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Zed · No Longer a Wean Joined: 07 Jan 2009 Posts: 63

Brown and Darling are said to be considering printing more money Shocked

to help the economy.
Surely this move will make the pound worthless and increase inflation ?

Could we be going to the supermarkets with wheelbarrows of worthless money ?

£1m quid for a loaf anyone ??? Confused

Scotland86 · Gaining a Reputation Joined: 12 Dec 2008 Posts: 249

Jesus i hope this aint true. Between them they are meant to be amonsgt the top financial minds in the UK so surely they can see this is suicide.

azzuri · 'Our Scotland' Fossil Joined: 12 Sep 2005 Posts: 4266

M3 money supply's been running at 20% for over a year, and this is mostly going to be used to shore up the banks' balance sheets with all the losses and writedowns. Problem is, what happens to all that cash when the banks stop hoarding?

Wheelbarrow time right enough...
_________________
"Gordon Brown mistook a glut of cheap money and a global bull market for his own administrative genius. In so doing, he wrecked the economy. Had the Prime Minister been running a company, instead of a country, he would be facing an inquiry into allegations of criminal negligence." - Jeff Randal

"Every single person on this planet is unique. Just like everyone else..." - Random Guy in Edinburgh Pub

"A democracy cannot exist as a permanent form of government. It can only exist until a majority of voters discover that they can vote themselves largess out of the public treasury." - Alexander Tytler

Possibly the funniest site in the world, 'The Daily Mash' - http://www.thedailymash.co.uk/

Zed · No Longer a Wean Joined: 07 Jan 2009 Posts: 63

Seems they are now back-tracking on when the recession will start to come to an end. They had estimated the the tail end of 2009 (nobody else did).

They really are living in fantasy land..... Rolling Eyes

Scotland86 · Gaining a Reputation Joined: 12 Dec 2008 Posts: 249

The Westminster govt are changing what they say on a daily basis. They say something then wait to hear the reaction then decide whether to admit it or pass it off as media speculation.

azzuri · 'Our Scotland' Fossil Joined: 12 Sep 2005 Posts: 4266

The actual negative growth will probably start to turn positive either late this year or early next year. It takes absolute meltdown for, say, 5 years of constant negative growth, but that doesn't mean that the country is back on the right track. The last decade's growth has been almost single-handedly constructed through debt. The GDP-to-debt ratio is somewhere around 400% at the moment, WAY too high (see - http://www.spectator.co.uk/coffee...rue-extent-of-britains-debt.thtml ).

To put this into perspective, the maximum GDP-to-debt ratio of the USA just during the Great Depression was 300%. And the government want us to get into more debt to keep this artificial growth going! The point is this; eventually the banks, China, and the credit card companies will want to be paid back, the ever-expanding credit line must stop. We have to get the bad debts out in the open, and either pay them down or get those people defaulting on those loans (bankruptcy). You cannot help an addict by giving them more of what they're addicted to, and this country is addicted to debt and consumption.

How much imported crap do folk really need? How many ipods, dvd players, flat screen tellies. If you look around most people's home, you'll find loads of imported crap that you don't actually use stuffed into rooms and cupboards. Look at the amount of new cars on the roads (didn't people just repair and make do with their cars before?!).

'Keeping up with the Jones'' with easy (and often undeserved) credit is what got us into this mess, we simply cannot spend our way out of this, because we don't have the money(as a country and as individuals).

We, quite simply, have oversupply in almost everything we consume. Houses (despite what the govt. say - I know LOADS of people living alone in 2/3 bedroom properties), Cars, Commercial Property (how many empty retail units do we need?), TVs, computers etc. etc. etc. The government say there is still 'demand' for these things, but they confuse 'demand' with 'want'. We have enough property to do us for another 20 years, it's not a good time to be in the building trade.

