this global economy problem

[TheMightyQuinn]

What I dont get, and I'm no financial guru but, the economy is a false, man made thing right? And now it's gone tits up which is bad. Is that not like me inventing an imaginary friend then crying cos he's pinched my missus and pissed on my cornflakes?

See, I'd just uninvent the friend at the point he pushed inside my girl friend thus saving me much grief.

Oh and Icke, yeah he knows the score.

 

[ElanJo]

And why is the US dollar so strong when the country is fucked?

It's rallied due to debt liquidation.

Once it starts to go back down tho it probably wont stop for quite some time.

 

[MCFCinUSA]

And why is the US dollar so strong when the country is fucked?

It's rallied due to debt liquidation.

Once it starts to go back down tho it probably wont stop for quite some time.

that's a great point.

also other countries are in even worse shape than the USA, us included, which you would expect to influence their currencies negatively; although I gave up trying to predict the FOREX markets on fundamentals a very long time ago.

the USA is likely to come out of recession sooner than most, and although it has some very serious problems, economists are still expecting it to pull through easier.

 

[Dubai Blue]

And also, everyone's skint in the UK. Why? Food's fairly cheap at the moment, the price of fuel has dropped. Wages haven't dropped, interests rates have plummeted so mortgage payments have gone down (if you're on a tracker). But still, everyone's skint. Where is the wage that they had a year ago, that covere3d everything suddenly become so little that people can't go out?

Obviously some people are a lot worse off (i.e. those have lost their jobs). However, the phenomenon you're talking about is largely psychological. People are reading the doom and gloom in the papers and seeing it on the telly. They go to the pub and all anyone talks about is impending financial armageddon. So despite them actually being better off, they become over cautious and stop spending.

It's almost a "keeping up with the Jones's" in reverse; "I see Frank's stopped going down to the pub, and Sarah doesn't go shopping anymore. Perhaps they know something we don't. Probably best we tighten the purse strings for a bit."

It becomes a self-fulfilling prophecy as the economy needs people to spend if it is to survive. The lowering of interest rates to practically 0% was designed to stimulate this spending, but all it seems to have done is confirmed everyone's suspicion that we're in a crisis, so they panic even more. It's a vicious circle.

Of course, there is also the problem that people currently have little job security, so they are choosing not to spend 80 quid on a night out because they might need that 80 quid to survive in a few months time.

PS IMO this crisis was allowed to happen so that the Governments could start to Nationalise Banks, and make it easier to devalue Sterling to be comparable with the Euro before telling us that we need to join the wider banking community !!

Don't be silly. Do you also believe the CIA was responsible for 9/11?

 

[ElanJo]

And also, everyone's skint in the UK. Why? Food's fairly cheap at the moment, the price of fuel has dropped. Wages haven't dropped, interests rates have plummeted so mortgage payments have gone down (if you're on a tracker). But still, everyone's skint. Where is the wage that they had a year ago, that covere3d everything suddenly become so little that people can't go out?

Obviously some people are a lot worse off (i.e. those have lost their jobs). However, the phenomenon you're talking about is largely psychological. People are reading the doom and gloom in the papers and seeing it on the telly. They go to the pub and all anyone talks about is impending financial armageddon. So despite them actually being better off, they become over cautious and stop spending.

It's almost a "keeping up with the Jones's" in reverse; "I see Frank's stopped going down to the pub, and Sarah doesn't go shopping anymore. Perhaps they know something we don't. Probably best we tighten the purse strings for a bit."

It becomes a self-fulfilling prophecy as the economy needs people to spend if it is to survive. The lowering of interest rates to practically 0% was designed to stimulate this spending, but all it seems to have done is confirmed everyone's suspicion that we're in a crisis, so they panic even more. It's a vicious circle.

Of course, there is also the problem that people currently have little job security, so they are choosing not to spend 80 quid on a night out because they might need that 80 quid to survive in a few months time.

PS IMO this crisis was allowed to happen so that the Governments could start to Nationalise Banks, and make it easier to devalue Sterling to be comparable with the Euro before telling us that we need to join the wider banking community !!

Don't be silly. Do you also believe the CIA was responsible for 9/11?

I agree, to a point, about the psychological damage, the whole "dont say the D word" etc, but if people are unaware that parts of their economy are in freefall, then the consequences could, and in most cases would, be even worse.

