1992-7 only 100x worse with the economy and living standards tanking, going the opposite way from the Major years.
The next GE result will be cataclysmic for the tories.
Starmer is no Blair and Labour are no where near as strong as New Labour was running up to 1997.
Conservatives will lose the nect election of course but Labour will only get a small majority. The next election will be 1974 not 1997 IMO.
Lets hope that weirdo Andrew Bridgen MP is finished!
BUT. One difference between the challenge of Blair and that of Starmer.
In 1997 there was no truly successful, competent Labour government in living memory. The last Callaghan government had ended at the IMF, the last of reign of Wilson was more than 2 decades ago and his heyday was 3 decades ago. So Blair faced a major credibility gap which he had to work hard, and successfully, to close.
Blair and Brown were more recent and although the financial crisis was a blot on the end of Brown's rule both he and Blair are still remembered as competent administrators who didn't immediately plunge the country into a sterling or debt crisis. Blair's biggest black mark was Iraq. So I think it's easier for potential Labour voters now to imagine a Blair-style government with decent economic growth and improving public services.
...Campbell dares to praise one of the most corrupt initiatives of Rama’s entire first term as prime minister, the illegal destruction of the monumental Qemal Stafa stadium, the transfer of public land to a private corporation, and a completely opaque procurement process that featured all the familiar names from Rama’s clientele.
I wonder what Campbell made of this Remain poster:
So that’s why so many Albanians are coming over! Leave won and now we’re like a home away from home for them.
The one true bastion of Socialism. Long live our Dear Leader and his Revolutionary Party!
With the World Cup coming round (sadly just missed out on qualification):
The Russian withdrawal from Kherson looks a bit too easy for Ukraine. Hmm
In six months time you'll be saying that about their withdrawal from Sevastopol.
Truly the most catastrophic self-inflicted blunder by a so-called "major power" in many decades.
Except that Zelensky himself is suspicious
“Zelensky: "I don't see them running away from Kherson. This is an information attack. I can't divulge everything. This is an operation to make us go there, to make us pull forces from other dangerous fronts there. They are not ready to leave Kherson."”
The USSR was essentially a Russian empire. When that empire collapsed, Russia lost a massive amount of its internal prestige and pride; Only its nuclear capabilities keep it as a world power, with a pre-war economy smaller than Canada's (and which will be smaller now).
Too many people in Russia - or at least the power brokers in the cities - want Russia to be a power once again. They could have done that the hard way, by using their many advantages - e.g. material and human resources; its massive industrial base - to become a power over he last two decades. Instead, they did the easy thing, stole and wasted those advantages.
But all that stolen loot, stolen talent and stolen time has not brought them the position they desire in the world. Instead of a might colossus, they are a mighty joke. This war is a toddler's stop - but sadly, a toddler with nuclear weapons.
TL;DR: Russia is butt-burt.
Totally agreed.
Its worth noting too that while the USSR was essentially a Russian empire, Russia itself is essentially a Muscovite empire.
Moscow is a parasite that drains the energy and wealth of other Russian regions, which prevents Russia from developing to a power it could be.
The logic applied, was visible when the Ukranians found No.1 uniforms in the first tanks across the border at Chernobyl.
The plan was to race to Kiev and hold the parade a week later, just as they did in Crimea in 2014.
They didn’t expect the overwhelming response they got from Ukraine and the international community.
So the entire Russian plan was predicated on Ukraine and the international community learning nothing whatsoever from 2014? Brilliant!
20 plus years of being told that Vladimir Putin is a clever and wily foe, when in reality he is an absolute chump.
That, and 20 years of under-investment and corruption in military procurement and maintenance, meaning that the reality of military capability on the ground was very substantially different, to the impression of such capability and serviceability in the Kremlin.
1992-7 only 100x worse with the economy and living standards tanking, going the opposite way from the Major years.
The next GE result will be cataclysmic for the tories.
Starmer is no Blair and Labour are no where near as strong as New Labour was running up to 1997.
Conservatives will lose the nect election of course but Labour will only get a small majority. The next election will be 1974 not 1997 IMO.
Lets hope that weirdo Andrew Bridgen MP is finished!
BUT. One difference between the challenge of Blair and that of Starmer.
In 1997 there was no truly successful, competent Labour government in living memory. The last Callaghan government had ended at the IMF, the last of reign of Wilson was more than 2 decades ago and his heyday was 3 decades ago. So Blair faced a major credibility gap which he had to work hard, and successfully, to close.
Blair and Brown were more recent and although the financial crisis was a blot on the end of Brown's rule both he and Blair are still remembered as competent administrators who didn't immediately plunge the country into a sterling or debt crisis. Blair's biggest black mark was Iraq. So I think it's easier for potential Labour voters now to imagine a Blair-style government with decent economic growth and improving public services.
The other (potential) difference is that the Tories in 1997 probably got some credit for the start of the economic boom years. The Tory Party of 1997 was clapped out, distrusted and felt not to have the right priorities, but it was at least managing things pretty well.
The risk for the Tory Party of 2022 is that it won’t have that luxury in 2 years time. So maybe Labour won’t need to be Blair or Brown in order to get a big victory next time - their opponents, in comparison, may look worse than Major’s government.
I reckon the BoE chickens out again and goes for 50bps.
I don't really go with all the slagging off the BoE. They aren't great, bit timid and behind the curve, but if we're going to cast around for a blame figure for the mess we're in I'd more go with the government. They've been shocking for the last few years.
But even that's unfair imo. We're transitioning out of a long period of near zero interest rates and QE propping us up after the financial crash. That was bound to be painful, then add the pandemic and Putin on top and you have a dire situation - stressed public finances and inflation and a poor growth outlook. 3 lemons.
The problem was not ticking up rates slowly over the past decade. A quarter-point every six months since 2015 or 2016, and we’d be in a much stronger position now.
Governments have loved rates being zero, they’ve been able to borrow and print almost at will, with seemingly none of the predicted inflation coming to fruition, and all of them have done just that. Well now the bill has come in, and the next few years are going to be horrible as those bills need to be paid.
Agree to an extent with the underlying sentiment. But the BoE brief is inflation and there wasn't any to speak of for a long time. As for the politicians they don't look beyond elections - and for good measure our lot got bogged down in the Brexit swamp for years on end. We just don't have a long term or a "planning" mindset when it comes to any aspect of economic policy.
There was huge inflation to speak of for a very long time. Inflation never went away, it just wasn't in the CPI basket that the Bank chose to look at.
The inflation went to house prices so some people mistakenly considered that "good" inflation and not "bad" inflation.
Increases in asset values, while most consumer goods prices are flat, is not a situation you can improve with interest rates. Greenspan though so and was tragically misguided.
Housing is a consumer price, people paying rent are not buying an asset when they pay that price, but it is just a consumer price the discredited CPI ignores.
Ignoring that was even more tragically misguided than any mistakes Greenspan may have made.
Most households don't pay current prices for the housing they use. Most mortgage owners agreed a price years ago, and outright owners and social tenants don't pay current prices at all. So you cannot easily control housing costs using inflation tools.
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
The logic applied, was visible when the Ukranians found No.1 uniforms in the first tanks across the border at Chernobyl.
The plan was to race to Kiev and hold the parade a week later, just as they did in Crimea in 2014.
They didn’t expect the overwhelming response they got from Ukraine and the international community.
So the entire Russian plan was predicated on Ukraine and the international community learning nothing whatsoever from 2014? Brilliant!
20 plus years of being told that Vladimir Putin is a clever and wily foe, when in reality he is an absolute chump.
That, and 20 years of under-investment and corruption in military procurement and maintenance, meaning that the reality of military capability on the ground was very substantially different, to the impression of such capability and serviceability in the Kremlin.
Then again, they so very nearly won in late February. If a few things had gone differently, e.g. Hostomel airport had been captured, then a Russian-compliant regime might well be ruling in Kyiv now.
I think it was a lot closer than many of us make out. What's screwed Russia is their failure to win in the first week, and their utter lack of preparedness for a long war.
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
The USSR was essentially a Russian empire. When that empire collapsed, Russia lost a massive amount of its internal prestige and pride; Only its nuclear capabilities keep it as a world power, with a pre-war economy smaller than Canada's (and which will be smaller now).
Too many people in Russia - or at least the power brokers in the cities - want Russia to be a power once again. They could have done that the hard way, by using their many advantages - e.g. material and human resources; its massive industrial base - to become a power over he last two decades. Instead, they did the easy thing, stole and wasted those advantages.
But all that stolen loot, stolen talent and stolen time has not brought them the position they desire in the world. Instead of a might colossus, they are a mighty joke. This war is a toddler's stop - but sadly, a toddler with nuclear weapons.
TL;DR: Russia is butt-burt.
I don't disagree, but we were happy for the looters to bring their loot over here. We offered them supercars, superyachts, superbabes ... anything in exchange for the loot. Russia is undoubtedly a crap country but much of the wealth they could have enjoyed is now sitting in the west thanks to the looters. Poor Russian conscripts may be vaguely aware of this.
An interesting diversion is to visit a random Russian town on Google Streetview. Rostov-on-Don, for example. Half a mile of tarmac downtown, the rest is dirt roads with no footpaths. As a world power it doesn't even qualify as a developed country.
I reckon the BoE chickens out again and goes for 50bps.
I don't really go with all the slagging off the BoE. They aren't great, bit timid and behind the curve, but if we're going to cast around for a blame figure for the mess we're in I'd more go with the government. They've been shocking for the last few years.
But even that's unfair imo. We're transitioning out of a long period of near zero interest rates and QE propping us up after the financial crash. That was bound to be painful, then add the pandemic and Putin on top and you have a dire situation - stressed public finances and inflation and a poor growth outlook. 3 lemons.
The problem was not ticking up rates slowly over the past decade. A quarter-point every six months since 2015 or 2016, and we’d be in a much stronger position now.
Governments have loved rates being zero, they’ve been able to borrow and print almost at will, with seemingly none of the predicted inflation coming to fruition, and all of them have done just that. Well now the bill has come in, and the next few years are going to be horrible as those bills need to be paid.
Agree to an extent with the underlying sentiment. But the BoE brief is inflation and there wasn't any to speak of for a long time. As for the politicians they don't look beyond elections - and for good measure our lot got bogged down in the Brexit swamp for years on end. We just don't have a long term or a "planning" mindset when it comes to any aspect of economic policy.
There was huge inflation to speak of for a very long time. Inflation never went away, it just wasn't in the CPI basket that the Bank chose to look at.
The inflation went to house prices so some people mistakenly considered that "good" inflation and not "bad" inflation.
Increases in asset values, while most consumer goods prices are flat, is not a situation you can improve with interest rates. Greenspan though so and was tragically misguided.
Housing is a consumer price, people paying rent are not buying an asset when they pay that price, but it is just a consumer price the discredited CPI ignores.
Ignoring that was even more tragically misguided than any mistakes Greenspan may have made.
Most households don't pay current prices for the housing they use. Most mortgage owners agreed a price years ago, and outright owners and social tenants don't pay current prices at all. So you cannot easily control housing costs using inflation tools.
Rent absolutely is a current price and should be fully incorporated within inflation figures.
Not every good that is in the CPI basket is bought by everyone, but they still get incorporated, rent is paid by a significant portion of the country and is a price not an asset.
Simply turning a blind eye to a portion of prices, because those prices aren't paid by everyone, or its all just too difficult, means you're using a misleading and fallacious figure for inflation.
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
Every time I have doubts about Labour winning a majority at the next election I remember just how bad the economy is going to get.
As we're frequently told, the great thing about FPTP is that we can throw the bums out.
Of course it would be better all round if Labour had a compelling convincing vision to improve the lot of Mr, Mrs and Mx Voter.
But it's very likely that "we haven't just failed in an inescapable way" could be the entirety of the Labour manifesto in 2024 and that would be enough.
