Euro crisis faces another stage?

Jason74

michaels wrote: »

My theory is that the 2008 crisis like the 30s had as its root cause an increased inequality in income and wealth leading to the asset rich underpricing risk in search or return and the income poor taking advantage to borrow to consume....

That makes a lot of sense to me. The only problem, is that it seems to me both that those imbalances haven't been fixed, and that we're seeing the same kind of behaviours as a result of those imbalances (accelerated further by unprecedented stimulus packages and ultra low interest rates). That suggests to me that a GFC2 is probably inevitable soone rather than later in the greater scheme of things.

Generali

TickersPlaysPop wrote: »

What will happen to interest rates if this deflation happens?

Real interest rates will, by definition, rise. That will mean that the ECB should increase QE although they won't necessarily.

MFW_ASAP

Generali wrote: »

Graham_Devon wrote: »

Nonsense

What do you want, a list? I'm putting you on ignore, discussing anything with you is pointless.

I've been saying this for years. Graham is just on here to muddle and wind people up. If he's not pretending to misunderstand the most simple concepts (followed by pages of explanations from other forum users), he's making a statement 100% at odds with something he said a few months ago causing yet more muddle and confusion.


He's a genius at forumnomics, I'm just amazed that so many people still fall for it.

Generali

MFW_ASAP wrote: »

I've been saying this for years. Graham is just on here to muddle and wind people up. If he's not pretending to misunderstand the most simple concepts (followed by pages of explanations from other forum users), he's making a statement 100% at odds with something he said a few months ago causing yet more muddle and confusion.


He's a genius at forumnomics, I'm just amazed that so many people still fall for it.

The bit that amazes me isn't the forumnomics it's, as you say, the ability to simultaneously argue incompatible points across different threads or indeed sometimes across a single thread.

Is deflation bad or good? Both at the same time and probably something different too in the world of one poster at least.

TBH, I don't think that Graham_D has any sockies as I think we'd spot them a mile off.

N1AK

Graham_Devon wrote: »

I'd argue it also creates opportunities for other companies. While one company doing things one way may struggle, a new company doing things differently may well prosper from the conditions.

The issue, when their is deflation across an economy, is that individuals are better off buying later. A new clever startup is still doomed, because I wouldn't want to buy their service now if I could buy it for less in the future.

Thus individuals effectively stop discretionary spending, which leads to far less activity in the economy, which leads to mass layoffs and even less activity in the economy...

Thrugelmir

CLAPTON wrote: »

For people with declining incomes then their debt burden will increase.

Only those with debt.

IronWolf

Is deflation really a worry though. Its probably the easiest thing to counter, just print money.

Generali

Thrugelmir wrote: »

Only those with debt.

Given the way that the current economy works, that sounds like, "I'm Alright Jack".

We can moralise about how people shouldn't borrow to consume but the fact is that many do and that will end up screwing a lot of people as consumption falls rapidly (if deflation takes hold).

Generali

IronWolf wrote: »

Is deflation really a worry though. Its probably the easiest thing to counter, just print money.

If people save that money it won't counter deflation: printing money only increases prices if it is spent.

danothy

Generali wrote: »

If people save that money it won't counter deflation: printing money only increases prices if it is spent.

Taxation then. That's the answer with the housing market. Tax people hoarding money and they will be forced to spend it.