Quadruple Dip Recession
Comments
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lostboysaint wrote:The simple answer to the whole economic situation is that this is the new norm - get used to it.
Is that not just another media sensation that draws on Japan as the prime example?
I do agree thought that this double-dip/triple-dip stuff is pretty silly and fairly insignificant. It's what happens when numbers and maths take centre-stage and we end up with a 'X'-dip recession based on a numerical technicality. It's true - the reality is that GDP is flat-lining.
I also agree with what's been said inasmuch as this hasn't been much of a recession for the majority of people. The majority of people still live comfortably and are only moaning because they can't afford life's luxuries that they became accustomed to (or at least expectant of or somehow felt entitled to) before 2008.
The problem comes in the shape of perhaps the only true casualty in this recession - young people. Young people have 'suffered' and will 'suffer' the most out of all this. Most of those issues have yet to be played out. Things such as the inability to get on the housing market, education debts, the educational imbalance (skills deficit) and lesser employment prospects (due to lack of investment dating back 30+years) haven't yet become the big issue's they will inevitably become.
It's surely not all doom and gloom though. A bit of investment to kick-start growth in genuinely wealth creating sectors (as opposed to consumer services and financial services) then we can get to tackling the budget deficit and then the national debt. The problem is where do we find the investment? At the moment with such a negative culture of investment in the private sector (where the majority of wealth in existence is being hoarded) the talk is of simply funding it all through more government borrowing. That's just stupid. The burden needs to be shared and both public and private sectors needs to work in partnership (literally contractual partnerships in many cases). It's the intelligent way to change investment culture whilst spreading burden and risk and getting the benefits of both private sector competition and public sector stability.
Basically if we all stopped trying to blame each other (private sector/public sector; 'x'political party/'y' political party; 'x' industry/'y' industry; 'x' class of people/'y' class of people) and actually worked together towards some kind of solution, we will find a solution. It's a cliché but where there's a will there's a way.0 -
All personal opinion on my part here as ever, but...the playing mantis wrote:@achilles, possibly, although could the US not drag us along with it? i dont think any government, especially the nailed on next labour one (ed milliband as PM, wtf is the world coming to that someone so... 'drippy'... can be PM!!), will get to grips or deal with household debt issues, it would be political suicide for any party.
The problem, as I see it, with regard to export demand lifting our economy is more to do with the nature of the goods involved. In short, we import labour intensive stuff and otherwise unobtainable commodities, and export less labour intensive stuff. The problem for us, as I see it, kinda breaks down like this...
Leaving housing costs aside, households spend the bulk of their money in areas in which imported goods are predominant. Food, power, transport, and physical non-essentials* make up a pretty substantial chunk of spending, and all are very susceptible to a falling Pound vs. the Dollar. What's more, a fair bit of that spending is in the form of fixed costs.
On the export side, it's fair to say that a significant pickup elsewhere, along with the accompanying fall in the Pound's value will, in all likelihood, result in some gains on the export side.
Where I reckon the whole "export led recovery" thing falls over comes down to a combination of the relatively low numbers employed in creating said exports, the likely spare capacity** of said exporters (meaning any initial gains may be pretty "jobless"), coupled with the disparity in lag between the effects of imported inflation (which hits quite quick) and the time required to noticeably expand our productive capacity in response to external demand (which takes a good while longer).
The other fly in the ointment here, in my opinion, is both the BoE and government's stance on inflation, which currently seems to be one of utter indifference. Personally, I find it very hard to believe that companies are going to fancy making the kind of major investments in Britain that would be required for us to benefit significantly from increased overseas demand when the overwhelming message sent out from the state regarding monetary policy (and therefore, by implication, the longer term exchange rate on which the viability of said investment depends) is so muddled and short-termist. Right now, I wouldn't want to actively*** bet a tenner on the government's response to significant and sustained bout of imported inflation.
The final gloomy note comes, IMHO, from having run out of deflation to import to offset any imported inflation (for the west in general). There isn't another China out there waiting to supply limitless labour that'll work for buttons, so the ultra-benign inflation environment of the 00s just can't be sustained. There's nowhere else that'll do it cheaper, and with the Chinese middle class cat well and truly out of the bag, we're more likely to be importing their domestic inflation than anything else.