I reckon the BoE chickens out again and goes for 50bps.
I don't really go with all the slagging off the BoE. They aren't great, bit timid and behind the curve, but if we're going to cast around for a blame figure for the mess we're in I'd more go with the government. They've been shocking for the last few years.
But even that's unfair imo. We're transitioning out of a long period of near zero interest rates and QE propping us up after the financial crash. That was bound to be painful, then add the pandemic and Putin on top and you have a dire situation - stressed public finances and inflation and a poor growth outlook. 3 lemons.
The problem was not ticking up rates slowly over the past decade. A quarter-point every six months since 2015 or 2016, and we’d be in a much stronger position now.
Governments have loved rates being zero, they’ve been able to borrow and print almost at will, with seemingly none of the predicted inflation coming to fruition, and all of them have done just that. Well now the bill has come in, and the next few years are going to be horrible as those bills need to be paid.
Agree to an extent with the underlying sentiment. But the BoE brief is inflation and there wasn't any to speak of for a long time. As for the politicians they don't look beyond elections - and for good measure our lot got bogged down in the Brexit swamp for years on end. We just don't have a long term or a "planning" mindset when it comes to any aspect of economic policy.
There was huge inflation to speak of for a very long time. Inflation never went away, it just wasn't in the CPI basket that the Bank chose to look at.
The inflation went to house prices so some people mistakenly considered that "good" inflation and not "bad" inflation.
Increases in asset values, while most consumer goods prices are flat, is not a situation you can improve with interest rates. Greenspan though so and was tragically misguided.
Housing is a consumer price, people paying rent are not buying an asset when they pay that price, but it is just a consumer price the discredited CPI ignores.
Ignoring that was even more tragically misguided than any mistakes Greenspan may have made.
Most households don't pay current prices for the housing they use. Most mortgage owners agreed a price years ago, and outright owners and social tenants don't pay current prices at all. So you cannot easily control housing costs using inflation tools.
Rent absolutely is a current price and should be fully incorporated within inflation figures.
Not every good that is in the CPI basket is bought by everyone, but they still get incorporated, rent is paid by a significant portion of the country and is a price not an asset.
Simply turning a blind eye to a portion of prices, because those prices aren't paid by everyone, or its all just too difficult, means you're using a misleading and fallacious figure for inflation.
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
2007, but Gordon Brown changed inflation from RPI which includes housing to the discredited CPI which does not, and Tory Chancellors have kept that change as it fraudulently pretended inflation had gone away.
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
And a European war. And the after effects of a global plague. And an energy crisis
I reckon the BoE chickens out again and goes for 50bps.
I don't really go with all the slagging off the BoE. They aren't great, bit timid and behind the curve, but if we're going to cast around for a blame figure for the mess we're in I'd more go with the government. They've been shocking for the last few years.
But even that's unfair imo. We're transitioning out of a long period of near zero interest rates and QE propping us up after the financial crash. That was bound to be painful, then add the pandemic and Putin on top and you have a dire situation - stressed public finances and inflation and a poor growth outlook. 3 lemons.
The problem was not ticking up rates slowly over the past decade. A quarter-point every six months since 2015 or 2016, and we’d be in a much stronger position now.
Governments have loved rates being zero, they’ve been able to borrow and print almost at will, with seemingly none of the predicted inflation coming to fruition, and all of them have done just that. Well now the bill has come in, and the next few years are going to be horrible as those bills need to be paid.
Agree to an extent with the underlying sentiment. But the BoE brief is inflation and there wasn't any to speak of for a long time. As for the politicians they don't look beyond elections - and for good measure our lot got bogged down in the Brexit swamp for years on end. We just don't have a long term or a "planning" mindset when it comes to any aspect of economic policy.
There was huge inflation to speak of for a very long time. Inflation never went away, it just wasn't in the CPI basket that the Bank chose to look at.
The inflation went to house prices so some people mistakenly considered that "good" inflation and not "bad" inflation.
Increases in asset values, while most consumer goods prices are flat, is not a situation you can improve with interest rates. Greenspan though so and was tragically misguided.
Housing is a consumer price, people paying rent are not buying an asset when they pay that price, but it is just a consumer price the discredited CPI ignores.
Ignoring that was even more tragically misguided than any mistakes Greenspan may have made.
Most households don't pay current prices for the housing they use. Most mortgage owners agreed a price years ago, and outright owners and social tenants don't pay current prices at all. So you cannot easily control housing costs using inflation tools.
Rent absolutely is a current price and should be fully incorporated within inflation figures.
Not every good that is in the CPI basket is bought by everyone, but they still get incorporated, rent is paid by a significant portion of the country and is a price not an asset.
Simply turning a blind eye to a portion of prices, because those prices aren't paid by everyone, or its all just too difficult, means you're using a misleading and fallacious figure for inflation.
Aren’t housing costs in RPI?
Which in no small part is why RPI has been consistently higher than CPI but Chancellors from Brown onwards have pretended that CPI is better thus pretending thus pretending inflation was lower than it really is by excluding from the calculation the single biggest cost in most households budget.
The BOE recession forecast might be a case of frightening the public into cutting their spending and so helping to reduce inflation more quickly .
I’m not sure what the point is of putting out these recession forecasts unless it’s for that reason .
They put the forecast out because it shows what they expect to happen and it's their job to explain their policy decisions with respect to their expectations for the economy. There is nothing more subtle or strategic going on. And in fact their forecasts don't exactly show what they think will happen, but what they expect would happen if interest rates go up as much as the market is pricing. Their view is that that market pricing is too aggressive (and do the recession won't be this bad). In my opinion it would be better to use their own rate expectations in the forecast but they have historically been unwilling to do that for reasons that I don't fully understand.
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
And a European war. And the after effects of a global plague. And an energy crisis
1992-7 only 100x worse with the economy and living standards tanking, going the opposite way from the Major years.
The next GE result will be cataclysmic for the tories.
Starmer is no Blair and Labour are no where near as strong as New Labour was running up to 1997.
Conservatives will lose the nect election of course but Labour will only get a small majority. The next election will be 1974 not 1997 IMO.
Lets hope that weirdo Andrew Bridgen MP is finished!
BUT. One difference between the challenge of Blair and that of Starmer.
In 1997 there was no truly successful, competent Labour government in living memory. The last Callaghan government had ended at the IMF, the last of reign of Wilson was more than 2 decades ago and his heyday was 3 decades ago. So Blair faced a major credibility gap which he had to work hard, and successfully, to close.
Blair and Brown were more recent and although the financial crisis was a blot on the end of Brown's rule both he and Blair are still remembered as competent administrators who didn't immediately plunge the country into a sterling or debt crisis. Blair's biggest black mark was Iraq. So I think it's easier for potential Labour voters now to imagine a Blair-style government with decent economic growth and improving public services.
The other (potential) difference is that the Tories in 1997 probably got some credit for the start of the economic boom years. The Tory Party of 1997 was clapped out, distrusted and felt not to have the right priorities, but it was at least managing things pretty well.
The risk for the Tory Party of 2022 is that it won’t have that luxury in 2 years time. So maybe Labour won’t need to be Blair or Brown in order to get a big victory next time - their opponents, in comparison, may look worse than Major’s government.
Brown didn't win a general election. He led his party into exactly one, which he ballsed up by insulting a voter behind her back. If you listen to the tone of his voice, he clearly found it painful and tiresome to have to listen to a voter, who always spoke to him politely - and this was during an election campaign! Imagine working with an idiot like that! Cameron and Johnson were both notoriously lazy in office, but if you can't handle the heat of an election campaign then stay out of the kitchen. Nobody wants to reprise Brown during an election.
As for a sterling crisis, such a tiny proportion of the electorate even know what that means. They understand inflation, though, even if these days it's not called inflation any more, because "inflation" sounds like something you can do something about (prices going up? real income falling? then demand higher salaries to keep up with prices!), whereas "cost of living crisis" sounds like something that's happening on the telly mostly - this week's issue for prissy types to debate with each other about.
Blair and Thatcher on the other hand both won every general election they ever fought.
I agree that if the Tories are going to lose the next election they will go down rather in the manner that Major did. But the catch is that that's a huge great Spartan "if". The Tories will win the next election. All they need do is play the immigration card.
Is there somewhere I can sell the Labour minus Tory voteshare gap? I suspect the "experts" are getting this completely wrong. I'd love to sell it at ~25pp if a market is currently assessing it so absurdly.
“The higher the exposure to political conservatism, the higher the COVID-19 mortality rates and stress on hospital intensive care unit (ICU) capacity, according to a new study from Harvard T.H. Chan School of Public Health.”
Sunak’s tactic for 2024 is going to have to be twofold
1. Convince voters that although you have guided the country through bad economic times (caused or at least worsened by your party) you have their best interests at heart and have managed things competently and fairly since then.
2. That deep down people’s preference is for a Tory government - I.e as much as there has been mistakes and mismanagement most peoples sensibilities lie with the Tories, not Labour.
He also needs luck. A lot of it. Resolution in Ukraine and a stabilisation in the world economy is probably a must for him, and it is largely outwith his control.
Number 1 is going to be a hard sell given the issues that the country finds itself in. If just one of his/Hunt’s budgets is seen as being unfair or unjust then it will probably remove any chance of success on that front. Given the state of the economy and the unpopular decisions that have to be made, it is a ludicrously hard objective to meet.
Bailey looks like he's screwing up in real time, sterling absolutely tanking. I can't think of a more ill suited BoE governor. Not up to the task at all.
The logic applied, was visible when the Ukranians found No.1 uniforms in the first tanks across the border at Chernobyl.
The plan was to race to Kiev and hold the parade a week later, just as they did in Crimea in 2014.
They didn’t expect the overwhelming response they got from Ukraine and the international community.
So the entire Russian plan was predicated on Ukraine and the international community learning nothing whatsoever from 2014? Brilliant!
20 plus years of being told that Vladimir Putin is a clever and wily foe, when in reality he is an absolute chump.
That, and 20 years of under-investment and corruption in military procurement and maintenance, meaning that the reality of military capability on the ground was very substantially different, to the impression of such capability and serviceability in the Kremlin.
Then again, they so very nearly won in late February. If a few things had gone differently, e.g. Hostomel airport had been captured, then a Russian-compliant regime might well be ruling in Kyiv now.
I think it was a lot closer than many of us make out. What's screwed Russia is their failure to win in the first week, and their utter lack of preparedness for a long war.
What predictions would you make based on that lack of preparedness?
Bailey looks like he's screwing up in real time, sterling absolutely tanking. I can't think of a more ill suited BoE governor. Not up to the task at all.
He's basically come out and said "we've put bank rates by 0.75% but this is a list of all the reasons we are going to be dovish from here".
So the UK gets the pain of the 0.75% but not the benefits of acting hawkishly.
Lose/lose. He is completely unsuited for the job and always was.
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
And a European war. And the after effects of a global plague. And an energy crisis
Yep. And those are manifested in the big 3 - (i) Inflation is back. (ii) We're borrowed to the hilt. (iii) There's no growth coming.
The situation is dire and the job of government imo is firstly to not make it worse (thus far a fail) and secondly to direct the pain at those who can best handle it (jury out on this one but I'm not optimistic - it's the Tories).
Bailey looks like he's screwing up in real time, sterling absolutely tanking. I can't think of a more ill suited BoE governor. Not up to the task at all.
He's basically come out and said "we've put bank rates by 0.75% but this is a list of all the reasons we are going to be dovish from here".
So the UK gets the pain of the 0.75% but not the benefits of acting hawkishly.
Lose/lose. He is completely unsuited for the job and always was.
I wonder how big the market hit would be to replace him before his tenure is up. Raghuram Rajan is said to covet the role, he'd be a big hawkish beast to put into the role at a time of high inflation. Bailey isn't a wartime consigliere.
