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Outlook for the economy in 2010 and beyond

Discussion in 'Speaker's Corner' started by dirtydog, Jan 3, 2010.

  1. dirtydog

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    What are people's thoughts on this? I think the US and Britain are in much deeper trouble than many realise, due to our incredible levels of public debt. I believe this debt has no realistic chance of ever being repaid or even being brought back to sane levels, indeed the debt is continuing to balloon at an alarming rate.

    Much as I have always been opposed to the euro, at this particular moment we would be safer within the eurozone because to me, the pound is looking awfully exposed as things stand. I think there is a real chance either the pound or the dollar could collapse in the not too distant future. Britain and the US are both effectively insolvent.

    Gold and silver have both risen sharply over the last year. China is quietly disposing of its large reserves of dollars and buying real goods like gold and hoarding other real commodities while it can.

    Most mainstream media and economists are silent about these issues, the consensus seems to be that this is just another recession which we have to weather, and afterwards we will just go on the way we did before. I think it is very different this time and many people are in for a hell of a shock.

    In the medium to long term I think the euro will collapse as well, but for now it looks a safer bet than the dollar or sterling. If you have all your money in either of those currencies I would seriously consider the euro or gold/silver. Just in case.
     
    Last edited: Jan 3, 2010
  2. Gaidin109

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    What reason do you have to believe that the three major currencies will collapse? What will replace them as the dominant currency? And why?
     
  3. dirtydog

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    The US and UK are both creating the conditions for hyper inflation in my view, by their out of control borrowing and spending policies. Real inflation is much higher than the fake official figures show. The US is still in recession as well, because their GDP figure is equally untrustworthy. Look at US tax receipts to get a true picture. They can't be faked.
     
  4. daz

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    Our levels of debt aren't particularly high in relation to other countries.

    Being in the Euro at a time like this can be very bad. Just ask the Greeks - their hands are tied and they effectively have very few fiscal tools available to them to combat their own spiralling debt.
     
  5. dirtydog

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    On paper. We also have off the books borrowing in the form of PFI liabilities. Our military operations are costing us dearly (in every sense) and we have a massive, bloated, inefficient public sector, pensions and benefits system which burns through nightmarish amounts of money which we do not have. The more you create money out of thin air to give to people to be unproductive, the more inflation erodes the currency's value. Labour has shown it is not ready to make the severe spending cuts which are needed, and I don't believe the Tories will do it either.

    That is why I have always said the UK is better out of it. We have benefited from being able to set our own monetary policy but at this moment I feel we would be safer inside, because the relative strength of Germany in particular but also France, would make us less vulnerable than I feel we are. Note I am not saying we should join the euro, just opining that for once there would be a benefit if we were already in.

    You are right that countries like Greece and Italy have ignored the eurozone rules on debt and spending etc. which is just one of the reasons why I feel the euro in the long term is not viable but then I have never thought it was.
     
  6. daz

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    The eurozone is fine as long as the countries economies are sufficiently aligned and remain aligned. Unfortunately, that's not the case, and is unlikely to be the case. Germany has a different type of economy to say, Greece. ... ;o We already see the same in the UK - what's good for the economy of London and the South East isn't necessarily the best for the rest of the country.

    The fact is though, we are in no more "in trouble" than most other first world Western nations of our size.

    Our debt (and the US's) is slightly more sustainable than a lot of countries', however, because of political stability and historically, we always pay our debts (or at least service them). The only way that this would fail to be the case (and lead to the collapse of the pound et al) would be for there to be some kind of a major event in the UK - revolutions, wars, any kind political instability are not investor friendly and would primarily be the only way that we will have problems in the future.
     
  7. dirtydog

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    I think such a major event is looming large, whether it be this year or not, and that is dwindling energy supplies. Chiefly oil but also gas and other commodities, possibly including food (most of which we import) and water. We also lack the electricity generating capacity for the future, even if we had the means to power it. I believe we are on borrowed time (and money) and the party is coming to an end.

    IMO this stuff should be the main story on the news. Instead we get nonsense about how the economy will soon 'recover' and we will return to 'growth' - it is not grounded in reality.
     
    Last edited: Jan 3, 2010
  8. teaboy5

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    Dirty i think you have been watching to many of those videos.

    But i do agree, that we are going to be in trouble regarding energy, and even if the country is in the best shape ever, it will just fall to bits once we cant afford to buy energy.

    Like i have always said nothing can ever replace oil.
     
  9. dirtydog

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    Hehe, well I hope my predictions are completely off base and we all live happily ever after, I really do. I just don't believe it is possible, because things have been so completely mismanaged and I don't see any sign of that changing.
     
  10. teaboy5

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    Also its not about oil running out, there was always be oil. But no one will be able to afford oil at say 300 dollars a barrel. Look what happened when petrol was 1.25, business were closing and people found it hard on the wallet. We also had companies which used a lot of gas etc closing as well as they couldn't afford to keep the business open.

