Macroeconomics, the economy, inflation etc. *likely to be very dull*

1575860626365

Comments

  • focuszing723
    focuszing723 Posts: 7,211
    Low IR's create problems too. Look at homes to live in prices.
  • rjsterry
    rjsterry Posts: 27,928

    rjsterry said:

    rjsterry said:

    rjsterry said:

    rjsterry said:

    WHAT HAVE I BEEN SAYING

    The McPherson quote is interesting as he refers to investment. That would have had no impact on the impact of "austerity" in the short term, as "austerity" was all about reducing current expenditure. Though investment 10+ years ago would doubtless have been useful if it could have got through the planning phase.

    And as a completely unjustified thought, I'm not sure austerity would be the issue it is today had we had a functioning government, as opposed to a party that is permanently campaigning like it's the Opposition, for the last 7-8 years.
    Not sure that's quite right. For example the BSF programme was cut (with a certain amount of glee) by Gove. Notwithstanding that, from my own experience things had rebounded pretty well as early as 2012. It's after 2016 that the government has stopped doing and focused on talking.
    What's the BSF programme? Thanks.
    BSF was essentially PFI, but the Labour model for schools. There were a number of differences though and a lot of it was about maximising quality for a fixed price. This compares with the early PFIs which were about minimising price for a service requirement. On this basis, BSF probably wasn't the right tool for the time, but they could and should have gone back to a more traditional PFI model and called it School Building for the Future or similar.
    Not sure the procurement route is the issue.
    You can change the procurement approach, but the difference between BSF and earlier PFIs remains. BSFs were expensive due to their design.
    Are you talking about the physical design of the buildings or the design of the procurement route?
    The buildings.
    Generally speaking, with construction you get what you pay for. Given the current fun with RAAC, I think it's fairly clear what the risk is of pursuing the lowest possible cost for long term capital projects. Compare the cost of building a school with a 60- or even 120-year design life with a school with a 30-year design life. It's unlikely the latter will be half the price of the former.
    That's not the trade off. It's not about design life or integrity of the building, but about the bells and whistles. Some of those could be purely cosmetic (is the building ugly?). Some might give slightly improved learning outcomes, but at too high a cost. For example, requirements for the level of natural lighting in a corridor. I am not an architect, so my examples may be flawed, but I'm sure you can imagine examples better than me.
    Based on the assumption that it's just bells and whistles rather than higher quality more durable materials and an all round better building that engenders some pride and care, you'd make a great QS 😁
    1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
    Pinnacle Monzonite

    Part of the anti-growth coalition
  • pblakeney
    pblakeney Posts: 26,038
    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.
  • TheBigBean
    TheBigBean Posts: 20,810
    rjsterry said:

    rjsterry said:

    rjsterry said:

    rjsterry said:

    rjsterry said:

    WHAT HAVE I BEEN SAYING

    The McPherson quote is interesting as he refers to investment. That would have had no impact on the impact of "austerity" in the short term, as "austerity" was all about reducing current expenditure. Though investment 10+ years ago would doubtless have been useful if it could have got through the planning phase.

    And as a completely unjustified thought, I'm not sure austerity would be the issue it is today had we had a functioning government, as opposed to a party that is permanently campaigning like it's the Opposition, for the last 7-8 years.
    Not sure that's quite right. For example the BSF programme was cut (with a certain amount of glee) by Gove. Notwithstanding that, from my own experience things had rebounded pretty well as early as 2012. It's after 2016 that the government has stopped doing and focused on talking.
    What's the BSF programme? Thanks.
    BSF was essentially PFI, but the Labour model for schools. There were a number of differences though and a lot of it was about maximising quality for a fixed price. This compares with the early PFIs which were about minimising price for a service requirement. On this basis, BSF probably wasn't the right tool for the time, but they could and should have gone back to a more traditional PFI model and called it School Building for the Future or similar.
    Not sure the procurement route is the issue.
    You can change the procurement approach, but the difference between BSF and earlier PFIs remains. BSFs were expensive due to their design.
    Are you talking about the physical design of the buildings or the design of the procurement route?
    The buildings.
    Generally speaking, with construction you get what you pay for. Given the current fun with RAAC, I think it's fairly clear what the risk is of pursuing the lowest possible cost for long term capital projects. Compare the cost of building a school with a 60- or even 120-year design life with a school with a 30-year design life. It's unlikely the latter will be half the price of the former.
    That's not the trade off. It's not about design life or integrity of the building, but about the bells and whistles. Some of those could be purely cosmetic (is the building ugly?). Some might give slightly improved learning outcomes, but at too high a cost. For example, requirements for the level of natural lighting in a corridor. I am not an architect, so my examples may be flawed, but I'm sure you can imagine examples better than me.
    Based on the assumption that it's just bells and whistles rather than higher quality more durable materials and an all round better building that engenders some pride and care, you'd make a great QS 😁
    I'm assuming you don't work on school designs. If so, I'll be the Cake Stop QS.
  • rjsterry
    rjsterry Posts: 27,928

