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> Economic Crash 2017?
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Rooney
post Jul 29 2017, 11:46 PM
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It seems quite a few people are predicting the dollar is about to crash again in August 2017, obviously this will have a major knock-on effect across the world.

I am no economic expert, but the few people I have heard this off all work within finance so I am inclined to believe them. Especially with interest rates so low, loads of people seem to be borrowing more money than they can afford. Then there is the share market where companies are posting major losses, but still receiving millions of investment.

So are we going to have another crash this year? Or is it scaremongering? Will any effect be as bad as 2007/2008?
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Envoirment
post Jul 30 2017, 03:01 AM
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Scaremongering for now. Some have been predicting the dollar to crash for the last year or so and it's still yet to happen. It has fallen this year, however the dollar falling in value won't necessarily cause an economic crash. It usually goes in 6-10 year cycles of rising, sustaining and then falling.

What's more worrying is high levels of debt. Thanks to the low interest rates, many countries and people have borrowed huge amounts of money cheaply. Interest rate hikes could cause a bit of trouble, but they are needed. Interest rates being too low for too long imo. It discourages saving and fuels unsustainable borrowing.
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popchartfreak
post Jul 30 2017, 08:01 PM
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QUOTE(Envoirment @ Jul 30 2017, 04:01 AM) *
Scaremongering for now. Some have been predicting the dollar to crash for the last year or so and it's still yet to happen. It has fallen this year, however the dollar falling in value won't necessarily cause an economic crash. It usually goes in 6-10 year cycles of rising, sustaining and then falling.

What's more worrying is high levels of debt. Thanks to the low interest rates, many countries and people have borrowed huge amounts of money cheaply. Interest rate hikes could cause a bit of trouble, but they are needed. Interest rates being too low for too long imo. It discourages saving and fuels unsustainable borrowing.


I agree with your comments, and it is very disturbing that debt levels (both private and national) are eye-wateringly high despite (or not helped by) a decade of austerity. People and banks have learnt nothing. Banks, because they got away scot-free last time assume the tax payer will bail them again. Property prices are a major problem. Chuck in economic downturns coming in the UK from Brexit, once it starts biting in 2 years or so, and the future is looking bad for the UK.

Trump is already ruining the economic US recovery that Obama created, after only 6 months of failure and idiocy, so I would expect the dollar to struggle. This time the pound won't be refuge.
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5 Silas Frøkner
post Jul 30 2017, 09:42 PM
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Banks are remarkably more stable than they were in 2008, BoE stress testing has ensued this. The Q will be is how much of a decline can they handle before they enter meltdown. They should weather a recession, but if it's a big one I'm not sure they'll survive without cash from Middle East and China. (China is an economic bubble that I'm dreading bursting. Their debt to GDP ratio is terrifying. They'll collapse the entire global economic system overnight when that bursts)

Our main problem is Austerity. It's been hampering growth and wage growth, unsurprisingly to everyone with economic sense!! Seriously low interest rates and low inflation have been compensating for anaemic wage growth but that's being shown up now thanks to the rapid devaluation of GBP. BoE in a tough place with UK growth faltering (even Scotland outperformed rUK in Q1 ffs for the first time since the crash) and inflation rising and wages falling. Half the signs are calling for a rate rise, the other half are calling for a maintain. I can see us ending 2017 on 0.25% with the real possibility of a decrease in 2018 if we enter a recession.

I think the economy will limp along for the rest of the year and may enter a technical recession next year but one of those ones the Gov stats people can fake our way out of with some dodgy stats (like how the Osbourne triple dip magically disappeared), so won't be too bad by and large for people or banks.
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Doctor Blind
post Jul 30 2017, 09:53 PM
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QUOTE(Bairlas @ Jul 30 2017, 10:42 PM) *
I can see us ending 2017 on 0.5% with the real possibility of a decrease in 2018 if we enter a recession.


