I urge you to put out the call before we get some real scare mongering babded about. Heaven forbid we get a reality check anytime soon. Complain about this comment Comment number 5. This is a good article Robert pointing out the fallacy that was de-coupling. Also it shows the US is still dominant, depsite its seeming messy circumstances. The dollar conquers all. In addition to this though, it is important to think about what happens next in order to make any investment decisions going forward. Complain about this comment Comment number 6.
Complain about this comment Comment number 7. Complain about this comment Comment number 8. Complain about this comment Comment number 9. Well Robert! So what's the next step? Should governemnts now freeze the deposits they have just guaranteed, as in many cases majority shareholders of banks they have just nationalised, or partly nationalised, in order to stem the flight of capital out of our economies perceived to have been living beyond their means?
Thomas M. Disch couldn't have written a more futurist novel! Complain about this comment Comment number Your own words "As I've pointed out in a tediously repetitive way, the sum of all we've borrowed - the aggregate of corporate, personal and public sector debt - is equivalent to three times our annual economic output. The reason for our troubles is, exactly as you have stated, from the ground up, we all borrowed too much. International shipping is decline at a rate not seen before, that means no one wants each others products and goods, purely because we cant afford it any more.
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I'm afraid the light at the end of the tunnel is a train coming the other way. Unemployment will rise, so will tax. Death rates in poorer countries will rise due starvation and declining health care.
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Political unrest will come later, but it will happen. We may not have to look very far for that either when the real impact hits the streets.
All we are seeing is some bad numbers in the newspapers. When factories start closing and unemployment puts real stain on an overburdened economy, that's when it'll happen big time. Come on, lets stop messing around and extending the pain process, raise the rates, keep the currency strong, bring the house prices into correction quicker.. Besides, I need a strong pound as I need to go on holiday and would like a bigger home..
In particular it could start with big energy efficiency measures we are now net importers of the stuff including more encouragement of energy efficient cars by more taxation of the inefficient ones if need be. We waste masses of energy unnecessarily. We also eat more food than we produce. While many of us might benefit from eating less I was thinking we should produce more. There seems to be a lot of political skirting around the problem s with fingers in ears going 'la la la la'. There are two problems here: 1 There was no growth in the financial sector over the last decade or so - we have to accept a much smaller market.
There is no magic solution - we just have to let things settle down. However there are those out there who know how to make money out of instability and they will endevour to make things unstable for as long as they can.
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They are more commonly known here as 'The City'. Thats the second problem: we've left the dealer in charge of controlling the drugs. This of course will also bring about the required house price correction. Also, just think about all the young people who have wasted the best part of their lives becoming 'estate agents' when they could have trained in something useful.
So what if there is a lot of personal debt? I assume this must be repaid eventually. A good investment for the lender I'd say unless someone stupid decides not to demand repayment. Please someone explain this is not the case. Most personal debt is for house purchases spread over many decades - not a few years. Another point, it's still cheaper over the life of a typical mortgage to buy than rent. So really I think most people are prudent with money. It really is shameful the way this country has been managed over the last years.
Of course Brown, full of deceit, will blame anyone except himself, but even simple souls such as myself know that while the experts were telling us how brilliant he is his apparent success was based on cheap and easy loans and a consumer boom. Journalists, I'm thinking of Evan Davies the BBC economis editor as was, forever telling us how well things were going and the likes of Osbourne and Cameron, not up to the job, no-one willing or able to bring Brown to book.
In any case, if GBP goes down the swanee, it simply becomes easier to repay the debt, that's the beauty of the mechanism. In fact, the entire FX market should be in search of exactly that target, as the Chinese so amply demonstrated in getting into the position they managed.
It's time to stop using passive tense. WHO exactly is big enough to take on a national economy and win, even in cartel which would certainly break US Trust law? An amorphous "the markets" doesn't cut it, someone's leading them, or at least pointing them in a particular direction, and at that level, you really don't want to be that person, the revenge extracted might be painful. And those of us who are long in all respects might get miffed at seeing our credit rating smashed because of others' imprudence, I'm already dismissing banks for rudeness. Does this not help us because the devaluation of other far eastern currencies against the pound will help to reduce our inflation because of cheaper imported goods despite the pound falling against the dollar and some related oil price inflation , so enabling further interest rate reductions?
In addition will we not be seen as less of a basket case and some of the capital may flow here, so helping the liquidity situation in the UK? Mind you will HSBC start to rock in the heavy weather? Who do governments borrow from? Surely it's ultimately its own people? Do they publish who the lenders are? What sort of contract is made? Where are these answers?
Why isn't this made more obvious? The run on the pound was highly predictable; which I did to Larry Elliott of the Gunriad. Basically, making loans is now more risky. Consequently, interests rates are required to go up. Merv King and Gordo are our two king Canutes we await their drowning. We are all under the misapprehension they know what they're doing.
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Pain now or pain later? Well we know that Gordo will do anything to remain in power.
So pity the poor children. This really is bigger than 'bird flu' isn't it. Time to invoke UK Resilience? Hope someone's working on that.. RP says, "That's a vast amount of debt to repay - and it's all the harder to do so at a time when our most successful industry, financial services, is in some difficulty and the global economy is slowing down. They are, but only because they are rubbish at making anything else and have been swept out of the market by better imports. The Banks profits and their employee bonus pools have been paid from inflating asset values not commercial trade. I am upset that we still think they are doing work of any real value - they are not.
They are not a success, they have failed. Robert where in real trouble!!!!! Our so called leaders have lots of brains, but sadly no common sense. We need to open our mines and plant more food now, and put millions of our homes back into the social sector. I shall take seriously Mr Peston's views of pending doom when there is a call for a National Government.
Markets are sensitive to small movements of money, the supply and demand curve is not linear. The flow of money as a spin off of the UK housing market into previously unattractive countires like Albania and Romania and Bulgaria has caused massive community problems in those countries, nationals from those countries tell me that back home unemployment is high, wages are very low, and houses unaffordable, and business pushes through things that the locals do not want. Take the inflow of money to those countries away and the situation collapses back nearer to what it was before.