    rjsterry said:

    rjsterry said:

    rjsterry said:

    rjsterry said:

    rjsterry said:

    WHAT HAVE I BEEN SAYING

    The McPherson quote is interesting as he refers to investment. That would have had no impact on the impact of "austerity" in the short term, as "austerity" was all about reducing current expenditure. Though investment 10+ years ago would doubtless have been useful if it could have got through the planning phase.

    And as a completely unjustified thought, I'm not sure austerity would be the issue it is today had we had a functioning government, as opposed to a party that is permanently campaigning like it's the Opposition, for the last 7-8 years.
    Not sure that's quite right. For example the BSF programme was cut (with a certain amount of glee) by Gove. Notwithstanding that, from my own experience things had rebounded pretty well as early as 2012. It's after 2016 that the government has stopped doing and focused on talking.
    What's the BSF programme? Thanks.
    BSF was essentially PFI, but the Labour model for schools. There were a number of differences though and a lot of it was about maximising quality for a fixed price. This compares with the early PFIs which were about minimising price for a service requirement. On this basis, BSF probably wasn't the right tool for the time, but they could and should have gone back to a more traditional PFI model and called it School Building for the Future or similar.
    Not sure the procurement route is the issue.
    You can change the procurement approach, but the difference between BSF and earlier PFIs remains. BSFs were expensive due to their design.
    Are you talking about the physical design of the buildings or the design of the procurement route?
    The buildings.
    Generally speaking, with construction you get what you pay for. Given the current fun with RAAC, I think it's fairly clear what the risk is of pursuing the lowest possible cost for long term capital projects. Compare the cost of building a school with a 60- or even 120-year design life with a school with a 30-year design life. It's unlikely the latter will be half the price of the former.
    That's not the trade off. It's not about design life or integrity of the building, but about the bells and whistles. Some of those could be purely cosmetic (is the building ugly?). Some might give slightly improved learning outcomes, but at too high a cost. For example, requirements for the level of natural lighting in a corridor. I am not an architect, so my examples may be flawed, but I'm sure you can imagine examples better than me.
    Based on the assumption that it's just bells and whistles rather than higher quality more durable materials and an all round better building that engenders some pride and care, you'd make a great QS 😁
    I'm assuming you don't work on school designs. If so, I'll be the Cake Stop QS.
    We did a while back but we were penalised by the funder because we brought the project in under budget. Unsurprisingly we have decided to look elsewhere.That was just straightforward traditional procurement.
    1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
    Pinnacle Monzonite

    Part of the anti-growth coalition
  • TheBigBean
    TheBigBean Posts: 20,810
    rjsterry said:

    rjsterry said:

    rjsterry said:

    rjsterry said:

    rjsterry said:

    rjsterry said:

    WHAT HAVE I BEEN SAYING

    The McPherson quote is interesting as he refers to investment. That would have had no impact on the impact of "austerity" in the short term, as "austerity" was all about reducing current expenditure. Though investment 10+ years ago would doubtless have been useful if it could have got through the planning phase.

