Economics Question

Wookster

Just curious here as I'm interested to know what people think about the causes of the current recession plaguing (by and large) Western Economies.

nicko33

bureaucracy, red-tape, legislation, human rights, health and safety, socialism, capitalism, China, Tony Blair, BTL landlords...

chewmylegoff

Look, this started in America....

Loughton_Monkey

There is no doubt in my mind that the UK recession was caused by... er... two successive quarters of negative growth.

In the same way, 'Child Poverty' is caused by people who insist on living on 60% or less of average income. In North Korea, one assumes that every family has just about the same income (possibly $1 a week?) hence there cannot be any child poverty.

When we define things on such arbitrary numbers, we deserve what we get.

michaels

I know! I know!

Globalisation has resulted in increasing income inequality.

Increasing income inequality has resulted in excess saving as those with the skills and or capital who are now getting a larger share of income are unable to spend all their income.

Excessive saving has driven down risk adjusted returns.

Relatively low borrowing costs and visible income inequality (see point 1 above) has led to low earners and governments borrowing to consume.

Debt to income ratios have become unsustainable, risk based adjustments to borrowing costs resulting in default rather than compensating lenders as this is non-linear.

With total expenditure no longer boosted by increasing borrowing a vicious circle of reduced incomes able to support lower levels of debt thus reducing spending below income maintains below trend / zero growth.

gagahouse

michaels wrote: »

I know! I know!

Globalisation has resulted in increasing income inequality.

Increasing income inequality has resulted in excess saving as those with the skills and or capital who are now getting a larger share of income are unable to spend all their income.

Excessive saving has driven down risk adjusted returns.

Relatively low borrowing costs and visible income inequality (see point 1 above) has led to low earners and governments borrowing to consume.

Debt to income ratios have become unsustainable, risk based adjustments to borrowing costs resulting in default rather than compensating lenders as this is non-linear.

With total expenditure no longer boosted by increasing borrowing a vicious circle of reduced incomes able to support lower levels of debt thus reducing spending below income maintains below trend / zero growth.

Nicely put! How many more years do you reckon before this Kondratieff winter ends? I think we have 3-5 years left.

Butterfly_Brain

Politicians!

Graham_Devon

Banks and all out greed.

Doesn't matter where it started, the root cause was greed from all sides.

Thrugelmir

Putting credit expansion to one side.

The ever increasing cost of the Welfare system as peoples lifespans extend.

lvader

World GDP actually grew in 2008 and has every year since.

sheffield_lad

How about blaming all of us putting everything on the tick and paying for today with tomorrows pay slip?

We can blame banks, the yanks, who ever but the wheels had to come off with the amount of personal debt we all have/had it just happened that the credit crunch saw to that.

Now the parties over and life won't IMHO ever go back to how it was pre bust maybe that's a good thing.

I find it annoying how many blame the banks for giving them too much credit, it's a pathetic excuse you lent you pay it back. I would not blame Morrisons for selling me too much whisky, it's my stupid fault if I drink it in one go!