The BOE recession forecast might be a case of frightening the public into cutting their spending and so helping to reduce inflation more quickly .
I’m not sure what the point is of putting out these recession forecasts unless it’s for that reason .
They put the forecast out because it shows what they expect to happen and it's their job to explain their policy decisions with respect to their expectations for the economy. There is nothing more subtle or strategic going on. And in fact their forecasts don't exactly show what they think will happen, but what they expect would happen if interest rates go up as much as the market is pricing. Their view is that that market pricing is too aggressive (and do the recession won't be this bad). In my opinion it would be better to use their own rate expectations in the forecast but they have historically been unwilling to do that for reasons that I don't fully understand.
Is it because that risks conflict of interest and also circularity?
The logic applied, was visible when the Ukranians found No.1 uniforms in the first tanks across the border at Chernobyl.
The plan was to race to Kiev and hold the parade a week later, just as they did in Crimea in 2014.
They didn’t expect the overwhelming response they got from Ukraine and the international community.
So the entire Russian plan was predicated on Ukraine and the international community learning nothing whatsoever from 2014? Brilliant!
20 plus years of being told that Vladimir Putin is a clever and wily foe, when in reality he is an absolute chump.
That, and 20 years of under-investment and corruption in military procurement and maintenance, meaning that the reality of military capability on the ground was very substantially different, to the impression of such capability and serviceability in the Kremlin.
Then again, they so very nearly won in late February. If a few things had gone differently, e.g. Hostomel airport had been captured, then a Russian-compliant regime might well be ruling in Kyiv now.
I think it was a lot closer than many of us make out. What's screwed Russia is their failure to win in the first week, and their utter lack of preparedness for a long war.
What predictions would you make based on that lack of preparedness?
That Russian bots will continue to appear on sites like this, attempting to stir divisions by for example, suggesting that the Tories will win the next election by playing the immigration card.
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
And a European war. And the after effects of a global plague. And an energy crisis
Yep. And those are manifested in the big 3 - (i) Inflation is back. (ii) We're borrowed to the hilt. (iii) There's no growth coming.
The situation is dire and the job of government imo is firstly to not make it worse (thus far a fail) and secondly to direct the pain at those who can best handle it (jury out on this one but I'm not optimistic - it's the Tories).
Inflation as measured by house prices was over 11% in August 2007.
Even measured by RPI it was over 4%
It was only because Brown dumped housing from RPI and shifted us to the dodgy CPI data to mask inflation that inflation ever seemed low.
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
2007, but Gordon Brown changed inflation from RPI which includes housing to the discredited CPI which does not, and Tory Chancellors have kept that change as it fraudulently pretended inflation had gone away.
Hmm not really like now. But you've managed to say "Gordon Brown" so job done there.
I reckon the BoE chickens out again and goes for 50bps.
I don't really go with all the slagging off the BoE. They aren't great, bit timid and behind the curve, but if we're going to cast around for a blame figure for the mess we're in I'd more go with the government. They've been shocking for the last few years.
But even that's unfair imo. We're transitioning out of a long period of near zero interest rates and QE propping us up after the financial crash. That was bound to be painful, then add the pandemic and Putin on top and you have a dire situation - stressed public finances and inflation and a poor growth outlook. 3 lemons.
The problem was not ticking up rates slowly over the past decade. A quarter-point every six months since 2015 or 2016, and we’d be in a much stronger position now.
Governments have loved rates being zero, they’ve been able to borrow and print almost at will, with seemingly none of the predicted inflation coming to fruition, and all of them have done just that. Well now the bill has come in, and the next few years are going to be horrible as those bills need to be paid.
Agree to an extent with the underlying sentiment. But the BoE brief is inflation and there wasn't any to speak of for a long time. As for the politicians they don't look beyond elections - and for good measure our lot got bogged down in the Brexit swamp for years on end. We just don't have a long term or a "planning" mindset when it comes to any aspect of economic policy.
There was huge inflation to speak of for a very long time. Inflation never went away, it just wasn't in the CPI basket that the Bank chose to look at.
The inflation went to house prices so some people mistakenly considered that "good" inflation and not "bad" inflation.
Increases in asset values, while most consumer goods prices are flat, is not a situation you can improve with interest rates. Greenspan though so and was tragically misguided.
Housing is a consumer price, people paying rent are not buying an asset when they pay that price, but it is just a consumer price the discredited CPI ignores.
Ignoring that was even more tragically misguided than any mistakes Greenspan may have made.
Most households don't pay current prices for the housing they use. Most mortgage owners agreed a price years ago, and outright owners and social tenants don't pay current prices at all. So you cannot easily control housing costs using inflation tools.
Rent absolutely is a current price and should be fully incorporated within inflation figures.
Not every good that is in the CPI basket is bought by everyone, but they still get incorporated, rent is paid by a significant portion of the country and is a price not an asset.
Simply turning a blind eye to a portion of prices, because those prices aren't paid by everyone, or its all just too difficult, means you're using a misleading and fallacious figure for inflation.
Aren’t housing costs in RPI?
Which in no small part is why RPI has been consistently higher than CPI but Chancellors from Brown onwards have pretended that CPI is better thus pretending thus pretending inflation was lower than it really is by excluding from the calculation the single biggest cost in most households budget.
CPI and RPI both include one housing component, rents. RPI has two additional housing components designed to capture owner occupied housing costs, depreciation and mortgage interest payments (MIPS). The first of these essentially captures house prices, which for most home owning households doesn't have any bearing on their day to day living costs. Meanwhile MIPS has had almost no impact on the RPI-CPI wedge in the last decade. There is another factor pushing RPI above CPI by around 0.9pp, the formula effect, which is a statistical artifice that explains why RPI is no longer an official national statistic and would have been abandoned completely by now if it weren't for the linkers market. RPI is garbage. There is another CPI measure that captures owner occupied housing in the same way the US CPI does, CPIH, but it's not used for the BOE target.
Russian propaganda really gone mad. Hilarious to see how Russian TV bosses imagine the winter conditions in the UK comparing to Russia. Now you understand why Soviet propaganda was always a laughing stock for the West. [Video]
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
2007, but Gordon Brown changed inflation from RPI which includes housing to the discredited CPI which does not, and Tory Chancellors have kept that change as it fraudulently pretended inflation had gone away.
Hmm not really like now. But you've managed to say "Gordon Brown" so job done there.
Its different to now, but it had all 3 that you mentioned. Over 11% inflation on some measures, over 4% in RPI, plus terrible public finances and a looming long recession.
I don't excuse Tory Chancellors for sticking to Brown's fraudulent scam that housing is somehow not real inflation, I've been critical on the Tories for that too for a long time. It suited Osborne et al to pretend somehow that inflation was lower than it really was by using Brown's dodgy data and the result was the Bank of England used dodgy data for their mandate.
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
And a European war. And the after effects of a global plague. And an energy crisis
As a weasel, I have a sneaking admiration for how all that was phrased. "I don't know if it's time to bring forward my pledge to see your parents tonight."
Bailey looks like he's screwing up in real time, sterling absolutely tanking. I can't think of a more ill suited BoE governor. Not up to the task at all.
He's basically come out and said "we've put bank rates by 0.75% but this is a list of all the reasons we are going to be dovish from here".
So the UK gets the pain of the 0.75% but not the benefits of acting hawkishly.
Lose/lose. He is completely unsuited for the job and always was.
I reckon the BoE chickens out again and goes for 50bps.
I don't really go with all the slagging off the BoE. They aren't great, bit timid and behind the curve, but if we're going to cast around for a blame figure for the mess we're in I'd more go with the government. They've been shocking for the last few years.
But even that's unfair imo. We're transitioning out of a long period of near zero interest rates and QE propping us up after the financial crash. That was bound to be painful, then add the pandemic and Putin on top and you have a dire situation - stressed public finances and inflation and a poor growth outlook. 3 lemons.
The problem was not ticking up rates slowly over the past decade. A quarter-point every six months since 2015 or 2016, and we’d be in a much stronger position now.
Governments have loved rates being zero, they’ve been able to borrow and print almost at will, with seemingly none of the predicted inflation coming to fruition, and all of them have done just that. Well now the bill has come in, and the next few years are going to be horrible as those bills need to be paid.
Agree to an extent with the underlying sentiment. But the BoE brief is inflation and there wasn't any to speak of for a long time. As for the politicians they don't look beyond elections - and for good measure our lot got bogged down in the Brexit swamp for years on end. We just don't have a long term or a "planning" mindset when it comes to any aspect of economic policy.
There was huge inflation to speak of for a very long time. Inflation never went away, it just wasn't in the CPI basket that the Bank chose to look at.
The inflation went to house prices so some people mistakenly considered that "good" inflation and not "bad" inflation.
Increases in asset values, while most consumer goods prices are flat, is not a situation you can improve with interest rates. Greenspan though so and was tragically misguided.
Housing is a consumer price, people paying rent are not buying an asset when they pay that price, but it is just a consumer price the discredited CPI ignores.
Ignoring that was even more tragically misguided than any mistakes Greenspan may have made.
Most households don't pay current prices for the housing they use. Most mortgage owners agreed a price years ago, and outright owners and social tenants don't pay current prices at all. So you cannot easily control housing costs using inflation tools.
Rent absolutely is a current price and should be fully incorporated within inflation figures.
Not every good that is in the CPI basket is bought by everyone, but they still get incorporated, rent is paid by a significant portion of the country and is a price not an asset.
Simply turning a blind eye to a portion of prices, because those prices aren't paid by everyone, or its all just too difficult, means you're using a misleading and fallacious figure for inflation.
Aren’t housing costs in RPI?
Which in no small part is why RPI has been consistently higher than CPI but Chancellors from Brown onwards have pretended that CPI is better thus pretending thus pretending inflation was lower than it really is by excluding from the calculation the single biggest cost in most households budget.
CPI and RPI both include one housing component, rents. RPI has two additional housing components designed to capture owner occupied housing costs, depreciation and mortgage interest payments (MIPS). The first of these essentially captures house prices, which for most home owning households doesn't have any bearing on their day to day living costs. Meanwhile MIPS has had almost no impact on the RPI-CPI wedge in the last decade. There is another factor pushing RPI above CPI by around 0.9pp, the formula effect, which is a statistical artifice that explains why RPI is no longer an official national statistic and would have been abandoned completely by now if it weren't for the linkers market. RPI is garbage. There is another CPI measure that captures owner occupied housing in the same way the US CPI does, CPIH, but it's not used for the BOE target.
The rental price in CPI is distorted and doesn't reflect the real world, housing costs far more for household budgets on average than CPI basket accounts for it.
The fact that "most households" don't have to pay house prices means absolutely nothing to those who are paying house prices.
"Most households" might not buy a new TV, or a new mobile phone, or plenty of other consumer goods in a year. But those costs are still included in inflation, because they're real and are paid, whether most pay it or not. What's worse is that the households that do have to pay housing costs are at the sharper end of the stick when it comes to inflation than those who are living house-cost-free, so faking your data by excluding housing costs just means you have dodgy data that is extremely inaccurate for those who are paying those costs.
I reckon the BoE chickens out again and goes for 50bps.
I don't really go with all the slagging off the BoE. They aren't great, bit timid and behind the curve, but if we're going to cast around for a blame figure for the mess we're in I'd more go with the government. They've been shocking for the last few years.
But even that's unfair imo. We're transitioning out of a long period of near zero interest rates and QE propping us up after the financial crash. That was bound to be painful, then add the pandemic and Putin on top and you have a dire situation - stressed public finances and inflation and a poor growth outlook. 3 lemons.
The problem was not ticking up rates slowly over the past decade. A quarter-point every six months since 2015 or 2016, and we’d be in a much stronger position now.
Governments have loved rates being zero, they’ve been able to borrow and print almost at will, with seemingly none of the predicted inflation coming to fruition, and all of them have done just that. Well now the bill has come in, and the next few years are going to be horrible as those bills need to be paid.