You really think Carney will increase from 0.25% - interest rates haven't risen in 10 years and I can't see it happening anytime soon as the anaemic growth in the economy - fuelled almost entirely by debt - would immediately start to be choked out and house prices would collapse as new mortgages plummeted and existing ones started to be defaulted on. We're stuck with 0.25% rates for the foreseeable IMO and it is going to screw over anyone who is currently under 45.
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5 Silas Frøkner
post Jul 30 2017, 10:06 PM
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Eeeek typo at the worst moment! I don't see a rate rise at all this year and I think we're more likely to see a 0.15% or 0% next year than a rise.
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Doctor Blind
post Jul 30 2017, 10:11 PM
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QUOTE(Bairlas @ Jul 30 2017, 11:06 PM) *
Eeeek typo at the worst moment! I don't see a rate rise at all this year and I think we're more likely to see a 0.15% or 0% next year than a rise.


Agreed.

Actually I quite like what Yellen has done at the Fed, by raising three times to 1% she has given the US a little more wriggle room once the inevitable slowdown comes either later this year or in 2018; however the Bank of England are well and truly fucked! biggrin.gif
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5 Silas Frøkner
post Jul 30 2017, 10:21 PM
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The ideal time for a rate rise never really presented itself imo. Worst case scenario we're facing down the barrel of negative interest rates, while fab for the already over inflated housing market it's horrific news for already f***ed savers.
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Envoirment
post Jul 31 2017, 01:46 AM
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Quite frankly it's absurd to have interest rates so low for so long. It really pisses me off to be honest. Relying on consumer spending and consumer debt for economic growth is just asking for a big bubble burst. It punishes the people who have the sense not to get themselves into debt to buy things they don't need.

I don't think we'll see interest rates cut at all. If anything I believe a rate rise is likely in 2018. Inflation doesn't seem to be as problematic thanks to the dollar's weakness and oil prices falling. But we'll see how long that lasts.

In terms of austerity I can understand why it was implemented. The tory government were given a budget deficit of nearly £150 billion thanks to the financial crisis which was almost 10% of GDP at the time. That's now fallen quite a bit and stands at less than 3% of GDP. Quite frankly it's better to sort the debt out sooner rather than later and the only way to make significant dents to it and to create a budget surplus is either to raise taxes or make cuts. I don't agree in the way the cuts have been done, but I do believe there can be a lot of savings by making things more efficient. Personally I think taxes should be raised for everyone in order to pay for public services - perhaps some sort of scaling tax increase across the bands. I think everyone should pay the same National Insurance rate too. Not to mention that tax dodging should be clamped down on, especially by big companies like Google/Apple/Starbucks etc.

Big infrastructure projects like Hinkley and HS2 should be scrapped and that money spent more wisely on upgrading existing infrastructure and creating new infrastructure which can generate electricity at a reasonable price. Nuclear is not the way to go for power generation. Especially a nuclear power plant financed mainly by France and China, both of which will be the ones reaping the profits.

In terms of the UK's economic growth, Q3 and Q4 usually have larger growth than Q1 & Q2. Particularly Q4 with the Christmas rush/black Friday etc. So we could see economic growth still be decent by the end of the year. There's still revisions of Q1 and Q2 to be made which could put them slightly higher.

The only "good" thing that I can see is that a transitional agreement for the UK's exit from the EU looks almost certain. And that trade talks are being made/discussed with other countries whilst EU negotiations go on. That should give us 4-5 years to create trade agreements with countries outside the EU, which will hopefully be ready to sign by that time.
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vidcapper
post Aug 7 2017, 09:08 AM
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QUOTE(Envoirment @ Jul 31 2017, 02:46 AM) *
Quite frankly it's absurd to have interest rates so low for so long. It really pisses me off to be honest. Relying on consumer spending and consumer debt for economic growth is just asking for a big bubble burst. It punishes the people who have the sense not to get themselves into debt to buy things they don't need.

I don't think we'll see interest rates cut at all.


How *can* they - we'll end up paying them to look after our savings! sad.gif


This post has been edited by vidcapper: Aug 7 2017, 09:08 AM
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5 Silas Frøkner
post Aug 7 2017, 09:22 AM
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Well it's not on 0% so it can be cut
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