    You will get people on here saying tech will save us etc, but it wont not if oil jumps real high real fast.

    http://www.peakoil.com/modules.php?name=News&file=article&sid=53798
     
    Last edited: Jan 3, 2010
  11. Frosti

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    We are certainly in uncharted waters in many regards and I have my worries about the rather blase attitude the western world has to resource consumption but I don't really see much how we can do about it.

    I think dragging our feet in building more nuclear plants is really going in hurt us in the next 10 - 20 years. But the proof as they say will be in the pudding.
     
  12. dirtydog

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    I understand the PO issues very well. And tech won't save us no matter what, unless we invent something new. All it can do is delay the inevitable.

    We have a monetary system (pyramid scheme) which is predicated on perpetual exponential growth.

    We have an economic system which is predicated on perpetual economic growth.

    These require perpetual growth in the supply of finite energy and other natural resources, which are fast reaching peak or are already at or past peak.

    Thus our modern civilisation which is ultimately predicated on cheap oil, is heading for a crash. And I don't see any of our politicians and most economists doing anything about it, other than scrabbling for control of the remaining oil and gas supplies so as to give us a few more years.
     
  13. dirtydog

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    This is precisely why I expect us to have serious energy shortages in the UK in the near future, because we simply lack the capacity to produce sufficient electricity for our population. Our government's solution? Dither and delay on building nuclear power stations, while giving tax and benefit incentives to have large families, especially to people who aren't in work! More people = more demand for power and other scant resources. Also having other policies which increase population like lax immigration rules, meaning our demand for energy is higher.

    It is a lot easier and cheaper to keep a lid on population than it is to build new nuclear power stations but that doesn't seem to have occurred to anyone in government.
     
  14. Biohazard

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    and who do we have to thank for flogging off our gold reserves en masse on the cheap?

    if i actually cared I'd cry.
     
  15. dirtydog

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    You should care because that was part of the real wealth of this country, not the mickey mouse fiat money which Labour are racing to devalue by their reckless spending. This is debt which people who haven't even been born yet are going to be saddled with for generations.
     
  16. Biohazard

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    We had war debt for generations.

    I still don't care. There have always been scare factors in life, the cold war, and previous recessions etc. What else can you do when you see the country run into the ground due to our own governments ineptitude and global circumstances?

    All the more reason to champion Europe now isn't it? Factoring in energy security etc. We've had a wrecked economy before, and I don't hold out for the Tory’s to wave a magic wand. They are looking forward to a decade of consolidating their position.
     
  17. muon

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    People talking with very little authority. What's the point?

    Here's what one of the best economists at Goldman Sachs thinks,

    http://www2.goldmansachs.com/ideas/global-economic-outlook/2010-forecast/global-weekly.pdf

    Note that the world isn't ending.

    Seriously, what gives you any authority on the subject to second guess the analysis of economists? All your arguments are words and conjecture based on rudimentary logic. Economists rarely use words, unless they have to explain something to non economists.

    Theres a reason why economists find it so hard to predict stuff. Even with all their training there are still so many variables and also uncertainty in equations.

    You have very little understanding on how exhaustible natural resources affect economic growth, beyond basic production linkages. I suspect.
     
    Last edited: Jan 3, 2010
  18. Amp34

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    That's all very well but doesn't have a huge amount to do with actual oil prices, most of that is tax so reduce the tax and you end up with cheaper petrol... Also isn't petrol cheaper than the equivilent amount 20-30 years ago?
     
  19. dirtydog

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    Why are you so in thrall to economists? I trust my own common sense more than I trust most so-called experts. And I think most economists, bankers and politicians are living in denial about the problems we are facing.

    You may find this article interesting: http://www.telegraph.co.uk/finance/...conomic-experts-who-stopped-making-sense.html

    Or notice how these 'experts' got it spectacularly wrong:

     
  20. muon

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    Experts got it spectacularly wrong, and so the guy on the street like you is somehow better. Economists don't proclaim to be always correct. That's why you'll note every detailed forecast is done in probabilities. Those probabilities may be wrong, but it highlights they aren't claiming to be infallible.

    Peter Schiff is a constant doom monger who believes the entire US economy will completely crumble. Props to him for correctly describing the MBS market problems before they occurred.

    He is such a doom monger that he actually lost his clients a lot of money whilst correctly predicting what would happen to the MBS market. He believed that the US had somehow decoupled from the rest of the world and so all his hedges failed when that didn't happen.

    http://www.businessinsider.com/2009/1/peter-schiffs-clients-got-hosed-this-year-too

    Secondly, since your common sense is so good, tell me why diminishing natural resources will result in some kind of crash. I'll tell you why your logic is wrong.
     
    Last edited: Jan 3, 2010