How much longer will this bear market go on for?

Type_45

Thumbs_Up said:

sevenhills said:

Just because there are other countries that have a high debt, that doesn't make it positive.
A high debt is negative, which is why the market reacted negatively.

What about the USA?  Admittedly the dollar is the world’s principal reserve currency. But for how long?

The end game of the USD as global reserve is in full swing.  And when that day eventually comes, the USA is basically Argentina.  It doesn't make anything.  It literally dines out on its global reserve status.  And when that ends the standard of living of Americans will take a huge hit.  Imports will become far more expensive.  The Biden regime weaponising the USD has hastened its demise.

Type_45

Thumbs_Up said:

sevenhills said:

Just because there are other countries that have a high debt, that doesn't make it positive.
A high debt is negative, which is why the market reacted negatively.

What about the USA?  Admittedly the dollar is the world’s principal reserve currency. But for how long?

Yet another "reckless" policy, on the back of a series of them, all of which reduce the common mans' freedom and wealth.  All pointing in that same direction.  What a massive coincidence.

Thumbs_Up

If you want your children to do well in this world advise them to learn Mandarin!

Thumbs_Up

Type_45 said:

Thumbs_Up said:

sevenhills said:

Just because there are other countries that have a high debt, that doesn't make it positive.
A high debt is negative, which is why the market reacted negatively.

What about the USA?  Admittedly the dollar is the world’s principal reserve currency. But for how long?

Yet another "reckless" policy, on the back of a series of them, all of which reduce the common mans' freedom and wealth.  All pointing in that same direction.  What a massive coincidence.

What your trying to say is the western world is in terminal decline.

Type_45

masonic said:

The plummeting pound and gilt markets give us a pretty good steer as to what investors think about the prospects for the UK following this budget. Our inflation problem was already looking to be the worst in the G7 and this is going to make it a lot worse. Hence the devaluing pound. Holding UK government debt has become more risky, so investors are selling it off and demanding a higher interest rate for the risk they'll be taking if they hold it. This has thrown a spanner in the works for the MPC, who have been trying to get a grip on inflation, and will now have to raise interest rates even higher, which will send the government's borrowing costs sky high just at a time when they are recklessly borrowing without abandon.

All of this to hand out some unfunded tax cuts, which will do the vast majority of people more harm than good and are unsustainable. No wonder the government had to suppress the OBR's impact assessment.

When you look at what they're doing, it's about two parts smoke and mirrors to about one part asset stripping the UK. The majority of people who would benefit from the reversal of the NI levy and reduction in basic rate tax, will already be worse off in real terms due to the inflationary effect of the budget. Those who might have benefited from the stamp duty changes will see any gains pared away by the now even higher interest rates on their mortgages. Businesses with debts are going to be put under further pressure in the same way. Even the roughly half a million people paying additional rate tax, who are the only ones to get a substantial bung, may have more money in their pockets, but will suffer in other ways due to the likely economic decay all around them. That's money the government is supposing will drive growth in the UK economy, but these people will already be living a very comfortable lifestyle, which a few thousand extra isn't going to materially change. So they will likely save or invest it, and if they are not fools, which most aren't, they will not keep it within the UK economy as it goes down the toilet.

Fiscal irresponsibility doesn't get much worse than this, and traditional conservatives must be looking on in disbelief.

On the two points in bold:

1)  They may want and need to raise interest rates.  But they won't be able to do so as the UK economy accelerates into a recession.  There will come a point where the data forces them to change course.  They can either raise rates to fight inflation, or lower rates to boost the economy.  They can't do both.  And in a *stagflationary environment they are snookered.

2)  This is the point of gold, silver and crypto.  They are outside of the UK economy and the financial system in general.

Type_45

Thumbs_Up said:

If you want your children to do well in this world advise them to learn Mandarin!

I'm not so sure anymore.  I used to think that China were the ascending power and would soon enough overtake the USA.

However, China's One Child policy was taken too far and their population is now in terminal decline which they can do nothing about.  And their population is also ageing.  On top of that their economy is about to implode led by their disastrous property sector.

I think China may be done.

There is life yet in the USA as the global power if it's steered in the right direction.  

GazzaBloom

“Despite some severe interruptions, our country's economic progress has been breathtaking. Our unwavering conclusion: Never bet against America,”

Warren Buffett 

masonic

Type_45 said:

masonic said:

The plummeting pound and gilt markets give us a pretty good steer as to what investors think about the prospects for the UK following this budget. Our inflation problem was already looking to be the worst in the G7 and this is going to make it a lot worse. Hence the devaluing pound. Holding UK government debt has become more risky, so investors are selling it off and demanding a higher interest rate for the risk they'll be taking if they hold it. This has thrown a spanner in the works for the MPC, who have been trying to get a grip on inflation, and will now have to raise interest rates even higher, which will send the government's borrowing costs sky high just at a time when they are recklessly borrowing without abandon.

All of this to hand out some unfunded tax cuts, which will do the vast majority of people more harm than good and are unsustainable. No wonder the government had to suppress the OBR's impact assessment.

