Stock market is a "fully-fledged epic bubble" and will burst
Discussion
All well and good saying couple years of 10% inflation but thst would require equal pay rises at the end to balance out or deflation. Otherwise £2 a litre petrol is the new norm.
Government could in a year or two go really brutal on the fuel duty and tax as an easy way to stimulate the economy. Everything gets cheaper with cheaper fuel prices
Government could in a year or two go really brutal on the fuel duty and tax as an easy way to stimulate the economy. Everything gets cheaper with cheaper fuel prices
Digga said:
alscar said:
And don’t forget the white elephant that is HS2 - passenger projection numbers always wrong before Covid and obviously now completely unobtainable.
Big gain with HS2 is additional freight capability.......if the train drivers don't keep going out on strike.
I guess we will never know / live that long to know the numbers as regards vfm and yes freight capability has a bearing on this but I’m afraid I just don’t get / am obviously not clever enough to understand the job creation / stimulus bearing on the decision to continue with it in actual real £ terms - both of which were trotted out a fair way into the construction.
Irrespective of which party you think is responsible it’s a vanity project but the sun is shining so good weekends all.
Irrespective of which party you think is responsible it’s a vanity project but the sun is shining so good weekends all.
I guess we will never know / live that long to know the numbers as regards vfm and yes freight capability has a bearing on this but I’m afraid I just don’t get / am obviously not clever enough to understand the job creation / stimulus bearing on the decision to continue with it in actual real £ terms - both of which were trotted out a fair way into the construction.
Irrespective of which party you think is responsible it’s a vanity project but the sun is shining so good weekends all.
Irrespective of which party you think is responsible it’s a vanity project but the sun is shining so good weekends all.
Ashfordian said:
speedy_thrills said:
Ashfordian said:
Debt is the biggest problem, there is too much everywhere. Inflation is the safest way to reduce the debt liability.
A student of the Argentinian school of economics? 
A year or two of 10% inflation and government debt, mortgage debt, etc are much smaller relatively. Put interest rates up to say 3%, maybe 4%, and we get an immediate recession as too much money and taxes is then directed towards servicing the debt.
I don't like it but the government wasting £100bn's on Covid and 14 years of historically low interest rates means the economic levers are dictated by debt this time and not inflation.
It's a fine balancing act but at the end of the day is balloon squeezing. If the public demand more of everything e.g more service from NHS, more frequent trains etc. then it all costs more money. The only way you pay for this is more productivity.
We are not getting the productivity because workers prior to lockdown are not so keen to work so hard or go back to work.
Inflation has fragile economics and can spiral out of control very quickly which is why it is important do what is possible to try to keep it under control.
Ashfordian said:
No, just a realist to the situation.
A year or two of 10% inflation and government debt, mortgage debt, etc are much smaller relatively. Put interest rates up to say 3%, maybe 4%, and we get an immediate recession as too much money and taxes is then directed towards servicing the debt.
I don't like it but the government wasting £100bn's on Covid and 14 years of historically low interest rates means the economic levers are dictated by debt this time and not inflation.
Just to be clear, if gov suddenly pay more money on their debts, which is apparently unsustainable, who gets it?A year or two of 10% inflation and government debt, mortgage debt, etc are much smaller relatively. Put interest rates up to say 3%, maybe 4%, and we get an immediate recession as too much money and taxes is then directed towards servicing the debt.
I don't like it but the government wasting £100bn's on Covid and 14 years of historically low interest rates means the economic levers are dictated by debt this time and not inflation.
Isn’t this all coming back into returns on investment for people buying gov debt?
Personally I’d rather have higher taxes to pay, but also have gov give me good honest returns on treasuries, than pay taxes on gains made on stock market in a low interest rate environment, where prices are high and yield seeking abs risks are high.
Mr Whippy said:
Ashfordian said:
No, just a realist to the situation.
A year or two of 10% inflation and government debt, mortgage debt, etc are much smaller relatively. Put interest rates up to say 3%, maybe 4%, and we get an immediate recession as too much money and taxes is then directed towards servicing the debt.
