11 thoughts on “Mark Carney’s Flying Circus has trouble with the UK’s trade and construction data

  1. Hi Shaun

    I believe I’m right in saying that the total of UK debt (public and private) is increasing. Given this one could be forgiven if one concluded that as each month passes we are not nearer an interest rate rise but farther away, as the consequent impact on the UK debt burden is that much worse with each month that passes.

    Carney et al are already in a trap of their own making and I don’t believe they will ever reverse course voluntarily; I think it’s far more likely that when their policies bring on the bust (odds on) and inflation goes through the roof – possibly through a currency collapse – then they will increase rates “to meet the emergency that no-one could have foreseen”.

    It is ironic that the Fed is now admitting that it is market dependent and is afraid to raise rates because it will prick the very bubble that it itself has caused – reflexivity anyone?

    • Your point about inveigling more and more people in an interest rate “trap” is one that I’ve made here before, but it may be even worse than this.
      Sure some people are scurrying to repay their debt “before interest rates go up,” but there must be many, many people so deep in debt that they view their position as hopeless.
      They know they will lose everything if interest rates ever return to normal, and since banks keep chucking more credit at them, are taking solace/ burying their heads, call it what you will, from ever more HP-financed consumer goods.
      They are what Carnage would call, “Good Citizens”.

      This will mean misery for millions, as it is just not sustainable in the long term.

      • I think the problem is that debt is one of the pillars of the whole consumer society. The fact is that for many people their standard of living has only gone up because of access to debt (there are others such as more women working full time ; Working Tax Credits).

        If you look at where real working incomes have gone in the last twenty five years they have increased by around 60% which sounds good. However, that is based on the CPI, not the RPI which is arguably a better measure of inflation. House prices have gone up much, much more so one of the main items of anyone’s cost of living has gone up much faster.

        Globalisation and robotics will do nothing for wages in the next twenty years so the underlying issues are likely to get worse not better.

        • I agree with Therawbuzzin about a possible endgame. As a net saver, I’m exposed to any attempts by the Govt to create excess inflation or bail out heavily indebted voters so I’ thinking about taking on debt and buying tangible assets to reduce any risk/benefit along with other debtors.

    • ‘ I think it’s far more likely that when their policies bring on the bust (odds on) and inflation goes through the roof – possibly through a currency collapse – then they will increase rates “to meet the emergency that no-one could have foreseen”.’

      Bang on Bob!

      I think they’ll bring Gordon Brown back to save the world again.

    • Hi Bob J

      I can see that you have a few replies so I thought I would simply add some numbers.

      Public Debt

      General Government Net Borrowing in the financial year ending 2015 (April 2014 to March 2015) was £93.5 billion (5.2% of Gross Domestic Product).

      Private Debt

      Total lending to individuals increased by £4.3 billion in August, compared to the average monthly increase of £3.5 billion over the previous six months. The three-month annualised and twelve-month growth rates were 3.5% and 2.7% respectively.

      Loans to non-financial businesses increased by £2.0 billion in August, compared to the average monthly decrease of £0.2 billion
      over the previous six months. The twelve-month growth rate was -0.9%. Within this, loans to small and medium-sized
      enterprises (SMEs) increased by £0.3 billion, broadly in line with the average over the previous six months. The twelve-month
      growth rate was 0.0%.

      So with even businesses seemingly borrowing we can see that every UK sector is a net borrower which gives a strong hint as to where debt is going!

  2. FIFA “is a four-letter word,” Carney jokingly told a panel in Lima with IMF head Christine Lagarde and Brazilian Finance Minister Joaquim Levy.
    ________________________________
    So is, “Bank.” Mr Carney, so is, “Bank.”

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