BoE forecast, didn't see this coming.

ILW

michaels wrote: »

Yep, if only our economy was more like Spain, Eire, Portugal Italy or Greece right now

The Bundesbanks responsibility is for the German economy, they seem to be doing a pretty good job.

The_J

People are forgetting (or they are so ignorant their opinions are formed on just recent history) that Germany (and the Bundesbank) had a decade of borrowing at 1% post reunification, enacting stricter retirement ages (67) and welfare reforms to give themselves a strong platform of manufacturing which puts them in a unique position of relative strength in the current market.

The other European countries have been given a couple of years at 6% interest rates.

Germany are the problem. Not the solution. The Euro cannot devalue because of Germany, they should leave.

purch

The_J wrote: »

Germany are the problem. Not the solution.

Deutsche Wiedervereinigung was not universally welcomed.

Our PM Margaret Thatcher "We do not want a United Germany", and French President Mitterand "France by no means wants German reunification"

Germany pressed ahead despite this and all other opposition.

The Exchange Rate Mechanism (the predecessor of the EUR) was torn apart by the results of reunification in 1992, as Germany pressed ahead with the politically inspired economics of the process, and the BUBA responded in the only way it knows how.

Germany has spend 20 years absorbing the economic effects of the joining together of the 2 nations and adjusting and adapting to the realities.

The rest of Europe meanwhile appears to have ignored what is happening, and responded to the effects without any realisation as to what was really happening.

Now we are where we are, and finally waking up to 20 years of sleepwalking towards a precipice.....

The_J

Those who cannot learn from history are doomed to repeat it.
George Santayana

Germany is not part of 'Europe', Germans are not 'Europeans', they have always felt like outsiders. Their history as a people is disjointed even since the days of the Deutscher Bund. They will never be our allies.

I rib the French a lot, as Brits we like to give them cheese eating surrender monkey stick but I assure you, they are much more 'European' than Germany.

People think that we will never return to those days and to some extent they may be right. We are too braindead with X-factor and BGT, mere drones pumping money through the system. Peacetime. Enjoy it while it lasts, homo sapiens does not do "peace".

MrRee_2

Start high and adjust lower ..... standard business - you don't want to start with low growth and depress the markets!

Thrugelmir

shortchanged wrote: »

But what is it that the BoE experts are seeing or more to the point what are actually missing all of the time when they make their forecasts?

Waiting for Europe to sort itself out maybe.

Graham_Devon

shortchanged wrote: »

No thankfully I don't.

But what is it that the BoE experts are seeing or more to the point what are actually missing all of the time when they make their forecasts?

Europe is a mess and is not being sorted. Unemployment remains very high, incomes remain squeezed for many. As I and others have stated for a long time, not conditions very conducive for growth.

Did watch someone on Newsnight I think suggest the BOE HAVE to be uber optimistic, regardless of whether 95% of the time they have to downgrade and still be wrong.

Stating anything more pessamistic has the knock on effect of actually making it come true, as confidence is lost.

I guess we are left weighing up which is better. Always being wrong, but optimistic, or being right, but making things worse.

shortchanged_2

Graham_Devon wrote: »

Did watch someone on Newsnight I think suggest the BOE HAVE to be uber optimistic, regardless of whether 95% of the time they have to downgrade and still be wrong.

Stating anything more pessamistic has the knock on effect of actually making it come true, as confidence is lost.

I guess we are left weighing up which is better. Always being wrong, but optimistic, or being right, but making things worse.

I think this is probably right Graham. Deep down they know they are telling porkies with their growth forecasts but if they can't look optimistic then who can.
The only problem is it makes them look like incompetent fools when they have to consistently downgrade their predictions.

Generali

shortchanged wrote: »

Thing is though Gen, when is the last time they were actually right, or saying that were overly pessimistic with a forecast?

The data are all here for the last 9 years:

http://www.bankofengland.co.uk/publications/Documents/inflationreport/gdpbankbackcast.xls

(Opens in Excel)

and from 1997:

http://www.bankofengland.co.uk/publications/Documents/inflationreport/gdpinternet.xls

The short version is that the BoE on average gave overly pessimistic forecasts up to about the time the wheels fell off (say 2007) since when they have been overly optimistic.

I know it's not a very fashionable thing to say but given the circumstances the BoE and MPC (don't forget the BoE is more than just a setter of base interest rates) have done a very good job. Certainly far better than anything I could have attempted.

There is nothing harder to predict than the future.

ILW

There is a difference between being out on growth forecasts and failing to be anywhere near inflation targets, which is one of their main tasks.