I don't like it but the government wasting £100bn's on Covid and 14 years of historically low interest rates means the economic levers are dictated by debt this time and not inflation.
Just to be clear, if gov suddenly pay more money on their debts, which is apparently unsustainable, who gets it?A year or two of 10% inflation and government debt, mortgage debt, etc are much smaller relatively. Put interest rates up to say 3%, maybe 4%, and we get an immediate recession as too much money and taxes is then directed towards servicing the debt.
I don't like it but the government wasting £100bn's on Covid and 14 years of historically low interest rates means the economic levers are dictated by debt this time and not inflation.
Isn’t this all coming back into returns on investment for people buying gov debt?
Personally I’d rather have higher taxes to pay, but also have gov give me good honest returns on treasuries, than pay taxes on gains made on stock market in a low interest rate environment, where prices are high and yield seeking abs risks are high.
vulture1 said:
All well and good saying couple years of 10% inflation...
Reserve Banks want inflation expectations to remain anchored or they end up having to do what Paul Volker did in the US where they needed 20%+ rates and 10%+ unemployment to reset expectations.If you listen to what BoE are actually saying they are essentially the last holdouts of #TeamTransitory. They believe inflation will self moderate in the next few months without the need for the larger rate rises other banks introduce as everyone tries to export inflation simultaneously.
speedy_thrills said:
If you listen to what BoE are actually saying they are essentially the last holdouts of #TeamTransitory. They believe inflation will self moderate in the next few months without the need for the larger rate rises other banks introduce as everyone tries to export inflation simultaneously.
The FT's unhedged column has a graph suggesting that we're seeing the beginning of demand rotating back to services from goods. If that turns out to be true then that element of inflationary pressure will diminish, just leaving us with the energy and food inflationary pressures due to the war in Ukraine.I wonder if the cheapest option is to give every non nuclear weapon in the inventory to Ukraine to get the war ended as quickly as possible, at which point we'd see some reduction in food costs and possibly political changes in Russia which would allow reduction of sanctions which would in turn would lower energy costs.
Ashfordian said:
GT3Manthey said:
Thought they might do 50 but no , a mere 25!
Madness , inflation is already a huge problem.
Mkt has last confidence. Both bond and stock mkts down the pan .
Pension fooked !
Debt is the biggest problem, there is too much everywhere. Inflation is the safest way to reduce the debt liability.Madness , inflation is already a huge problem.
Mkt has last confidence. Both bond and stock mkts down the pan .
Pension fooked !
With the amount of debt, inflation is much preferred to a recession and this is the way I see them navigating this going forward.
Who knows if there will be any unintended consequences?
Domestic inflation is today very easy to micro manage as the core consumer population falls into two distinct groups, living on debt or living off pension income.
Want to slow the amount the debt consumers hurl away on imported, non essential tat? Simply increase the regulation on junk lenders. Want to curb the impact of excessive capital into the domestic housing market you add second home taxes and remove landlord protections.
A huge amount of consumer pricing such as the cost of non essential services has been being heavily subsidised by investors hurling VC capital into firms attempting to buy market share by selling their product below market. We don't need to worry about that inflation as it is non essential. Hence why all their valuations are plummeting.
House price inflation can be dealt with by taxation. Let the upper end of the market run away, crash, do whatever it wants but the bottom end of the market has been warped by furlough cash, stamp duty shenanigans. A percent on the borrowing isn't all that pertinent. The best means to locking out the excessive capital flowing in to the market is to apply additional voluntary taxation on investment capital or to scare a chunk of it off by giving tenant the right to store as many feral dogs and children as they like and remove some eviction rules.
Oil and food. Mostly short lived. As in a year or two. Besides, one must also get round to questioning what the real impact of an increase in diesel and driver costs is on a delivery of milk to a supermarket once that extra cost is amortised across several thousand pints of milk etc.
