UK economic recovery worse than Great Depression, and no sign of improving

Batchy

Generali, you truly are one of the old greats on here, I list to what you say each and every time I see a post as what you say always makes sense, I love the fact you have highlighted what I was thinking, 6% GDP from MEW, this is the main reason they need houseprices to Increase AGAIN, as there is no other way to make this back up, other than SPENDING. Which they can't do.

kabayiri

I was thinking about the term 'recovery' in it's wider sense.

I think few would argue that a full recovery means a return to a situation just before the crunch.

Does economic recovery mean an elimination of the deficit , with the debt mountain to pay off as and when ?

Does it mean we generate a £60bn surplus every year, or whatever figure is required to cover interest payments on the debt ?

..or does it mean whatever the politicians want us to think whenever the conditions suit them?

ruggedtoast

kabayiri wrote: »

I was thinking about the term 'recovery' in it's wider sense.

I think few would argue that a full recovery means a return to a situation just before the crunch.

Does economic recovery mean an elimination of the deficit , with the debt mountain to pay off as and when ?

Does it mean we generate a £60bn surplus every year, or whatever figure is required to cover interest payments on the debt ?

..or does it mean whatever the politicians want us to think whenever the conditions suit them?

Thats a good point, whether the economy is growing or shrinking, there is always more debt than there is money to pay it back after all.

MiserlyMartin

Thing is, if they had not meddled with the free market, left interest rates at normal levels, not printed money, not bailed out banks, this depression would be over by now. They've created so much inflation by destroying the pound and printing money just to prop up asset prices. If they had not done this and even allowed some subdued deflation, everyone would be a lot better off by now. A short extremely painful deep recession is far better then years of this. Its like trying to rip off a piece of leg wax slowly hair by hair to not cause pain instead of pulling it fast and getting it over and done with quickly. Crap analogy maybe but...

HAMISH_MCTAVISH

Wookster wrote: »

Do you really seriously believe that record amounts of debt are not affecting consumption?

Seriously?

Oh !!!!!!.... are you being deliberately obtuse or are you just stupid?

I merely pointed out that the percentage of income presently allocated towards paying off mortgage debt is at near record lows.

You can either accept that fact for what it is, or try to concoct ever more fanciful theories.

Up to you really.

HAMISH_MCTAVISH

MiserlyMartin wrote: »

Crap analogy.

Yes it was.:cool:

Your "solution" is mental.

Pobby

MiserlyMartin wrote: »

Thing is, if they had not meddled with the free market, left interest rates at normal levels, not printed money, not bailed out banks, this depression would be over by now. They've created so much inflation by destroying the pound and printing money just to prop up asset prices. If they had not done this and even allowed some subdued deflation, everyone would be a lot better off by now. A short extremely painful deep recession is far better then years of this. Its like trying to rip off a piece of leg wax slowly hair by hair to not cause pain instead of pulling it fast and getting it over and done with quickly. Crap analogy maybe but...

Well I don`t totally agree but yes, interest rates should have been left around the median. Most of my mortgage life would be based at around around 8% plus. in fact 8% now seems pretty low as compared to Thatch in the 90`s.

Up to a point I would agree that inflation has been low. Had rents, house prices , utilities and fuel been in the mix it would have been a very different figure, not to mention food.

I see wages going no where, a country that lives in debt. The same country that really cannot afford useless wars. A country that has increased the wealth gap, and as usual, a government that is totally in La La land.

Wookster

HAMISH_MCTAVISH wrote: »

Oh !!!!!!.... are you being deliberately obtuse or are you just stupid?

Could say exactly the same to you.

Anyways you still haven't answered my question: do higher levels of debt diminish folks ability to consume. A simple yes or no will do.

Thank you.

HAMISH_MCTAVISH

Wookster wrote: »

do higher levels of debt diminish folks ability to consume..

Not necessarily.

Higher debt service costs reduce the ability of people to consume, not necessarily higher levels of debt.

If debt rises, but debt service costs fall, then the ability to consume increases.

Also higher levels of debt today can create higher levels of economic growth, resulting in higher levels of income with which to pay the increased debt. Resulting in a lower percentage of income allocated to debt service, and thus an increased ability to consume, even though debt has increased.

It's nowhere near as clear cut as you like to portray.

And that's before you get into much wider issues around money creation, counterparty gain, etc.

.

Thrugelmir

Itismehonest wrote: »

I imagine (I don't follow figures that closely ) that, as far as paying off early is concerned, it would, indeed, be the case recently - presumably since things started to bite more - but the BOE certainly reported that it was happening back at the turn of 2010/11.

The real problem is that mortgage debt effectively doubled between 2003 and 2007 from £600 billion to £1,200 billion pounds.

Going to take a generation 15 -25 years for debt levels to correct back to a sustainable level. At the moment the BOE is helping to fund the liquidity thats required to keep the heavily exposed mortgage lenders (banks) afloat.