Macroeconomics, the economy, inflation etc. *likely to be very dull*
Comments
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pblakeney said:
If the wheels are to keep turning then people need to keep buying.TheBigBean said:
Capitalism isn't about keeping people happy.pblakeney said:
True. Doesn't make for a very happy populace though, does it?TheBigBean said:People can ask or even demand higher wages, but they will only get them if there is demand for their services, in excess of supply, from employers.
I'm sure that there are people who are just fine, but there are others at breaking point.
It's a drug.0 -
This. People can ask for what they like and are free to look elsewhere if they are disappointed with the answer but if the market for the services they provide is diminished because their customer base has less money to spend, that better offer elsewhere may not actually exist.TheBigBean said:People can ask or even demand higher wages, but they will only get them if there is demand for their services, in excess of supply, from employers.
1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
Pinnacle Monzonite
Part of the anti-growth coalition0 -
The above may be fact, or fiction, I may be serious, I may be jesting.
I am not sure. You have no chance.Veronese68 wrote:PB is the most sensible person on here.0 -
And the pain associated with quelling excessive inflation is the biggest reason to stop it occurring in the first place.pblakeney said:
True. Doesn't make for a very happy populace though, does it?TheBigBean said:People can ask or even demand higher wages, but they will only get them if there is demand for their services, in excess of supply, from employers.
I'm sure that there are people who are just fine, but there are others at breaking point.
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It’s not popular as a view but between an economic downturn and rampant inflation, the former is probably the least bad option collectively.Jezyboy said:
Sure but its long term survival requires it does.TheBigBean said:
Capitalism isn't about keeping people happy.pblakeney said:
True. Doesn't make for a very happy populace though, does it?TheBigBean said:People can ask or even demand higher wages, but they will only get them if there is demand for their services, in excess of supply, from employers.
I'm sure that there are people who are just fine, but there are others at breaking point.
Saw an article about "zombie" firms being killed off with interest rate hikes. I wonder how many people are employed by firms in the zombie category.
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I'd guess it all depends on how big a downturn and how rampant.wallace_and_gromit said:
It’s not popular as a view but between an economic downturn and rampant inflation, the former is probably the least bad option collectively.Jezyboy said:
Sure but its long term survival requires it does.TheBigBean said:
Capitalism isn't about keeping people happy.pblakeney said:
True. Doesn't make for a very happy populace though, does it?TheBigBean said:People can ask or even demand higher wages, but they will only get them if there is demand for their services, in excess of supply, from employers.
I'm sure that there are people who are just fine, but there are others at breaking point.
Saw an article about "zombie" firms being killed off with interest rate hikes. I wonder how many people are employed by firms in the zombie category.
It feels like we are going to get both, so I guess that's something!0 -
Anyone seen a rampant runaway downturn?
I have. It’s not good.The above may be fact, or fiction, I may be serious, I may be jesting.
I am not sure. You have no chance.Veronese68 wrote:PB is the most sensible person on here.1 -
Not saying a downturn is good. But neither is an inflation-induced cost of living crisis. History suggests that leaving inflation unchecked is potentially worse than even the post-GFC recession in the U.K.pblakeney said:Anyone seen a rampant runaway downturn?
I have. It’s not good.
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Hopefully the resulting downturn will be mild. Leading indicators related to the money supply suggest inflation is not a long term feature and that interest rates will fall again relatively soon.Jezyboy said:
I'd guess it all depends on how big a downturn and how rampant.wallace_and_gromit said:
It’s not popular as a view but between an economic downturn and rampant inflation, the former is probably the least bad option collectively.Jezyboy said:
Sure but its long term survival requires it does.TheBigBean said:
Capitalism isn't about keeping people happy.pblakeney said:
True. Doesn't make for a very happy populace though, does it?TheBigBean said:People can ask or even demand higher wages, but they will only get them if there is demand for their services, in excess of supply, from employers.
I'm sure that there are people who are just fine, but there are others at breaking point.
Saw an article about "zombie" firms being killed off with interest rate hikes. I wonder how many people are employed by firms in the zombie category.
It feels like we are going to get both, so I guess that's something!
