Poster T--: I guess we are moving from stage 8 to 9 to 10...
I think the central banks will resist raising rates for some time yet.
BUBB's ANSWER was:
That's right.
Watch for the currency to continue to weaken, and people to start getting their assets out of the UK, where they can.
Banks are going to be pushed to lend, so those who cannot sell assets, will borrow against them, and move the money out. This will serve to increase the indebtedness and vulnerability of the UK. Meantime, the government will not want to admit it is happening, because that we act as encouragement for others to do the same.
Slowly, the UK is creeping up on the "No Exit" point, intentionally blind to the dangerous path that they are on.
Meantime, what do I see on Bloomberg at this very minute?:
They are talking about the BofE expanding the purchase of bonds, to keep rates down. This is a very temporary fix, to a unfixable problem that Brown's government has baked into the cake through years of ignoring outrageous and dangerous house price inflation. Thanks to that huge, world-leading house bubble. Spain, Holland, and the UK are stuck in a similar very sad corner. But the per capita size of the UK's debts is bigger, and London has relied heavily on grotesque growth in its financial sector.
Here's a chart that should keep every UK homeowner and UK Prime Minister awake at night !
The UK is truly bankrupt if incomes fail to rise alot, and/or property does the "normal" overshoot to the downside.
This is based on the following statistics on historical Price-to-Income ratios / attachment=1049:housepriceratios.pdf
What if it overshoots, and falls back to the 24% discount seen after the last crash?
Also discussed here:
UK's HPC will be much, much worse than 1990