A global recession is on the horizon - please read OP for mod warning - Page 269 (2024)

There is a lot of average people who employ cleaners so yes all the hike in average prices will affect them.

Your first line highlights the problem if hikes only force the recession.

There'll even more demand for supports with bankruptcies and all that for nought as energy prices won't be tamed as demand from other blocs continues.

What you've described is the act of appearing to be doing something, a placebo effectively considering ground level supports are needed. What's the point in inducing a regional recession when it won't quench global demand?

A big jump in oil after that statement today. Maybe they are planning on increasing production, you never know.

what I am saying is you have to raise rates or you end up in a way worse position than we are currently in. And when I say way worse I mean crippling inflation followed by the mother of all recessions if you don’t raise rates.

what you are suggesting by not raising rates to fight inflation is the equivalent of giving a unlimited credit card to a shopaholic.

People are being forced to borrow to survive the current hikes, that's counterproductive.

If hikes had been applied in early 2000s we might never have had the massive mortgage debt bubble implosion in 08.

Hikes make sense when inflation is being driven by credit, but that's not what's happening now.

Who is borrowing to deal with the increased cost of finance? That doesn't make any sense

Household debt seems to be falling instead of rising according to the central bank quarterly data but I could be reading it arseways like I often do with these things.

A serious issue for the west make no mistake about it.

Seems inevitable with the west's declining birth rates. Much harder to compete with the economic productivity of these emerging powers.

It's the Chinese doing what they always do, thinking 25-50 years down the road. Meanwhile look at the current crop of idiots the west has leading us and the supposedly greatest nation on earth has Joe Biden or Donald Trump to look forward to leading them for a few years. If that's the best the west can do it's no wonder the outlook is grim.

Then the cost of living supports!

The household energy subsidy is us borrowing from ourselves.

To be fair though the US has had its fair share of gobsh*tes in the Oval Office well before Biden or Trump. China could be facing the same crisis with demographics as the west, they're severely under populated in the young cohort. It's all a guessing game though, but this goes well beyond decisions made in the White House. This is just the natural progression of developed nations, less people having children and those who are usually sticking to one.

You can look at it as the West needing to keep up or it could just be seen as the rest catching up for their slice of the pie. Problem is we've eaten a lot of our own and theirs already.

Nothing a few boomerangs won't solve. Stopping exports of Adidas trainers, mars bars, parmesan cheese, Mercedes and champagne will soon sort them out. They will have the white flags out in a fortnight you watch.

No, its not. Its paid out of the state tax revenues, which have been bumper lately.

Nobody is borrowing to deal with the higher cost of finance.

It is tax diverted in response to rate rises if you want to be pedantic.

It's still taking borrowing if it's supposed to an a temporary measure and not cyclical funding.

Wasn't it outlined in Budget 2023? The measure is being paid for by tax receipts, not borrowing. I suppose you could say that it could be used to pay off debt previously accumulated but that is a stretch considering you could say the same about anything.

I know the covid supports were an emergency measure supported through ECB bonds, but someone with more knowledge than I would be better speaking to that.

"One in three private renters have been forced to borrow money to pay theirrentin the space of a month, shocking new figures show.

Over two million people have turned to credit cards, overdrafts, family members or even payday loans to meet landlords’ demands."

Shocking, to be honest.

You'd wonder what the situation is like here.

More to the point, you'd wonder how long this fiasco can last before a complete upending.

If you knew you could borrow 40k to buy a new car and you only had to repay 35k for a car that would be 50k if you bought in 5 years time. what do you think most people would do?

That example is quick calculation (back of a fa*g box) of inflation staying at 5% for 5 years.

If you don’t raise rates you end up with inflation been driven by credit. It makes no difference what caused it in day one.

Inflation wont be 5% for 5 years if anything even near to that happened the country is goosed.

The OP is saying that we shouldn’t raise rates to fight inflation. I am just highlighting what would happen in this scenario and being conservative by using 5%….I’m reality if central banks didn’t raise rates it would be way higher than 5%

Isn't it amazing how we should defer to financial sales people yet at the same time be considered competent enough to take on a multi decade financial debt product?

Project forward, we get an induced recession, yet inflation remains elevated because other rising trade blocs are driving energy demand regardless of what we do.

Do we make domestic energy supports permanent?

...or should we be investing heavily to become more independent of international energy markets, although we ll probably always need to import some of our energy requirements?

Honestly not sure what you mean, I only really grasped the last line and not saying this being a smart arse. On them being permanent, I don't think they are and i'd imagine the eventual decline of energy costs for households will see the reliance of supports reduced to the usual social welfare schemes as before. The planned additional support of €200 on top of the €600 already paid looks to be coming from windfall taxes on the energy company profits. Not that they won't factor that in when the gouge further.

Ok, forget I said borrowing and we'll just say funded by windfall taxes. But windfall taxes aren't permanent either.

My main point, and you've helped me evolve it, is that when a recession does arrive but inflation remains high because other global trade blocs sustain energy demand that will mean interest hikes will have been for nought.

The only way out of that as far as I can see is more alternatives to oil and gas energy energy. .

The interconnector with France is due in the coming years so some nuclear will help. France had one of the lower inflation rates because of that.

yea the interconnects are badly needed alright, its a pity we may never become a nuclear state ourselves, but this is the next best thing, its great to see the rapid expansion of renewables, it should have happened years ago, but better late.....

yup, we need to become as energy independent as we can, as its very likely energy markets may remain very unstable from here on in, and we re already feeling the pain that brings....

Fair point on the energy side of things but is this inflation all energy driven? I studied economics years ago and no doubt the very limited amont I know is long dated but surely the monetary policy that saw huge amounts of money introduced during covid had something to do with this. I recently looked at data that said otherwise but I just couldn't understand why that would be the case.

...its a significant proportion of our inflationary problems, but not entirely....

...i wouldnt be worrying about your previous economic studies, probably largely neoclassical, so largely meaningless....

Thank god for that because i'd run this country into the ground with the little I know.