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BrilloPad
13th August 2012, 08:05
Five years on, the Great Recession is turning into a life sentence - Telegraph (http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/9471018/Five-years-on-the-Great-Recession-is-turning-into-a-life-sentence.html)

The debt will have to be written off. Whether this done by inflation (1945-1952) or default (1930-1934) will be the great political battle of this decade. Pick your side. Pick your history.

Poll to follow.

Looks like savers are stuffed whatever.

aussielong
13th August 2012, 08:07
Five years on, the Great Recession is turning into a life sentence - Telegraph (http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/9471018/Five-years-on-the-Great-Recession-is-turning-into-a-life-sentence.html)

The debt will have to be written off. Whether this done by inflation (1945-1952) or default (1930-1934) will be the great political battle of this decade. Pick your side. Pick your history.

Poll to follow.

Looks like savers are stuffed whatever.

I was wondering when the doom would restart after the olympic break :laugh

KentPhilip
13th August 2012, 08:44
It's going to be inflation init. Because most of the cash is owned overseas by foreigners who don't vote in UK elections.

BrilloPad
13th August 2012, 08:46
It's going to be inflation init. Because most of the cash is owned overseas by foreigners who don't vote in UK elections.

And there are more feckless than careful who vote in the UK. I recjkon it is good to be feckless - in fact I might even start an online service for those who are not on the finer points of fecklessness.

SimonMac
13th August 2012, 08:49
On a serious note has anyone seen what happened to Iceland after their default, its not the doom and gloom that is going around the likes of Greece as their economy is only subject to their nation.

Icelandic Anger Brings Debt Forgiveness in Best Recovery Story - Bloomberg (http://www.bloomberg.com/news/2012-02-20/icelandic-anger-brings-record-debt-relief-in-best-crisis-recovery-story.html)

petergriffin
13th August 2012, 08:55
I've voted for default but in reality it's more complicated than this. In modern post-Lehman Bros economy there's no more deflation vs inflation but a constant financial repression, where interest rates are kept artificially low or even negative.

The only possible outcome of this policy is either a long agonizing Japanese-style deflation (the lost decades) or a 3rd world style proper default.

I root for the default because I have little paper money and I could survive decently for a few years selling my PM's, which will have skyrocketed by then.

BrilloPad
13th August 2012, 08:57
On a serious note has anyone seen what happened to Iceland after their default, its not the doom and gloom that is going around the likes of Greece as their economy is only subject to their nation.

Icelandic Anger Brings Debt Forgiveness in Best Recovery Story - Bloomberg (http://www.bloomberg.com/news/2012-02-20/icelandic-anger-brings-record-debt-relief-in-best-crisis-recovery-story.html)

Indeed. And they have even been able to borrow on the debt markets again.

As atw has pointed out though, there is not a huge disparity in their import/export like there is a Greece : so it would take them longer to recover. But I reckon in a year Greece would be fine. And it worries the ECB that if they boot Greece out then after a year the other latin countries will form an orderly queue.

Old Greg
13th August 2012, 13:25
Inflation.

Robinho
13th August 2012, 13:49
Default please

Back on the gold standard
Scrap the Bank of England

Everyone's life will be hell for a few years - many poor people and chavs will die

Then we're golden :smokin

BrilloPad
13th August 2012, 14:22
Default please

Back on the gold standard
Scrap the Bank of England

Everyone's life will be hell for a few years - many poor people and chavs will die

Then we're golden :smokin

But its very unfortunate for the poor people. The chavs no-one cares about.

Robinho
13th August 2012, 14:39
The chavs can be used as a cheap source of food for the poor in the meantime.

Scoobos
13th August 2012, 15:55
A good article I thought, especially this paragraph:

"Monetarists blame the ECB and the Fed for keeping money too tight in early to mid 2008, pushing a fragile credit system over the edge. They blame “pro-cyclical” regulators for aborting recovery ever since by forcing banks to raise asset ratios too fast. They are right on both counts.

Yet the `Austrian School’ is surely right as well to argue that a rise in debt ratios across the rich world from 167pc of GDP to 314pc in just thirty years was bound to end badly. There comes a point when extra debt draws down prosperity from the future. The future arrived in 2008."


I'm a bit miffed that, having never operated unethically with my personal finances, and been debt free, that economic policy seems to be to protect those that have taken more than they can afford - and also the companies too.

