Macroeconomics, the economy, inflation etc. *likely to be very dull*
Comments
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So I don't think it is inflationary.
The general economist output is basically asking the question about whether it is the right time to enact fiscal policies that take some heat out of the economy when the security of the recovery from corona is still in the balance.
Furthermore with the dampening effects of Brexit.
This is especially the case when you are in a likely stagflation situation (lower output, higher prices) with the corona induced supply challenges plus Brexit, where the BoE is may have to have to raise rates in order to keep inflation under control, further dampening the recovery.0 -
(Pretty much) all of the above, is a model that assumes that the dimensions of the ‘balloon’ into which the air is put , remains the same. The truth is, that’s not guaranteed at all. Put loads of air ( economic pressure ) into a given sized ‘balloon’ ( the economy) and you risk the balloon going bang. However, the variables introduced by such things as the end of furlough, and the associated possible mass ejections / redundancies, gives a degree of uncertainty, which guarantees a cautious approach from central banks ( I.M.O.) for the foreseeable future. If they hit the brakes hard, and yank interest rates up, they risk causing the opposite effect for which they are aiming. If too many people turn out to have been lying about their resources / income, for tax break reasons ( perish the thought) then a cautious approach will be the wrong call. I wouldn’t want to be the great white chief, in charge of central banking policy for all the tea in China right now.0
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So there was a relatively large global sell off today, (stories always follow prices ,not the other way around) and the narrative is that it's Evergrande.rick_chasey said:https://www.theguardian.com/world/2021/sep/09/china-property-market-evergrande-300bn-debt-share-slump
https://www.reuters.com/business/china-evergrande-selloffs-default-worries-onshore-bond-temporarily-suspended-2021-09-09/
worth keeping an eye on.
In summary for those who do not follow, Evergrade is one of, if not the, biggest real estate developers in China.
It's also extremely indebted - to the point that even the chinese regulators went public that it was in a dodgy situation 2 years ago.
Things have accelerated since then as it's become clear the developer has been struggling to sell off assets required to reduce the debt burden.
That has created a bit of a vicious cycle, as they are dramatically reducing the prices of their assets to get the properties to sell, plus a bigger concern that the firm is in trouble , so the banks increase the cost of borrowing to compensate for the added perceived risk, and so they have to sell more assets etc.
The concern is that it is so large and so indebted it is a problem for the entire system, and so this sudden collapse and likely default (it's currently rated by Fitch as "default imminent") will cause a crisis in the Chinese financial system.
I was reading that the average Chinese company is 2-2.5x as indebted as the average American company - and they're hardly debt shy. If it was the other way around, the world would be bricking itself.
I guess the difference is the Chinese financial system is fairly self-contained and ultimately the debt is eventually owed to the state.
Nonetheless, you might not get such a big panic in the markets, but if there is a big real estate crash - which looks almost inevitable - a lot of people are going to be waking up on paper a lot poorer, and that makes people angry and generally that's what the state is keen to avoid.
So I think we're still in the beginning phase of this.0 -
So in the first 5 months of the fiscal debt servicing costs have hit £27.6bn and with £6.3bn in August it is on an upwards trajectory.
I know people will argue it does not matter but it is a staggering amount of money comapred to the fuss over raising £12bn for social care.
At this rate it could be nudging the NHS as the biggest cost and reach a point where the State effectively eats itself.0 -
What's the proportion to overall spending and how does that compare to the past?surrey_commuter said:So in the first 5 months of the fiscal debt servicing costs have hit £27.6bn and with £6.3bn in August it is on an upwards trajectory.
I know people will argue it does not matter but it is a staggering amount of money comapred to the fuss over raising £12bn for social care.
At this rate it could be nudging the NHS as the biggest cost and reach a point where the State effectively eats itself.0 -
could only find this old chart - Govt spending about £1trn so easy to work out the %rick_chasey said:
What's the proportion to overall spending and how does that compare to the past?surrey_commuter said:So in the first 5 months of the fiscal debt servicing costs have hit £27.6bn and with £6.3bn in August it is on an upwards trajectory.
I know people will argue it does not matter but it is a staggering amount of money comapred to the fuss over raising £12bn for social care.
At this rate it could be nudging the NHS as the biggest cost and reach a point where the State effectively eats itself.
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or try this onesurrey_commuter said:
could only find this old chart - Govt spending about £1trn so easy to work out the %rick_chasey said:
What's the proportion to overall spending and how does that compare to the past?surrey_commuter said:So in the first 5 months of the fiscal debt servicing costs have hit £27.6bn and with £6.3bn in August it is on an upwards trajectory.
I know people will argue it does not matter but it is a staggering amount of money comapred to the fuss over raising £12bn for social care.
At this rate it could be nudging the NHS as the biggest cost and reach a point where the State effectively eats itself.