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I think the concern for the BoE, which I definitely dismissed 3 months ago so lets not pretend I'm some sort of clairvoyant here, is that the labour market is *so tight* it's going to need quite a lot of demand reduction to halt a wage/price spiral.0
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There’s also a huge amount of “pent up demand” fuelled by Covid era savings from cancelled holidays and inability to buy some things due to supply chain issues. Obviously this is concentrated amongst a subset of the population but it’s a very real factor eg in aviation where leisure / discretionary flights are in high demand.rick_chasey said:I think the concern for the BoE, which I definitely dismissed 3 months ago so lets not pretend I'm some sort of clairvoyant here, is that the labour market is *so tight* it's going to need quite a lot of demand reduction to halt a wage/price spiral.
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Was it 1700 flights that easyJet cancelled over the summer?
That's one way to keep demand for the remaining flights high.The above may be fact, or fiction, I may be serious, I may be jesting.
I am not sure. You have no chance.Veronese68 wrote:PB is the most sensible person on here.0 -
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Sure, but I think it's the labour tightness that really concerns them. The competition for labour is still really hot, despite the pretty tricky market conditions.wallace_and_gromit said:
There’s also a huge amount of “pent up demand” fuelled by Covid era savings from cancelled holidays and inability to buy some things due to supply chain issues. Obviously this is concentrated amongst a subset of the population but it’s a very real factor eg in aviation where leisure / discretionary flights are in high demand.rick_chasey said:I think the concern for the BoE, which I definitely dismissed 3 months ago so lets not pretend I'm some sort of clairvoyant here, is that the labour market is *so tight* it's going to need quite a lot of demand reduction to halt a wage/price spiral.
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The middle classes’ Covid era cash piles are in search of all manner of goods and services which is helping fuel demand for labour in general. And even flights need pilots, cabin crew, ground staff etc.rick_chasey said:
Sure, but I think it's the labour tightness that really concerns them. The competition for labour is still really hot, despite the pretty tricky market conditions.wallace_and_gromit said:
There’s also a huge amount of “pent up demand” fuelled by Covid era savings from cancelled holidays and inability to buy some things due to supply chain issues. Obviously this is concentrated amongst a subset of the population but it’s a very real factor eg in aviation where leisure / discretionary flights are in high demand.rick_chasey said:I think the concern for the BoE, which I definitely dismissed 3 months ago so lets not pretend I'm some sort of clairvoyant here, is that the labour market is *so tight* it's going to need quite a lot of demand reduction to halt a wage/price spiral.
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It's unclear to me that they are really separate things. To my simple mind, a downturn will likely eventually follow the cost of living crisis. I'd guess many are treading water to a large extent, and anyone remortgaging is likely to be doing worse than that.wallace_and_gromit said:
Hopefully the resulting downturn will be mild. Leading indicators related to the money supply suggest inflation is not a long term feature and that interest rates will fall again relatively soon.Jezyboy said:
I'd guess it all depends on how big a downturn and how rampant.wallace_and_gromit said:
It’s not popular as a view but between an economic downturn and rampant inflation, the former is probably the least bad option collectively.Jezyboy said:
Sure but its long term survival requires it does.TheBigBean said:
Capitalism isn't about keeping people happy.pblakeney said:
True. Doesn't make for a very happy populace though, does it?TheBigBean said:People can ask or even demand higher wages, but they will only get them if there is demand for their services, in excess of supply, from employers.
I'm sure that there are people who are just fine, but there are others at breaking point.
Saw an article about "zombie" firms being killed off with interest rate hikes. I wonder how many people are employed by firms in the zombie category.
It feels like we are going to get both, so I guess that's something!
Having said that I thought the economy would be shafted last winter as even with the price cap, heating was still pretty dam costly.0 -
I think the idea of raising interest rates to head off recession is to minimise the size of the downturn. Once inflation is embedded, as it now is, there are no easy options, as eventually inflation will kill the exchange rate and make government borrowing much harder, both of which will force a large downturn. Raising interest rates hopefully heads off these risks, albeit not without some pain.Jezyboy said:
It's unclear to me that they are really separate things. To my simple mind, a downturn will likely eventually follow the cost of living crisis. I'd guess many are treading water to a large extent, and anyone remortgaging is likely to be doing worse than that.wallace_and_gromit said:
Hopefully the resulting downturn will be mild. Leading indicators related to the money supply suggest inflation is not a long term feature and that interest rates will fall again relatively soon.Jezyboy said:
I'd guess it all depends on how big a downturn and how rampant.wallace_and_gromit said:
It’s not popular as a view but between an economic downturn and rampant inflation, the former is probably the least bad option collectively.Jezyboy said:
Sure but its long term survival requires it does.TheBigBean said:
Capitalism isn't about keeping people happy.pblakeney said:
True. Doesn't make for a very happy populace though, does it?TheBigBean said:People can ask or even demand higher wages, but they will only get them if there is demand for their services, in excess of supply, from employers.