Agree to an extent with the underlying sentiment. But the BoE brief is inflation and there wasn't any to speak of for a long time. As for the politicians they don't look beyond elections - and for good measure our lot got bogged down in the Brexit swamp for years on end. We just don't have a long term or a "planning" mindset when it comes to any aspect of economic policy.
There was huge inflation to speak of for a very long time. Inflation never went away, it just wasn't in the CPI basket that the Bank chose to look at.
The inflation went to house prices so some people mistakenly considered that "good" inflation and not "bad" inflation.
Increases in asset values, while most consumer goods prices are flat, is not a situation you can improve with interest rates. Greenspan though so and was tragically misguided.
Housing is a consumer price, people paying rent are not buying an asset when they pay that price, but it is just a consumer price the discredited CPI ignores.
Ignoring that was even more tragically misguided than any mistakes Greenspan may have made.
Most households don't pay current prices for the housing they use. Most mortgage owners agreed a price years ago, and outright owners and social tenants don't pay current prices at all. So you cannot easily control housing costs using inflation tools.
Rent absolutely is a current price and should be fully incorporated within inflation figures.
Not every good that is in the CPI basket is bought by everyone, but they still get incorporated, rent is paid by a significant portion of the country and is a price not an asset.
Simply turning a blind eye to a portion of prices, because those prices aren't paid by everyone, or its all just too difficult, means you're using a misleading and fallacious figure for inflation.
Aren’t housing costs in RPI?
Which in no small part is why RPI has been consistently higher than CPI but Chancellors from Brown onwards have pretended that CPI is better thus pretending thus pretending inflation was lower than it really is by excluding from the calculation the single biggest cost in most households budget.
CPI and RPI both include one housing component, rents. RPI has two additional housing components designed to capture owner occupied housing costs, depreciation and mortgage interest payments (MIPS). The first of these essentially captures house prices, which for most home owning households doesn't have any bearing on their day to day living costs. Meanwhile MIPS has had almost no impact on the RPI-CPI wedge in the last decade. There is another factor pushing RPI above CPI by around 0.9pp, the formula effect, which is a statistical artifice that explains why RPI is no longer an official national statistic and would have been abandoned completely by now if it weren't for the linkers market. RPI is garbage. There is another CPI measure that captures owner occupied housing in the same way the US CPI does, CPIH, but it's not used for the BOE target.
We also have a separate measure of inflation specifically for house prices, HPI, which isn't within the BoE's remit but maybe should be.
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
2007, but Gordon Brown changed inflation from RPI which includes housing to the discredited CPI which does not, and Tory Chancellors have kept that change as it fraudulently pretended inflation had gone away.
Hmm not really like now. But you've managed to say "Gordon Brown" so job done there.
Its different to now, but it had all 3 that you mentioned. Over 11% inflation on some measures, over 4% in RPI, plus terrible public finances and a looming long recession.
I don't excuse Tory Chancellors for sticking to Brown's fraudulent scam that housing is somehow not real inflation, I've been critical on the Tories for that too for a long time. It suited Osborne et al to pretend somehow that inflation was lower than it really was by using Brown's dodgy data and the result was the Bank of England used dodgy data for their mandate.
I'd say you want housing costs (rent and rent equivalents for owners) in there not house prices.
Anyway "Brown's fraudulent scam" - well done again. But we'll stop now, I think, so you can't keep crowbarring Gordophobic abuse into the chat. Enough's enough. I won't be an enabler.
The logic applied, was visible when the Ukranians found No.1 uniforms in the first tanks across the border at Chernobyl.
The plan was to race to Kiev and hold the parade a week later, just as they did in Crimea in 2014.
They didn’t expect the overwhelming response they got from Ukraine and the international community.
So the entire Russian plan was predicated on Ukraine and the international community learning nothing whatsoever from 2014? Brilliant!
20 plus years of being told that Vladimir Putin is a clever and wily foe, when in reality he is an absolute chump.
That, and 20 years of under-investment and corruption in military procurement and maintenance, meaning that the reality of military capability on the ground was very substantially different, to the impression of such capability and serviceability in the Kremlin.
Then again, they so very nearly won in late February. If a few things had gone differently, e.g. Hostomel airport had been captured, then a Russian-compliant regime might well be ruling in Kyiv now.
I think it was a lot closer than many of us make out. What's screwed Russia is their failure to win in the first week, and their utter lack of preparedness for a long war.
What predictions would you make based on that lack of preparedness?
Predictions? My goodness. Whilst I think it's very difficult to see a way that Russia ends up better than it was in January, I wouldn't say it's impossible for them to gain Ukraine. Difficult, not impossible.
As for preparedness: I honestly don't think they're structured in the right way to fix the preparedness problems. And I don't see a willingness to fix their structure.
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
2007, but Gordon Brown changed inflation from RPI which includes housing to the discredited CPI which does not, and Tory Chancellors have kept that change as it fraudulently pretended inflation had gone away.
Hmm not really like now. But you've managed to say "Gordon Brown" so job done there.
Its different to now, but it had all 3 that you mentioned. Over 11% inflation on some measures, over 4% in RPI, plus terrible public finances and a looming long recession.
I don't excuse Tory Chancellors for sticking to Brown's fraudulent scam that housing is somehow not real inflation, I've been critical on the Tories for that too for a long time. It suited Osborne et al to pretend somehow that inflation was lower than it really was by using Brown's dodgy data and the result was the Bank of England used dodgy data for their mandate.
I'd say you want housing costs (rent and rent equivalents for owners) in there not house prices.
Anyway "Brown's fraudulent scam" - well done again. But we'll stop now, I think, so you can't keep crowbarring Gordophobic abuse into the chat. Enough's enough. I won't be an enabler.
I think you would want house prices in there to a degree because people buy houses, it's a living cost.
Bailey has essentially given up all of Rishi and Hunt's gains on the currency markets since Liz was dumped. He truly is a moron and we're going to add 3-5% to commodity price inflation starting from Monday. The UK will see higher than necessary inflation for another 6-8 months by my reckoning because Bailey isn't up to the job. If there's any one factor lengthening the recession expectations, it's the BoE dragging out bringing inflation down for longer than is necessary and not keeping up with the Fed.
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
2007, but Gordon Brown changed inflation from RPI which includes housing to the discredited CPI which does not, and Tory Chancellors have kept that change as it fraudulently pretended inflation had gone away.
Hmm not really like now. But you've managed to say "Gordon Brown" so job done there.
Its different to now, but it had all 3 that you mentioned. Over 11% inflation on some measures, over 4% in RPI, plus terrible public finances and a looming long recession.
I don't excuse Tory Chancellors for sticking to Brown's fraudulent scam that housing is somehow not real inflation, I've been critical on the Tories for that too for a long time. It suited Osborne et al to pretend somehow that inflation was lower than it really was by using Brown's dodgy data and the result was the Bank of England used dodgy data for their mandate.
I'd say you want housing costs (rent and rent equivalents for owners) in there not house prices.
Anyway "Brown's fraudulent scam" - well done again. But we'll stop now, I think, so you can't keep crowbarring Gordophobic abuse into the chat. Enough's enough. I won't be an enabler.
Its not Brownaphobic abuse to point out the Gordon Brown change the inflation measure to exclude most households single largest cost from the measurement, at a time when that cost was rapidly rising (and has continued to rise) which has led to inflation being falsely portrayed as lower than it is for the past two decades.
If the Bank hadn't had their mandate changed to the dodgy and unrepresentative CPI data then they're have had to deal with inflation more often than they have. But that didn't suit Chancellors from Brown onwards.
When many households are paying a thousand pounds a month or more for their home, and that price has gone up dramatically for two decades now, to pretend there was no inflation in that cost or the costs that any households have to pay is a dishonest lie pure and simple. The fact not all households pay for an item is not a reason for that item to be excluded from inflation figures.
If you don't want to be an "enabler" of calling out that, then don't try to get the last word in.
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
2007, but Gordon Brown changed inflation from RPI which includes housing to the discredited CPI which does not, and Tory Chancellors have kept that change as it fraudulently pretended inflation had gone away.
Hmm not really like now. But you've managed to say "Gordon Brown" so job done there.
Its different to now, but it had all 3 that you mentioned. Over 11% inflation on some measures, over 4% in RPI, plus terrible public finances and a looming long recession.
I don't excuse Tory Chancellors for sticking to Brown's fraudulent scam that housing is somehow not real inflation, I've been critical on the Tories for that too for a long time. It suited Osborne et al to pretend somehow that inflation was lower than it really was by using Brown's dodgy data and the result was the Bank of England used dodgy data for their mandate.
I'd say you want housing costs (rent and rent equivalents for owners) in there not house prices.
Anyway "Brown's fraudulent scam" - well done again. But we'll stop now, I think, so you can't keep crowbarring Gordophobic abuse into the chat. Enough's enough. I won't be an enabler.
I think you would want house prices in there to a degree because people buy houses, it's a living cost.
Bingo! It is part of the cost of living.
That not everyone pays for it is perhaps an argument to have it weighted to represent the costs as paid for by those who do at the appropriate weighting, not an argument to exclude it completely.
The BoE might as well go for 0.75 - the mortgage market won't budge on 0.5 as everyone knows it'll have to go up more later. Most mortgagees will be better off with 0.75 medicine now, not later.
Even at 1pp mortgage rates will drop, just because peak inflation expectations will fall and mortgage rates are being kept artificially high by banks looking to make a quick buck.
It should be a 1pp rise, with passive QT continuing, but active QT suspended until the market stabilises (and probably forever realistically).
Active QT limits the amount that the government can borrow and reduces upward pressure on house prices.
1992-7 only 100x worse with the economy and living standards tanking, going the opposite way from the Major years.
The next GE result will be cataclysmic for the tories.
Starmer is no Blair and Labour are no where near as strong as New Labour was running up to 1997.
Conservatives will lose the nect election of course but Labour will only get a small majority. The next election will be 1974 not 1997 IMO.
Lets hope that weirdo Andrew Bridgen MP is finished!
BUT. One difference between the challenge of Blair and that of Starmer.
In 1997 there was no truly successful, competent Labour government in living memory. The last Callaghan government had ended at the IMF, the last of reign of Wilson was more than 2 decades ago and his heyday was 3 decades ago. So Blair faced a major credibility gap which he had to work hard, and successfully, to close.
Blair and Brown were more recent and although the financial crisis was a blot on the end of Brown's rule both he and Blair are still remembered as competent administrators who didn't immediately plunge the country into a sterling or debt crisis. Blair's biggest black mark was Iraq. So I think it's easier for potential Labour voters now to imagine a Blair-style government with decent economic growth and improving public services.
I am no fan of Callaghan , but his Government did not 'end at the IMF'. The IMF was called in late 1976 - based on inaccurate data which when subsequently revised implied there had actually been no need to resort to it after all. His Government also bequeathed a lower RPI inflation rate to Thatcher in May 1979 than we face today.
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
2007, but Gordon Brown changed inflation from RPI which includes housing to the discredited CPI which does not, and Tory Chancellors have kept that change as it fraudulently pretended inflation had gone away.
Hmm not really like now. But you've managed to say "Gordon Brown" so job done there.
Its different to now, but it had all 3 that you mentioned. Over 11% inflation on some measures, over 4% in RPI, plus terrible public finances and a looming long recession.
I don't excuse Tory Chancellors for sticking to Brown's fraudulent scam that housing is somehow not real inflation, I've been critical on the Tories for that too for a long time. It suited Osborne et al to pretend somehow that inflation was lower than it really was by using Brown's dodgy data and the result was the Bank of England used dodgy data for their mandate.
I'd say you want housing costs (rent and rent equivalents for owners) in there not house prices.
