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It's okay. You're forgetting it's a "miracle" economy!
House prices..
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It's okay. You're forgetting it's a "miracle" economy!
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CPI last month came in at 2.1% which is over the target. Only slightly, but definitely over the target as opposed to on target!
Since then we have seen massive hikes in petrol and energy prices. I believe this months CPI figure is published soon and I am certain it will be a fair bit more than 2.1%.
It's all a bit wishy washy anyway, because they are supposedly targeting inflation 2 years down the line! But saying that they seem to react to headlines from newspapers before christmas so perhaps it's all just a big sham!
If there is a big recession then demand will drop and prices will fall giving room for rate cuts
ie. oil will probably drop to low $80s somtime this year
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Prices of what? If there is a "big recession" then it's a bit late for interest rate cuts.
Stagflation anyone?
How is raising interest rates (or keeping them on hold) going to change demand for petrol and energy, which is a price inelastic commodity?
Less demand of course. We have already seen it drop $3 because of the states
How will it achieve that? Petrol isn't something that people buy less of when the price goes up, same with electricity. Altering interest rates will not alter the demand for these commodities. That's what a price inelastic commodity is.
So how do you think this will help again? How will the interest rate reduce fuel price inflation, given that demand is generally unaffected by price unless something so bad is happening that people literally cannot afford it (in which case raising rates is the last thing you want to do)?
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Read a few pages.
I've watched world events, news, local area behaviour, etc carefully and combine that with even basic economic knowledge you can see problems.
From my review of progress from 2006-2007 end I can see a recession hopefully this year. I say hopefully because preventative methods have not and will not work, the quicker it is accepted the better able the UK will be to handle it.
I've seen plenty of news reads and articles saying the economy is still healthy, latest evidence could be the amount spent at xmas. How much of it was bought with credit though?
You won't hear an official announcement because buying is still being sustained through false income (credit cards and loans).
I believe we entered a recession 6-12 months ago but the boom we had is being exploited to its maximum.
As for inelastic goods (those where demand does not change much from price changes) you will only see petrol demand fall by a small amount in comparasant to total sales. The same applies to other addictive and neccessary products.
Don't forget the USA is preparing for a recession now and everything there comes here!
I've watched world events, news, local area behaviour, etc carefully and combine that with even basic economic knowledge you can see problems.
From my review of progress from 2006-2007 end I can see a recession hopefully this year. I say hopefully because preventative methods have not and will not work, the quicker it is accepted the better able the UK will be to handle it.
I've seen plenty of news reads and articles saying the economy is still healthy, latest evidence could be the amount spent at xmas. How much of it was bought with credit though?
You won't hear an official announcement because buying is still being sustained through false income (credit cards and loans).
I believe we entered a recession 6-12 months ago but the boom we had is being exploited to its maximum.
As for inelastic goods (those where demand does not change much from price changes) you will only see petrol demand fall by a small amount in comparasant to total sales. The same applies to other addictive and neccessary products.
Don't forget the USA is preparing for a recession now and everything there comes here!
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Wake up Dolph! It's irrelevent in the context of this post whether it will or won't change demand. The point is that these items affect the CPI figure so if the MPC stick to their remit they will come under increased pressure to raise rates or at least keep them on old.
I'm sorry I don't share your faith, but theres no need to imply that just because I don't, there's something wrong with me, such as being asleep, being blind, not paying attention etc.
The MPC are aware of price-inelasticity. It makes raising interest rates to combat certain types of inflation utterly pointless, unless you wish to control inflation by causing damage to other parts of the economy. If too many areas are suffering, and will suffer more with a rates rise, they will resist it, because they aren't obsessed with driving the country into a recession like you seem to be.
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Hmmm...because economists couldn't possibly also have VIs could they?
Of course they could. Vested interests aren't the main reason to have no faith in random people on the internet making incorrect claims year on year....
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Dolph, you must see that tarring everyone with the same brush isn't the answer either?
For all you know there could be professionals employed in the banking industry posting here, yet you choose to dismiss all opinions in this thread as worthless because they were posted on OCUK?
He's right .... prices will keep on rising and will not crash.
In about 10-20 years time of consistant 5-10% price rises, a flat in london will cost 500k and a house will go for 1 million to 1.5 million as a starting figure.
Kids will need to borrow 10 times their salary and their mortgage payments will eat up about 99% to 199% of their monthly salaries.
The only way to get around this will be 50 year mortgages, and generational ones where you will be forced into having 2 children - not because you want them, but because you basically need someone to carry on the mortgage.
..... Of course, some people argue that economic cycles are called that because they are by their very nature ... Cyclical?
In about 10-20 years time of consistant 5-10% price rises, a flat in london will cost 500k and a house will go for 1 million to 1.5 million as a starting figure.
Kids will need to borrow 10 times their salary and their mortgage payments will eat up about 99% to 199% of their monthly salaries.
The only way to get around this will be 50 year mortgages, and generational ones where you will be forced into having 2 children - not because you want them, but because you basically need someone to carry on the mortgage.
..... Of course, some people argue that economic cycles are called that because they are by their very nature ... Cyclical?
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And also, just because someone is a professional in the banking industry doesn't mean they know what they're talking about
By the same argument then, a person who doesn't work in banking and posts on the internet *could* know what they're talking about
By the same argument then, a person who doesn't work in banking and posts on the internet *could* know what they're talking about
True!
I used to work at one of the big US banks and to be honest, while there were a lot of incredibly smart people there, it seemed to be the ones who shouted the loudest who got their views listened to the most!
Lol, looking at this thread even 3 months after it was started makes me laugh the number of people who are like "omg, house prices falling, where do you live, sucker".
How wrong they were. Expect at least £20k shaved off house prices in the next year and even more in subsequent years. BOE wont let it go like the late 80's and are more in a position to control it, but its likely that people will be less likely to sell throughout this year.
I'm down south, one of the most expensive areas in britian and we are already seeing £20being knocked off new builds.
However, in the long run, as it always does, housing investments will outperform any other type of investment over its period.
How wrong they were. Expect at least £20k shaved off house prices in the next year and even more in subsequent years. BOE wont let it go like the late 80's and are more in a position to control it, but its likely that people will be less likely to sell throughout this year.
I'm down south, one of the most expensive areas in britian and we are already seeing £20being knocked off new builds.
However, in the long run, as it always does, housing investments will outperform any other type of investment over its period.