    And as a completely unjustified thought, I'm not sure austerity would be the issue it is today had we had a functioning government, as opposed to a party that is permanently campaigning like it's the Opposition, for the last 7-8 years.
    Not sure that's quite right. For example the BSF programme was cut (with a certain amount of glee) by Gove. Notwithstanding that, from my own experience things had rebounded pretty well as early as 2012. It's after 2016 that the government has stopped doing and focused on talking.
    What's the BSF programme? Thanks.
    BSF was essentially PFI, but the Labour model for schools. There were a number of differences though and a lot of it was about maximising quality for a fixed price. This compares with the early PFIs which were about minimising price for a service requirement. On this basis, BSF probably wasn't the right tool for the time, but they could and should have gone back to a more traditional PFI model and called it School Building for the Future or similar.
    Not sure the procurement route is the issue.
    You can change the procurement approach, but the difference between BSF and earlier PFIs remains. BSFs were expensive due to their design.
    Are you talking about the physical design of the buildings or the design of the procurement route?
    The buildings.
    Generally speaking, with construction you get what you pay for. Given the current fun with RAAC, I think it's fairly clear what the risk is of pursuing the lowest possible cost for long term capital projects. Compare the cost of building a school with a 60- or even 120-year design life with a school with a 30-year design life. It's unlikely the latter will be half the price of the former.
    That's not the trade off. It's not about design life or integrity of the building, but about the bells and whistles. Some of those could be purely cosmetic (is the building ugly?). Some might give slightly improved learning outcomes, but at too high a cost. For example, requirements for the level of natural lighting in a corridor. I am not an architect, so my examples may be flawed, but I'm sure you can imagine examples better than me.
    Based on the assumption that it's just bells and whistles rather than higher quality more durable materials and an all round better building that engenders some pride and care, you'd make a great QS 😁
    I'm assuming you don't work on school designs. If so, I'll be the Cake Stop QS.
    We did a while back but we were penalised by the funder because we brought the project in under budget. Unsurprisingly we have decided to look elsewhere.That was just straightforward traditional procurement.
    Sounds like BSF. You needed more bells and whistles which is what I was saying.
  • rjsterry
    rjsterry Posts: 27,928
    edited October 2023

    rjsterry said:

    rjsterry said:

    rjsterry said:

    rjsterry said:

    rjsterry said:

    rjsterry said:

    WHAT HAVE I BEEN SAYING

    The McPherson quote is interesting as he refers to investment. That would have had no impact on the impact of "austerity" in the short term, as "austerity" was all about reducing current expenditure. Though investment 10+ years ago would doubtless have been useful if it could have got through the planning phase.

    And as a completely unjustified thought, I'm not sure austerity would be the issue it is today had we had a functioning government, as opposed to a party that is permanently campaigning like it's the Opposition, for the last 7-8 years.
    Not sure that's quite right. For example the BSF programme was cut (with a certain amount of glee) by Gove. Notwithstanding that, from my own experience things had rebounded pretty well as early as 2012. It's after 2016 that the government has stopped doing and focused on talking.
    What's the BSF programme? Thanks.
    BSF was essentially PFI, but the Labour model for schools. There were a number of differences though and a lot of it was about maximising quality for a fixed price. This compares with the early PFIs which were about minimising price for a service requirement. On this basis, BSF probably wasn't the right tool for the time, but they could and should have gone back to a more traditional PFI model and called it School Building for the Future or similar.
    Not sure the procurement route is the issue.
    You can change the procurement approach, but the difference between BSF and earlier PFIs remains. BSFs were expensive due to their design.
    Are you talking about the physical design of the buildings or the design of the procurement route?
    The buildings.
    Generally speaking, with construction you get what you pay for. Given the current fun with RAAC, I think it's fairly clear what the risk is of pursuing the lowest possible cost for long term capital projects. Compare the cost of building a school with a 60- or even 120-year design life with a school with a 30-year design life. It's unlikely the latter will be half the price of the former.
    That's not the trade off. It's not about design life or integrity of the building, but about the bells and whistles. Some of those could be purely cosmetic (is the building ugly?). Some might give slightly improved learning outcomes, but at too high a cost. For example, requirements for the level of natural lighting in a corridor. I am not an architect, so my examples may be flawed, but I'm sure you can imagine examples better than me.
    Based on the assumption that it's just bells and whistles rather than higher quality more durable materials and an all round better building that engenders some pride and care, you'd make a great QS 😁
    I'm assuming you don't work on school designs. If so, I'll be the Cake Stop QS.
    We did a while back but we were penalised by the funder because we brought the project in under budget. Unsurprisingly we have decided to look elsewhere.That was just straightforward traditional procurement.
    Sounds like BSF. You needed more bells and whistles which is what I was saying.
    Wasn't part of BSF. Small project for a Church school (VA funded). No bells or whistles just a more interesting structural solution to a complicated site (on top of the existing school) and slightly better than bargain basement flooring to give it some longevity and because infant school children often sit on the floor.
    1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
    Pinnacle Monzonite

    Part of the anti-growth coalition
  • rick_chasey
    rick_chasey Posts: 73,204
    Tell you what, I've been pretty happy this year generally, much happier than for a long time, but f*ck me, the business bearishness is really getting to me now.