Anyway "Brown's fraudulent scam" - well done again. But we'll stop now, I think, so you can't keep crowbarring Gordophobic abuse into the chat. Enough's enough. I won't be an enabler.
In fairness Brown has a lot to answer for in the way he fudged stuff. The worst in my opinion was the dividend tax change such that you couldn't reclaim tax if you didn't have taxable income to set it against. An honest increase in the basic rate of income tax was unacceptable, but tax people where they don't see it ie their pension funds and they don't notice. Of course long term it has done a huge amount of damage, not least a number of funds going into FAS and the PPF.
The Tories however are no better. Having promised to rectify the situation they have done nothing and although lobbied have refused to do anything. Worse they have now completely broken the link between Corporation Tax, ACT and dividends.
I reckon the BoE chickens out again and goes for 50bps.
I don't really go with all the slagging off the BoE. They aren't great, bit timid and behind the curve, but if we're going to cast around for a blame figure for the mess we're in I'd more go with the government. They've been shocking for the last few years.
But even that's unfair imo. We're transitioning out of a long period of near zero interest rates and QE propping us up after the financial crash. That was bound to be painful, then add the pandemic and Putin on top and you have a dire situation - stressed public finances and inflation and a poor growth outlook. 3 lemons.
The problem was not ticking up rates slowly over the past decade. A quarter-point every six months since 2015 or 2016, and we’d be in a much stronger position now.
Governments have loved rates being zero, they’ve been able to borrow and print almost at will, with seemingly none of the predicted inflation coming to fruition, and all of them have done just that. Well now the bill has come in, and the next few years are going to be horrible as those bills need to be paid.
Agree to an extent with the underlying sentiment. But the BoE brief is inflation and there wasn't any to speak of for a long time. As for the politicians they don't look beyond elections - and for good measure our lot got bogged down in the Brexit swamp for years on end. We just don't have a long term or a "planning" mindset when it comes to any aspect of economic policy.
There was huge inflation to speak of for a very long time. Inflation never went away, it just wasn't in the CPI basket that the Bank chose to look at.
The inflation went to house prices so some people mistakenly considered that "good" inflation and not "bad" inflation.
Increases in asset values, while most consumer goods prices are flat, is not a situation you can improve with interest rates. Greenspan though so and was tragically misguided.
Housing is a consumer price, people paying rent are not buying an asset when they pay that price, but it is just a consumer price the discredited CPI ignores.
Ignoring that was even more tragically misguided than any mistakes Greenspan may have made.
Most households don't pay current prices for the housing they use. Most mortgage owners agreed a price years ago, and outright owners and social tenants don't pay current prices at all. So you cannot easily control housing costs using inflation tools.
Rent absolutely is a current price and should be fully incorporated within inflation figures.
Not every good that is in the CPI basket is bought by everyone, but they still get incorporated, rent is paid by a significant portion of the country and is a price not an asset.
Simply turning a blind eye to a portion of prices, because those prices aren't paid by everyone, or its all just too difficult, means you're using a misleading and fallacious figure for inflation.
Aren’t housing costs in RPI?
Which in no small part is why RPI has been consistently higher than CPI but Chancellors from Brown onwards have pretended that CPI is better thus pretending thus pretending inflation was lower than it really is by excluding from the calculation the single biggest cost in most households budget.
CPI and RPI both include one housing component, rents. RPI has two additional housing components designed to capture owner occupied housing costs, depreciation and mortgage interest payments (MIPS). The first of these essentially captures house prices, which for most home owning households doesn't have any bearing on their day to day living costs. Meanwhile MIPS has had almost no impact on the RPI-CPI wedge in the last decade. There is another factor pushing RPI above CPI by around 0.9pp, the formula effect, which is a statistical artifice that explains why RPI is no longer an official national statistic and would have been abandoned completely by now if it weren't for the linkers market. RPI is garbage. There is another CPI measure that captures owner occupied housing in the same way the US CPI does, CPIH, but it's not used for the BOE target.
The rental price in CPI is distorted and doesn't reflect the real world, housing costs far more for household budgets on average than CPI basket accounts for it.
The fact that "most households" don't have to pay house prices means absolutely nothing to those who are paying house prices.
"Most households" might not buy a new TV, or a new mobile phone, or plenty of other consumer goods in a year. But those costs are still included in inflation, because they're real and are paid, whether most pay it or not. What's worse is that the households that do have to pay housing costs are at the sharper end of the stick when it comes to inflation than those who are living house-cost-free, so faking your data by excluding housing costs just means you have dodgy data that is extremely inaccurate for those who are paying those costs.
RPI may be garbage, but CPI is worse.
Housing is an asset. If you want to capture the cost of housing then you might want to capture the cost of mortgage interest payments. But for those who own their homes outright an increase in prices simply makes them richer, which would be an odd thing to describe as inflation as we usually understand it. The question of whether central banks should be worried about asset price inflation is a different one. They most certainly should, and have paid too little attention in the past. But simply wedging asset prices into a measure of consumer price inflation isn't the right approach, in my opinion. Nor is persisting with a discredited measure like RPI.
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
2007, but Gordon Brown changed inflation from RPI which includes housing to the discredited CPI which does not, and Tory Chancellors have kept that change as it fraudulently pretended inflation had gone away.
Hmm not really like now. But you've managed to say "Gordon Brown" so job done there.
Its different to now, but it had all 3 that you mentioned. Over 11% inflation on some measures, over 4% in RPI, plus terrible public finances and a looming long recession.
I don't excuse Tory Chancellors for sticking to Brown's fraudulent scam that housing is somehow not real inflation, I've been critical on the Tories for that too for a long time. It suited Osborne et al to pretend somehow that inflation was lower than it really was by using Brown's dodgy data and the result was the Bank of England used dodgy data for their mandate.
I'd say you want housing costs (rent and rent equivalents for owners) in there not house prices.
Anyway "Brown's fraudulent scam" - well done again. But we'll stop now, I think, so you can't keep crowbarring Gordophobic abuse into the chat. Enough's enough. I won't be an enabler.
In fairness Brown has a lot to answer for in the way he fudged stuff. The worst in my opinion was the dividend tax change such that you couldn't reclaim tax if you didn't have taxable income to set it against. An honest increase in the basic rate of income tax was unacceptable, but tax people where they don't see it ie their pension funds and they don't notice. Of course long term it has done a huge amount of damage, not least a number of funds going into FAS and the PPF.
The Tories however are no better. Having promised to rectify the situation they have done nothing and although lobbied have refused to do anything. Worse they have now completely broken the link between Corporation Tax, ACT and dividends.
The political justification at the time was, of course, that pension funds were "in surplus". Because predicting the distant future is easy money when boom and bust have been abolished.
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
2007, but Gordon Brown changed inflation from RPI which includes housing to the discredited CPI which does not, and Tory Chancellors have kept that change as it fraudulently pretended inflation had gone away.
Hmm not really like now. But you've managed to say "Gordon Brown" so job done there.
Its different to now, but it had all 3 that you mentioned. Over 11% inflation on some measures, over 4% in RPI, plus terrible public finances and a looming long recession.
I don't excuse Tory Chancellors for sticking to Brown's fraudulent scam that housing is somehow not real inflation, I've been critical on the Tories for that too for a long time. It suited Osborne et al to pretend somehow that inflation was lower than it really was by using Brown's dodgy data and the result was the Bank of England used dodgy data for their mandate.
I'd say you want housing costs (rent and rent equivalents for owners) in there not house prices.
Anyway "Brown's fraudulent scam" - well done again. But we'll stop now, I think, so you can't keep crowbarring Gordophobic abuse into the chat. Enough's enough. I won't be an enabler.
I think you would want house prices in there to a degree because people buy houses, it's a living cost.
Yep, so it's a matter of how to include those costs. How I look at it is that the regular outgoing (that I'd want to measure) is the rent or (if an owner) the rent equivalent. This latter being mortgage servicing costs plus (if there is equity) the "lost" interest income on that element, ie the income foregone (to the owner) due to it being tied up in a house. Conceptually that's what I'd include in an inflation figure, I think. No clue what they actually do but I'd hope it's something like that.
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
2007, but Gordon Brown changed inflation from RPI which includes housing to the discredited CPI which does not, and Tory Chancellors have kept that change as it fraudulently pretended inflation had gone away.
Hmm not really like now. But you've managed to say "Gordon Brown" so job done there.
Its different to now, but it had all 3 that you mentioned. Over 11% inflation on some measures, over 4% in RPI, plus terrible public finances and a looming long recession.
I don't excuse Tory Chancellors for sticking to Brown's fraudulent scam that housing is somehow not real inflation, I've been critical on the Tories for that too for a long time. It suited Osborne et al to pretend somehow that inflation was lower than it really was by using Brown's dodgy data and the result was the Bank of England used dodgy data for their mandate.
I'd say you want housing costs (rent and rent equivalents for owners) in there not house prices.
Anyway "Brown's fraudulent scam" - well done again. But we'll stop now, I think, so you can't keep crowbarring Gordophobic abuse into the chat. Enough's enough. I won't be an enabler.
I can understand why from your point of view you don't like the fact that the current failed policies are those of the last 20 years, not just the last 12.
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
2007, but Gordon Brown changed inflation from RPI which includes housing to the discredited CPI which does not, and Tory Chancellors have kept that change as it fraudulently pretended inflation had gone away.
Hmm not really like now. But you've managed to say "Gordon Brown" so job done there.
Its different to now, but it had all 3 that you mentioned. Over 11% inflation on some measures, over 4% in RPI, plus terrible public finances and a looming long recession.
I don't excuse Tory Chancellors for sticking to Brown's fraudulent scam that housing is somehow not real inflation, I've been critical on the Tories for that too for a long time. It suited Osborne et al to pretend somehow that inflation was lower than it really was by using Brown's dodgy data and the result was the Bank of England used dodgy data for their mandate.
I'd say you want housing costs (rent and rent equivalents for owners) in there not house prices.
Anyway "Brown's fraudulent scam" - well done again. But we'll stop now, I think, so you can't keep crowbarring Gordophobic abuse into the chat. Enough's enough. I won't be an enabler.
Its not Brownaphobic abuse to point out the Gordon Brown change the inflation measure to exclude most households single largest cost from the measurement, at a time when that cost was rapidly rising (and has continued to rise) which has led to inflation being falsely portrayed as lower than it is for the past two decades.
If the Bank hadn't had their mandate changed to the dodgy and unrepresentative CPI data then they're have had to deal with inflation more often than they have. But that didn't suit Chancellors from Brown onwards.
When many households are paying a thousand pounds a month or more for their home, and that price has gone up dramatically for two decades now, to pretend there was no inflation in that cost or the costs that any households have to pay is a dishonest lie pure and simple. The fact not all households pay for an item is not a reason for that item to be excluded from inflation figures.
If you don't want to be an "enabler" of calling out that, then don't try to get the last word in.
You do seem to be wrong about this. What Brown inherited was a system which targeted RPIX where X means excluding mortgage payments, so where is the Brownian fraud in all this? The change to CPI in 2003 was to enable comparison with European countries which I would have thought you would welcome as a relative sclerosis detector.
Despite this, the group were not keen on an immediate General Election. They did not think the country needed the upheaval right now, and were willing to give Sunak a chance, albeit as a caretaker, to see the country through the worst of what’s still to come economically.
Although some Tories might find useful the reminder that the rot started under Johnson and the timbers were already rotten through by the time their members decided it was the right time for another gamble…
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
2007, but Gordon Brown changed inflation from RPI which includes housing to the discredited CPI which does not, and Tory Chancellors have kept that change as it fraudulently pretended inflation had gone away.
Hmm not really like now. But you've managed to say "Gordon Brown" so job done there.
Its different to now, but it had all 3 that you mentioned. Over 11% inflation on some measures, over 4% in RPI, plus terrible public finances and a looming long recession.