When you look at what they're doing, it's about two parts smoke and mirrors to about one part asset stripping the UK. The majority of people who would benefit from the reversal of the NI levy and reduction in basic rate tax, will already be worse off in real terms due to the inflationary effect of the budget. Those who might have benefited from the stamp duty changes will see any gains pared away by the now even higher interest rates on their mortgages. Businesses with debts are going to be put under further pressure in the same way. Even the roughly half a million people paying additional rate tax, who are the only ones to get a substantial bung, may have more money in their pockets, but will suffer in other ways due to the likely economic decay all around them. That's money the government is supposing will drive growth in the UK economy, but these people will already be living a very comfortable lifestyle, which a few thousand extra isn't going to materially change. So they will likely save or invest it, and if they are not fools, which most aren't, they will not keep it within the UK economy as it goes down the toilet.

Fiscal irresponsibility doesn't get much worse than this, and traditional conservatives must be looking on in disbelief.

On the two points in bold:

1)  They may want and need to raise interest rates.  But they won't be able to do so as the UK economy accelerates into a recession.  There will come a point where the data forces them to change course.  They can either raise rates to fight inflation, or lower rates to boost the economy.  They can't do both.  And in a *stagflationary environment they are snookered.

2)  This is the point of gold, silver and crypto.  They are outside of the UK economy and the financial system in general.

1) What we could see is a damaging war between the Bank of England and the Treasury. Interest rate policy has to reflect what foreign investment requires. Concerns over the depth of recession have to be secondary to that. There's also a huge volume of index linked government debt out there, so failure to continue on their inflation driven mandate will have its own costs. This has painted the UK into a corner, and any thoughts about loosening to take the edge off the current recession can now be put to bed. It is time to adopt the brace position.

2) Any asset that sits outside the UK economy is looking much more attractive today. That includes international bonds and equities, although equities could have further to fall. I think crypto will continue to be correlated with risk-on assets, and so presents an inferior proposition to companies, whose valuations are at least driven by their capability to grow earnings over the longer term. I am certainly not regretting allocating part of my portfolio to gold about a year ago, for the first time ever.

GSP

From what I have seen on charts on proposed savings from the budget, there are more savings to be had for most if the TV license fee was cancelled!

I suppose the suggested higher interest rates by some on this forum will finally cause that fall in house prices that’s been expected for what seems like decades now. Some people will be forced to sell up, and while mortgage rates increase, perhaps the fall in house prices with the glut of properties on the market will mean actual amounts going out of people’s bank accounts will be much the same.

Type_45

masonic said:

Type_45 said:

masonic said:

The plummeting pound and gilt markets give us a pretty good steer as to what investors think about the prospects for the UK following this budget. Our inflation problem was already looking to be the worst in the G7 and this is going to make it a lot worse. Hence the devaluing pound. Holding UK government debt has become more risky, so investors are selling it off and demanding a higher interest rate for the risk they'll be taking if they hold it. This has thrown a spanner in the works for the MPC, who have been trying to get a grip on inflation, and will now have to raise interest rates even higher, which will send the government's borrowing costs sky high just at a time when they are recklessly borrowing without abandon.

All of this to hand out some unfunded tax cuts, which will do the vast majority of people more harm than good and are unsustainable. No wonder the government had to suppress the OBR's impact assessment.

When you look at what they're doing, it's about two parts smoke and mirrors to about one part asset stripping the UK. The majority of people who would benefit from the reversal of the NI levy and reduction in basic rate tax, will already be worse off in real terms due to the inflationary effect of the budget. Those who might have benefited from the stamp duty changes will see any gains pared away by the now even higher interest rates on their mortgages. Businesses with debts are going to be put under further pressure in the same way. Even the roughly half a million people paying additional rate tax, who are the only ones to get a substantial bung, may have more money in their pockets, but will suffer in other ways due to the likely economic decay all around them. That's money the government is supposing will drive growth in the UK economy, but these people will already be living a very comfortable lifestyle, which a few thousand extra isn't going to materially change. So they will likely save or invest it, and if they are not fools, which most aren't, they will not keep it within the UK economy as it goes down the toilet.

Fiscal irresponsibility doesn't get much worse than this, and traditional conservatives must be looking on in disbelief.

On the two points in bold:

1)  They may want and need to raise interest rates.  But they won't be able to do so as the UK economy accelerates into a recession.  There will come a point where the data forces them to change course.  They can either raise rates to fight inflation, or lower rates to boost the economy.  They can't do both.  And in a *stagflationary environment they are snookered.

2)  This is the point of gold, silver and crypto.  They are outside of the UK economy and the financial system in general.

1) What we could see is a damaging war between the Bank of England and the Treasury. Interest rate policy has to reflect what foreign investment requires. Concerns over the depth of recession have to be secondary to that. There's also a huge volume of index linked government debt out there, so failure to continue on their inflation driven mandate will have its own costs. This has painted the UK into a corner, and any thoughts about loosening to take the edge off the current recession can now be put to bed. It is time to adopt the brace position.

2) Any asset that sits outside the UK economy is looking much more attractive today. That includes international bonds and equities, although equities could have further to fall. I think crypto will continue to be correlated with risk-on assets, and so presents an inferior proposition to companies, whose valuations are at least driven by their capability to grow earnings over the longer term. I am certainly not regretting allocating part of my portfolio to gold about a year ago, for the first time ever.

What does the brace position look like to you, regarding the average investor/person?