I think it has more to do with the bit I highlighted.

What I dont get, and I'm no financial guru but, the economy is a false, man made thing right? And now it's gone tits up which is bad. Is that not like me inventing an imaginary friend then crying cos he's pinched my missus and pissed on my cornflakes?

See, I'd just uninvent the friend at the point he pushed inside my girl friend thus saving me much grief.

Oh and Icke, yeah he knows the score.

The economy is a "false, man-made thing" in so far as the word is man-made and it is a word to describe human interactions with regards to producing,buying and selling etc. I have no idea how you would uninvent the economy :S

And also, everyone's skint in the UK. Why? Food's fairly cheap at the moment, the price of fuel has dropped. Wages haven't dropped, interests rates have plummeted so mortgage payments have gone down (if you're on a tracker). But still, everyone's skint. Where is the wage that they had a year ago, that covere3d everything suddenly become so little that people can't go out?

Obviously some people are a lot worse off (i.e. those have lost their jobs). However, the phenomenon you're talking about is largely psychological. People are reading the doom and gloom in the papers and seeing it on the telly. They go to the pub and all anyone talks about is impending financial armageddon. So despite them actually being better off, they become over cautious and stop spending.

It's almost a "keeping up with the Jones's" in reverse; "I see Frank's stopped going down to the pub, and Sarah doesn't go shopping anymore. Perhaps they know something we don't. Probably best we tighten the purse strings for a bit."

It becomes a self-fulfilling prophecy as the economy needs people to spend if it is to survive. The lowering of interest rates to practically 0% was designed to stimulate this spending, but all it seems to have done is confirmed everyone's suspicion that we're in a crisis, so they panic even more. It's a vicious circle.

Of course, there is also the problem that people currently have little job security, so they are choosing not to spend 80 quid on a night out because they might need that 80 quid to survive in a few months time.

PS IMO this crisis was allowed to happen so that the Governments could start to Nationalise Banks, and make it easier to devalue Sterling to be comparable with the Euro before telling us that we need to join the wider banking community !!

Don't be silly. Do you also believe the CIA was responsible for 9/11?

I thin that is abit of an unfair comparison. People in power have done alot of destructive things to gain(more), and stay in power. Governments are constantly molding economies, foreign and domestic, to enhance their status. It is much more common than false flag operations, which do happen - tho, I do not believe 9/11 was one of them (even if I do understand why some think it is)

 

[Danish Blue]

a few obsevations

the us dollar isnt particularly strong, it just feels that way to those in the uk because the pound is very weak.

as much as i love septic bashing as much as the next man, the us cannot shoulder the blame alone, it is only because of the size of there economy that they get a dissproportionate amount of the blame. Banking practices in the uk were no better, the uk govt chose to bail out the first major failure in the uk because it had the advantage of observing what happened in the us when they let lehmans go to the wall. Lending 6 times income and self certificating mortgages were freely available in the uk. Banks building whole balance sheets based on buy to let loans is not prubent banking. Sacking the guy who is telling you your bank is going to go tits up as in the case of RBS because he is rocking the boat and then have the government put the guy who sacked him in charge of a review of what went wrong doesnt seem that logical either.

the world has a vested interest in keeping the us afloat. Even the chinese finance minister has admitted that at present growth rates (and he was speaking when chinese growth was considerably higher) would take 20 years at least to fill the consumption hole left by the us, in simple terms, noone else is greedy enough, they need to practise at over consumption.

us govt paper is crap yielding crap and yet who buys it......if the chinese/japanese said we dont want to buy this low yielding junk anymore, its sayanora but they dont because they would get dragged down too.



so come on everyone lets inflate the bubble one last time and this time lets all remeber to get off before it bursts

 

[JohnMaddocksAxe]

I realise I'm a money simpleton..so bare with me BUT

If every country in the world is feeling the pinch, every economy is bolloxed, every country is heading down the swanny. WHY cant every country just agree to rip up all debts, get rid of all present monetary devices, burn all current money, print new money, set up a new system, and start again. A little like pressing reset on the games machine. Surely the problem the world is facing isn't due to owing money, its due to money not moving about. just start again...OK if a few banks lose out...who cares!!!!!!