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Looks some way off eclipsing even education, let alone health.1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
Pinnacle Monzonite
Part of the anti-growth coalition0 -
That does rather confirm the idea that the NIC increase won't touch the sides of what is needed.1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
Pinnacle Monzonite
Part of the anti-growth coalition0 -
Right so what is the problem?surrey_commuter said:
or try this onesurrey_commuter said:
could only find this old chart - Govt spending about £1trn so easy to work out the %rick_chasey said:
What's the proportion to overall spending and how does that compare to the past?surrey_commuter said:So in the first 5 months of the fiscal debt servicing costs have hit £27.6bn and with £6.3bn in August it is on an upwards trajectory.
I know people will argue it does not matter but it is a staggering amount of money comapred to the fuss over raising £12bn for social care.
At this rate it could be nudging the NHS as the biggest cost and reach a point where the State effectively eats itself.
Given we've just gone through a pandemic, I think things are remarkably OK. We have a manageable debt servicing level which is the price for keeping the economy from properly falling over.
Let's not forget we're still trying to recover from the worst recession the nation has seen in 300 years. Is that really so bad?0 -
COVID wasn't really a recession, but it may be about to cause one.0
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Interest payments in 2020/21 were 9% lower than in 2019/20, so looking at an increase should take that into account (and obviously the massive hopefully one off spend).0
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they are now taking off because of the volume of index linked giltskingstongraham said:Interest payments in 2020/21 were 9% lower than in 2019/20, so looking at an increase should take that into account (and obviously the massive hopefully one off spend).
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Presumably that those are 2016-17 figures and, if I'm reading SC's earlier post correctly, we are not far short of that number in half a year?rick_chasey said:surrey_commuter said:
or try this onesurrey_commuter said:
could only find this old chart - Govt spending about £1trn so easy to work out the %rick_chasey said:
What's the proportion to overall spending and how does that compare to the past?surrey_commuter said:So in the first 5 months of the fiscal debt servicing costs have hit £27.6bn and with £6.3bn in August it is on an upwards trajectory.
I know people will argue it does not matter but it is a staggering amount of money comapred to the fuss over raising £12bn for social care.
At this rate it could be nudging the NHS as the biggest cost and reach a point where the State effectively eats itself.
Right so what is the problem?
Given we've just gone through a pandemic, I think things are remarkably OK. We have a manageable debt servicing level which is the price for keeping the economy from properly falling over.
Let's not forget we're still trying to recover from the worst recession the nation has seen in 300 years. Is that really so bad?0 -
Exactly they were £6.3bn in August and will keep going up with inflation which is calculated on a 3 month average so will keep rising.Pross said:
Presumably that those are 2016-17 figures and, if I'm reading SC's earlier post correctly, we are not far short of that number in half a year?rick_chasey said:surrey_commuter said:
or try this onesurrey_commuter said:
could only find this old chart - Govt spending about £1trn so easy to work out the %rick_chasey said:
What's the proportion to overall spending and how does that compare to the past?surrey_commuter said:So in the first 5 months of the fiscal debt servicing costs have hit £27.6bn and with £6.3bn in August it is on an upwards trajectory.
I know people will argue it does not matter but it is a staggering amount of money comapred to the fuss over raising £12bn for social care.
At this rate it could be nudging the NHS as the biggest cost and reach a point where the State effectively eats itself.
Right so what is the problem?
Given we've just gone through a pandemic, I think things are remarkably OK. We have a manageable debt servicing level which is the price for keeping the economy from properly falling over.
Let's not forget we're still trying to recover from the worst recession the nation has seen in 300 years. Is that really so bad?
As always Rick just looks at unavoidable spending and say we had no choice and ignores the pre-Covid budget with a £60bn deficit0 -
Right.surrey_commuter said:
Exactly they were £6.3bn in August and will keep going up with inflation which is calculated on a 3 month average so will keep rising.Pross said:
Presumably that those are 2016-17 figures and, if I'm reading SC's earlier post correctly, we are not far short of that number in half a year?rick_chasey said:surrey_commuter said:
or try this onesurrey_commuter said:
could only find this old chart - Govt spending about £1trn so easy to work out the %rick_chasey said:
What's the proportion to overall spending and how does that compare to the past?surrey_commuter said:So in the first 5 months of the fiscal debt servicing costs have hit £27.6bn and with £6.3bn in August it is on an upwards trajectory.
I know people will argue it does not matter but it is a staggering amount of money comapred to the fuss over raising £12bn for social care.
At this rate it could be nudging the NHS as the biggest cost and reach a point where the State effectively eats itself.
Right so what is the problem?
Given we've just gone through a pandemic, I think things are remarkably OK. We have a manageable debt servicing level which is the price for keeping the economy from properly falling over.
Let's not forget we're still trying to recover from the worst recession the nation has seen in 300 years. Is that really so bad?