For example, I imagine 20%+ of the male population of the UK want a Ferrari. This, however, does not create demand. If Ferrari made 6 million Ferraris and exported them to the UK, they wouldn't sell. Why? - because 10% of people in the UK don't have the means to buy a £100k sports car. 'Demand' is want combined with the means of purchasing something. The 'demand' in this country has been skewed by easy credit. An small anecdotal; a single male friend of mine (28 years old), went bankrupt earlier this year with a mortgage of £115,000 (interest-only of course), and £40,000 worth of credit card debt. All this on a salary of £21,000. It's complete madness, and I'll bet this isn't as rare as we think. Who is to blame, him or the bank? I'd argue the bank, as a lot of people aren't financially astute and the banks were actively marketing loans to people, loans to pay off their credit card debts FFS! Loans to pay off loans - complete lunacy!

The more I think about it, the more it looks like a good old-fashioned deflation. The reason I think this is that there is no way that Britain could just start quantitative-easing without trashing sterling and then defaulting on the sovereign debt to countries like China. Secondly, the cost of borrowing is going to go higher very soon, combined with a much higher savings rate as the cash-starved banks try to attract savers. Thirdly, high inflation is caused by TWO things, not just the printing of money. The first is the printing of money, which the government are doing. The second is the velocity of money i.e. how fast that money makes it way round the system. I'm afraid that money just isn't going to be spent that way it was. In these uncertain times, with people losing their jobs and not sure about the future, they will hoard money. With an over-supply of non-essentials, people will spend on only the essentials and debt-servicing, or paying it off entirely. Paying off debt in this climate 'destroys' the money, since the economic outlook means banks won't be relending that money and thus the velocity of money will be very low. Thirdly, without wage inflation, we won't major inflation in any other goods or services.

Banks have re-priced risk, and so won't lend like they have again in any of our lifetimes. In 1982, 5% of corporate profits came from the financial sector. In 2006, that figure had risen to an astonishing 40%. Finance is completely screwed, and is going to be trashed over the next decade. We are going to start making stuff ourselves again, and people are going to have to 'get real' over their aspirations in life, and stop buying crap we don't need. Look out for falling wages and falling prices of non-essentials, twinned with static prices of essentials. Unemployment to reach 20% within 2 years?!

For me, a small but comfortable home, a triennial trip abroad somewhere in Europe, a reasonable car and getting to watch my fitba' team every other Saturday are all of my 'wants' in life. Perhaps we will discover that the simple things in life really do give us pleasure; your own and your family's/friend's health, in the company of said family and friends, steak pie and mashed potatoes, the odd pint and the heat of your home while it's pissing down and freezing outside. Very Happy

We need to restructure the economy so we both produce AND consume, not the one-way traffic it's been over the past 20 years. If the UK does this successfully, we can hopefully sort out this mess in 15-20 years, as that's how long this whole thing is going to take hold for and for us to recover from.
_________________
"Gordon Brown mistook a glut of cheap money and a global bull market for his own administrative genius. In so doing, he wrecked the economy. Had the Prime Minister been running a company, instead of a country, he would be facing an inquiry into allegations of criminal negligence." - Jeff Randal

"Every single person on this planet is unique. Just like everyone else..." - Random Guy in Edinburgh Pub

"A democracy cannot exist as a permanent form of government. It can only exist until a majority of voters discover that they can vote themselves largess out of the public treasury." - Alexander Tytler

Possibly the funniest site in the world, 'The Daily Mash' - http://www.thedailymash.co.uk/

Reluctant Hero · Posted: Fri Jan 09, 2009 10:59 pm Post subject:

Zed · No Longer a Wean Joined: 07 Jan 2009 Posts: 63

[quote="Reluctant HeroDon't think they have actually used the R word yet though Laughing

[/quote]

I think you're right. But if there was no growth after two consecutive quarters of negative economic growth then they will have to officially use the R word for sure. Cool

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If only a Nation can awake and join, we shall be as one !

Cruachan · Posted: Sun Jan 11, 2009 12:05 pm Post subject:

Azzuri's post looks to me like a good manifesto in an uncertain future.

Not sure about the housing issue though. Having one spare room does not seem to me to be gross over consumption. eg divorced people needing a room for their kids at the weekend, elderly relatives etc.
We are at historically low levels of housebuilding in Scotland and EWNI, with tens of thousands of young homeless and older adults living in unsuitable/unhealthy housing situations, sofa surfing, living in inadequate or unhealthy situtations.

