The global economy is in serious danger

[raspberry-blower]

Business Insider: Cargo ships being scrapped at a faster rate than they are being built

[raspberry-blower]

Mish Shedlock: World Trade plunges 13.8% in US Dollar terms

“Before the 2008 crisis global trade grew at as much as twice the rate of global output for decades. Since 2011, however, trade growth has slowed to be in line with — or even below — the broader growth of the global economy, prompting some to raise questions about whether the globalisation that has been such a dominant feature for decades has peaked.”

Keynesian stimulus has hit the end of the line.

[johnhemming2]

However, the volume of trade went up and the value of the dollar compared to many currencies went up. Perhaps it would be best to separate out:

a) Changes in the values of currencies by having a currency basket as the base scale.

b) Changes in the value of oil. A lot of trade is in oil and gas. If the prices of that go down then the value of the trade will go down,

[raspberry-blower]

However, the volume of trade went up and the value of the dollar compared to many currencies went up,

Have you got a link to back this assertion up, please John?

[johnhemming2]

Looking at the following chart which is in the same article.



It appears to me that the end of 2015 is slightly higher than the start of 2015. There was a midyear drop.

The article is written by someone who wishes to undermine the approach of Keynsian economics. A Keynsian demand boost through borrowing is being used by pretty well all of the Western governments.

[biffvernon]

Without reform of the financial system, another crisis is certain, and the failure ... to tackle the disequilibrium in the world economy makes it likely that it will come sooner rather than later

This is written by someone who was the Governor of The Bank of England.

http://www.theguardian.com/business/201 ... m-of-banks

[johnhemming2]

It is difficult to see what changes he proposes. I personally expect another crash when there is a further price spike. This may not be that soon as companies are likely to respond quite quickly to increased oil prices. Properly values are also v high, but that is in part planning and migration.

[Little John]

It is difficult to see what changes he proposes. I personally expect another crash when there is a further price spike. This may not be that soon as companies are likely to respond quite quickly to increased oil prices. Properly values are also v high, but that is in part planning and migration.

That is largely, though of course not entirely, bullshit. House prices are insanely high largely because of a wall of lent-into-existence credit that has occurred over the last three decades. A wall of credit that has led to an entirely predictable and massive inflationary driven prices rise in primarily just the one asset class; real estate. And when it looked, in 2008, like this massive inflationary bubble was about to burst, in turn causing prices to fall back to where they should have been based on their real underlying supply and demand, which they should have done, our governments (echoed across the Western world) bailed out the lenders, all in order to keep this house of cards afloat. This was an evil act and you are an apologist and cheerleader for the people who committed this act.

[johnhemming2]

This was an evil act and you are an apologist and cheerleader for the people who committed this act.

However, prices are not high across the country. There are places where because demand for the properties is low the prices are a lot lower. Some properties because of their state have been sold for £1.

This two bedroom terraced house is on the market for £17,500
http://www.rightmove.co.uk/property-for ... 05520.html

Hence you are wrong if you believe that the availability of credit is the sole factor that drives up prices. It is primarily demand and supply. I accept that the availability of credit affects people's ability to buy and, therefore, is one factor in demand. However, the main factor is people wanting places to live (even if they are paying rent and funding a landlords BTL mortgage).

[biffvernon]

Of course it's demand and supply! But geography is not isotropic. To benefit from the easy credit generated by the banking system in a neo-liberal economy one has to have a job that pays above a certain threshold (or the Bank of Mum & Dad) a threshold often not met in those areas where house prices are low. In other areas, such as London, a 'virtuous' (?) circle exists of high wages enabling access to cheap credit that allows house prices to be bid upwards. It's all part of the complex transfer of wealth from the majority to the minority that has been aided by the Tories and, when they had the chance, the LibDems.

And Lord knows why, John, you might think migration is a contributory cause of house price inflation. Emigrants are likely to be property owners selling up, immigrants tend to be without the funds to compete in the housing market for quite some while. I don't suppose the incoming Russian oligarchs are the game-changer!

As for planning, there are plenty of building plots with planning permission waiting to be developed and plenty of other land that could get planning permission. That's a pretty weak excuse.

[PS_RalphW]

People need housing. The rate of house building is a small fraction of the increase in population. Family size is falling. Long term economic factors have moved jobs from country to city, North to South. People have a simple choice to buy or rent (or sometimes stay living with family or bunk or become homeless). This has led to ever higher rent prices.

Most people prefer to buy and so will spend whatever they can afford in terms of monthly payments in order that one day they can call the house theirs. Easier credit and finite supply has driven prices ever up as people pay whatever they can afford to break away from renting. This has lead to massive unearned income for property owners selling up.

At the same time the buy to let market has received tax benefits which
1. reduces the number of houses for people to buy for themselves
2. Increases total debt levels as the Landlords take on more debt
3. Produces a whole new class of rentiers taking their cut.

Housing is a huge debt bubble with the banks taking the biggest cut of the profits on the way up, and receiving free handouts when the bubble bursts.

This is more or less fuedal land control.

[johnhemming2]

And Lord knows why, John, you might think migration is a contributory cause of house price inflation.

Supply and demand. The more people there are in the UK the more demand for housing.

[kenneal - lagger]

And Lord knows why, John, you might think migration is a contributory cause of house price inflation.

Supply and demand. The more people there are in the UK the more demand for housing.

Yes, Biff, 1 + 1 = 2 or in the case of immigrants and housing 1 + 1 = 1.5 because immigrants are willing to live a family or 5 to a rented room provided by, often, by ex immigrant landlords! And there are well over 300,000 more immigrants every year than there are emigrants. That's quite a few houses even if they are stacked five to a room!

The buy to let market has also been fuelled by *ankers' bonuses. They know of the fragility and worthlessness of many of the markets to which they send people's money so they get into property. Even if there is a crash you are left holding a physical asset which can gain value again and provides a return in the form of the rent unless, of course, you foolishly leverage your cash with cheap money from the bank.

[biffvernon]

And Lord knows why, John, you might think migration is a contributory cause of house price inflation.

Supply and demand. The more people there are in the UK the more demand for housing.

Noooo. It's the more rich people there are the more the demand. Any number of poor people can remain homeless sleeping on the street without affecting house prices. Folk who don't/can't participate in the market do not influence the price.

And remember that the area of habitable space divided by the population has consistently been rising (with indoor lavatories added). Population has risen, housing has risen even faster, house prices have risen faster still - because money has been created and the banks still think (perhaps correctly) that bricks and mortar are a relatively safe place for the money.

[PS_RalphW]

And remember that the area of habitable space divided by the population has consistently been rising (with indoor lavatories added). Population has risen, housing has risen even faster,

Where is the evidence for this? I strongly suspect that the number of dwellings per capita has fallen, and if total housing square feet has risen it is due to the middle class adding ever more rooms to their McMansions. The size of starter homes seems to have been progressively falling in my limited experience.

I could not buy a bungalow round here for silly money because they were all snapped up by developers on the day they went on the market, so that they could be extended within an inch of their planning constraints and sold to Dinkies.

That's why I'm in a listed building - no chance for increased floor area.