As always Rick just looks at unavoidable spending and say we had no choice and ignores the pre-Covid budget with a £60bn deficit
So we have a very precarious recovery from a fairly economically cataclysmic event which will likely take a decade to recover.
All the evidence from multiple recessions all point to stimulating demand during the recovery is absolutely vital to shaping how the economy does for the next decade or so, and you are not worried about the recovery (which will help pay off any debt, by the way) because you are worried about debt?
And your solution to the debt problem is not to get the economy going to help pay it off, but to choke it off in a panic?0 -
As we are discussing the pre-Covid staffing I am going to argue that Brexit was not an “economically cataclysmic event” but more of a long term downwards shift in economic growth. As such I do not think it appropriate for the Govt to fill a Brexit sized hole in the economy and Govt finances by borrowing.rick_chasey said:
Right.surrey_commuter said:
Exactly they were £6.3bn in August and will keep going up with inflation which is calculated on a 3 month average so will keep rising.Pross said:
Presumably that those are 2016-17 figures and, if I'm reading SC's earlier post correctly, we are not far short of that number in half a year?rick_chasey said:surrey_commuter said:
or try this onesurrey_commuter said:
could only find this old chart - Govt spending about £1trn so easy to work out the %rick_chasey said:
What's the proportion to overall spending and how does that compare to the past?surrey_commuter said:So in the first 5 months of the fiscal debt servicing costs have hit £27.6bn and with £6.3bn in August it is on an upwards trajectory.
I know people will argue it does not matter but it is a staggering amount of money comapred to the fuss over raising £12bn for social care.
At this rate it could be nudging the NHS as the biggest cost and reach a point where the State effectively eats itself.
Right so what is the problem?
Given we've just gone through a pandemic, I think things are remarkably OK. We have a manageable debt servicing level which is the price for keeping the economy from properly falling over.
Let's not forget we're still trying to recover from the worst recession the nation has seen in 300 years. Is that really so bad?
As always Rick just looks at unavoidable spending and say we had no choice and ignores the pre-Covid budget with a £60bn deficit
So we have a very precarious recovery from a fairly economically cataclysmic event which will likely take a decade to recover.
All the evidence from multiple recessions all point to stimulating demand during the recovery is absolutely vital to shaping how the economy does for the next decade or so, and you are not worried about the recovery (which will help pay off any debt, by the way) because you are worried about debt?
And your solution to the debt problem is not to get the economy going to help pay it off, but to choke it off in a panic?
My argument is for economic prudence in the average and good times so that there is dry powder and head room for the Govt to counter short-term problems.1 -
I thought covid was the cataclysmic event?0
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that would make no sense in reply to my commentJezyboy said:I thought covid was the cataclysmic event?
As always Rick just looks at unavoidable spending and say we had no choice and ignores the pre-Covid budget with a £60bn deficit0 -
But it's not relevant anymore. You can't go back in time. We are in a post-corona world and the fiscal policy needs to reflect that.surrey_commuter said:
that would make no sense in reply to my commentJezyboy said:I thought covid was the cataclysmic event?
As always Rick just looks at unavoidable spending and say we had no choice and ignores the pre-Covid budget with a £60bn deficit0 -
You are ignoring my point that these irresponsible tossers will always borrow as much as they can which is why we are on the road to ruin.rick_chasey said:
But it's not relevant anymore. You can't go back in time. We are in a post-corona world and the fiscal policy needs to reflect that.surrey_commuter said:
that would make no sense in reply to my commentJezyboy said:I thought covid was the cataclysmic event?
As always Rick just looks at unavoidable spending and say we had no choice and ignores the pre-Covid budget with a £60bn deficit
Pre Covid in a normal year they budgeted to borrow 3% of GDP when growth was forecast at circa 1.5%1 -
I realise I'm waving my own ignorance around in a most unflattering way here, but I do wonder how much of any of it matters.surrey_commuter said:
You are ignoring my point that these irresponsible tossers will always borrow as much as they can which is why we are on the road to ruin.rick_chasey said:
But it's not relevant anymore. You can't go back in time. We are in a post-corona world and the fiscal policy needs to reflect that.surrey_commuter said:
that would make no sense in reply to my commentJezyboy said:I thought covid was the cataclysmic event?
As always Rick just looks at unavoidable spending and say we had no choice and ignores the pre-Covid budget with a £60bn deficit
Pre Covid in a normal year they budgeted to borrow 3% of GDP when growth was forecast at circa 1.5%
Looking at the numbers spinning round on the world debt clock (https://www.usdebtclock.org/world-debt-clock.html) is, dizzying, but on preliminary investigation, I can't see any trend between countries that seem desirable to live in (which surely should be the priority of government) and fiscal prudence.