Divorce rates, high incidents of domestic abuse and violence, changing patterns of employment and a more mobile population have led to a surge in one person households in the last 20 years. Living with mum and dad into your 20s and even 30s just does not fit with folk's expectations for an independent lifestyle and is a practical necessity in many cases.

I agree that once securing decent affordable housing to meet their needs (rented or home ownership) changing our - relatively recent - habits of getting into debt to fund buying stuff we don't really need is definitely part of the answer to our economic and environmental challenges ahead. Having two teenage daughters this is a constant topic of conversation in our house! Rolling Eyes

I caught myself the other day thinking that what my family really "needed" was a new laptop to stop me and the kids arguing about who's turn it is next on the PC. It was not that long ago that having a home computer at all was a huge luxury. Of course I could get a "free" one from those nice people at Carphone Warehouse, as long as I sign up to an 18 month contract at £40 a month for mobile broadband. This would help me get on Our Scotland more easily, but I have resisted the temptation.

Well, I'm off to tighten my belt. Its going to be an interesting year.

P.S. Is the Our Scotland site now going stop having advertising encouraging us to buy stuff we don't need? Over to you moderators Confused

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IT'S TIME.
http://loosechange-cruachan.blogspot.com/

agentmancuso · Posted: Sun Jan 11, 2009 12:40 pm Post subject:

azzuri · 'Our Scotland' Fossil Joined: 12 Sep 2005 Posts: 4266

...and we make nothing from the ads, this is the hosting company who get the money from these, which pays for the running of the site itself.
_________________
"Gordon Brown mistook a glut of cheap money and a global bull market for his own administrative genius. In so doing, he wrecked the economy. Had the Prime Minister been running a company, instead of a country, he would be facing an inquiry into allegations of criminal negligence." - Jeff Randal

"Every single person on this planet is unique. Just like everyone else..." - Random Guy in Edinburgh Pub

"A democracy cannot exist as a permanent form of government. It can only exist until a majority of voters discover that they can vote themselves largess out of the public treasury." - Alexander Tytler

Possibly the funniest site in the world, 'The Daily Mash' - http://www.thedailymash.co.uk/

Cruachan · Posted: Sun Jan 11, 2009 4:31 pm Post subject:

Reluctant Hero · Posted: Wed Jan 14, 2009 7:21 pm Post subject:

If it wasn't so serious it would be laughable, but the Labour Business Minister has said that there are a few green shoots of economic recovery.

http://news.bbc.co.uk/1/hi/uk_politics/7828549.stm

This recession has a long way to run before there is any sort of recovery. If Labour thought they had any chance of winning the next Westminster election, I think it has just disappeared with that comment.
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Reluctant Hero · Posted: Sat Jan 17, 2009 9:58 pm Post subject:

According to Iain Dale, a Labour Govt Minister, Hazel Blears, has said that we cannot spend our way out of the recession!!

Isn't that what all Labour's policies are aimed at?!
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Lord Pitsligo · Posted: Sat Jan 17, 2009 11:44 pm Post subject:

Scott2006 · Posted: Sun Jan 18, 2009 4:25 am Post subject:

Will Hutton in the Observer/commentisfree

Unless we are decisive Britain faces bankruptcy

Lord Pitsligo · Posted: Sun Jan 18, 2009 1:27 pm Post subject:

Will Hutton's just another journalist who talked up the boom (hmmm, I wonder if he owns any buy-to-let properties?) and now is talking utter nonsense to sound important as everything crashes.

Its not just the banks and the government that have been useless in this - the media have shown a disgraceful lack of awareness of the situation.
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If it wasn't for my avatar, you wouldn't be reading this...

Reluctant Hero · Posted: Sun Jan 18, 2009 7:57 pm Post subject:

Lord Pitsligo · Posted: Sun Jan 18, 2009 8:01 pm Post subject:

azzuri · 'Our Scotland' Fossil Joined: 12 Sep 2005 Posts: 4266