Could we be heading into Stagflation?

[LuisNaniencia]

Stagflation is a period when slow economic growth and joblessness coincide with rising inflation.

I'm pretty worried right now. The 2008 recession obviously dented the housing market short term, but living costs dramatically reduced. A litre of petrol was way below £1 for a time.

With gas prices/fuel/food all increasing, pandemic recovery/brexit effects all due to hit next year, could this be the worst financial situation many of us have experienced?

Is there anything anyone can do about it?

 

[Moby]

Think we are already in it.

 

[LuisNaniencia]

Think we are already in it.

I think we are still officially in growth, but can't see it lasting long.

 

[The Boy]

To be honest I am more worried than that. Debt in the UK, US and other western countries is at its highest levels ever and at the same time you have one of the biggest companies in the world in China Evergrande on the brink and now another Chinese developer, Fantasia, defaulting on debt, you have all the ingredients for a financial crash that puts 2008 into the shade.

 

[LuisNaniencia]

To be honest I am more worried than that. Debt in the UK, US and other western countries is at its highest levels ever and at the same time you have one of the biggest companies in the world in China Evergrande on the brink and now another Chinese developer, Fantasia, defaulting on debt, you have all the ingredients for a financial crash that puts 2008 into the shade.

What do you think that would mean for us average Joe's?

 

[jojojo]

In the UK, I suspect we're heading into a massive rise in imported food in order to temporarily preserve low supermarket prices. The subsequent collapse of UK agriculture will fix the shortage of butchers and crop pickers and that will reduce pressure on the UK food processing industry. Stags wil however roam freely, for weekend shoots by Boris's mates.

So stags for sure. Short-term, inflation via fuel and transport cost rises, including some pay increases. Long-term, inflation across the board to eat back the pay increases.

 

[Ish]

Our unemployment in South Africa is around 35%. Feels like we’ve been in stagflation ever since the financial crisis.

 

[Deery]

Gas prices set to go up an extra £400 a year that’s a massive hit for some people as well as electricity and food. It’s going to be a bleak time ahead.

Do you think Boris keeps banging on about higher wages as he knows inflation is on its way.

 

[Pexbo]

Gas prices set to go up an extra £400 a year that’s a massive hit for some people as well as electricity and food. It’s going to be a bleak time ahead.

Do you think Boris keeps banging on about higher wages as he knows inflation is on its way.

1000%

 

[The Boy]

What do you think that would mean for us average Joe's?

Pretty standard horrendous stuff...

Fall in real term wages while inflation rises as Jojojo described above. Rise in redundancies as businesses struggle and fold, collapse of the housing market (though this may not be a bad long term effect in the UK) investments, pensions etc worth less.

Basically we all have less money but everything is more expensive.

 

[golden_blunder]

Welcome to a better U.K.

At least you can wallow with no Johnny Foreigner stealing your tears

 

[TwoSheds]

Gas prices set to go up an extra £400 a year that’s a massive hit for some people as well as electricity and food. It’s going to be a bleak time ahead.

Do you think Boris keeps banging on about higher wages as he knows inflation is on its way.

It's not on its way, it's already here and has been for a while. The supermarkets have got very comfortable in jacking prices up 10% at once, they don't bother with piddly 2 and 3% rises any more. Gas has gone up the best part of 400% since last year. It will probably come down at some point but not back to where it was. We've severed ourselves from the stabilising effects of being part of the European single market and even they will likely have inflation in some areas so we're frankly fecked. Oh, and we've got the fecking Tories in charge of the pissup - they don't understand about minor concepts like planning or energy security.

@The Boy makes a good point about debts all over the Western world and China as well. Inflation will be the only way to tackle them, particularly when there's still no widespread political will for increasing taxes on the ultra wealthy.

 

[Maagge]

Denmark is doing really well coming out of the pandemic.
However, we are overdue a crash. Housing prices are ridiculous and it surely can't continue growing much longer.

 

[LuisNaniencia]

Denmark is doing really well coming out of the pandemic.
However, we are overdue a crash. Housing prices are ridiculous and it surely can't continue growing much longer.

Are you suffering from food/fuel/gas price increases as well?

 

[MikeUpNorth]

It's possible, for sure. But I'm going to stick my neck on the line and say I don't expect high inflation (above 4-5%) to last for very long in the west. It seems to me that the current pressures are mostly down to supply bottlenecks, particularly in microchips and some commodities. I think the bottlenecks will be worked out over the next 6-12 months, and inflation pressures will abate. I do think growth will likely disappoint on the downside though - corporate margins are at record levels and are going to get squeezed.

