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If QE Was Withdrawn....
Comments
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Our currency has tanked against all the major currencies in the last five years, even the Euro. And even some of the minor currencies like the NZD.
Thanks some useful posts and I follow your thinking.
It hasn't tanked it had the pulled out deliberately and sank. It was deliberately driven down.
I view tank as an accident or collision, brown stuff and fans."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
redbuzzard wrote: »It surely will be high at some point, it's the only way UK can get rid of its debt? High enough anyway.
In 1977 I bought a house, and by 1983 I owned half of it without paying anything off the mortgage.
Had I kept an equivalent amount of money in the bank, I would have lost half the value of a house, rather than gaining it. As my parents did in fact. Nasty.
Now that I have no debt, and a modest pile of hard-saved money I will need to live on for up to 30 years, the shoe is on the other foot. Time to gear up and buy a couple of houses on BTL? Or is there any more liquid way to have a reasonable chance of preserving savings in real terms?
If history is to be repeated, the debt will take care of itself.
I do have a core of FS pensions to come, but RPI linkage is capped at 2.5%-5%. That's going to look a bit sick if we get 70s/80s inflation. Oh why didn't I work for the council!
On topic, I see the market is moving down again today. No point flapping though, having reorganised my modest portfolio to reduce risk a few weeks ago, I am sitting on a few visible losses.
I have a PCLS coming this month, that might go into premium bonds for a few weeks as an each way bet...if the current blip becomes a trend, at least I'll have something to buy in with.
Forecasting the direction of the markets is not something I feel able to do - but it's reasonable to think there's more scope downwards than upwards for now and that means less risk, though even that isn't easy to pick through. When the reverse becomes true, I'll add back the risk.
Doesn't feel like a foolproof plan though.
The difference between 1977 to 1983 and now is that the reccession then was followed by a period of high wages growth, plus, compared to now, we had relatively low population growth.
Now we have downwards pressure on wages, exacerbated by our growing population, plus a fall in the real value of assets, not to mention real wages, caused by a deliberate policy to devalue the pound.
If there is no relaxation in planning laws, house prices may well continue to rise, as demand outstrips supply and those unable to afford to buy are stuck with renting, the cost of which will probably rise with inflation, regardless of what happens to mortgage interest rates.
The government's debt may well take care of itself, if the pound continues to go down. Ordinarily I would say it will eventually rise, despite the government's efforts to push it down, but I don't see the manufacturing increases that would underpin any rise.
On a brighter note, anyone with a mortgage may well enjoy low interest rates for years to come. You can't have demand for mortygage funds if no one can afford to pay one back at todays housing prices.0 -
The difference between 1977 to 1983 and now is that the reccession then was followed by a period of high wages growth, plus, compared to now, we had relatively low population growth.
True. I am wondering how far it will go if and when there is some real growth in the economy.
Now we have downwards pressure on wages, exacerbated by our growing population, plus a fall in the real value of assets, not to mention real wages, caused by a deliberate policy to devalue the pound.
You can't keep devaluing without causing inflation, it's the other side of the same coin.
It's really a question of degree.
I'm sure the great and the good have a vague intention of keeping some sort of balance (i.e. not upsetting any large group of voters any more than they have to) but experience suggests things don't always go according to plan.
I suspect the only feasible ambition is to try and hold borrowing flat in real terms for a while and hope something turns up, and if it doesn't then fan the inflation a bit.
Truth is nobody knows, least of all those in charge (if they were any good at predicting, we wouldn't be here - and a lot of us little people had been saying for years that it was unsustainable), but you are certainly right to say the current situation differs extremely from the 1970s."Things are never so bad they can't be made worse" - Humphrey Bogart0 -
Yes, because unions then were still strong in the private sector, so wages kept place with inflation. But unions are still strong in the public sector, and the Government quickly backed down when unions resisted their attempts to reduce the (unaffordable) public sector pensions commitment.The difference between 1977 to 1983 and now is that the reccession then was followed by a period of high wages growth,.“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair0 -
redbuzzard wrote: »True. I am wondering how far it will go if and when there is some real growth in the economy.
You can't keep devaluing without causing inflation, it's the other side of the same coin.
It's really a question of degree.
I'm sure the great and the good have a vague intention of keeping some sort of balance (i.e. not upsetting any large group of voters any more than they have to) but experience suggests things don't always go according to plan.
I suspect the only feasible ambition is to try and hold borrowing flat in real terms for a while and hope something turns up, and if it doesn't then fan the inflation a bit.
Truth is nobody knows, least of all those in charge (if they were any good at predicting, we wouldn't be here - and a lot of us little people had been saying for years that it was unsustainable), but you are certainly right to say the current situation differs extremely from the 1970s.
Yes, I agree, that inflation is the other side of QE. But it doesn't then follow that inflation occurs evenly across the board. What we are seeing is below inflation wage increases, if there are any at all, while the cost of essential items is on the rise.
I suspect politically the lib/cons can't actually do things like cut the NMW, though I am sure some conservatives would love to abolish it, so they are doing their next best option, which is to cause price inflation on essential goods and services sufficiently to mean that wages drop in real terms.0 -
I think disgraced MP Patrick Mercer OBE gave a clue when he was caught by the hidden camera saying there would be few Tory MPs around in 2 years time (So they needed Labour MPs on his pressure group to get the Dictatorship in Fiji readmitted to the Commonwealth)
Lets Remember Osborne was not voted in at the last election and is less likely to be voted in at the next.
So I think Osborne just wants to leave a poisoned chalice to his successor, as the last Tory Government did with the botched Privatisations.“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair0 -
Glen_Clark wrote: »So I think Osborne just wants to leave a poisoned chalice to his successor, as the last Tory Government did with the botched Privatisations.
Are you serious? He'd ruin the country to stick it to Ed Balls?
I might question his, or Dave's, judgement but I don't think either is a psychopath :eek:"Things are never so bad they can't be made worse" - Humphrey Bogart0 -
they're not trying to leave a poisoned chalice.
politics is a very attractive profession to psychopaths, because there is so much power if you get to the top. it is all about being prepared to tell any lie, and being charming, and never letting the mask slip, in order to get, and then hang onto, power.
nothing to do with poisoned chalices.0 -
Glen_Clark wrote: »But unions are still strong in the public sector, and the Government quickly backed down when unions resisted their attempts to reduce the (unaffordable) public sector pensions commitment.
Not the force they were. PCS walkouts appear to be saving money for the taxpayer!0 -
redbuzzard wrote: »Are you serious? He'd ruin the country to stick it to Ed Balls?
I might question his, or Dave's, judgement but I don't think either is a psychopath :eek:
What other explanation is there for Osborne's taxpayer guaranteed interest free loans on £600k sub prime mortgages?“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair0
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