I don't excuse Tory Chancellors for sticking to Brown's fraudulent scam that housing is somehow not real inflation, I've been critical on the Tories for that too for a long time. It suited Osborne et al to pretend somehow that inflation was lower than it really was by using Brown's dodgy data and the result was the Bank of England used dodgy data for their mandate.
I'd say you want housing costs (rent and rent equivalents for owners) in there not house prices.
Anyway "Brown's fraudulent scam" - well done again. But we'll stop now, I think, so you can't keep crowbarring Gordophobic abuse into the chat. Enough's enough. I won't be an enabler.
I think you would want house prices in there to a degree because people buy houses, it's a living cost.
Yep, so it's a matter of how to include those costs. How I look at it is that the regular outgoing (that I'd want to measure) is the rent or (if an owner) the rent equivalent. This latter being mortgage servicing costs plus (if there is equity) the "lost" interest income on that element, ie the income foregone (to the owner) due to it being tied up in a house. Conceptually that's what I'd include in an inflation figure, I think. No clue what they actually do but I'd hope it's something like that.
UK Geometric mean rental (Includes notional rents of OO housing) value as part of the basket.
1992-7 only 100x worse with the economy and living standards tanking, going the opposite way from the Major years.
The next GE result will be cataclysmic for the tories.
Starmer is no Blair and Labour are no where near as strong as New Labour was running up to 1997.
Conservatives will lose the nect election of course but Labour will only get a small majority. The next election will be 1974 not 1997 IMO.
Lets hope that weirdo Andrew Bridgen MP is finished!
BUT. One difference between the challenge of Blair and that of Starmer.
In 1997 there was no truly successful, competent Labour government in living memory. The last Callaghan government had ended at the IMF, the last of reign of Wilson was more than 2 decades ago and his heyday was 3 decades ago. So Blair faced a major credibility gap which he had to work hard, and successfully, to close.
Blair and Brown were more recent and although the financial crisis was a blot on the end of Brown's rule both he and Blair are still remembered as competent administrators who didn't immediately plunge the country into a sterling or debt crisis. Blair's biggest black mark was Iraq. So I think it's easier for potential Labour voters now to imagine a Blair-style government with decent economic growth and improving public services.
I am no fan of Callaghan , but his Government did not 'end at the IMF'. The IMF was called in late 1976 - based on inaccurate data which when subsequently revised implied there had actually been no need to resort to it after all. His Government also bequeathed a lower RPI inflation rate to Thatcher in May 1979 than we face today.
What about Clement Atlees 1945 governments achievements, at a time when the country was on its knees
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
2007, but Gordon Brown changed inflation from RPI which includes housing to the discredited CPI which does not, and Tory Chancellors have kept that change as it fraudulently pretended inflation had gone away.
Hmm not really like now. But you've managed to say "Gordon Brown" so job done there.
Its different to now, but it had all 3 that you mentioned. Over 11% inflation on some measures, over 4% in RPI, plus terrible public finances and a looming long recession.
I don't excuse Tory Chancellors for sticking to Brown's fraudulent scam that housing is somehow not real inflation, I've been critical on the Tories for that too for a long time. It suited Osborne et al to pretend somehow that inflation was lower than it really was by using Brown's dodgy data and the result was the Bank of England used dodgy data for their mandate.
I'd say you want housing costs (rent and rent equivalents for owners) in there not house prices.
Anyway "Brown's fraudulent scam" - well done again. But we'll stop now, I think, so you can't keep crowbarring Gordophobic abuse into the chat. Enough's enough. I won't be an enabler.
Its not Brownaphobic abuse to point out the Gordon Brown change the inflation measure to exclude most households single largest cost from the measurement, at a time when that cost was rapidly rising (and has continued to rise) which has led to inflation being falsely portrayed as lower than it is for the past two decades.
If the Bank hadn't had their mandate changed to the dodgy and unrepresentative CPI data then they're have had to deal with inflation more often than they have. But that didn't suit Chancellors from Brown onwards.
When many households are paying a thousand pounds a month or more for their home, and that price has gone up dramatically for two decades now, to pretend there was no inflation in that cost or the costs that any households have to pay is a dishonest lie pure and simple. The fact not all households pay for an item is not a reason for that item to be excluded from inflation figures.
If you don't want to be an "enabler" of calling out that, then don't try to get the last word in.
"An explicit inflation target was first set in October 1992 by Chancellor of the Exchequer Norman Lamont, following the UK's departure from the Exchange Rate Mechanism. Initially, the target was based on the RPIX, which is the RPI calculated excluding mortgage interest payments."
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
2007, but Gordon Brown changed inflation from RPI which includes housing to the discredited CPI which does not, and Tory Chancellors have kept that change as it fraudulently pretended inflation had gone away.
Hmm not really like now. But you've managed to say "Gordon Brown" so job done there.
Its different to now, but it had all 3 that you mentioned. Over 11% inflation on some measures, over 4% in RPI, plus terrible public finances and a looming long recession.
I don't excuse Tory Chancellors for sticking to Brown's fraudulent scam that housing is somehow not real inflation, I've been critical on the Tories for that too for a long time. It suited Osborne et al to pretend somehow that inflation was lower than it really was by using Brown's dodgy data and the result was the Bank of England used dodgy data for their mandate.
I'd say you want housing costs (rent and rent equivalents for owners) in there not house prices.
Anyway "Brown's fraudulent scam" - well done again. But we'll stop now, I think, so you can't keep crowbarring Gordophobic abuse into the chat. Enough's enough. I won't be an enabler.
I think you would want house prices in there to a degree because people buy houses, it's a living cost.
Yep, so it's a matter of how to include those costs. How I look at it is that the regular outgoing (that I'd want to measure) is the rent or (if an owner) the rent equivalent. This latter being mortgage servicing costs plus (if there is equity) the "lost" interest income on that element, ie the income foregone (to the owner) due to it being tied up in a house. Conceptually that's what I'd include in an inflation figure, I think. No clue what they actually do but I'd hope it's something like that.
UK Geometric mean rental (Includes notional rents of OO housing) value as part of the basket.
It's a big calculation but it'd probably spit out something like 800 quid. Maybe 900.
I reckon the BoE chickens out again and goes for 50bps.
I don't really go with all the slagging off the BoE. They aren't great, bit timid and behind the curve, but if we're going to cast around for a blame figure for the mess we're in I'd more go with the government. They've been shocking for the last few years.
But even that's unfair imo. We're transitioning out of a long period of near zero interest rates and QE propping us up after the financial crash. That was bound to be painful, then add the pandemic and Putin on top and you have a dire situation - stressed public finances and inflation and a poor growth outlook. 3 lemons.
The problem was not ticking up rates slowly over the past decade. A quarter-point every six months since 2015 or 2016, and we’d be in a much stronger position now.
Governments have loved rates being zero, they’ve been able to borrow and print almost at will, with seemingly none of the predicted inflation coming to fruition, and all of them have done just that. Well now the bill has come in, and the next few years are going to be horrible as those bills need to be paid.
Agree to an extent with the underlying sentiment. But the BoE brief is inflation and there wasn't any to speak of for a long time. As for the politicians they don't look beyond elections - and for good measure our lot got bogged down in the Brexit swamp for years on end. We just don't have a long term or a "planning" mindset when it comes to any aspect of economic policy.
There was huge inflation to speak of for a very long time. Inflation never went away, it just wasn't in the CPI basket that the Bank chose to look at.
The inflation went to house prices so some people mistakenly considered that "good" inflation and not "bad" inflation.
Increases in asset values, while most consumer goods prices are flat, is not a situation you can improve with interest rates. Greenspan though so and was tragically misguided.
Housing is a consumer price, people paying rent are not buying an asset when they pay that price, but it is just a consumer price the discredited CPI ignores.
Ignoring that was even more tragically misguided than any mistakes Greenspan may have made.
Most households don't pay current prices for the housing they use. Most mortgage owners agreed a price years ago, and outright owners and social tenants don't pay current prices at all. So you cannot easily control housing costs using inflation tools.
Rent absolutely is a current price and should be fully incorporated within inflation figures.
Not every good that is in the CPI basket is bought by everyone, but they still get incorporated, rent is paid by a significant portion of the country and is a price not an asset.
Simply turning a blind eye to a portion of prices, because those prices aren't paid by everyone, or its all just too difficult, means you're using a misleading and fallacious figure for inflation.
Aren’t housing costs in RPI?
Which in no small part is why RPI has been consistently higher than CPI but Chancellors from Brown onwards have pretended that CPI is better thus pretending thus pretending inflation was lower than it really is by excluding from the calculation the single biggest cost in most households budget.
CPI and RPI both include one housing component, rents. RPI has two additional housing components designed to capture owner occupied housing costs, depreciation and mortgage interest payments (MIPS). The first of these essentially captures house prices, which for most home owning households doesn't have any bearing on their day to day living costs. Meanwhile MIPS has had almost no impact on the RPI-CPI wedge in the last decade. There is another factor pushing RPI above CPI by around 0.9pp, the formula effect, which is a statistical artifice that explains why RPI is no longer an official national statistic and would have been abandoned completely by now if it weren't for the linkers market. RPI is garbage. There is another CPI measure that captures owner occupied housing in the same way the US CPI does, CPIH, but it's not used for the BOE target.
The rental price in CPI is distorted and doesn't reflect the real world, housing costs far more for household budgets on average than CPI basket accounts for it.
The fact that "most households" don't have to pay house prices means absolutely nothing to those who are paying house prices.
"Most households" might not buy a new TV, or a new mobile phone, or plenty of other consumer goods in a year. But those costs are still included in inflation, because they're real and are paid, whether most pay it or not. What's worse is that the households that do have to pay housing costs are at the sharper end of the stick when it comes to inflation than those who are living house-cost-free, so faking your data by excluding housing costs just means you have dodgy data that is extremely inaccurate for those who are paying those costs.
RPI may be garbage, but CPI is worse.
Housing is an asset. If you want to capture the cost of housing then you might want to capture the cost of mortgage interest payments. But for those who own their homes outright an increase in prices simply makes them richer, which would be an odd thing to describe as inflation as we usually understand it. The question of whether central banks should be worried about asset price inflation is a different one. They most certainly should, and have paid too little attention in the past. But simply wedging asset prices into a measure of consumer price inflation isn't the right approach, in my opinion. Nor is persisting with a discredited measure like RPI.
Say you own a house worth 1m and have a mortgage of 0.4m. I'd calc your "housing cost" as the interest you're paying on that 0.4m. Then I'd add in the interest you are NOT earning on that 0.6m of equity.
Something like that anyway. But there's no doubt various ways of looking at it.
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
2007, but Gordon Brown changed inflation from RPI which includes housing to the discredited CPI which does not, and Tory Chancellors have kept that change as it fraudulently pretended inflation had gone away.
Hmm not really like now. But you've managed to say "Gordon Brown" so job done there.
Its different to now, but it had all 3 that you mentioned. Over 11% inflation on some measures, over 4% in RPI, plus terrible public finances and a looming long recession.
I don't excuse Tory Chancellors for sticking to Brown's fraudulent scam that housing is somehow not real inflation, I've been critical on the Tories for that too for a long time. It suited Osborne et al to pretend somehow that inflation was lower than it really was by using Brown's dodgy data and the result was the Bank of England used dodgy data for their mandate.
I'd say you want housing costs (rent and rent equivalents for owners) in there not house prices.
Anyway "Brown's fraudulent scam" - well done again. But we'll stop now, I think, so you can't keep crowbarring Gordophobic abuse into the chat. Enough's enough. I won't be an enabler.
I think you would want house prices in there to a degree because people buy houses, it's a living cost.
Yep, so it's a matter of how to include those costs. How I look at it is that the regular outgoing (that I'd want to measure) is the rent or (if an owner) the rent equivalent. This latter being mortgage servicing costs plus (if there is equity) the "lost" interest income on that element, ie the income foregone (to the owner) due to it being tied up in a house. Conceptually that's what I'd include in an inflation figure, I think. No clue what they actually do but I'd hope it's something like that.