As for the next election, I think Cameron and Clegg will be breath a fair ol' sigh of relief as they pack their bags if they manage to kick Brown's can over to Milliband. Agreed totally than none want to touch household debt. The problem is it's going to touch one of them in a pretty big way, the only real question in my mind is which (and if I knew that, I'd be a very rich man indeed!).
* Phones, bikes, fondue sets, cuddly toys, etc.
** Assumption based on the remarkably small job losses during recent times.
*** I'm doing it passively, clearly.Mangeur0 -
Doesnt help that QE is giving the stock markets false sentiment and sending indexes to, if not, near all time highs. I suspect an equity bubble is to burst this year, sooner rather than later. Not enough has changed in terms of legislature and policy change to prevent another 2008 occuring. The banks are still doing what they want, where they want and in what quantities they like.0
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the playing mantis wrote:ekimike, steady on, i wasnt critcising u, i was merely making a joke at the paradigm usage. i hear so many buzzwords, and its corp gobbledegook, that i always ake such comments, no need to go all 'vtech' on me!!!!!
im not being partisan, calling u dumb, or anything im merely agreeing wiv whiners assertation about the public needing to get real.
No worries, that's how I interpreted what you said and clearly I got the wrong end of the stick.
The general gist of what I said still applies though. Just no longer in direct response your comment.
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Fevmeister wrote:Doesnt help that QE is giving the stock markets false sentiment and sending indexes to, if not, near all time highs. I suspect an equity bubble is to burst this year, sooner rather than later. Not enough has changed in terms of legislature and policy change to prevent another 2008 occuring. The banks are still doing what they want, where they want and in what quantities they like.
Maybe it isn't a bubble? The high index values simply reflect the fact that the financial sector has been bankrolled to the hilt by national governments - do you really think the government bonds will default? The risk will always be socialised and the financial sector knows that.
Personally, I think the only crisis we're going to witness in the financial sector are going to be fragmented instances of arrogance, excessive risk taking, market abuse or outright fraud - similar to cases like MFGlobal who were so confident they bet almost their entire customer funds several times over on Eurozone debt defaults just for a bit of short-term liquidity. The majority of other financial institutions have realised that this kind of behaviour caused the credit crisis in the first place and they'll lose their government funding/backstop if they start messing around too much with off-balance sheet stuff again.
Then again, it's a mugs game trying to pre-empt the financial sector so we're probably both going to be way off the mark. 0 -
Frank the tank wrote:Our ecconomy will soon have more dips than the average house party buffet.
Is your analogy to the 'average house' party or the average house party?
Are the LibDEM's the average house party?0 -
i dont think you can describe it as a bubble.yet at least. i dont think you can define less than a few months rally, and most of that in the last weeks as a bubble. its simply an exaggerated move (that at least in asia-pac indices has retracted slightly in the last couple of days) in the markets, that should have happened over a longer period at a more gradual basis back to normalisation/rebalancing, as people grow tired with the lack of return on cash and FI, (finally and move back into equity again, thank f*ck) and im not sure how much qe has contributed to this, rather investor patience (greed for a return) has snapped imo. the sustained flight from equity into debt was not a natural position of the market. there was no balance. hopefully we are now seeing that reversed. but could it go too far again? who knows.
as for the indices, well that interseting, the dow is a very narrow index though, so isnt a great indicator witho its all time highs, but s&p 500 is was aloso approaching a high till it tailed off yesterday. its very strange. but then if i knew what was going on i would'lnt be wasting my time making posts on here!0 -
EKIMIKE wrote:Fevmeister wrote:Doesnt help that QE is giving the stock markets false sentiment and sending indexes to, if not, near all time highs. I suspect an equity bubble is to burst this year, sooner rather than later. Not enough has changed in terms of legislature and policy change to prevent another 2008 occuring. The banks are still doing what they want, where they want and in what quantities they like.