The reason money isn't moving about is precisely because of people owing, and not being able to pay off, debts. Aswell as general economies (particularly the USA's economy - seeing how the crisis began there) being unsustainable 70-80% service based economies.

A new monetary policy is needed, banking system etc. Personally I think money needs to be made sound again by some kind of backing - gold, silver etc - to ensure the integrity of the currency and to keep government spending in check. A new decentralized banking system, whereby interest rates are set by the market and not some central "authority" , the Federal Reserve in the USA's case,

Basically we have to do the opposite of what we have been doing for the past couple of decades. Shrink government, and its burden on society, size/spending/power. Restore soundness to currency. Cut taxes massively. Let the market work and allow poorly run businesses to go bankrupt which then allows the more honest and/or competent people to take over. Allow recessions to play out (the reason why this one is so bad is because the US kept re-inflating bubbles, like the .com one etc), cut barriers to competition (ie. regulations) and generally cut back on central economic planning. The Western economies need to rebalance and start manufacturing products to sell. To do this people need to save.

I'd disagree with you that all the worlds economies are bolloxed. Most are, but some, like the Asian economies, have stronger foundations and are much more capable of working their way out of the crisis because they have a manufacturing base. Of course, if they continue the policies of creating "Zombie" banks and businesses then they will be as fucked as we will be. If we all keep rewarding bad business practices by printing up bail outs then there is a much worse crisis heading our way in the next decade.

And writing off debts will not go down well with those who are owed the green ;)

I'm not sure how you work a lot of that out.

The 'smaller government, less taxes, less regulation, 'let the market work' statement just seem to be the knee jerk reaction of any monetary policy/right wing man to everything.

Just as a lot of left wing/socialist people will automatically claim that the answer to everything is centralisation, nationalisation and state interference.

Anyway, the facts remain that this economic crisis was caused exactly by a severe lack of regulation and governement involvement in the city and financial markets. It's a bit rich to then try to pin the blame for it on too much government involvement.

As for getting out of the mess. Well, cutting taxes won't do much. Cutting interest rates, part of the same fiscal theory, has and will do nothing because of the pcyhological issues mentioned above. Cutting governement spending and involvement would have already seen the crisis be beyond recovery, as the banks would have gone to the wall, and you'll do well to find any serious economist who can see any other options for getting out of this than huge levels of government spending to boost the economy, create jobs, safeguard others and hope that in a few years it can return to normal levels.

I might be missing something, and I'm prepared to accept that I could be, but the above just sounds a bit like the cliched 'everything is the governement's fault - they want to take my taxes' point of view and seems to fly in the face of all the facts that have got us in this situation in the first place.

Don't tke that as me advocating nationalisation of everything, I'm not, but it's a funny time to be bleating about too much government interference, regulation and spending.

You might not have noticed, but even without your views being implemented, there are dozens of 'bad businesses' going to the wall every day, meaning that the market is currently doing a more than adequate job of 'freeing up space' as you put it. It hardly needs the implementation of John Redwood on speed policies to ensure that only the strong survive.

 

[ElanJo]

I realise I'm a money simpleton..so bare with me BUT

If every country in the world is feeling the pinch, every economy is bolloxed, every country is heading down the swanny. WHY cant every country just agree to rip up all debts, get rid of all present monetary devices, burn all current money, print new money, set up a new system, and start again. A little like pressing reset on the games machine. Surely the problem the world is facing isn't due to owing money, its due to money not moving about. just start again...OK if a few banks lose out...who cares!!!!!!

The reason money isn't moving about is precisely because of people owing, and not being able to pay off, debts. Aswell as general economies (particularly the USA's economy - seeing how the crisis began there) being unsustainable 70-80% service based economies.

A new monetary policy is needed, banking system etc. Personally I think money needs to be made sound again by some kind of backing - gold, silver etc - to ensure the integrity of the currency and to keep government spending in check. A new decentralized banking system, whereby interest rates are set by the market and not some central "authority" , the Federal Reserve in the USA's case,

Basically we have to do the opposite of what we have been doing for the past couple of decades. Shrink government, and its burden on society, size/spending/power. Restore soundness to currency. Cut taxes massively. Let the market work and allow poorly run businesses to go bankrupt which then allows the more honest and/or competent people to take over. Allow recessions to play out (the reason why this one is so bad is because the US kept re-inflating bubbles, like the .com one etc), cut barriers to competition (ie. regulations) and generally cut back on central economic planning. The Western economies need to rebalance and start manufacturing products to sell. To do this people need to save.

