Bad news is coming!

grizzly1911

Graham_Devon wrote: »

What's a car then?

Something to put fuel in if we could afford it?

globalds

Thrugelmir wrote: »

By printing money. This reduces the exchange rate. Thereby increasing inflation.

Inflating away debt isn't painless.

Alternative is to cut wages directly to improve competitiveness.

Or we all work harder increasing productivity or work longer hours for the same money.

Choice is down to each individual.

Aren't the consequences the same ..

A German is sat by the pool because I can't afford the holiday and a Japanese man is chowing down on my rib eye as I can only afford the off cuts ?

globalds

grizzly1911 wrote: »

More likley to be the consequence of inflation.

What happens when we can't afford horse or water for that matter.

We are still struggling with first world problems ..
those real 3rd world problems of famine or dire disaster are thankfully not yet consequences of our poor decisions ..maybe along the road ..but nowhere on the horizon .

grizzly1911

Thrugelmir wrote: »

Or we all work harder increasing productivity or work longer hours for the same money.

Sounds like the NHS 3 - 4 years ago basicworking week increased to 37.5 no increase in pay, hourly equivalent rate drops.

Now want to reduce the basic working week down to 35 hours, at this reduced hourly rate but keeping workload. Annual salary drops as does potential future pension. All this on the back of no pay rise for the last 6/7 years and increased pension contributions.

Bingo.

michaels

grizzly1911 wrote: »

Sounds like the NHS 3 - 4 years ago basicworking week increased to 37.5 no increase in pay, hourly equivalent rate drops.

Now want to reduce the basic working week down to 35 hours, at this reduced hourly rate but keeping workload. Annual salary drops as does potential future pension. All this on the back of no pay rise for the last 6/7 years and increased pension contributions.

Bingo.

So everyone was being paid 10% more than the country could afford (paid for via borrowing and ever increasing debt). To rectify this situation their were two options:
1 (Greece) Reduce all pay and benefits by 10% whilst holding prices steady - pretty bad news for anyone with a loan/mortgage as the principal will now be a lot higher compared to income
2 (UK) Hold pay steady whilst increasing prices by 10%. Yes for purchasing goods the net effect is the same but for paying interest on and paying off debts obviously this is a lot easier.*

*Interest rates held artificially low via unconventional monetary policy so that they do not adjust to counteract the inflationary policy

DervProf

ess0two wrote: »

With no mortgage,puts you in a better position than most.

It may do, but I'm informed that HPI is a good thing. Does HPI help me pay for the increase in cost of everday items/services ?

Mernerva

Graham_Devon wrote: »

Oh noes.... inflation may be above target for another 2 years, the BOE is likely to announce on Wednesday.

Commenting economists say rising prices is bad news...

But I'm not all about bad news, oh no!

See, in the same article, theres some good news. Something which could take the sting out of the tail of rising prices.....

Yes...house prices will rise, which is much less gloomy than prices rising.

Thank god for a commodity rising in price....it makes the thought of our commodities rising in price much more bearable.

http://www.cityam.com/wealth-management/market-braced-bad-news-inflation-report

:wall:

How do you measure inflation? It depends which basket of goods or services you choose.

If you put utilities and food in the cost of living inflation is much higher than the basket of goods the official numbers show, but they choose goods which will make the inflation numbers not look too high.

[Deleted User]

Graham_Devon - some words of wisdom from my late father to back you up -

- something that costs a penny is too dear if you don't need it.

- for most folk golf clubs and cars aren't assets, and neither is a house. An asset puts money in your pocket, a liability takes it out.

At present, my house is a liability. I now have no mortgage but my house costs me money every month - insurance, council tax, maintenance etc. It will only be an asset if I sell it, and then I'll have to spend some or all of it to live somewhere else, or pay rent and my rental agreement become someone else's "asset".

Most "goods" are not assets as almost all of them are "worth" less as soon as you have bought them.

The asset/liability difference was a major aspect of the book "Rich Dad, Poor Dad". One of the things that helps keep poor people poor is that they don't know the difference between assets and liabilities, or if they do know the difference, they don't act accordingly. I wish I had recognised the difference years ago!

WR

Mernerva

Wild_Rover wrote: »

Graham_Devon - some words of wisdom from my late father to back you up -

- something that costs a penny is too dear if you don't need it.

- for most folk golf clubs and cars aren't assets, and neither is a house. An asset puts money in your pocket, a liability takes it out.

At present, my house is a liability. I now have no mortgage but my house costs me money every month - insurance, council tax, maintenance etc. It will only be an asset if I sell it, and then I'll have to spend some or all of it to live somewhere else, or pay rent and my rental agreement become someone else's "asset".

Most "goods" are not assets as almost all of them are "worth" less as soon as you have bought them.

The asset/liability difference was a major aspect of the book "Rich Dad, Poor Dad". One of the things that helps keep poor people poor is that they don't know the difference between assets and liabilities, or if they do know the difference, they don't act accordingly. I wish I had recognised the difference years ago!

WR

If you ask most people today what is their biggest asset, the owners would say their house, the renters would say their mind.

The owners are wrong of course as you say and as the Rich Dad books show. You have to pay property outgoings like insurance, council tax, maintenance etc. So it takes money out of your pocket not putting it in. Which makes owning your home a liability not an asset.

If you rent you get the owner of the property to pay all the outgoings insurance, maintenance etc. These days most renters get housing benefit because rents have been pushed so high and unless you are earning a lot, not many can afford these high rents out of earnings alone.

What will the future hold for rents only time will tell, but average earnings are going up less than inflation and there are some big cuts to housing/council tax benefit coming.

ukcarper

I'll carry on looking at my house as an asset because although I spend a few hundred pounds a year on insurance etc that pales into insignificance compare to the rent I would have to pay if I rented it. I would not get enough house benefit to rent a decent house if I got any at all and would have to live in a one bed flat.