Lady Star Posted June 20, 2011 Share Posted June 20, 2011 So I'm not a particularly intelligent woman but not a thicky either and am finding it hard to get my head around why business has dropped off so badly in the last few months? It seemed things economy wise were starting to get better but now there's nothing out there! How long is this likely to carry on? It was like this for most of the last tory government - Hopefully we won't have a further ten years of this, eh? The UK has a habit of choosing bad governments Link to comment Share on other sites More sharing options...
crookesey Posted June 20, 2011 Share Posted June 20, 2011 If the government ordered the state owned banks to start lending to businesses and homebuyers we would fly out of this recession. Link to comment Share on other sites More sharing options...
GrapeApe Posted June 20, 2011 Share Posted June 20, 2011 Labour were taking us out of the recession...now this shower are taking us back into one....but only deeper.. ....and longer Link to comment Share on other sites More sharing options...
Grandad.Malky Posted June 20, 2011 Share Posted June 20, 2011 Do you believe that he worlds 4th/5th richest country really needs aid money sent to us? Hold on I thought we were skint ……it must be true didn’t the incoming party find a light hearted joke to that effect and turn it into national headlines. Link to comment Share on other sites More sharing options...
Cavegirl Posted June 20, 2011 Share Posted June 20, 2011 I think that the main reason the economy has slowed in the last few months is because the US is preparing for the end of QE2 (its second round of quantitative easing) and many banks, investors and traders are very worried about what the consequence of this will be. http://www.marketwatch.com/story/bernanke-to-tell-investors-public-dont-jump-2011-06-20?reflink=MW_news_stmp Many investors have been quietly pulling out of stocks since March- Pimco, for example, previously the largest holder of US treasury bonds has recently sold its entire stock in the belief that the market rally will end this month. http://www.reuters.com/article/2011/03/09/us-pimco-debt-idUSTRE7285M020110309 The huge amount of additional new dollars (estimated at about $14 trillion) in the system that have accrued from both the bank bail out and the quantitative easing programs have essentially halved the value of an already heavily devalued dollar and this has led to an increase in commodity prices globally because commodities are priced in dollars. http://www.theglobeandmail.com/report-on-business/it-looks-like-the-feds-qe-cruise-has-docked/article2066884/ This extra inflation raised food prices and giave speculators more money to purchase various food stocks as a hedge against the inflation they knew would arise as QE2 progressed. This, alongside last year's bad harvests has reduced the supply of food globally thus further pushing up already strained food prices. The lack of transparency in global food production has meant that individual nations find it hard to determine to what extent speculation has been to blame for the price hikes as opposed to lower food production. http://www.moneycontrol.com/news/world-news/g20-farm-talks-set-to-focusfood-shun-markets_558706.html A similar problem is occurring in the oil markets because oil is also priced in dollars. Speculators have purchased oil stocks as a hedge against inflation, but OPEC (world oil producers) are refusing to increase their production (despite very high prices which would offer them a high return) leading many to wonder whether they are actually capable of supplying more oil, certainly the supply of light sweet crude has been declining since 2005. http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/8564508/Oil-price-jumps-as-Opec-holds-production-quotas.html These rising commodity prices have impacted most heavily upon the developing nations and have been the primary cause of the Middle East uprisings, which in turn have caused the shutdown of oil refineries, mining operations and agriculture which has caused further commodity price increases. http://www.thenational.ae/business/energy/oil-companies-play-a-waiting-game-on-libyan-crude In addition to all of this Europe is currently braced for another round of bailouts to Greece and investors and banks are wary of releasing their funds at this time. Ireland, Spain, Italy and Portugal are also still in a terrible financial condition. http://www.sharecast.com/cgi-bin/sharecast/story.cgi?story_id=4304629 Add to this the enormous losses of Japan since the tsunami, which was the world's third largest economy and really we're currently just waiting for the next economic disaster to hit. Far too much US (and UK) money has been created these past few years with absolutely no real wealth or productivity to back it up. It's been done on purpose because it is possible to inflate your debt away- if a government owes $50, but then it inflates its currency until a dollar's new value in real terms is only 50 cents then it can pay its $50 debt whilst only really offering $25 worth of value. The US is essentially cheating the Chinese to whom it owes most of its debt, and unfortunately this tactic causes everyone to suffer. It's a result of all these things and others that's caused the economy to grind to a halt. See it as the global community holding their breath until QE2 has ended and the economic results of that are known. Link to comment Share on other sites More sharing options...
dosxuk Posted June 20, 2011 Share Posted June 20, 2011 If the government ordered the state owned banks to start lending to businesses and homebuyers we would fly out of this recession. But wasn't lending money to people who could ill afford it what caused half the problem in the first place? Link to comment Share on other sites More sharing options...
crookesey Posted June 20, 2011 Share Posted June 20, 2011 But wasn't lending money to people who could ill afford it what caused half the problem in the first place? Who said anything about 'lending money to people who could ill afford it'? Also I very mistakenly thought that the investment arms of the banks, taking on billions of pounds worth of sub prime packaged mortgage debt, caused the problem in the first place. Silly me. Link to comment Share on other sites More sharing options...
altus Posted June 20, 2011 Share Posted June 20, 2011 Who said anything about 'lending money to people who could ill afford it'? Also I very mistakenly thought that the investment arms of the banks, taking on billions of pounds worth of sub prime packaged mortgage debt, caused the problem in the first place. Silly me. You can't have "sub prime packaged mortgage debt" without lending to people who are unlikely to be able to pay you back. Link to comment Share on other sites More sharing options...
TJC1 Posted June 20, 2011 Share Posted June 20, 2011 Uh, no, actually, it isn't. And that's exactly the point. In the UK, there are very few people indeed who only have 10x the cost of a loaf of bread. That would be approx £10. There aren't many people - thanks to the welfare state, apart from anything else - who only have a tenner as their entire wealth/assets. However, there are many people in poorer countries who probably only possess the cost of ten loaves of bread. And that just illustrates my point. The point is wealth is relative to the cost of living. If we took UK wages and bought goods in Sweden would you feel rich or poor? you'd feel poor. Link to comment Share on other sites More sharing options...
TJC1 Posted June 20, 2011 Share Posted June 20, 2011 But if everyone else you know has less money than you and can't afford that loaf of bread, you will still feel rich because you can. Yep. Wouldnt disagree. Link to comment Share on other sites More sharing options...
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