    We've cut headcount by over a third now since January and firms still really aren't hiring. Brutal out there.
  • rick_chasey
    rick_chasey Posts: 73,204
    You wonder if the fiscal drag tax take is acting like the MMT approach, increasing taxes when inflation is high...
  • You wonder if the fiscal drag tax take is acting like the MMT approach, increasing taxes when inflation is high...

    I guess there's some circularity here in that the proceeds to "fiscal drag" can be used to fund the higher debt service costs on IL gilts.
  • rick_chasey
    rick_chasey Posts: 73,204

    You wonder if the fiscal drag tax take is acting like the MMT approach, increasing taxes when inflation is high...

    I guess there's some circularity here in that the proceeds to "fiscal drag" can be used to fund the higher debt service costs on IL gilts.
    Well the flipside to "borrow as much as you want" in MMT is that you aggressively use your fiscal policy to combat inflation; so if there is a lot, you want to be raising taxes a lot etc.

    Clearly MMT is not a credible policy if you only use it for the good times.

    You wonder if, down the road, we see that this fiscal drag and the effect on the real tax rate is what had the bigger impact on inflation and not rates, which is changing in its effectiveness, partly because of the proliferation of fixed rates, but also because you have an aging population who are more reliant on asset prices (read house prices) for how wealthy they're feeling, as opposed to cashflow.
  • Except it hits the poorest hardest. People who were just under the tax threshold are paying an infinity % more tax, the ultra rich are paying a tiny % more tax. To be expected from this government TBH
  • pblakeney
    pblakeney Posts: 26,038


    ...but also because you have an aging population who are more reliant on asset prices (read house prices) for how wealthy they're feeling, as opposed to cashflow.

    This'll be my hobby horse. People who think more of paper wealth than cashflow are muppets. I'd rather feel poor but have cashflow than feel rich and have no cashflow.
    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.
  • rick_chasey
    rick_chasey Posts: 73,204
    edited October 2023
    pblakeney said:


    ...but also because you have an aging population who are more reliant on asset prices (read house prices) for how wealthy they're feeling, as opposed to cashflow.

    This'll be my hobby horse. People who think more of paper wealth than cashflow are muppets. I'd rather feel poor but have cashflow than feel rich and have no cashflow.
    Cashflow matters less if you’re retired, no? It’s roughly fixed.
  • pblakeney
    pblakeney Posts: 26,038

    pblakeney said:


    ...but also because you have an aging population who are more reliant on asset prices (read house prices) for how wealthy they're feeling, as opposed to cashflow.

    This'll be my hobby horse. People who think more of paper wealth than cashflow are muppets. I'd rather feel poor but have cashflow than feel rich and have no cashflow.
    Cashflow matters less if you’re retired, no? It’s roughly fixed.
    Not necessarily. It depends on how your pension is structured.
    Mine most definitely is not fixed.
    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.
  • rick_chasey
    rick_chasey Posts: 73,204
    pblakeney said:

    pblakeney said:


    ...but also because you have an aging population who are more reliant on asset prices (read house prices) for how wealthy they're feeling, as opposed to cashflow.

    This'll be my hobby horse. People who think more of paper wealth than cashflow are muppets. I'd rather feel poor but have cashflow than feel rich and have no cashflow.
    Cashflow matters less if you’re retired, no? It’s roughly fixed.
    Not necessarily. It depends on how your pension is structured.
    Mine most definitely is not fixed.
    Based on your assets though isn't it?
  • pblakeney
    pblakeney Posts: 26,038

    pblakeney said:

    pblakeney said:


    ...but also because you have an aging population who are more reliant on asset prices (read house prices) for how wealthy they're feeling, as opposed to cashflow.

    This'll be my hobby horse. People who think more of paper wealth than cashflow are muppets. I'd rather feel poor but have cashflow than feel rich and have no cashflow.
    Cashflow matters less if you’re retired, no? It’s roughly fixed.
    Not necessarily. It depends on how your pension is structured.
    Mine most definitely is not fixed.
    Based on your assets though isn't it?
    Completely separate from any property though and instant access.
    Think of it as a large shares ISA. That's in some cases, others do go for defined pensions.
    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.
  • rick_chasey
    rick_chasey Posts: 73,204
    edited October 2023

    Except it hits the poorest hardest. People who were just under the tax threshold are paying an infinity % more tax, the ultra rich are paying a tiny % more tax. To be expected from this government TBH
    Can we assume that pretty much any additional cost is always hitting the poorest the hardest?

