What it all means to me!

baby_boomer

ianmr65 wrote: »

No i don't trust the BoE or the fed [enough to buy government fixed rate bonds]

That sounds like Ian is also concerned about potential inflation in spite of earlier suggesting a deflationary slump was very possible.

Looks like you guys have all the predictions covered .

Equivocate all you like. My partner and I are invested in index linked certificates to the maximum and also hold other index linked investments.

WTF?_2

baby_boomer wrote: »

That sounds like Ian is also concerned about potential inflation in spite of earlier suggesting deflation.

Government bonds are normally the safest places to have your money but if the UK govt is converting dodgy Mortgage Backed Securities into govt. bonds to bail out the banks from their bad investments, then it calls into question the wisdom of investing in UK bonds.

To compensate for the risk, you'd want a higher interest rate. But the UK govt. is pushing strongly for lower rates (to bail out those precious banks again).

Still, if you want to hold cash in Sterling it's probably the safest place to have it. I suspect that many may decide to move out of Sterling.

ianmr65

baby_boomer wrote: »

That sounds like Ian is also concerned about potential inflation in spite of earlier suggesting a deflationary slump was very possible.

Looks like you guys have all the predictions covered .

Well in !!!!!!'s ABC scenario, we either get monetary inflation, and moenetary hyper inflation, weimar republic, or monetary inflation followed by monetary deflation, - great depression. which unlike !!!!!! i think is the most likely outcome.
Either way we get a period of inflation which is just starting.

The fed is paranoid about a slump and the Germans running the ECB are paranoid about hyper inflation.
Which explain their respective stances.

While 'normal' inflation is on the up, and BoE intrest rates are coming down, As they are here, as we seem to be taking the lead from helicopter ben. (Uk M5 money supply doubled in two years), it makes sense to invest accordingly.

When as is likely the FED and BoE liquidity push fails to stop property, stocks, and derivative deflation, and the credit cruch continues unabated, and Inflation creeps into double figure. And intrest rates start to creep up again, as the £/$ currencies will be on the floor. And when the ECB realises that the contagion from Spain, and Ireland has spread all over euroland, and they are facing deflation, the lack of a co-ordinated approch will send the west into a spiral of monetary deflation the like of which has never been seen.

Meanwhile the east will have called in the debts, and will be sitting pretty with all the wealth, and resources, and no one to sell them too.
Sending their economies into rescession.

At that point a world war will be all that can stop the whole global economy going crunch.

borntobefree

Davesnave wrote: »

I see big problems in cities if things get really tight.

Surely, as petrol rises to scary heights ($115 a barrel :eek:) it will be rural areas that feel it - urbanites don't really "need" a car at all. I don't actually feel that our personal inflation level is that high as we live in London and rarely use our car and thus hardly ever buy petrol. Both me and OH work from home, so have no travelling costs either and our kids walk to school and use public transport (which is free to them).

ianmr65

baby_boomer wrote: »

Equivocate all you like. My partner and I are invested in index linked certificates to the maximum and also hold other index linked investments.

Sound like a wise move, over the long term, and esp in the deflationary scenario, unless, that is, we go hyper inflated...£20k for a cup of tea guv...:eek: :eek: Short term as !!!!!! says returns are too low.

ianmr65

borntobefree wrote: »

Surely, as petrol rises to scary heights ($115 a barrel :eek:) it will be rural areas that feel it - urbanites don't really "need" a car at all. I don't actually feel that our personal inflation level is that high as we live in London and rarely use our car and thus hardly ever buy petrol. Both me and OH work from home, so have no travelling costs either and our kids walk to school and use public transport (which is free to them).

I think davesnave was refering to the potential for riots, and civil unrest. it's difficult to orgainise a riot in a village with 500 people who know each other, in it: especially if they have to walk 5 miles to the next village, to fight them, as their cars have no petrol.
Also rural areas have farms, crops and grazing land, so tend not to suffer as much in extreme circumstances, as though life gets harder people are not homeless, nor starving.

Spanish civil war -
My dad lived in a rural village, and came through it realtively unscathed.
My mum lived in a town, was born in a refugee camp, in france suffered terrible hunger, and her father was killed.

EdInvestor

borntobefree wrote: »

Surely, as petrol rises to scary heights ($115 a barrel :eek:) it will be rural areas that feel it - urbanites don't really "need" a car at all. I don't actually feel that our personal inflation level is that high as we live in London and rarely use our car and thus hardly ever buy petrol. Both me and OH work from home, so have no travelling costs either and our kids walk to school and use public transport (which is free to them).

Apparently Brits only spend 7% of their disposable income on food, so higher prices won't make a lot of difference. And you only have to look at the "SOAs" published on debt forums to see that even people with lots of debt have loads of ways to economise.

dudleyboy

Call it what you will - a house price crash or a house price correction - I, like many others, have been anticipating the inevitable for several years and now it's actually happening. We're all now only too aware of the factors that have kept house prices inflated for so long (like we didn't know already) and, irrespective of what Gordon Brown and his desperate government try to do to soften the blow, as far as I'm concerned the writing is on the wall.

Had Brown, as Chancellor of the Exchequer, managed the finances of this nation with greater control, integrity and comptence then the current credit crisis would be far less damaging - even avoidable. As it is, he will probably go down in history as the man who financially ruined the United Kingdom and I cannot wait for the day where he and his useless government are removed from office.

In fact, after 12 years of abstaining and spoiling ballots I'm going to be first in line at the polling station to cast my vote to reduce this man's power and acheive his eventual removal, such is my disdain for what he and "New Labour" have done to this nation. If it ever existed, voter apathy is about to become a thing of the past. Well done, Gordon: that's one acheivement at least. As far as our great leaders go, you're going to be right up there with Mrs Thatcher.

As for the recession - it's on its way if it's not already here. You can wait for your text book definition News at Ten announcement if you want but I think everyone here knows how this will play out, crystal balls or not. As others have said, protect yourself now before it's too late. It's frightening to think that some people have never heard of Martin Lewis and this site. I'm afraid to say that I suspect they're going to be the first casualties of this nation's great decline. If I had money I wouldn't be concerned half as much as I am but I have this nasty feeling that things are going to get much, much worse over the next decade or so for the vast majority of normal, every day, hard working, tax-paying people. And if I'm proved wrong... well... let's just say I won't be disappointed.

I don't know if anyone saw Panorama the other night, hosted by BBC Breakfast's excellent Declan Curry, but I have to say it was a cause of great concern. You can watch it again here:

http://www.bbc.co.uk/iplayer/page/item/b009z0jl.shtml

It starts off, as one would expect, with falling house prices, the credit crunch, people spending less money, companies losing profits, people losing jobs, etc, but then moves on to the possibility of the UK actually avoiding a recession altogether and the reasons for this. The last few minutes are particularly unsettling. Uncertain times ahead indeed.

Davesnave

I think davesnave was refering to the potential for riots, and civil unrest. it's difficult to orgainise a riot in a village with 500 people who know each other, in it: especially if they have to walk 5 miles to the next village, to fight them, as their cars have no petrol.
Also rural areas have farms, crops and grazing land, so tend not to suffer as much in extreme circumstances, as though life gets harder people are not homeless, nor starving.

Yes, and the rest of your analysis is more or less what I've been thinking. A year or two ago, when I told people I was off to find somewhere rural with its own wood & water supplies, people would put me in the box with David Icke! Not so sure now...

People in rural areas are frequently used to making do, and there's often a flourishing underground economy.

borntobefree

Historically, people go where the work is. I believe as petrol gets more expensive people will want to be in cities. The only factor that would change this is a break through in technology (a very efficient electric car perhaps?)