That's CPIH, but it doesn't capture house price inflation which is where the majority of the nation's inflation problem has been until now.
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
2007, but Gordon Brown changed inflation from RPI which includes housing to the discredited CPI which does not, and Tory Chancellors have kept that change as it fraudulently pretended inflation had gone away.
Hmm not really like now. But you've managed to say "Gordon Brown" so job done there.
Its different to now, but it had all 3 that you mentioned. Over 11% inflation on some measures, over 4% in RPI, plus terrible public finances and a looming long recession.
I don't excuse Tory Chancellors for sticking to Brown's fraudulent scam that housing is somehow not real inflation, I've been critical on the Tories for that too for a long time. It suited Osborne et al to pretend somehow that inflation was lower than it really was by using Brown's dodgy data and the result was the Bank of England used dodgy data for their mandate.
I'd say you want housing costs (rent and rent equivalents for owners) in there not house prices.
Anyway "Brown's fraudulent scam" - well done again. But we'll stop now, I think, so you can't keep crowbarring Gordophobic abuse into the chat. Enough's enough. I won't be an enabler.
I think you would want house prices in there to a degree because people buy houses, it's a living cost.
Yep, so it's a matter of how to include those costs. How I look at it is that the regular outgoing (that I'd want to measure) is the rent or (if an owner) the rent equivalent. This latter being mortgage servicing costs plus (if there is equity) the "lost" interest income on that element, ie the income foregone (to the owner) due to it being tied up in a house. Conceptually that's what I'd include in an inflation figure, I think. No clue what they actually do but I'd hope it's something like that.
UK Geometric mean rental (Includes notional rents of OO housing) value as part of the basket.
Ok. Sounds on the right lines then. Rent or rent equivalent.
This clapped out, miserable, hopeless, culture warrior government is clapped out and has screwed everyone. Time to go. And go now.
You just said that, but didn't answer my response:
Great. Who should we change to that has any better idea of what to do?
Easy. Labour. Starmer and Reeves look a good team, with more brain power between them than the entire Tory frontbench combined.
I asked for someone who has a better idea of what to do. Sir Keir and Reeves, so far as we can tell from public pronouncements, decidedly do not qualify.
We are in such a mess, aren't we? As pundits, all we've got to do is decide who takes the lion's share of the blame.
Is it a) Gordon Brown, b) Jeremy Corbyn, c) Andrew Bailey, or d) all of the above?
No, it’s E) Margaret Beckett. Just join the dots.
We established recently that it is, in fact, Sir Kenny Dalglish – for scoring the winning goal against England at Wembley in 1977, which led to Scotland becoming British Home Champions.
I would have thought that much would have been obvious?
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
2007, but Gordon Brown changed inflation from RPI which includes housing to the discredited CPI which does not, and Tory Chancellors have kept that change as it fraudulently pretended inflation had gone away.
Hmm not really like now. But you've managed to say "Gordon Brown" so job done there.
Its different to now, but it had all 3 that you mentioned. Over 11% inflation on some measures, over 4% in RPI, plus terrible public finances and a looming long recession.
I don't excuse Tory Chancellors for sticking to Brown's fraudulent scam that housing is somehow not real inflation, I've been critical on the Tories for that too for a long time. It suited Osborne et al to pretend somehow that inflation was lower than it really was by using Brown's dodgy data and the result was the Bank of England used dodgy data for their mandate.
I'd say you want housing costs (rent and rent equivalents for owners) in there not house prices.
Anyway "Brown's fraudulent scam" - well done again. But we'll stop now, I think, so you can't keep crowbarring Gordophobic abuse into the chat. Enough's enough. I won't be an enabler.
I think you would want house prices in there to a degree because people buy houses, it's a living cost.
Yep, so it's a matter of how to include those costs. How I look at it is that the regular outgoing (that I'd want to measure) is the rent or (if an owner) the rent equivalent. This latter being mortgage servicing costs plus (if there is equity) the "lost" interest income on that element, ie the income foregone (to the owner) due to it being tied up in a house. Conceptually that's what I'd include in an inflation figure, I think. No clue what they actually do but I'd hope it's something like that.
That's CPIH, but it doesn't capture house price inflation which is where the majority of the nation's inflation problem has been until now.
It does capture it. Least how I'm thinking of it.
As your house goes up in value so does your equity - therefore the 'income foregone due to it being tied up in a house' element of your housing cost increases.
This clapped out, miserable, hopeless, culture warrior government is clapped out and has screwed everyone. Time to go. And go now.
You just said that, but didn't answer my response:
Great. Who should we change to that has any better idea of what to do?
Easy. Labour. Starmer and Reeves look a good team, with more brain power between them than the entire Tory frontbench combined.
I asked for someone who has a better idea of what to do. Sir Keir and Reeves, so far as we can tell from public pronouncements, decidedly do not qualify.
I'm shocked, stunned I tell you, that you feel that way.
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
2007, but Gordon Brown changed inflation from RPI which includes housing to the discredited CPI which does not, and Tory Chancellors have kept that change as it fraudulently pretended inflation had gone away.
Hmm not really like now. But you've managed to say "Gordon Brown" so job done there.
Its different to now, but it had all 3 that you mentioned. Over 11% inflation on some measures, over 4% in RPI, plus terrible public finances and a looming long recession.
I don't excuse Tory Chancellors for sticking to Brown's fraudulent scam that housing is somehow not real inflation, I've been critical on the Tories for that too for a long time. It suited Osborne et al to pretend somehow that inflation was lower than it really was by using Brown's dodgy data and the result was the Bank of England used dodgy data for their mandate.
I'd say you want housing costs (rent and rent equivalents for owners) in there not house prices.
Anyway "Brown's fraudulent scam" - well done again. But we'll stop now, I think, so you can't keep crowbarring Gordophobic abuse into the chat. Enough's enough. I won't be an enabler.
I think you would want house prices in there to a degree because people buy houses, it's a living cost.
Yep, so it's a matter of how to include those costs. How I look at it is that the regular outgoing (that I'd want to measure) is the rent or (if an owner) the rent equivalent. This latter being mortgage servicing costs plus (if there is equity) the "lost" interest income on that element, ie the income foregone (to the owner) due to it being tied up in a house. Conceptually that's what I'd include in an inflation figure, I think. No clue what they actually do but I'd hope it's something like that.
UK Geometric mean rental (Includes notional rents of OO housing) value as part of the basket.
It's a big calculation but it'd probably spit out something like 800 quid. Maybe 900.
The government (ONS?) does already calculate average private rents for the Local Housing Allowance rates of course.
I'm not convinced house prices are going to drop too much with hugely negative real rates.
I'll stick with my 15% prediction for London.
There’s been a lot of building around here (Ealing) over the last few years. It feels like the supply will increase greatly, and I could see a big fall in prices. Probably a good thing overall.
Yes, defo a good thing overall - but better if it happens gradually and relatively with (other) prices & earnings inflation doing most of the work.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
No, but 20% wouldn’t surprise me either.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
Tough times, that's for sure. I can't recall when we last had all 3 of rampant inflation, terrible public finances, and a looming long recession.
2007, but Gordon Brown changed inflation from RPI which includes housing to the discredited CPI which does not, and Tory Chancellors have kept that change as it fraudulently pretended inflation had gone away.
Hmm not really like now. But you've managed to say "Gordon Brown" so job done there.
Its different to now, but it had all 3 that you mentioned. Over 11% inflation on some measures, over 4% in RPI, plus terrible public finances and a looming long recession.
I don't excuse Tory Chancellors for sticking to Brown's fraudulent scam that housing is somehow not real inflation, I've been critical on the Tories for that too for a long time. It suited Osborne et al to pretend somehow that inflation was lower than it really was by using Brown's dodgy data and the result was the Bank of England used dodgy data for their mandate.
I'd say you want housing costs (rent and rent equivalents for owners) in there not house prices.
Anyway "Brown's fraudulent scam" - well done again. But we'll stop now, I think, so you can't keep crowbarring Gordophobic abuse into the chat. Enough's enough. I won't be an enabler.
I think you would want house prices in there to a degree because people buy houses, it's a living cost.
Yep, so it's a matter of how to include those costs. How I look at it is that the regular outgoing (that I'd want to measure) is the rent or (if an owner) the rent equivalent. This latter being mortgage servicing costs plus (if there is equity) the "lost" interest income on that element, ie the income foregone (to the owner) due to it being tied up in a house. Conceptually that's what I'd include in an inflation figure, I think. No clue what they actually do but I'd hope it's something like that.
That's CPIH, but it doesn't capture house price inflation which is where the majority of the nation's inflation problem has been until now.
But you can't have hpi feeding into your main inflation measure, because what if it gets out of control? The secondary effect will be that the BoE feebly tries to rein it in, the primary one will be feed through to all those indexed final salary pensions that Barty is so unhappy about. So you pension goes up, and your il gilts, precisely because your house price does. Huzzah.
This clapped out, miserable, hopeless, culture warrior government is clapped out and has screwed everyone. Time to go. And go now.
You just said that, but didn't answer my response:
Great. Who should we change to that has any better idea of what to do?
Easy. Labour. Starmer and Reeves look a good team, with more brain power between them than the entire Tory frontbench combined.
They are not a match for Sunak and Hunt
The worrying thing is that might be true. They are all pretty useless. I call for @TheScreamingEagles as benign dictator. Happy to stand in when he is on holiday.
I reckon the BoE chickens out again and goes for 50bps.
I don't really go with all the slagging off the BoE. They aren't great, bit timid and behind the curve, but if we're going to cast around for a blame figure for the mess we're in I'd more go with the government. They've been shocking for the last few years.
But even that's unfair imo. We're transitioning out of a long period of near zero interest rates and QE propping us up after the financial crash. That was bound to be painful, then add the pandemic and Putin on top and you have a dire situation - stressed public finances and inflation and a poor growth outlook. 3 lemons.
The problem was not ticking up rates slowly over the past decade. A quarter-point every six months since 2015 or 2016, and we’d be in a much stronger position now.
Governments have loved rates being zero, they’ve been able to borrow and print almost at will, with seemingly none of the predicted inflation coming to fruition, and all of them have done just that. Well now the bill has come in, and the next few years are going to be horrible as those bills need to be paid.
Agree to an extent with the underlying sentiment. But the BoE brief is inflation and there wasn't any to speak of for a long time. As for the politicians they don't look beyond elections - and for good measure our lot got bogged down in the Brexit swamp for years on end. We just don't have a long term or a "planning" mindset when it comes to any aspect of economic policy.
There was huge inflation to speak of for a very long time. Inflation never went away, it just wasn't in the CPI basket that the Bank chose to look at.
The inflation went to house prices so some people mistakenly considered that "good" inflation and not "bad" inflation.
Increases in asset values, while most consumer goods prices are flat, is not a situation you can improve with interest rates. Greenspan though so and was tragically misguided.
Housing is a consumer price, people paying rent are not buying an asset when they pay that price, but it is just a consumer price the discredited CPI ignores.
Ignoring that was even more tragically misguided than any mistakes Greenspan may have made.
Most households don't pay current prices for the housing they use. Most mortgage owners agreed a price years ago, and outright owners and social tenants don't pay current prices at all. So you cannot easily control housing costs using inflation tools.
Rent absolutely is a current price and should be fully incorporated within inflation figures.
Not every good that is in the CPI basket is bought by everyone, but they still get incorporated, rent is paid by a significant portion of the country and is a price not an asset.
Simply turning a blind eye to a portion of prices, because those prices aren't paid by everyone, or its all just too difficult, means you're using a misleading and fallacious figure for inflation.
Aren’t housing costs in RPI?
