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Outlook for the economy in 2010 and beyond

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

  1. Stretch

    Capodecina

    Joined: Feb 14, 2004

    Posts: 11,546

    Location: Cambridge

    We won't return to "normal" levels of interest for a decade or more imo. Rates are only ever raised to cool the economy. As you mention, people have borrowed sizable sums at low rates, only small rises will be required to have the desired effect.

    The biggest danger is imported inflation via fuel or food.

    I think the BoE will start with rises of 0.1% until we hit 1%, and that could take 4/5 years.

    I read somewhere that during the great depression (early 30s), rates were dropped and it took until the late 50s for them to return to pre-crash levels.

    http://www.economicshelp.org/wp-content/uploads/blog-uploads/2009/04/historical-interest-rates-1800-2010.png
     
    Last edited: May 27, 2014
  2. Freakbro

    Capodecina

    Joined: Jul 29, 2010

    Posts: 15,600

    Location: Lincs

    I know it's all speculation, but the outgoing deputy of the BoE just the other day talked about a base rate of 3% by 2017-19.

    http://www.bbc.co.uk/news/business-27563346

    I don't think we're going to have a problem of an overheating economy, but they are definately concerened about another housing bubble - even if it is mainly concentrated in the south-east, it will drag the rest of the country up with it too.

    What would that do to mortgages, I did a quick check on a 3% increase of a £150,000 mortgage and it was about £220 / month increase - which would hurt, but probably not be catastrophic and would certainly help to curb prices.
     
    Last edited: May 28, 2014
  3. silversurfer

    Capodecina

    Joined: Jul 13, 2004

    Posts: 18,776

    Location: Stanley Hotel, Colorado

    Ultimately governments dont choose their interest rates. USA has many backers to it, including ironical the support of communism which helps when they cant vote otherwise
    UK is more of a tag along to that system.

    If we have 3% rates and EU and USA are near zero I think it will have a profound effect on our trading with them both. Depends who is the cart and who is the donkey in all this but BOE owns 1/3 of all uk gov debt I think, that wont be easy to reverse

    dont worry about too much growth, its easy money that is the problem and we have that already in banking
     
  4. Stretch

    Capodecina

    Joined: Feb 14, 2004

    Posts: 11,546

    Location: Cambridge

    You also need to consider that the banking situation is still not "normal". When the crash happened, most variable rate mortgages were 0.5-1% above base rate. Many people with pre-crash mortgages are still paying 1-1.5%.

    Anyone who applied form a mortgage since 2008 knows that rates are now much higher than that. Typically 3-4% i.e. base rates are only part of the normalization process. We could well see BoE rates go up, whilst lender rates stay steady.

    The first rate rise is going to be interesting. I'd like to see a symbolic 0.1% by the autumn.
     
    Last edited: May 28, 2014
  5. silversurfer

    Capodecina

    Joined: Jul 13, 2004

    Posts: 18,776

    Location: Stanley Hotel, Colorado



     
  6. El Capitano

    Mobster

    Joined: Oct 18, 2002

    Posts: 2,577

    Seriously, you're replying to a post of mine from 8 months ago with some YouTube video? Do you ever post anything coherent?
     
  7. El Pew

    Wise Guy

    Joined: Sep 1, 2009

    Posts: 1,053

    Just put him on ignore, it'll give you a migraine trying to translate his word salad into recognisably meaningful English. Plus you won't have to waste bandwidth downloading whichever meaningless chart or video he's attached to his post, bonus!
     
  8. q974739

    Hitman

    Joined: Feb 4, 2009

    Posts: 617

    I'm almost tempted to think that this debate is dead.

    Broadly, the economy has done unexpectedly well under the coalition / returned to historic trends (delete as political views require) and there's nothing left to really debate. Unless someone wants to disagree ;)
     
  9. El Pew

    Wise Guy

    Joined: Sep 1, 2009

    Posts: 1,053

    There's loads to debate: whether a better set of economic policies would have ended the recession earlier or prevented the double dip; has anything been done to prevent the banking sector going into meltdown again; the housing bubble; interest rates; rebalancing the economy to reduce inequality; has the recovery favoured the well off in society at the expense of the less well off.

    All fairly hot topics, and that's ignoring fiat currencies and gold standards and lizard bankers and various other tinfoil hat things that some people can't shut up about.
     
    Last edited: Jun 16, 2014
  10. Mr Jack

    Capodecina

    Joined: May 19, 2004

    Posts: 17,301

    Location: Kiel, Germany

    I think it's perhaps time we created some new threads to investigate those topics, El Pew?

