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fake boom...
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lalman
Posts: 279 Forumite
At work and bored so thinking about the economy again! :-)
The UK economy is accelerating in a positive way - i hear the champagne corks popping in westminister as George Osborne and Dave 'the rave' Cameron celebrate the 'effects' of fiscal tightening on the wider economy... clearly for anyone who has studied economics (yes you are cool like me) fiscal tightening creates a multiplier negative effect which should have cause our economy to contract rather than grow... what are the reasons for this growth then?
1. Increasing personal debt - people are borrowing more than ever again - 75% of new purchases of new cars are on PCP.
2. The PPI boom which added 1% to the annual GDP
3. HTB scheme has pushed up property again making everyone feel richer (is this 2005 again?!?!) and thus spending more fake money that they haven't earned.
Whilst our current account deficit is at 2008 levels, consumption is back with a bang etc.
All of this behaviour is totally understandable - interest rates are too low and as people try to protect themselves from inflation/ think why bother saving when i get 0% (i know you can get upto 5% gross from Nationwide but this is to illustrate a point) from the bank lets spend today and save/ pay it back tomorrow/ sometime in the future when i am earning loads more money...
hmm.. the argument doesn't stack up for me... it feels so much like early 2000's... it scares me as we have fired our fiscal weapons already... and we are creating an even bigger financial debt bubble were we are even less prepared to solve it.
I dont think we are going to suffer from this financial crisis this year... bubbles can go on longer than they should rationally... the arguments are the same - 'this time its different'. hmm.. im not sure.
With so much debt in the system i can't see interest rates rises... ever... whatever anyone tells me the Bank of England is not independent... an independent authority wouldn't have to write letters to the guy who hired them saying 'im sorry inflation is to low because XXXXX'.
O-well... enough me ranting.. atleast 2014 will be a year of 'fake boom'
The UK economy is accelerating in a positive way - i hear the champagne corks popping in westminister as George Osborne and Dave 'the rave' Cameron celebrate the 'effects' of fiscal tightening on the wider economy... clearly for anyone who has studied economics (yes you are cool like me) fiscal tightening creates a multiplier negative effect which should have cause our economy to contract rather than grow... what are the reasons for this growth then?
1. Increasing personal debt - people are borrowing more than ever again - 75% of new purchases of new cars are on PCP.
2. The PPI boom which added 1% to the annual GDP
3. HTB scheme has pushed up property again making everyone feel richer (is this 2005 again?!?!) and thus spending more fake money that they haven't earned.
Whilst our current account deficit is at 2008 levels, consumption is back with a bang etc.
All of this behaviour is totally understandable - interest rates are too low and as people try to protect themselves from inflation/ think why bother saving when i get 0% (i know you can get upto 5% gross from Nationwide but this is to illustrate a point) from the bank lets spend today and save/ pay it back tomorrow/ sometime in the future when i am earning loads more money...
hmm.. the argument doesn't stack up for me... it feels so much like early 2000's... it scares me as we have fired our fiscal weapons already... and we are creating an even bigger financial debt bubble were we are even less prepared to solve it.
I dont think we are going to suffer from this financial crisis this year... bubbles can go on longer than they should rationally... the arguments are the same - 'this time its different'. hmm.. im not sure.
With so much debt in the system i can't see interest rates rises... ever... whatever anyone tells me the Bank of England is not independent... an independent authority wouldn't have to write letters to the guy who hired them saying 'im sorry inflation is to low because XXXXX'.
O-well... enough me ranting.. atleast 2014 will be a year of 'fake boom'
My Goal: From 1st of Jan 2015 to 31st of December 2015 is to save 30000.
48.78% towards 2015 target.
105.3% towards 2014 target. :j
48.78% towards 2015 target.
105.3% towards 2014 target. :j
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Comments
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Busy day then.
I've always thought it amusing that economists focus so much on productivity when that has to be one of the least productive things anyone can do.0 -
hahaha
Im a financial accountant... loads of work but no pressing timescales...My Goal: From 1st of Jan 2015 to 31st of December 2015 is to save 30000.
48.78% towards 2015 target.
105.3% towards 2014 target. :j0 -
. what are the reasons for this growth then?
'
Same as the reasons for low inflation, they are fiddling the figures.
How can anyone trust a politician who devises a scheme to increase house prices, then calls it 'Help to Buy' ?“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair0 -
How about....?
relatively weak pound compared to the Euro
Flexible employment laws
Low union membership outside of the public sector
Low wages compared to continental Europe
Relatively low corporation tax
Somewhat stable government
Top universities
English language
London and the Olympics effect
The UK had a deeper recession than most, so more scope for recovery
Population is growing
Most of our debt is in long term Gilts, less new bonds to issue in the short term compared to other large economies.
outside confidence that the government has public finances in control
working relationship with the Chinese
Special relationship with the US0 -
Doubt the corks are popping in Downing Street. As the issues are far from solved. It's what the politicians don't want to talk about that should be concerning people.0
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How about....?
Top universities
London and the Olympics effect
The UK had a deeper recession than most, so more scope for recovery
outside confidence that the government has public finances in control
Special relationship with the US
are you having a laugh?
Despite throwing money at education, most kids are leaving school way below our competitor countries, exam qualifications handed out like confetti.. The cleverest kids are creamed off and trained in non productive subjects, encouraged by overpaid pointless jobs in the public sector like compiling statistics nobody trusts. If you want engineers you have to recruit them from abroad.
The Olympics effect has proven to be about as useful to the economy as the Royal Family and the honours system - an establishment created myth.
Public finances in the sort of control where they are funding interest free sub prime mortgages with taxpayers borrowed money to pump up housing costs.
As for the special relationship with the US we saw how much use that was to Britain when Obama set about BP, and supported ludicrous compensation claims for Macondo“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair0 -
3 of the world top ten universities.
London IS booming and the Olympics was a great advert for it,
I"m not a great Obama fan, but i don't hold the rest of the US to account.0 -
What is your evidence for this?Glen_Clark wrote: »Same as the reasons for low inflation, they are fiddling the figures.0 -
3 of the world top ten universities.
London IS booming and the Olympics was a great advert for it,
I"m not a great Obama fan, but i don't hold the rest of the US to account.
Bubbles everywhere... inflated prices everywhere "outstripping" what we're told and supposed to believe is inflation.
Rapacious bankers handing themselves invented billions via central bank proxies, empowered by captured government and engineered financial repression, that's the real growth sector, funding their privileged lifestyles and desire to speculate and profit at the expense of everyone and ultimately everything else if need be.
It's become so insidious yet uncontroversial I think many people not happily riding on their coat tails are just beyond caring and willing to accept or ignore that they're being shafted by a gang of crooks, as long as it keeps them safe from the imagined bogeyman.What is your evidence for this?
Not one for doing the shopping then.. or just too wealthy to care?
http://www.tullettprebon.com/announcements/strategyinsights/notes/2010/SIN20130220.pdf'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB0 -
Not one for doing the shopping then..
http://www.tullettprebon.com/announcements/strategyinsights/notes/2010/SIN20130220.pdf
I do, the price of bread is the same now as in 2010.0
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