    Unless specified otherwise.

    Kind why being poor sucks.
  • Dorset_Boy
    Dorset_Boy Posts: 7,009
    edited October 2023

    Except it hits the poorest hardest. People who were just under the tax threshold are paying an infinity % more tax, the ultra rich are paying a tiny % more tax. To be expected from this government TBH
    ??? The personal allowance has increased significantly under the Conservative governments. That has benefitted the poorest hugely.
    Freezing the point at which you change from basic rate to Higher rate has had no impact whatsoever on the poorest as they don't earn near that amount each year.
    Or are you saying those earning £50,001 are amongst the poorest?
    Oh and the margin is 20% on the excess income over the threshold so way less than an infinity % more tax.
  • verylonglegs
    verylonglegs Posts: 3,963

    Except it hits the poorest hardest. People who were just under the tax threshold are paying an infinity % more tax, the ultra rich are paying a tiny % more tax. To be expected from this government TBH
    ??? The personal allowance has increased significantly under the Conservative governments. That has benefitted the poorest hugely.
    Freezing the point at which you change from basic rate to Higher rate has had no impact whatsoever on the poorest as they don't earn near that amount each year.
    Or are you saying those earning £50,001 are amongst the poorest?
    Oh and the margin is 20% on the excess income over the threshold so way less than an infinity % more tax.
    Oh come on, let's keep it sensible.
  • Except it hits the poorest hardest. People who were just under the tax threshold are paying an infinity % more tax, the ultra rich are paying a tiny % more tax. To be expected from this government TBH

    This feels like an odd way off looking at the unavoidable situation of someone starting to be liable for income tax when their income increases.

    "Infinite more tax" could easily be avoided by either abolishing the tax free threshold (currently a generous £12.5k, so that half of working age adults pay no income tax) or by not experiencing an increase in income.

    Both of these scenarios are far less preferable than having a pay rise and paying 20% income tax on the excess over £12.5k.

  • Jezyboy
    Jezyboy Posts: 3,004
    My hunch is that the average salary and house price numbers vary so much in the US that those two statistics are completely unhelpful.
  • Interesting article about "Bond Vigilantes".

    https://www.theguardian.com/business/2023/oct/26/ghastly-expensive-mess-bond-vigilantes-return-as-deficits-rise

    Or as James Carville, a former advisor to Bill Clinton, put it:

    "I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody."
  • Ho ho. I'm a cheapskate and don't subscribe to the FT. And tbh, I've known about Bond Vigilantes for decades even if Liz Truss was unaware of them.
  • rick_chasey
    rick_chasey Posts: 73,204
    edited October 2023
    Well yeah, your quote was from them mid 90s.

    They certainly killed off Truss pretty quickly.
  • I freely admit to knowing nothing about the bond markets but surely there is a difference between market sentiment (what the article descibes) and traders trying to short the market for personal gain (what the headline describes)?

    Anyway none of this matters because;
    sovereign currency
    debt far higher in Japan
    Interest rates at historically low levels
    The multiplier effect
    There is no downside to QE
    There is no limit to QE

    All of the above will overwhelm market sentimement and all will be fine so long as we borrow even more and call it investment.
  • rick_chasey
    rick_chasey Posts: 73,204
    edited October 2023

    I freely admit to knowing nothing about the bond markets but surely there is a difference between market sentiment (what the article descibes) and traders trying to short the market for personal gain (what the headline describes)?

    Anyway none of this matters because;
    sovereign currency
    debt far higher in Japan
    Interest rates at historically low levels
    The multiplier effect
    There is no downside to QE
    There is no limit to QE

    All of the above will overwhelm market sentimement and all will be fine so long as we borrow even more and call it investment.

    It's mainly a turn of phrase to illustrate that the bond market can have an outsized impact on the local politics; in that if it moves against a politician or a policy it can sink it quite quickly.

    It's used more often in the context of big EM scenarios where there are far fewer bondholders, enough that sometimes you can corale them in one room.

    There are also instances where a few big bond investors can hold EM governments over a barrel if they don't agree to certain politics etc.