That said, I could well be wrong. And if any western country were to get some nasty demand-pull inflation, I think it would be the UK due to staff shortages and inflationary wage pressures.

 

[Maagge]

Are you suffering from food/fuel/gas price increases as well?

Not that I've noticed. I don't drive though.
I haven't heard talk of anything with regards to those prices.

Unemployment is like 3.6 % which is the lowest in 12 years (which worryingly was around the last crash).

 

[Superden]

gas prices yesterday were up 35% on the day before losing all their gains and dropping 65% from their intra day high, yes, Putin calmed the markets etc with comments about increasing supply, but lets be honest, Its a bigger casino then its ever been. None of the lessons / platitudes after the last crash have been learnt. and everyday folk will pay the price. how many bankers / traders were ever held accountable after the last crash?

will there ever be a time where the rage people have for migrants etc is actually aimed at those at the top who have responsibility for peoples shitty lives.

 

[Massive Spanner]

Denmark is doing really well coming out of the pandemic.
However, we are overdue a crash. Housing prices are ridiculous and it surely can't continue growing much longer.

Sounds pretty much the same as Ireland.

 

[MadMike]

Stagflation is a period when slow economic growth and joblessness coincide with rising inflation.

I'm pretty worried right now. The 2008 recession obviously dented the housing market short term, but living costs dramatically reduced. A litre of petrol was way below £1 for a time.

With gas prices/fuel/food all increasing, pandemic recovery/brexit effects all due to hit next year, could this be the worst financial situation many of us have experienced?

Is there anything anyone can do about it?

We don't have joblessness. In the UK unemployment rate is below 5% and we're heading for the lowest unemployment rate since the 70s. In fact, the economy is struggling to grow in part at least due to labour shortages.

PS. You cannot magically convert the 5% unemployed to HGV drivers, roofers, software engineers, doctors, carers and teachers. We have a pretty severe shortage of skilled labour, which will only be exacerbated in the future by falling birth rates. Immigration and access to bigger labour markets is the only thing that can save us from that. Ironically, we shot ourselves on the foot by voting to leave the biggest labour market right on our doorstep.

 

[Superden]

let the markets decide. thats good old capitalism, if gas / oil gets too expensive, then people will choose to stop using it. then the price will come down. what could possibly be wrong with that. ?

 

[Superden]

We don't have joblessness. In the UK unemployment rate is below 5%. In fact, the economy is struggling to grow partly at least due to labour shortages.

how many of those in 'employment' are actually in part time work with their wages supplemented by the state via tax credits and universal credit.

 

[Buster15]

Stagflation is a period when slow economic growth and joblessness coincide with rising inflation.

I'm pretty worried right now. The 2008 recession obviously dented the housing market short term, but living costs dramatically reduced. A litre of petrol was way below £1 for a time.

With gas prices/fuel/food all increasing, pandemic recovery/brexit effects all due to hit next year, could this be the worst financial situation many of us have experienced?

Is there anything anyone can do about it?

Yes of course. Cometh the hour, cometh the man.
Boris to the rescue.
Hoorah for Boris. Our saviour....

 

[Buster15]

let the markets decide. thats good old capitalism, if gas / oil gets too expensive, then people will choose to stop using it. then the price will come down. what could possibly be wrong with that. ?

Apart from freezing to death, nothing.

 

[MadMike]

how many of those in 'employment' are actually in part time work with their wages supplemented by the state via tax credits and universal credit.

I don't know, I'd be interested to see numbers. I'd be surprised if the number was so significantly high that it greatly changes the picture though.

It's pretty evident from reading the news, seeing what has been happening to wages and listening to what all business lobbies are shouting from the rooftops... that we have a severe skilled labour shortage.

https://www.bbc.co.uk/news/business-58014256

EDIT: If a shortage of affordable property (to rent or buy) especially in the cities along with extortionate transport costs were not bleeding young people dry, then I would argue this would be one of the best times to be young and look forward to your future. That's a big if though. We desperately need to sort that one out because currently teachers, coppers, bus drivers etc., they can't afford to leave in London any more. Almost in any borough now. That's insane.

 

[LuisNaniencia]

We don't have joblessness. In the UK unemployment rate is below 5% and we're heading for the lowest unemployment rate since the 70s. In fact, the economy is struggling to grow in part at least due to labour shortages.

PS. You cannot magically convert the 5% unemployed to HGV drivers, roofers, software engineers, doctors, carers and teachers. We have a pretty severe shortage of skilled labour, which will only be exacerbated in the future by falling birth rates. Immigration and access to bigger labour markets is the only thing that can save us from that. Ironically, we shot ourselves on the foot by voting to leave the biggest labour market right on our doorstep.