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I get the point, I just don't think it's helpful.surrey_commuter said:
You are ignoring my point that these irresponsible tossers will always borrow as much as they can which is why we are on the road to ruin.rick_chasey said:
But it's not relevant anymore. You can't go back in time. We are in a post-corona world and the fiscal policy needs to reflect that.surrey_commuter said:
that would make no sense in reply to my commentJezyboy said:I thought covid was the cataclysmic event?
As always Rick just looks at unavoidable spending and say we had no choice and ignores the pre-Covid budget with a £60bn deficit
Pre Covid in a normal year they budgeted to borrow 3% of GDP when growth was forecast at circa 1.5%
What is the best thing to do *right now*?0 -
I don’t disagree with most of the short term measures around Covid.rick_chasey said:
I get the point, I just don't think it's helpful.surrey_commuter said:
You are ignoring my point that these irresponsible tossers will always borrow as much as they can which is why we are on the road to ruin.rick_chasey said:
But it's not relevant anymore. You can't go back in time. We are in a post-corona world and the fiscal policy needs to reflect that.surrey_commuter said:
that would make no sense in reply to my commentJezyboy said:I thought covid was the cataclysmic event?
As always Rick just looks at unavoidable spending and say we had no choice and ignores the pre-Covid budget with a £60bn deficit
Pre Covid in a normal year they budgeted to borrow 3% of GDP when growth was forecast at circa 1.5%
What is the best thing to do *right now*?
I totally disagree with the decision not to trim other spending.
I will refrain from editing and say that now I have considered eating out and stamp duty there is probably a lot I don’t agree with0 -
£4.4 bn on the stamp duty reduction.0
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not at all if anybody is in danger then it is me as your view is very much mainstreamJezyboy said:
I realise I'm waving my own ignorance around in a most unflattering way here, but I do wonder how much of any of it matters.surrey_commuter said:
You are ignoring my point that these irresponsible tossers will always borrow as much as they can which is why we are on the road to ruin.rick_chasey said:
But it's not relevant anymore. You can't go back in time. We are in a post-corona world and the fiscal policy needs to reflect that.surrey_commuter said:
that would make no sense in reply to my commentJezyboy said:I thought covid was the cataclysmic event?
As always Rick just looks at unavoidable spending and say we had no choice and ignores the pre-Covid budget with a £60bn deficit
Pre Covid in a normal year they budgeted to borrow 3% of GDP when growth was forecast at circa 1.5%
Looking at the numbers spinning round on the world debt clock (https://www.usdebtclock.org/world-debt-clock.html) is, dizzying, but on preliminary investigation, I can't see any trend between countries that seem desirable to live in (which surely should be the priority of government) and fiscal prudence.
Rick's theory (and it is one of his better ones) is that my thinking is too grounded in the accepted wisdom of the time in which I studied.
He probably phrased it as "Yo Boomer get with the program"0 -
Should add that my education in economics came in 2005-2006 and the final paper which pulled it all together was a case study of the EU, and it was basically variants of "what are the economic fundamentals that underpin it" and implicitly "why this is so successful"surrey_commuter said:
not at all if anybody is in danger then it is me as your view is very much mainstreamJezyboy said:
I realise I'm waving my own ignorance around in a most unflattering way here, but I do wonder how much of any of it matters.surrey_commuter said:
You are ignoring my point that these irresponsible tossers will always borrow as much as they can which is why we are on the road to ruin.rick_chasey said:
But it's not relevant anymore. You can't go back in time. We are in a post-corona world and the fiscal policy needs to reflect that.surrey_commuter said:
that would make no sense in reply to my commentJezyboy said:I thought covid was the cataclysmic event?
As always Rick just looks at unavoidable spending and say we had no choice and ignores the pre-Covid budget with a £60bn deficit
Pre Covid in a normal year they budgeted to borrow 3% of GDP when growth was forecast at circa 1.5%
Looking at the numbers spinning round on the world debt clock (https://www.usdebtclock.org/world-debt-clock.html) is, dizzying, but on preliminary investigation, I can't see any trend between countries that seem desirable to live in (which surely should be the priority of government) and fiscal prudence.
Rick's theory (and it is one of his better ones) is that my thinking is too grounded in the accepted wisdom of the time in which I studied.
He probably phrased it as "Yo Boomer get with the program"0 -
I have been banging the drum about the stagflation risk and lo and behold.0 -
Bizarrely upping inflation and slowing growth could be described as economic policy.rick_chasey said:
I have been banging the drum about the stagflation risk and lo and behold.
As I have said before from an academic point of view Brexit is fascinating. How long will Brexit adjustments boost inflation for and how long does higher inflation have to persist to get baked into people’s assumptions?0 -
Yes, a f*cking stupid one.surrey_commuter said:<
Bizarrely upping inflation and slowing growth could be described as economic policy.0