Which in no small part is why RPI has been consistently higher than CPI but Chancellors from Brown onwards have pretended that CPI is better thus pretending thus pretending inflation was lower than it really is by excluding from the calculation the single biggest cost in most households budget.
CPI and RPI both include one housing component, rents. RPI has two additional housing components designed to capture owner occupied housing costs, depreciation and mortgage interest payments (MIPS). The first of these essentially captures house prices, which for most home owning households doesn't have any bearing on their day to day living costs. Meanwhile MIPS has had almost no impact on the RPI-CPI wedge in the last decade. There is another factor pushing RPI above CPI by around 0.9pp, the formula effect, which is a statistical artifice that explains why RPI is no longer an official national statistic and would have been abandoned completely by now if it weren't for the linkers market. RPI is garbage. There is another CPI measure that captures owner occupied housing in the same way the US CPI does, CPIH, but it's not used for the BOE target.
The rental price in CPI is distorted and doesn't reflect the real world, housing costs far more for household budgets on average than CPI basket accounts for it.
The fact that "most households" don't have to pay house prices means absolutely nothing to those who are paying house prices.
"Most households" might not buy a new TV, or a new mobile phone, or plenty of other consumer goods in a year. But those costs are still included in inflation, because they're real and are paid, whether most pay it or not. What's worse is that the households that do have to pay housing costs are at the sharper end of the stick when it comes to inflation than those who are living house-cost-free, so faking your data by excluding housing costs just means you have dodgy data that is extremely inaccurate for those who are paying those costs.
RPI may be garbage, but CPI is worse.
Housing is an asset. If you want to capture the cost of housing then you might want to capture the cost of mortgage interest payments. But for those who own their homes outright an increase in prices simply makes them richer, which would be an odd thing to describe as inflation as we usually understand it. The question of whether central banks should be worried about asset price inflation is a different one. They most certainly should, and have paid too little attention in the past. But simply wedging asset prices into a measure of consumer price inflation isn't the right approach, in my opinion. Nor is persisting with a discredited measure like RPI.
Housing is a cost, for those who are paying for it. Its no more just an asset for those who need to pay to have a roof above their heads than a can of beans or roll of toilet paper in their cupboard is an asset.
Yes those who have a stockpile of toilet paper or houses might be better off reselling them if the price rises, but that's true in any market, those who have to pay the cost OTOH are worse off.
You keep referring to those who own their own homes, but those who own their own homes aren't the ones who are paying the cost generally, it is people who have to pay to buy something who pay the cost. If you have bought a lifetime supply of toilet paper then the fact that you never need to buy toilet paper again doesn't mean others elsewhere are excused from paying that cost.
Comments
In 1997 there was no truly successful, competent Labour government in living memory. The last Callaghan government had ended at the IMF, the last of reign of Wilson was more than 2 decades ago and his heyday was 3 decades ago. So Blair faced a major credibility gap which he had to work hard, and successfully, to close.
Blair and Brown were more recent and although the financial crisis was a blot on the end of Brown's rule both he and Blair are still remembered as competent administrators who didn't immediately plunge the country into a sterling or debt crisis. Blair's biggest black mark was Iraq. So I think it's easier for potential Labour voters now to imagine a Blair-style government with decent economic growth and improving public services.
20 plus years of being told that Vladimir Putin is a clever and wily foe, when in reality he is an absolute chump.
https://www.youtube.com/watch?v=PBm5M7MUWl8
But I’m not quite convinced. Maybe blowing the dam makes more sense? Or the zap power plant?
The fact they are looting art and taking statues suggests they don’t expect to be back any time soon. They’ve gone for good
Its worth noting too that while the USSR was essentially a Russian empire, Russia itself is essentially a Muscovite empire.
Moscow is a parasite that drains the energy and wealth of other Russian regions, which prevents Russia from developing to a power it could be.
The risk for the Tory Party of 2022 is that it won’t have that luxury in 2 years time. So maybe Labour won’t need to be Blair or Brown in order to get a big victory next time - their opponents, in comparison, may look worse than Major’s government.
In any case 15% absolute is pretty big. Do you mean a lot more than that? That would surprise me actually.
I think it was a lot closer than many of us make out. What's screwed Russia is their failure to win in the first week, and their utter lack of preparedness for a long war.
But each significant fall is likely to be met by an increase in first-time buyers at the point that they realise they can afford to buy. I.e. they won’t hang about for possible further falls.
An interesting diversion is to visit a random Russian town on Google Streetview. Rostov-on-Don, for example. Half a mile of tarmac downtown, the rest is dirt roads with no footpaths. As a world power it doesn't even qualify as a developed country.
Not every good that is in the CPI basket is bought by everyone, but they still get incorporated, rent is paid by a significant portion of the country and is a price not an asset.
Simply turning a blind eye to a portion of prices, because those prices aren't paid by everyone, or its all just too difficult, means you're using a misleading and fallacious figure for inflation.
Miss Argentina and Miss Puerto Rica reveal they secretly got married
Unlikely but possible
Of course it would be better all round if Labour had a compelling convincing vision to improve the lot of Mr, Mrs and Mx Voter.
But it's very likely that "we haven't just failed in an inescapable way" could be the entirety of the Labour manifesto in 2024 and that would be enough.
https://www.bbc.co.uk/news/business/market-data
You have to scroll down to USD before hitting green.
And gas, gas is green.
As for a sterling crisis, such a tiny proportion of the electorate even know what that means. They understand inflation, though, even if these days it's not called inflation any more, because "inflation" sounds like something you can do something about (prices going up? real income falling? then demand higher salaries to keep up with prices!), whereas "cost of living crisis" sounds like something that's happening on the telly mostly - this week's issue for prissy types to debate with each other about.
Blair and Thatcher on the other hand both won every general election they ever fought.
I agree that if the Tories are going to lose the next election they will go down rather in the manner that Major did. But the catch is that that's a huge great Spartan "if". The Tories will win the next election. All they need do is play the immigration card.
Is there somewhere I can sell the Labour minus Tory voteshare gap? I suspect the "experts" are getting this completely wrong. I'd love to sell it at ~25pp if a market is currently assessing it so absurdly.
“The higher the exposure to political conservatism, the higher the COVID-19 mortality rates and stress on hospital intensive care unit (ICU) capacity, according to a new study from Harvard T.H. Chan School of Public Health.”
1. Convince voters that although you have guided the country through bad economic times (caused or at least worsened by your party) you have their best interests at heart and have managed things competently and fairly since then.
2. That deep down people’s preference is for a Tory government - I.e as much as there has been mistakes and mismanagement most peoples sensibilities lie with the Tories, not Labour.
He also needs luck. A lot of it. Resolution in Ukraine and a stabilisation in the world economy is probably a must for him, and it is largely outwith his control.
Number 1 is going to be a hard sell given the issues that the country finds itself in. If just one of his/Hunt’s budgets is seen as being unfair or unjust then it will probably remove any chance of success on that front. Given the state of the economy and the unpopular decisions that have to be made, it is a ludicrously hard objective to meet.
So the UK gets the pain of the 0.75% but not the benefits of acting hawkishly.
Lose/lose. He is completely unsuited for the job and always was.
The situation is dire and the job of government imo is firstly to not make it worse (thus far a fail) and secondly to direct the pain at those who can best handle it (jury out on this one but I'm not optimistic - it's the Tories).
NEW:
Rishi Sunak has scrapped Liz Truss’ plan to move to British embassy in Israel from Tel Aviv to Jerusalem.
https://twitter.com/electpoliticsuk/status/1588138939235311616
Even measured by RPI it was over 4%
It was only because Brown dumped housing from RPI and shifted us to the dodgy CPI data to mask inflation that inflation ever seemed low.
There is another CPI measure that captures owner occupied housing in the same way the US CPI does, CPIH, but it's not used for the BOE target.
https://twitter.com/tarasberezovets/status/1587896275164631041
I don't excuse Tory Chancellors for sticking to Brown's fraudulent scam that housing is somehow not real inflation, I've been critical on the Tories for that too for a long time. It suited Osborne et al to pretend somehow that inflation was lower than it really was by using Brown's dodgy data and the result was the Bank of England used dodgy data for their mandate.
This is not over at all.
The fact that "most households" don't have to pay house prices means absolutely nothing to those who are paying house prices.
"Most households" might not buy a new TV, or a new mobile phone, or plenty of other consumer goods in a year. But those costs are still included in inflation, because they're real and are paid, whether most pay it or not. What's worse is that the households that do have to pay housing costs are at the sharper end of the stick when it comes to inflation than those who are living house-cost-free, so faking your data by excluding housing costs just means you have dodgy data that is extremely inaccurate for those who are paying those costs.
RPI may be garbage, but CPI is worse.
Anyway "Brown's fraudulent scam" - well done again. But we'll stop now, I think, so you can't keep crowbarring Gordophobic abuse into the chat. Enough's enough. I won't be an enabler.
She has pivoted, as that word seems popular currently, onto not only saving the planet but onto overthrowing capitalism and racism.
What a ledge.
https://www.msn.com/en-gb/entertainment/music/greta-thunberg-it-s-time-to-transform-the-west-s-oppressive-and-racist-capitalist-system/ar-AA13Ebby?ocid=entnewsntp&cvid=2775caec17904eccbd72dc95a9b8e10b
As for preparedness: I honestly don't think they're structured in the right way to fix the preparedness problems. And I don't see a willingness to fix their structure.
The Russian military is, IMO, screwed.
If the Bank hadn't had their mandate changed to the dodgy and unrepresentative CPI data then they're have had to deal with inflation more often than they have. But that didn't suit Chancellors from Brown onwards.
When many households are paying a thousand pounds a month or more for their home, and that price has gone up dramatically for two decades now, to pretend there was no inflation in that cost or the costs that any households have to pay is a dishonest lie pure and simple. The fact not all households pay for an item is not a reason for that item to be excluded from inflation figures.
If you don't want to be an "enabler" of calling out that, then don't try to get the last word in.
https://twitter.com/SavantaComRes/status/1588158672299081728
That not everyone pays for it is perhaps an argument to have it weighted to represent the costs as paid for by those who do at the appropriate weighting, not an argument to exclude it completely.
What’s not to like?
The Tories however are no better. Having promised to rectify the situation they have done nothing and although lobbied have refused to do anything. Worse they have now completely broken the link between Corporation Tax, ACT and dividends.
The question of whether central banks should be worried about asset price inflation is a different one. They most certainly should, and have paid too little attention in the past. But simply wedging asset prices into a measure of consumer price inflation isn't the right approach, in my opinion. Nor is persisting with a discredited measure like RPI.
Great. Who should we change to that has any better idea of what to do?
"Penguin Random House, which is owned by the German media conglomerate Bertelsmann."
(Wikipedia).
https://journals.openedition.org/osb/1124
Although some Tories might find useful the reminder that the rot started under Johnson and the timbers were already rotten through by the time their members decided it was the right time for another gamble…
https://en.wikipedia.org/wiki/RPIX
Is it a) Gordon Brown, b) Jeremy Corbyn, c) Andrew Bailey, or d) all of the above?
Something like that anyway. But there's no doubt various ways of looking at it.
Beckett apologists are the worst on this site, second only to Leon.
Anyone bar the people who have been in power and their decade long advocates basically.
I would have thought that much would have been obvious?
As your house goes up in value so does your equity - therefore the 'income foregone due to it being tied up in a house' element of your housing cost increases.
Yes those who have a stockpile of toilet paper or houses might be better off reselling them if the price rises, but that's true in any market, those who have to pay the cost OTOH are worse off.
You keep referring to those who own their own homes, but those who own their own homes aren't the ones who are paying the cost generally, it is people who have to pay to buy something who pay the cost. If you have bought a lifetime supply of toilet paper then the fact that you never need to buy toilet paper again doesn't mean others elsewhere are excused from paying that cost.