Unemployment rates are indeed low now, but when the pandemic and other factors cause a pinch, will it last? I'm thinking next year is going to be the worry.

 

[Superden]

I don't know, I'd be interested to see numbers. I'd be surprised if the number was so significantly high that it greatly changes the picture though.

It's pretty evident from reading the news, seeing what has been happening to wages and listening to what all business lobbies are shouting from the rooftops... that we have a severe skilled labour shortage.

https://www.bbc.co.uk/news/business-58014256

EDIT: If a shortage of affordable property (to rent or buy) especially in the cities along with extortionate transport costs were not bleeding young people dry, then I would argue this would be one of the best times to be young and look forward to your future. That's a big if though. We desperately need to sort that one out because currently teachers, coppers, bus drivers etc., they can't afford to leave in London any more. Almost in any borough now. That's insane.

i would say its an 'unskilled' labour shortage with massive gaps in hospitality and the care sector. which is why Boris's whole high wage high skilled economy is nonsensical. the people paid to hold open doors, serve drinks and wipe arses in singapore are cheap imported labour from places like indonesia.

 

[MadMike]

Unemployment rates are indeed low now, but when the pandemic and other factors cause a pinch, will it last? I'm thinking next year is going to be the worry.

I have no magic ball to say what will happen, there are always events you cannot account for like the pandemic or global financial crisis etc.

But barring any such event, I would be more worried about drowning in a desert than high unemployment for the next 5 years. And I don't worry about the former at all.

 

[One Night Only]

We all gonna be bankrupt in a couple of years, every company just wanting bigger profit margins. Councils being greedy and upping council tax while fixing feck all problems. They just piss money away.

 

[sun_tzu]

To be honest I am more worried than that. Debt in the UK, US and other western countries is at its highest levels ever and at the same time you have one of the biggest companies in the world in China Evergrande on the brink and now another Chinese developer, Fantasia, defaulting on debt, you have all the ingredients for a financial crash that puts 2008 into the shade.

Throw in the US debt ceiling being hit ... due around October 18th...

There would be chaos if that happened and being realistic investors wont wait till the last day to act

18th is a Monday so at the latest by Wednesday / Thursday next week you will see people taking pre-emptive action... so basically we might be a week from the start of a massive financial meltdown.

 

[LuisNaniencia]

Throw in the US debt ceiling being hit ... due around October 18th...

There would be chaos if that happened and being realistic investors wont wait till the last day to act

18th is a Monday so at the latest by Wednesday / Thursday next week you will see people taking pre-emptive action... so basically we might be a week from the start of a massive financial meltdown.

Time to start shorting stocks?

 

[sun_tzu]

Time to start shorting stocks?

Depends... if / when you think they will lift the debt ceiling

 

[entropy]

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[Green_Red]

Kind of off topic, but does anyone think that a crash would represent a perfect moment to adopt digital/crypto currencies? It seems that this SEC vs Ripple case could have a positive outcome for the asset classification. Its going to happen eventually, would it make sense to reduce the clearing times for financial transactions during a recession? I know the liquidity problem related to clearing times doesn't help in a recession, right? Or am I linking two completely separate things that have no connection?

 

[Zen86]

Is it time to start hoarding bog roll yet?

 

[The Boy]

Throw in the US debt ceiling being hit ... due around October 18th...

There would be chaos if that happened and being realistic investors wont wait till the last day to act

18th is a Monday so at the latest by Wednesday / Thursday next week you will see people taking pre-emptive action... so basically we might be a week from the start of a massive financial meltdown.

I agree it could be that soon, but even if they raise the ceiling it won’t last, maybe I’m being pessimistic, but I think we’re heading for one of the biggest crashes ever seen probably by the end of this year.

 

[MikeUpNorth]

Seems like I'm the only optimistic fecker here.

 

[golden_blunder]

Seems like I'm the only optimistic fecker here.

Ever considered an over the bar but for politics? I reckon you’d get some great analysts/pundits in here.

 

[sun_tzu]

I agree it could be that soon, but even if they raise the ceiling it won’t last, maybe I’m being pessimistic, but I think we’re heading for one of the biggest crashes ever seen probably by the end of this year.

I think one of the republican plans seems to be to agree a small raise that will see them through to December then they need to agree again - presumably because if bidens other plans pass in that time they will fully walk away from negotiations

 

[MikeUpNorth]

Ever considered an over the bar but for politics? I reckon you’d get some great analysts/pundits in here.

Yeah, that could be good. Would need to get peterstorey back though.

 

[golden_blunder]

Yeah, that could be good. Would need to get peterstorey back though.

Get on it, I’d give it a listen