I'd disagree with you that all the worlds economies are bolloxed. Most are, but some, like the Asian economies, have stronger foundations and are much more capable of working their way out of the crisis because they have a manufacturing base. Of course, if they continue the policies of creating "Zombie" banks and businesses then they will be as fucked as we will be. If we all keep rewarding bad business practices by printing up bail outs then there is a much worse crisis heading our way in the next decade.

And writing off debts will not go down well with those who are owed the green ;)

I'm not sure how you work a lot of that out.

The 'smaller government, less taxes, less regulation, 'let the market work' statement just seem to be the knee jerk reaction of any monetary policy/right wing man to everything.

Just as a lot of left wing/socialist people will automatically claim that the answer to everything is centralisation, nationalisation and state interference.

Anyway, the facts remain that this economic crisis was caused exactly by a severe lack of regulation and governement involvement in the city and financial markets. It's a bit rich to then try to pin the blame for it on too much government involvement.

As for getting out of the mess. Well, cutting taxes won't do much. Cutting interest rates, part of the same fiscal theory, has and will do nothing because of the pcyhological issues mentioned above. Cutting governement spending and involvement would have already seen the crisis be beyond recovery, as the banks would have gone to the wall, and you'll do well to find any serious economist who can see any other options for getting out of this than huge levels of government spending to boost the economy, create jobs, safeguard others and hope that in a few years it can return to normal levels.

I might be missing something, and I'm prepared to accept that I could be, but the above just sounds a bit like the cliched 'everything is the governement's fault - they want to take my taxes' point of view and seems to fly in the face of all the facts that have got us in this situation in the first place.

Don't tke that as me advocating nationalisation of everything, I'm not, but it's a funny time to be bleating about too much government interference, regulation and spending.

You might not have noticed, but even without your views being implemented, there are dozens of 'bad businesses' going to the wall every day, meaning that the market is currently doing a more than adequate job of 'freeing up space' as you put it. It hardly needs the implementation of John Redwood on speed policies to ensure that only the strong survive.

THese "serious economists" are the same people who saw no crisis coming over the horizon. The same people who saw monetary policy as "spactacular" and the same people, who once the recession was here, said it'd be "very mild". The same people who see nothing wrong with a 70-80% based service economy. The same people who think the dollar is infallible. Trust them at your own peril.
Cutting taxes (and Gov. spending) is the way to get out of a recession. It is the true market, not some artificial government creation. You think a few people in Washington or London know how to best run an economy? I don't, and neither does history. To get out of a recession and actually be on firm ground after it is over you want the people to spend. If you had more money in your pocket, you'd spend it alot better than Brown or Obama could. Without Government printing up money, prices in the market will stay lower for longer and it wouldn't take too long to see this crisis through. It'd be tough for a while, but we've gotta man up and take it. It's the consequence of living above our means, on cheap unsustainable credit, not saving and spending all our money on things that cannot make a return. Too many McDonald's and not enough Production. The current economy is completely out of whack and unsustainable, anyone who wants to prop it up is just either going to prolong the pain or merely put it off and in the meantime have it bubble up into something much worse. Government caused this, make no mistake, by propping up former bubbles and encouraging bad business practices. Regulation merely acts as a barrier to competition. THe amount of red tape a small business has to jump through to even get set up is crazy and only helps to maintain the status quo, thus why corporations continue to lobby for regulations.

It's fine if you disagree, but I would advise you to look at putting some of your money into commodities(gold is going to rocket) and maybe agriculture. You could make a nice bit of money if you even invested in McDonalds (aslong as you get out quite quickly) since more people are going to be going to McDonalds than nice restaurants for a while.

 

[goatfood]

Wages haven't dropped

erm...mine have, plenty of us who still have jobs and are living under the threat of redundancy have had to take a wage cut

interests rates have plummeted so

now what income I have from my savings to supplement my wages is non existant

;-)

 

[jimharri]

Wages haven't dropped

Speak for yourself. I've been on a three day week since before Christmas (effectively, a 40% drop in wages). Now we've got a meeting with management next week, and the rumour is that we're facing anything from a 10-20% actual wage cut. I wouldn't mind living in your world Scall.