It seems that everyone who lived beyond their means is being helped out of the mess. I don't agree with this, how else will anyone learn?

Old Greg
13th August 2012, 15:57
A good article I thought, especially this paragraph:

"Monetarists blame the ECB and the Fed for keeping money too tight in early to mid 2008, pushing a fragile credit system over the edge. They blame “pro-cyclical” regulators for aborting recovery ever since by forcing banks to raise asset ratios too fast. They are right on both counts.

Yet the `Austrian School’ is surely right as well to argue that a rise in debt ratios across the rich world from 167pc of GDP to 314pc in just thirty years was bound to end badly. There comes a point when extra debt draws down prosperity from the future. The future arrived in 2008."


I'm a bit miffed that, having never operated unethically with my personal finances, and been debt free, that economic policy seems to be to protect those that have taken more than they can afford - and also the companies too.

It seems that everyone who lived beyond their means is being helped out of the mess. I don't agree with this, how else will anyone learn?

Ambrose is my favourite.

I'm afraid you made the wrong decision and should have moved into debt a while ago so it can be inflated away.

Scoobos
13th August 2012, 15:59
I'm afraid you made the wrong decision and should have moved into debt a while ago so it can be inflated away.

So now's the time to get a mortgage???

Old Greg
13th August 2012, 16:00
So now's the time to get a mortgage???

Who knows?

d000hg
13th August 2012, 16:04
If you have savings, what IS traditionally the right thing to do with your money when inflation is high relative to interest rates?

Scoobos
13th August 2012, 16:05
Quality comment too! ->

This tendency was particularly pronounced in the British economy, where the City of London exercised enormous power over the boardroom strategies of major companies, and which became overly focused on share price and insufficiently focused on long-term R&D and investment.

I see this being the same within Government itself , replace shareprice with GDP .

We need to look at ways to make the UK unique and competitive and invest in a future that's diversified and sustainable.

Robinho
13th August 2012, 16:15
Quality comment too! ->

This tendency was particularly pronounced in the British economy, where the City of London exercised enormous power over the boardroom strategies of major companies, and which became overly focused on share price and insufficiently focused on long-term R&D and investment.

I see this being the same within Government itself , replace shareprice with GDP .

We need to look at ways to make the UK unique and competitive and invest in a future that's diversified and sustainable.

It's simple, you go back to the gold standard and let the market decide the interest rates.

Much harder for banks to mess up things when they can't print money with a 0 reserve ratio.

Old Greg
13th August 2012, 16:17
It's simple, you go back to the gold standard and let the market decide the interest rates.

Much harder for banks to mess up things when they can't print money with a 0 reserve ratio.

That is indeed simple.

Robinho
13th August 2012, 16:20
That is indeed simple.

Well it won't be simple, only because it will reveal what an absolute state the country is in though. There will be no hiding it with inflation or ridiculous interest rates.

Old Greg
13th August 2012, 19:02
Well it won't be simple, only because it will reveal what an absolute state the country is in though. There will be no hiding it with inflation or ridiculous interest rates.

So how did clinging to the Glad Standard work out in the '30s?

SantaClaus
13th August 2012, 21:07
Who knows?

No-one on here, that's for sure!

Robinho
13th August 2012, 21:40
So how did clinging to the Glad Standard work out in the '30s?

They didn't cling onto the gold standard. They left it in 1933 and FDR embarked on a huge Keynesian binge causing a depression and the world is doing the very same thing today.

petergriffin
14th August 2012, 09:55
They didn't cling onto the gold standard. They left it in 1933 and FDR embarked on a huge Keynesian binge causing a depression and the world is doing the very same thing today.

Yes and no. They left the gold standard for the silver standard, which is probably healthier than the gold standard. Then they introduced the Glass Steagall Act in 1933 which was partially repealed in 1999 and that's where we are now!

petergriffin
14th August 2012, 09:56
Inflation.
No chance you're going to see any inflation for the next 20 years.

DodgyAccountant
14th August 2012, 10:18
If you have savings, what IS traditionally the right thing to do with your money when inflation is high relative to interest rates?

Precious metals.

BrilloPad
14th August 2012, 10:22
No chance you're going to see any inflation for the next 20 years.

I beg to differ. Lets come back in 20 years and see who is right.

I aim to have 300,000 posts by then......