Rate rises are probably the most efficient means to get a population to wake up and pay attention. We can't put them too high or the country goes bust. They then need to be accompanied by regulatory changes in key markets to push the excess spending elsewhere.
Luckily, the head of the Bank of England is Andrew Bailey. A man whose tenure at the FCA presided over the most disastrous era of the financial regulator since its formation. The man is an utterly useless meat unit whose only purpose is to be woken up between meals to do his master's bidding. He can't even be relied upon to speak in public such is his incompetence as a functioning human.
We just have to hope that the carers who surround him and help him get through each day have enough collective common sense to patch over this truly frightening state of affairs which finds the BofE being piloted by what amounts to not much more than a vegetable with a pulse.
DonkeyApple said:
Luckily, the head of the Bank of England is Andrew Bailey. A man whose tenure at the FCA presided over the most disastrous era of the financial regulator since its formation. The man is an utterly useless meat unit whose only purpose is to be woken up between meals to do his master's bidding. He can't even be relied upon to speak in public such is his incompetence as a functioning human.
We just have to hope that the carers who surround him and help him get through each day have enough collective common sense to patch over this truly frightening state of affairs which finds the BofE being piloted by what amounts to not much more than a vegetable with a pulse.
Bring back Merv!We just have to hope that the carers who surround him and help him get through each day have enough collective common sense to patch over this truly frightening state of affairs which finds the BofE being piloted by what amounts to not much more than a vegetable with a pulse.
DonkeyApple said:
egomeister said:
Bring back Merv!
For all his faults he was arguably independent whereas Bailey has only ever sat back and just copied other countries with no consideration to bespoke solutions. With Bailey we just have to hope his carers and puppet master have a good grip on things.
I think food may take a bit longer to calm down. Wheat stocks were at a low before war broke out. Weather events are probably going to make this harvest a poor one worldwide. Fertiliser costs could make the following poor aswell thus compounding the problem. Only one harvest a year and it could take supply and demand a few years to normalise. I think wheat use rises 18 million tons a year which has to be found somewhere.
egomeister said:
I didn't really follow economics while he was in charge, but have found him interesting to listen to since. What would have have said his faults and successes were?
Primary success was being able to remain roughly independent of the deregulatory lunacy of Brown's gerrymandering and artificially created economic boom. Core failing was that he was on his own in a room with Brown on multiple occasions and never did the right thing. 
On a serious note, I wouldn't put Merv down as a 'great' but rather that by comparison to Bailey he was a complete superstar. He certainly had a gravitas that is wholly absent from a man who has no right or ability to stand in front of the public and speak.
DonkeyApple said:
Primary success was being able to remain roughly independent of the deregulatory lunacy of Brown's gerrymandering and artificially created economic boom. Core failing was that he was on his own in a room with Brown on multiple occasions and never did the right thing.
On a serious note, I wouldn't put Merv down as a 'great' but rather that by comparison to Bailey he was a complete superstar. He certainly had a gravitas that is wholly absent from a man who has no right or ability to stand in front of the public and speak.
All the more unforgivable because if he'd approached it correctly Brown would never have seen it coming On a serious note, I wouldn't put Merv down as a 'great' but rather that by comparison to Bailey he was a complete superstar. He certainly had a gravitas that is wholly absent from a man who has no right or ability to stand in front of the public and speak.
I think your take is not far away from my impression of him. He seems like a safe pair of hands who was able to resist the worst ideas pushed on him and as far as I can tell handled 2008 as well as can be expected.
speedy_thrills said:
vulture1 said:
All well and good saying couple years of 10% inflation...
Reserve Banks want inflation expectations to remain anchored or they end up having to do what Paul Volker did in the US where they needed 20%+ rates and 10%+ unemployment to reset expectations.If you listen to what BoE are actually saying they are essentially the last holdouts of #TeamTransitory. They believe inflation will self moderate in the next few months without the need for the larger rate rises other banks introduce as everyone tries to export inflation simultaneously.
Gassing Station | Finance | Top of Page | What's New | My Stuff