Maybe it isn't a bubble? The high index values simply reflect the fact that the financial sector has been bankrolled to the hilt by national governments - do you really think the government bonds will default? The risk will always be socialised and the financial sector knows that.
Personally, I think the only crisis we're going to witness in the financial sector are going to be fragmented instances of arrogance, excessive risk taking, market abuse or outright fraud - similar to cases like MFGlobal who were so confident they bet almost their entire customer funds several times over on Eurozone debt defaults just for a bit of short-term liquidity. The majority of other financial institutions have realised that this kind of behaviour caused the credit crisis in the first place and they'll lose their government funding/backstop if they start messing around too much with off-balance sheet stuff again.
Then again, it's a mugs game trying to pre-empt the financial sector so we're probably both going to be way off the mark.
Well you're talking about two different things here - bonds and equity indexes. I could never see a developed nation default on their debt. The fact that bond yields are so shite and at 20 year lows is driving people to equity markets in the search for some decent gains. I expect a correction in the near future as soon as investors realise there is no substance behind the inflated prices!
The fact you mention MFGlobal is interesting and sounds identical to the AIG scandal in the states which involved offering insurance on CDOs dished around pre-2008. I have said it before and will say it again that the AIGs business was like picking pennies up in front of a steam roller. Massive risk with very little gains. I wouldn't think that would happen again though, even bankers aren't stupid enough to start doing that again after what happened last time whether or not they get bailed out!0 -
Fevmeister wrote:Well you're talking about two different things here - bonds and equity indexes.
But they are related in this instance right? I mean you said yourself that poor gains in bonds are driving investors in to equity markets or am i missing something? I won't claim to know much about all this - the tiny bit i do know comes from having to look at the regulatory apparatus.
And i can't really see how MFGlobal was identical to AIG? Again, maybe i'm missing something? As far a i know they went in big in the repo market and lost, dipping into customer funds to try and stem the liquidity crisis.0 -
i also said the flight to equities was due to lack of return on FI. on page 1!!
however i dont see it as temporary. it had to happen sooner or later and will form a 'healthier' market...as long as it doesnt go silly again. fear stalking investors causing them to flee to safehavens, including in currency terms, is no good for anyone, at all, even those with no direct stake in the sector. Sure the gains in the last weeks have probably been too fast and will be corrected to an extent, but surely the trend being seen has to continue,
on another note, i dont think its beyond the realms of possibility at all to see greece, still, even now, exiting the single currency and strategically defaulting.0 -
EKIMIKE wrote:Fevmeister wrote:Well you're talking about two different things here - bonds and equity indexes.
But they are related in this instance right? I mean you said yourself that poor gains in bonds are driving investors in to equity markets or am i missing something? I won't claim to know much about all this - the tiny bit i do know comes from having to look at the regulatory apparatus.
And i can't really see how MFGlobal was identical to AIG? Again, maybe i'm missing something? As far a i know they went in big in the repo market and lost, dipping into customer funds to try and stem the liquidity crisis.
I meant MFG and AIG were identical in the sense they were taking huge market risk for very little gain. With both been hit by CDO defaults0 -
EKIMIKE wrote:tiredofwhiners wrote:The Uk has no idea what a real recession is like as we have a generation who have grown up under a Labour government where they have never actually had to spend less than they receive in government bribes.
Fixed that for you.
Yes, it is easy to forget that the last Labour govmt it was spend, spend, spend on ensuring that everyone was happy and middle-class ideologies applied like a giant sociologist experiment. Sod the country and our children.
But growing up in London under red Ken was the same. Spend on votes until the bailiffs arrive...
FTFY0 -
SiF123 wrote:EKIMIKE wrote:tiredofwhiners wrote:The Uk has no idea what a real recession is like as we have a generation who have grown up under a Labour government where they have never actually had to spend less than they receive in government bribes.
Fixed that for you.
Yes, it is easy to forget that the last Labour govmt it was spend, spend, spend on ensuring that everyone was happy and middle-class ideologies applied like a giant sociologist experiment. Sod the country and our children.
But growing up in London under red-dish Ken was the same. Spend on votes until the bailiffs arrive...
FTFY0
