since.



The Nikkei 225. If you held shares in 90, they would still be worth less than a quarter of their original value, 12 years on.

Their housing market:



From here: http://www.globalpropertyguide.com/Asia/Japan/Price-History

A textbook example


Japan’s property bubble was a textbook example of how fast economic growth combined with loose monetary conditions can lead to asset price bubbles. Japan had one of the highest economic growth rates in the world from the 60s to the 80s, growing annually by an average of 8%.
Massive speculation in the commodities and real estate markets emerged as a result of PM Tanaka Kakuei’s macroeconomic policies in the 70s, with uncontrolled increases in the money supply. Land prices rose 213.4% (85.3% in real terms) in the six biggest cities, and by 178% (22.7% in real terms) nationally during the decade to 1980. From 1980 to 1990, land prices in the six biggest cities rose by another 251.2% (179.7% in real terms), while national land prices climbed 119% (44.3% in real terms).
In the late 80s, monetary policy was suddenly tightened, and this led to the biggest financial crash in modern Japanese history. The real estate bubble finally burst in 1991. Three-quarters of local banks’ lending was to small businesses, which had properties as collateral. The property crash crippled the banking sector, as the amount of bad loans skyrocketed to almost USD1 trillion. This led to more than a decade of stagnation and deflation, known as Japan’s lost decade.

Sound familiar?

It doesnt always follow that boom follows bust. THey have a higher population density than us too. I remember many bulls on here arguing back in 2008 that everything would be back to normal in a year or so.

See how that worked out.

DaddyBear

There will be another boom, but this time it's different. In previous cycles boom has followed bust pretty quicky. However, Labour burned this country before they left and as a result we'll be bumping along the bottom for the best part of a decade.