I'm sure that there are people who are just fine, but there are others at breaking point.
Saw an article about "zombie" firms being killed off with interest rate hikes. I wonder how many people are employed by firms in the zombie category.
It feels like we are going to get both, so I guess that's something!
Having said that I thought the economy would be shafted last winter as even with the price cap, heating was still pretty dam costly.
Per my earlier post, the pain caused by excessive inflation one way or another is such that avoiding it should be an absolute priority for any sound government.
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Listening to an economist over lunch says recession in the UK likely, EU 50:50, USA possibly not, risk to the UK thereafter is then of stagflation.0
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The Eurozone, driven by Germany, is already in recession. Obviously EU =/= Eurozone but a Eurozone and German recession at least 6 months before a U.K. recession is a notable state of affairs.shirley_basso said:Listening to an economist over lunch says recession in the UK likely, EU 50:50, USA possibly not, risk to the UK thereafter is then of stagflation.
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Looks like the US team transitory can almost call a victory, with their inflation back down to 3%0
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That's great to hear, hopefully we will catch their cold.0
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Honestly, I know we talk about how British needs to improve investment levels but when the US is like that why would you invest anywhere else but the US?
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Does that make matters good or worse for UK? We tend to have to follow their lead with interest rates, but if they have inflation under control, they have more freedom to adjust their rates, but we have generally to follow? Are we then caught between controlling rates to benefit our UK predicament and having to play it right with respect to the US? Thoughts?0
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Too protectionist for me.rick_chasey said:Honestly, I know we talk about how British needs to improve investment levels but when the US is like that why would you invest anywhere else but the US?
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GDP fall in May of 0.1% is apparently good news as everyone was expecting it to be much worse given the bank holidays.0
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Fat margins, better ROI than any other country not good enough?TheBigBean said:
Too protectionist for me.rick_chasey said:Honestly, I know we talk about how British needs to improve investment levels but when the US is like that why would you invest anywhere else but the US?
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Graveyard for many foreign firms, so no.rick_chasey said:
Fat margins, better ROI than any other country not good enough?TheBigBean said:
Too protectionist for me.rick_chasey said:Honestly, I know we talk about how British needs to improve investment levels but when the US is like that why would you invest anywhere else but the US?
Patent trolls too.0 -
scary stat for the day, it is estimated that the Treasury will have to transfer £275bn to the BofE over the next decade to cover QE losses.
Relatively simple explanation here
To carry out qe, central banks created money in the form of reserves in the banking system and used them to buy long-term bonds, with the intention of lowering their yields. The immediate problem is that as central banks have raised interest rates to fight inflation, they have had to pay out more on those reserves. The coupon payments they receive on the bonds, however, have remained fixed. Selling the bonds to stop the outflow would not help, because they would fetch much less than they cost. Paper losses would crystallise.0 -
QE may have been the least bad option immediately post-GFC (not so sure myself, but I'm no expert) but in respect of the QE that followed in subsequent years (i.e. the majority of it) recent developments demonstrate that old adages never die:surrey_commuter said:scary stat for the day, it is estimated that the Treasury will have to transfer £275bn to the BofE over the next decade to cover QE losses.
Relatively simple explanation here
To carry out qe, central banks created money in the form of reserves in the banking system and used them to buy long-term bonds, with the intention of lowering their yields. The immediate problem is that as central banks have raised interest rates to fight inflation, they have had to pay out more on those reserves. The coupon payments they receive on the bonds, however, have remained fixed. Selling the bonds to stop the outflow would not help, because they would fetch much less than they cost. Paper losses would crystallise.
- If it sounds too good to be true then it is
- There are no free lunches0