    The think I've been thinking about is the question of when we'll see the next major recession. On the trends of the last 45 years, we should be expecting to see a new global recession hit within the next three years. Now, I don't think that the reality is as clockwork as all that but I think we should be on the lookout for the next downturn. The UK is barely back on its first since the last recession and we certainly haven't finished cleaning up the mess; what happens if there is another global recession now? How does the UK cope?
     
  11. El Pew

    Wise Guy

    Joined: Sep 1, 2009

    Posts: 1,053

    A housing thread would work, maybe. That's something that most people on this board can relate too since most will either rent or own a house, or would like to. For most people interest rates are most closely bound up in mortgages so it makes sense to bundle that in too.
     
  12. V F

    Capodecina

    Joined: Aug 13, 2003

    Posts: 15,867

    Location: UK

    Which part? 2007?
     
  13. q974739

    Hitman

    Joined: Feb 4, 2009

    Posts: 617

    My point was that the topic, which I'd describe as "The economy from 2010 onwards now that those sane conservatives / evil coalition is in charge (delete as applicable)" is now mostly dead. The trajectory isn't going to be changed by the government, because this years queen speech is basically empty of policy.

    I would indeed agree that other threads would be of value, the initial topic of this one is...well...if not dead, then close to dead.
     
  14. silversurfer

    Capodecina

    Joined: Jul 13, 2004

    Posts: 18,776

    Location: Stanley Hotel, Colorado


    I didnt actually say a word, maybe the criticism is for that or lack of context but I quoted a Aseops fable which is about savings and a quote from Aristotle who directly references the ultimate tendencies of fiat currency.

    If you find a way to ignore a mans words who stood true two millennia and put every other historical precedent on ignore then I would be happy to reside on the same list

    There is the debt, a deficit and the QE overhang still. When we bring any of those back to average we can call conclusions.
    It would be great to be wrong, I love free money
     
  15. V F

    Capodecina

    Joined: Aug 13, 2003

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    Location: UK

    Ah, yes of course. America's 17 trillion and our lovely 1.2.
     
  16. El Pew

    Wise Guy

    Joined: Sep 1, 2009

    Posts: 1,053

    Don't flatter yourself.

    I disregard your posts because you either a) spout a load of nonsense which is effectively meaningless (like "USA has many backers to it, including ironical the support of communism which helps when they cant vote otherwise" - wtf???), b) post a trite quote which sounds vaguely relevant but is otherwise empty of meaning or c) link some table breaking chart that has at best a tenuous link to the topic currently under discussion.

    Perhaps you could try to take more effort over your posts, then people might engage you. Otherwise, you're a waste of bandwidth.
     
  17. Slam62

    Soldato

    Joined: Jan 3, 2006

    Posts: 7,297

    Location: Monaco

    Debt rising at 2bn a week,
    Currently 1.29trn,
    Weren't they going to balance the budget by 2015,

    Productivity 16% below 2007 and the boe find it puzzling.

    The pound breaches 1.7 $ , interest rates have been stuck at 0.5% for 6 years.
    I would say the fat lady has yet to sing.
     
  18. El Pew

    Wise Guy

    Joined: Sep 1, 2009

    Posts: 1,053

    Meaning what, exactly?

    Why is it that the doom merchants are happy to reel off a load of scary sounding statistics but are unable to explain why they are bad, or why the signal impending doom. Or even what that doom will look like: hyper-inflation? A new Great Depression? Marxist revolution? Alien invasion?
     
  19. Bear

    Capodecina

    Joined: Oct 24, 2002

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    Location: Bucks and Edinburgh

    It's not that puzzling at all, in fact the articles I read said it's probably down to the fact many employers used different means to cope with the downturn instead of the standard redundancies path, which means there is a lot of spare capacity.
     
  20. {T5K}TT

    Gangster

    Joined: Jan 15, 2004

    Posts: 424

    Location: UK

    I think that Marxist revolution and Alien invasion have about the same probability of happening. The major problem the doom merchants have is that they have no alternative; all they do is list the negative and pretend it explains the whole. It's a psychological state of mind: For them the glass is permanently (at least) half empty.
    No doubt that the UK economy has turned the corner and is doing better than than expected. Christine Lagarde, of the IMF, has asked whether she needs to "grovel on her knees" before George Osborne over the IMF's incorrect warnings on the UK economy. The positive news, along with the prospect of an interest rate rise and continually falling UK unemployment is surely welcome. One of the strongest points is that current UK growth is significantly fueled by investment, not consumption. However, the UK economy still has a huge debt mountain, and for our recovery to continue we must keep an eye on state spending: The coalition must not be tempted by a cheap pre-election dash for growth (ie, what Gordon Brown did before the 2010 election).