We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
Debate House Prices
In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non MoneySaving matters are no longer permitted. This includes wider debates about general house prices, the economy and politics. As a result, we have taken the decision to keep this board permanently closed, but it remains viewable for users who may find some useful information in it. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Flatlining GDP is Our Fault
Comments
-
The fault is not the consumers.
Isn't that the crux of the problem. Consumerism is of little benefit. The UK borrowed billions of £'s to spend on items manufactured in China . That aren't actually neccessary for daily life.
Now we're cutting back. The effect is rippling round the world. Hence why the Germans too are struggling. Demand is at best static.
From Corporate earnings statements there's definately a squeeze on margins. So growth is going to remain sluggish for an extended period. Whilst everything rebalances.0 -
The savings rate has just gone back to 7% which is normal or even a little below the long term average. All that has happened is that things have gone to normal.
Unfortunately that mean that this:
analysis is all wrong.
Oh well, back to the drawing board eh?
George was arguing people should start spending and it would solve the problem of na depressed economy. You say people are saving and this is normal. On average this is true, but the reasons are not to cause the graph to return to the average. They do so for many reasons.
In the real world many people are not spending because they fear for their futures. You may feel quite secure, as I do, but there are lots who do not. But deny it if you must.
Do you know any people who work for low pay in insecure jobs?Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.0 -
Which part of the collapse of the world economy escaped you?
Well if you must quote me out of context for a cheap quip.
I took the world economic crisis as a given. (Glad you have acknowledged its not all the fault of the last Government!)
Accepting that austerity is needed there are differences of opinion (now infecting the Coalition) on the strategy, but whatever you think of what is being done, a lot of people are fearful of their own personal circumstances and will not be dashing out to buy a new car in response to an appeal from George.
Maybe you do not know any strivers on low wages with insecure jobs either!Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.0 -
George was arguing people should start spending and it would solve the problem of na depressed economy. You say people are saving and this is normal. On average this is true, but the reasons are not to cause the graph to return to the average. They do so for many reasons.
In the real world many people are not spending because they fear for their futures. You may feel quite secure, as I do, but there are lots who do not. But deny it if you must.
Do you know any people who work for low pay in insecure jobs?
Anecdote isn't data.
What the data show is that people are not saving excessively, they are saving at rates just below what it is reasonable to consider normal.
I realise that this theory doesn't fit your economic catastrophe model but it does fit the data.
And yes, I do know people in that position. Most of them are working hard to get into a better position as I did when I was.0 -
Possibly although it's worth remembering that interest rates fell in pretty much a straight line from 1997-2004 from over 7% to under 4%. Larger mortgages don't necessarily mean bigger payments, especially as during that time the rise of shadow banking, the internet and consumer comparison sites (this one was started in 2003) meant that the mortgage market become much more competitive.
they kind of do though, as bigger mortgage = bigger chance mortgagee will want to deleverage harder. still making double payments on ours, whereas if prices hadnt had gotten extortionate in the last decade, i iprobably would have been consuming more in the general economy.
where did all that money go? in boomers pockets, to be now spent on stanna stairlifts, extortionate waitrose shopping and having the heating up at 25 degrees 30 hours a day.
what a waste of my income; it should be getting pumped into the economy instead.0 -
George was arguing people should start spending and it would solve the problem of na depressed economy. You say people are saving and this is normal. On average this is true, but the reasons are not to cause the graph to return to the average. They do so for many reasons.
In the real world many people are not spending because they fear for their futures. You may feel quite secure, as I do, but there are lots who do not. But deny it if you must.
Do you know any people who work for low pay in insecure jobs?
It is true that on one level the present level of saving cannot be deemed abnormal or unwise.
However in a climate where the flatline GDP is (to a massively overblown degree in my view) portrayed as an economic crisis, the normal rules do not apply.
There are many who say the government should set the example by spending more. I am saying that consumers should do that. For the government to spend more requires even more imprudent borrowing, and this will hit everybody's tax levels sometime down the road -- not might do, must do because ultimately you don't get ought for nought. But consumers are saving more on average, they have the money and don't have to borrow it.
Some are saying that consumers have to save because of uncertaintly etc. There may be some that have clear and present risk of job loss, the majority do not, it's just a sheep like gut reaction to the doom stories being continually flung out by the breadcast media and some of the press. Why should the government -- acting on all our behalfs -- be expected to act imprudently and irrationally by spending more money that it doesn't have, when consumers are acting imprudently and irrationally by not spending money that they do have on things they want and thus perpetuating the very slump that is troubling them so much ?No-one would remember the Good Samaritan if he'd only had good intentions. He had money as well.
The problem with socialism is that eventually you run out of other people's money.
Margaret Thatcher0 -
they kind of do though, as bigger mortgage = bigger chance mortgagee will want to deleverage harder. still making double payments on ours, whereas if prices hadnt had gotten extortionate in the last decade, i iprobably would have been consuming more in the general economy.
Without the "credit" in circulation. Your income may not have risen as much. We are witnessing a wind back, a contraction.
Growth was built for 40 years on an increasing money supply. Aided by technological advances which reduced manpower requirements. Thereby increasing profitability.
I feel as if we've reached a plateau. Where until we've resolved baggage from the past. Going to be difficult to move forward at any speed. The numbers involved are simply too large. To disappear overnight.
George (or who ever) is going to have pull numerous levers. To have a meaningful impact on the economy. Likewise indebted consumers . Correction will take time.0 -
GeorgeHowell wrote: »The slump is our fault -- the consumers.
We are saving rather than spending. Saving percent of income has been around 7% for 2 or 3 years compared with around 2% prior to that.
The money is there, people don't want to go out and spend enough. By and large business now says that money to invest is there, but the market future is too uncertain.
Time for people to put their money where their mouth is, and put that 5% back into consumer spending. Stop holding back in sheep-like fashion and book the holiday, buy the new car, have the nights out, upgrade the iPhone, get a new outfit, whatever -- but spend it. If everybody did so it would make a big difference.
No good blaming everyone else when one of the major causes is US !
How will I build up a deposit for my first house if I buy a new iPhone and go on exotic holidays?0 -
Flatlining GDP is Our Fault
Indeed. Anyone who is aware of recent history will know that conservatives are not good at managing a modern economy. Since overall we voted for a party of incompetent economic managers to take command, we can hardly complain that the economy is failing.0 -
Voyager2002 wrote: »Flatlining GDP is Our Fault
Indeed. Anyone who is aware of recent history will know that conservatives are not good at managing a modern economy. Since overall we voted for a party of incompetent economic managers to take command, we can hardly complain that the economy is failing.
:rotfl::rotfl::rotfl::rotfl::rotfl::rotfl::rotfl::rotfl::rotfl:0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 352.3K Banking & Borrowing
- 253.6K Reduce Debt & Boost Income
- 454.3K Spending & Discounts
- 245.3K Work, Benefits & Business
- 601.1K Mortgages, Homes & Bills
- 177.6K Life & Family
- 259.2K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards