The end of Whingonomics?
Discussion
With the US seemingly posting a fall in unemployment and most interestingly a small rise in wages and the UK delivering some better than expected numbers in the service sector could we actually be at the turning point?
Equity markets always lead any true recovery by 6-12 months and they are hitting new highs.
It's too early to say obviously and most of these numbers can be taken and have relatively good arguements set against them, but I have always held the view that in a downturn the only two figures that are of importance are firstly to wait for a fall in unemployment and then look for a rise in wages.
Now in the UK this is difficult as such a massive % of our working population are govt employees on fixed wages and increases but in the US it is easier to see when the private sector is havin to start to bid wages up to get the new staff they need.
One hurdle is the EU but it does look more and more like it will be sold off to the Chinese and retain its branding.
We also know that the media loves to publish doom and gloom and so negativity weighs heavy in the media during a downturn.
Plus, more people are struggling in this recession because of the vast levels of personal debt taken on by so many and the lack of core savings due to excessive spending. But there are many more who did save and are recession proof.
But generally speaking there appears to be a relatively broad spectrum of positive data to be able to suggest that we could be in the turning point?
Equity markets always lead any true recovery by 6-12 months and they are hitting new highs.
It's too early to say obviously and most of these numbers can be taken and have relatively good arguements set against them, but I have always held the view that in a downturn the only two figures that are of importance are firstly to wait for a fall in unemployment and then look for a rise in wages.
Now in the UK this is difficult as such a massive % of our working population are govt employees on fixed wages and increases but in the US it is easier to see when the private sector is havin to start to bid wages up to get the new staff they need.
One hurdle is the EU but it does look more and more like it will be sold off to the Chinese and retain its branding.
We also know that the media loves to publish doom and gloom and so negativity weighs heavy in the media during a downturn.
Plus, more people are struggling in this recession because of the vast levels of personal debt taken on by so many and the lack of core savings due to excessive spending. But there are many more who did save and are recession proof.
But generally speaking there appears to be a relatively broad spectrum of positive data to be able to suggest that we could be in the turning point?
EDLT said:
No no no. The economy is about to collapse, the euro will collapse next week (again) and it is all Labours fault.
It's not all Labour's fault. A lot is down to people over borrowing. So we can share the blame between Labour who promoted the concept of borrowing more than you can safely handle and the punters who did that and thought it was the end of boom and bust. 
But, I'm just reminded that the personal gloom and downbeat human nature always outlasts the turn around well into the recovery.
The EU is a heavy restriction and it is bust but I suspect they will sell out to the Chinese and muddle on. They could get the money from the cash rich residents, or they could print but I suspect they will opt for more debt and being controlled from Bejing.
. It'll keep the gravy train going for much longer for the guys at the top. But, I've said since 08 that the key is to watch real unemployment, or more accurately the net jobs data and then wait to see if it is confirmed by sectorial wage inflation.
On Friday we saw this in the US and they lead by at least half a year traditionally but the EU mess probably extends that gap and the data may be anomalous but it's something we'll worth keeping an eye on.
Well Greece has defaulted by any real meaning of the term and no reforms have happened at all in the Eurozone, so I'll continue to be careful with my cash thanks! Just because the cycle of articles has switched to ignore the fundamental economics/politics doesn't mean reform isn't needed.
Agreed that the US will be fine though.
Agreed that the US will be fine though.
Dont the US have the 99'ers...they arent counted as unemployed once their benefits have run out after 99 weeks.
Plus these things are always revised next month or quarter...negatively.
US unemployment isnt falling other than in the Department of Statistics or Department of Labor or whatever its called press releases. Its just pre-election BS to retain Obama as chief teleprompter reader.
Plus these things are always revised next month or quarter...negatively.
US unemployment isnt falling other than in the Department of Statistics or Department of Labor or whatever its called press releases. Its just pre-election BS to retain Obama as chief teleprompter reader.
12gauge said:
Dont the US have the 99'ers...they arent counted as unemployed once their benefits have run out after 99 weeks.
Plus these things are always revised next month or quarter...negatively.
US unemployment isnt falling other than in the Department of Statistics or Department of Labor or whatever its called press releases. Its just pre-election BS to retain Obama as chief teleprompter reader.
You have other factors to be wary of such as in a long downturn kids will postpone joining the labour market by staying in education and older people will take retirement. Plus these things are always revised next month or quarter...negatively.
US unemployment isnt falling other than in the Department of Statistics or Department of Labor or whatever its called press releases. Its just pre-election BS to retain Obama as chief teleprompter reader.
The current data is by no means to be taken as relevant as of yet, it's just an observation for me and as I'm in the UK I remain fundamentally bearish because of the EU.
davepoth said:
I get the feeling that the Eurozone is going to be in for a Japan-style "Lost Decade" the way they're going on. Hopefully we won't get caught in their mire.
As I've posted before, the Japanese lost decade really hasn't been a bad thing for Japan at all. I think what Europe is heading for will be a whole different kettle of fish.The fundamentals have not changed (in any meaningful way). The Eurozone is reliant on Germany bailing it out. German markets (DAX) are powering ahead - ignoring the Greek employee about to drop the anchor on the good ship BundesBoom.
Kick ass start to the year - wishful thinking by the markets? There is a slight conflict here. Unless the markets rise no one is getting paid.
Kick ass start to the year - wishful thinking by the markets? There is a slight conflict here. Unless the markets rise no one is getting paid.
The rate at which many Euro Zone countries are issuing debt is still much too high.
However I’m optimistic about the U.S. because, while their debt is still an unresolved issue, they have at least managed to reduce real estate prices to a more affordable level and seem to have real economic growth in important industries (manufacturing, engineering etc.)
In the UK (and in other countries) your low rates seem to have continued to prop up your real estate asset bubble thingy for now and your unemployment rate is still rising. You are in the same boat as other western countries (debt burden, age demographics, educational attainment etc.) and, while it may require major restructuring of industry and quite a significant hike in tax rates, the UK will continue to amble along in the future. If the lessons learned by post baby boomers is about being industrious, living within your means and having a greater awareness of political/economic realities then it may also be a prosperous future.
But not yet, still too soon.
However I’m optimistic about the U.S. because, while their debt is still an unresolved issue, they have at least managed to reduce real estate prices to a more affordable level and seem to have real economic growth in important industries (manufacturing, engineering etc.)
In the UK (and in other countries) your low rates seem to have continued to prop up your real estate asset bubble thingy for now and your unemployment rate is still rising. You are in the same boat as other western countries (debt burden, age demographics, educational attainment etc.) and, while it may require major restructuring of industry and quite a significant hike in tax rates, the UK will continue to amble along in the future. If the lessons learned by post baby boomers is about being industrious, living within your means and having a greater awareness of political/economic realities then it may also be a prosperous future.
But not yet, still too soon.
Bing o said:
davepoth said:
I get the feeling that the Eurozone is going to be in for a Japan-style "Lost Decade" the way they're going on. Hopefully we won't get caught in their mire.
As I've posted before, the Japanese lost decade really hasn't been a bad thing for Japan at all. I think what Europe is heading for will be a whole different kettle of fish.DonkeyApple said:
AJS- said:
What is whingonomics?
It's the period when griping is at its peak prior to or during the start of the next upturn. You can only spot it with hindsight. AJS- said:
Oh as in whinge? I was pronouncing it in my head as wing, like on a plane. I would replace the first "o" with an "e" to make the soft palato alveolar affricate sound, as the "o" suggests a velar nasal "ng" sound, or worse still perhaps followed by hard, voiced velar plosive "g" to sound like wing-go-nomics.
I guess that would be where we all say f
k it and fly to Vegas. speedy_thrills said:
However I’m optimistic about the U.S. because, while their debt is still an unresolved issue, they have at least managed to reduce real estate prices to a more affordable level and seem to have real economic growth in important industries (manufacturing, engineering etc.)
I think this is an absolutely crucial element. The US boom like all the others was fuelled by relaxed lending which led to over zealous borrowing and an enormous spike in property values. They have redressed this by their property market collapsing and rebasing. Their next generation can start life without having to pay for the hideous primary asset inflation created by the boomers.
Here we are still living in a property bubble. Our leaders far too weak to allow the right thing to happen.
If we had let the bubble burst in 08 then the future would be very bright for our children but we chose to underwrite the market and keep it propped up as part of the bank bailout.
Personally, I think that will transpire to be the greatest error of the last government.
DonkeyApple said:
They have redressed this by their property market collapsing and rebasing. Their next generation can start life without having to pay for the hideous primary asset inflation created by the boomers.
So, in the face of your own question in your own OP, the end of 'whingonomics' may be here or not but there's still room for a bit if a whinge on economics then turbobloke said:
So, in the face of your own question in your own OP, the end of 'whingonomics' there's still room for a bit if a whinge then
Indeed. I'm still bearish for the UK but I was back in the early 90s when hindsight told us we were back on the up much earlier than we appreciated.
DonkeyApple said:
I think this is an absolutely crucial element. The US boom like all the others was fuelled by relaxed lending which led to over zealous borrowing and an enormous spike in property values.
They have redressed this by their property market collapsing and rebasing. Their next generation can start life without having to pay for the hideous primary asset inflation created by the boomers.
I’m loathed to say it’s a demographic problem alone. Remember in the UK planning restrictions are tighter which constricts supply and there are differing repercussions to “handing back the keys” which is a much easier solution in the U.S.They have redressed this by their property market collapsing and rebasing. Their next generation can start life without having to pay for the hideous primary asset inflation created by the boomers.
Also regarding historic precedent remember that when people talk about the median house price being 3 to 4 times median annual income there have been some fundamental changes in household income (women are more likely to work) and mortgage providers are more flexible to accommodating those who previously wouldn’t really have been eligible. Of course either via wage growth or price collapse the market will tend towards becoming affordable eventually as the current situation is unsustainable.
I would say real estate bubbles are more of a cultural phenomenon of our time. After all there isn’t really any great shortage of land in many countries where the boom occurred and there are alternatives (though they may not be perfect replacements).
DonkeyApple said:
EDLT said:
No no no. The economy is about to collapse, the euro will collapse next week (again) and it is all Labours fault.
It's not all Labour's fault. A lot is down to people over borrowing. So we can share the blame between Labour who promoted the concept of borrowing more than you can safely handle and the punters who did that and thought it was the end of boom and bust. Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff