How high will inflation go ?

[MBE2017]

Car finance will become a huge scandal, most garages are pushing it as far as they can before it crashes down. Loads of money in commissions.

I disagree on the almost every car being a new or just couple of years old, people are borrowing even for 10/15 year old cars as well.

My now deceased father in law was always asking how his neighbours kept buying new cars, how could they afford to? I always replied quite simply, they cannot, they were just on the tick. He was like myself, old school, buy for cash, save when you couldn’t afford something, but we are a dying breed.

Hard to talk youngsters and others from taking out finance when they have little future to look forward to, most believe houses are beyond their means, hence most live at home.

 

[Justin Smith]

And I predicted a few days/weeks ago that education and care would be the next sectors hit by rising costs but fixed incomes and now I see schools are talking about 4 (or even 3) day weeks come winter to save the energy bills (how much would a 4 day week even save, 5% ?)

Would they be the same schools who, having shut for 7 months in 2020/21, are now fining parents for taking their kids (even kids with otherwise perfect attendance records) out of school for one week so they can actually afford to take them on holiday ?
The stench of hypocrisy is overwhelming.

 

[Justin Smith]

Western economies were extremely vulnerable and Putin saw his opportunity. One quick and painless push into Ukraine and we can take it back. "We have a huge and very well-financed military with some of the most modern weapons available!" he thought. Except he didn't - corruption had drained the military of funds for just about everything, even fuel and maintenance.

He also didn't expect the West to pour billions into reequipping the Ukrainian military with truly modern weapons his soldiers could only dream about. Six months into this pointless conflict and the Russian government is embroiled in a war that it cannot win and cannot afford to lose.

I do not think Putin would have invaded Ukraine were it not for Covid, or more accurately, the West's reaction to it. I am certain he thought the West's reaction to Covi : do anything which may save lives regardless of the cost, shows how cautious and even, to him, weak willed they are. He knew they would never risk any deaths of westerners, and he was right, but he hadn't counted on the Ukrainians spirited resistance and the fact that then gave the west time to supply loads of weapons (because the latter doesn't result in westerners getting killed....).

 

[Ozzy]

I've just done a tiny bit of editing in the hope we can keep the conversation objective, civil and avoid any personal digs/insults please.

 

[DontAsk]

Trading anecdotes doesn't defeat facts I'm afraid. That's the material point.

I am not posting anecdotes, I am posting facts, from my own first hand observations, that refute an incorrect assertion.

 

[Chawton]

I've just done a tiny bit of editing in the hope we can keep the conversation objective, civil and avoid any personal digs/insults please.

Regrettable you feel the need to censor like that tbh. Don't believe any of it could be described as insulting or uncivil.

 

[IanSuth]

Would they be the same schools who, having shut for 7 months in 2020/21, are now fining parents for taking their kids (even kids with otherwise perfect attendance records) out of school for one week so they can actually afford to take them on holiday ?
The stench of hypocrisy is overwhelming.

Yes

BUT I would ascertain there is no "right" to go on holiday and def not abroad. I am going to say something that every time i mention it people get really grumpy

foreign holidays are a way of exporting wealth from this country - I would seriously curtail them if chancellor - probably by hiding behind a "green levy" or similar, but from a national economic perspective every holiday taken in Devon, Cleethorpes or Whitby rather than Benidorm or Ibiza is money in the counties pocket

I dont want the vast majority of people to go on holiday overseas once a year - it should be a rare treat not a yearly chore which is what it has become

 

[IanSuth]

I do not think Putin would have invaded Ukraine were it not for Covid, or more accurately, the West's reaction to it. I am certain he thought the West's reaction to Covi : do anything which may save lives regardless of the cost, shows how cautious and even, to him, weak willed they are. He knew they would never risk any deaths of westerners, and he was right, but he hadn't counted on the Ukrainians spirited resistance and the fact that then gave the west time to supply loads of weapons (because the latter doesn't result in westerners getting killed....).

Yes and I think people forget how the Russians fought "the great patriotic war" (WW2), their tactics were successive lines of defence, just keep sapping the strength of the Germans and extending their supply lines no matter what the cost in lives.

They lost over 11m military dead in that war so 80k now is chicken feed from the point of view of their military doctrine

 

[MBE2017]

They lost over 11m military dead in that war so 80k now is chicken feed from the point of view of their military doctrine

Times have changed, with mobile telephony, internet etc the people’s of the world have never had so much information to look at. Hopefully the Russian public would baulk at those kind of figures today. If they had known that figure in advance, I doubt many would have welcomed the loss.

Unfortunately too many in the West still believe the “official” news outlets, and seem happy to believe anything. The Russian people learnt over many years to read between the lines, understanding their news outlets were under complete control, so hopefully they are slightly more adept at spotting propaganda.

 

[Casually made]

Regrettable you feel the need to censor like that tbh. Don't believe any of it could be described as insulting or uncivil.

Unfortunately whether you want to censor it or not Britain runs on middle class consumerism and debt

Without it companies can't make profits , bankers can't take fat bonuses and governments can't control ......

If its a necessary evil for society is another question , i certainly personally benefit from it but not sure that makes leaving millions in a constant state of indoctrination right

 

[Justin Smith]

Yes and I think people forget how the Russians fought "the great patriotic war" (WW2), their tactics were successive lines of defence, just keep sapping the strength of the Germans and extending their supply lines no matter what the cost in lives.

They lost over 11m military dead in that war so 80k now is chicken feed from the point of view of their military doctrine

It is no coincidence that Hitler was beaten by the Russians, the Western Allies, by comparison, just mopped up really. The reason for that is the Russians had the same callous disregard tor life as the Nazis and, let's remember, they killed many millions of people during the collectivisation of farming in the 1930s, and it was particularly bad in..... Ukraine. I suspect they have never forgotten that and that is part of the reason they are fighting so hard now.

 

[Justin Smith]

Times have changed, with mobile telephony, internet etc the people’s of the world have never had so much information to look at. Hopefully the Russian public would baulk at those kind of figures today. If they had known that figure in advance, I doubt many would have welcomed the loss.

Unfortunately too many in the West still believe the “official” news outlets, and seem happy to believe anything. The Russian people learnt over many years to read between the lines, understanding their news outlets were under complete control, so hopefully they are slightly more adept at spotting propaganda.

Not so sure about this. I remember talking to a friendly Russian family in Tenerife years ago. They actually lived in Belgium, so one would have thought they had total access to a free press, and were more internationalist in their outlook. Despite this, I was amazed to hear, they were big Putin fans....
Russians really are quite nationalistic and like "strong leaders".

 

[IanSuth]

Times have changed, with mobile telephony, internet etc the people’s of the world have never had so much information to look at. Hopefully the Russian public would baulk at those kind of figures today. If they had known that figure in advance, I doubt many would have welcomed the loss.

Unfortunately too many in the West still believe the “official” news outlets, and seem happy to believe anything. The Russian people learnt over many years to read between the lines, understanding their news outlets were under complete control, so hopefully they are slightly more adept at spotting propaganda.

But with no effective opposition and heavy crack downs on dissent any grass roots grumblings would need to get very very loud before anything happened and to be quite honest I think that would takes years not months

Not so sure about this. I remember talking to a friendly Russian family in Tenerife years ago. They actually lived in Belgium, so one would have thought they had total access to a free press, and were more internationalist in their outlook. Despite this, I was amazed to hear, they were big Putin fans....
Russians really are quite nationalistic and like "strong leaders".

100% this - you can not measure the Russian population against expectations of the reaction of a western population.

There are still many who hark back to communism when "at least we had bread in our stomachs", they do not see a move to a western style economy as anything positive

 

[Chawton]

Unfortunately whether you want to censor it or not Britain runs on middle class consumerism and debt

Without it companies can't make profits , bankers can't take fat bonuses and governments can't control ......

If its a necessary evil for society is another question , i certainly personally benefit from it but not sure that makes leaving millions in a constant state of indoctrination right

I completely agree fwiw.

That's why I challenged the anecdotal rebuttal offered by Newchodge.

As Mark T (correctly) commented, it was a perfectly valid challenge by Newchodge. It was not a sound one however as it was based on a false premise. ie the evidence of "my street" is proof of a national standard. It illustrates the difference between a valid argument and a sound argument and is week 1 (if not day 1) of a decent law degree.

The reality is Newchodge simply doesn't like being reminded that many people live irresponsibly beyond their means. That's because her ideological possession has it that it's always factors outwith their control that put them into debt.

She responded with an anecdote because she knew the central point (that car finance is ubiquitous and people live irresponsibly & beyond their means) was unassailable. It's a dishonest, bad faith way to argue and deflects from a serious point.

I do think it's regrettable that censorship was applied here but I've observed it in posts connected with this particular member previously. One, I think it's perfectly fair to say, who gives her own opinions and views robustly.

It's a shame as I think the forum polices (itself) quite well by and large and is a reasonable standard of debate.

 

[DontAsk]

It is no coincidence that Hitler was beaten by the Russians, the Western Allies, by comparison, just mopped up really. The reason for that is the Russians had the same callous disregard tor life as the Nazis and, let's remember, they killed many millions of people during the collectivisation of farming in the 1930s, and it was particularly bad in..... Ukraine. I suspect they have never forgotten that and that is part of the reason they are fighting so hard now.

And the allies supplied the Russians with a lot of equipment, just like we are doing for Ukraine today.

 

[JEREMY HAWKE]

The reality is Newchodge simply doesn't like being reminded that many people live irresponsibly beyond their means. That's because her ideological possession has it that it's always factors outwith their control that put them into debt.

A good friend is a street pastor at the church He helps at the local food bank He like me does OK but it is unacceptable that some people claiming from the food bank have better phones than us and smoke !

The food banks objective is to make sure the children are fed !

 

[Chawton]

A good friend is a street pastor at the church He helps at the local food bank He like me does OK but it is unacceptable that some people claiming from the food bank have better phones than us and smoke !

The food banks objective is to make sure the children are fed !

A perfectly moderate view which I happen to share.

Feel compelled to add, not taking responsibility for your own health (smoking/obesity etc) is another characteristic I see being excused time and again from the more extreme side of the political spectrum. Taking responsibility away from an individual and denying them agency is-in my view-cruel in the long run. The personal outcomes are disastrous.

No kids should go hungry. But equally parents shouldn't be queuing at food banks with ham hocks for elbows, on the latest iPhones, smoking. Mirrors need to be forcibly re-installed into some homes. For figurative and physical reasons.

 

[Justin Smith]

Yes

BUT I would ascertain there is no "right" to go on holiday and def not abroad. I am going to say something that every time i mention it people get really grumpy

foreign holidays are a way of exporting wealth from this country - I would seriously curtail them if chancellor - probably by hiding behind a "green levy" or similar, but from a national economic perspective every holiday taken in Devon, Cleethorpes or Whitby rather than Benidorm or Ibiza is money in the counties pocket

I dont want the vast majority of people to go on holiday overseas once a year - it should be a rare treat not a yearly chore which is what it has become

The parents I know who got fined took their kid to Cornwall, they said they could not have afforded to take her in the school holiday as it was a ridiculous price, even higher than usual because fewer people are going abroad because of all the Covid cobblers.
Their child had a perfect attendance record apart from when she had a day off wit a broken arm, and, ironically, when she had Covid. She had pretty well no symptoms and they only found out through a test, but the school did not want her to go in for about a week, again very inconsistent when they are fining them parents for her missing a week. I have no respect for these people.

Incidentally, these UK holiday companies charging a fortune might be getting their comeupance !
We went to the Isle Of Wight, the ferry was an absolute fortune (£270 for a return 40min trip...), but on the day, a Saturday afternoon in the summer school holidays (absolute peak time for them) they were cancelling trips for lack of customers ! Also the bungalow we stayed at, and it was one of the cheaper ones, was offering the week after ours (still in the school holiday) at a discount,i.e. it was not booked.
Supply and demand = they'd set their prices too high !

 

[Justin Smith]

And the allies supplied the Russians with a lot of equipment, just like we are doing for Ukraine today.

And just like Ukraine, they do the dying for us !
I am not saying the Western allies had no deaths in WWII, but it was a low number compared to the Russians. Much of that was because we fought the war in a slow methodical highly mechanised and very well supplied way that minimised deaths. Plus the fact we waited so long to got back into Europe, when the Russians had blunted the German army for us.

 

[Justin Smith]

And just like Ukraine, they do the dying for us !
I am not saying the Western allies had no deaths in WWII, but it was a low number compared to the Russians. Much of that was because we fought the war in a slow methodical highly mechanised and very well supplied way that minimised deaths. Our artillery was something else, the Germans had never experienced anything like it. Plus the fact we waited so long to get back into Europe, when the Russians had blunted the German army for us.

 

[Justin Smith]

Feel compelled to add, not taking responsibility for your own health (smoking/obesity etc) is another characteristic I see being excused time and again from the more extreme side of the political spectrum. Taking responsibility away from an individual and denying them agency is-in my view-cruel in the long run. The personal outcomes are disastrous.

Best example of this ! :

 

[The Byre]

Just to get back on the topic of inflation -

John Law created the Mississippi Bubble, which led to the complete collapse of the French economy and directly to the French Revolution.

The lad to look up and read about is Nicolaus Copernicus who created the Quantity Theory of Money in 1517 and also created the forerunner to Gresham's Law (bad money drives out good money) a couple of years later. He did other stuff as well, like discovering that the sun was in the middle of the solar system and the Earth revolves around it. He is regarded as one of the founders of modern scientific method and he spoke six or seven languages and wrote mostly in Latin. (He probably could juggle with rats as well!)

(His writings inspired Galileo to get into all that trouble with Pope Paul V.)

Another lad to look up is Georg Friedrick Knapp (or Friedrich Georg - I can never remember which way about his name went). In 1905 he presented a paper that postulated that an economy may be regulated by changes in the money supply. This led to all sorts of schools of thought that ended up with the philosophy of the Magic Money Tree that is so popular today with 'The Establishment' (i.e. central bankers and Bloomberg aficionados).

John Law would have just fitted right in with that lot!

Knapp was right if changes in the money supply are done slight and marginal - but the MMT crowd just do the QE side and never balance it with QT, or when they try, someone complains that OAPs are getting cold and Derrick glues his stupid face to the M25 again, so we're back with QE - and nowadays in tens of trillions.

Now the housing market is beginning to look like it did in 2006 - just saying!

 

[MBE2017]

Also the bungalow we stayed at, and it was one of the cheaper ones, was offering the week after ours (still in the school holiday) at a discount,i.e. it was not booked.
Supply and demand = they'd set their prices too high !

This is something many get wrong regarding holiday and short term rentals, ideally everyone would like 100% bookings, in reality the aim is 80%.

Price too low and you lose on all the bookings, anyone booked up say a year ahead, is too cheap, unless the very odd company let, say contractors have been booked in for a local company.

Just to get back on the topic of inflation -
Now the housing market is beginning to look like it did in 2006 - just saying!

Personally I think the signs are much more ominous, this time there is likely to be a world wide contagion. China is looking at possibly trillions of dollars lost in value, hard to gauge with so many details mired in the fog of deceit. Even sensible countries like New Zealand, worldwide record increases in the last couple of years is looking very bad.

Only guess work on my part, but I think a large correction of 20/45% is on its way for most, couples with job losses and repossessions. The hardest question is over how long, I’m thinking 2/5 years for all this to play out, but the effect will last for over a decade for most.

 

[Justin Smith]

This is something many get wrong regarding holiday and short term rentals, ideally everyone would like 100% bookings, in reality the aim is 80%.

Price too low and you lose on all the bookings, anyone booked up say a year ahead, is too cheap, unless the very odd company let, say contractors have been booked in for a local company.

That might be right in theory but to have empty properties in the middle of the summer school holidays is unusual to put it mildly. Even rarer for Wightlink to be cancelling services on a summer holiday afternoon !

 

[Casually made]

Only guess work on my part, but I think a large correction of 20/45% is on its way for most, couples with job losses and repossessions. The hardest question is over how long, I’m thinking 2/5 years for all this to play out, but the effect will last for over a decade for most.

I think we see the initial collapse early - mid 2023

Then then we see a double drop in 2024

BOE will have increased base rate to 3%+ by December by the end of 2023 it will be 6-7%

To go from 0.10% to 3% within 12 months in an economy that is highly reliant on cheap credit is going to be catastrophic and whilst the energy issues are currently at the forefront of the panic these interest rate rises will creep up behind everyone

The cost of commercial lending is about to go through the roof and for millions who do live credit heavy lifestyles or are over exposed on low rate mortgages the chickens are about to come home to roost .....

 

[IanSuth]

The parents I know who got fined took their kid to Cornwall, they said they could not have afforded to take her in the school holiday as it was a ridiculous price, even higher than usual because fewer people are going abroad because of all the Covid cobblers.
Their child had a perfect attendance record apart from when she had a day off wit a broken arm, and, ironically, when she had Covid. She had pretty well no symptoms and they only found out through a test, but the school did not want her to go in for about a week, again very inconsistent when they are fining them parents for her missing a week. I have no respect for these people.

Incidentally, these UK holiday companies charging a fortune might be getting their comeupance !
We went to the Isle Of Wight, the ferry was an absolute fortune (£270 for a return 40min trip...), but on the day, a Saturday afternoon in the summer school holidays (absolute peak time for them) they were cancelling trips for lack of customers ! Also the bungalow we stayed at, and it was one of the cheaper ones, was offering the week after ours (still in the school holiday) at a discount,i.e. it was not booked.
Supply and demand = they'd set their prices too high !

Then they went to the wrong place in cornwall, or didnt look around

I just spent 10 days there, worked from home about 1/3 of it, went sea kayaking, wild swimming, body boarding and lots of long walks. Was based just above Tavistock but went into cornwall for the sea bits (Seaton and Polzeath), spent about the same as I do at home. I of course had a zero cost lodge and tent space to use but even without those I could have done it for sub £200 by not staying in a tourist trap

 

[MBE2017]

To go from 0.10% to 3% within 12 months in an economy that is highly reliant on cheap credit is going to be catastrophic and whilst the energy issues are currently at the forefront of the panic these interest rate rises will creep up behind everyone

With the 80% price cap hike in energy bills announced today, further pain is due in January, a further increase after today’s hike of another 51%.

Current forecasts are for the average Gas and Electric DD bill to go up to........ £5386 per year!!!!!!!!

Unless Gov help is forthcoming very soon, the don’t pay movement will grow enormously as those letters and emails start arriving over the next week or two.

 

[Newchodge]

With the 80% price cap hike in energy bills announced today, further pain is due in January, a further increase after today’s hike of another 51%.

Current forecasts are for the average Gas and Electric DD bill to go up to........ £5386 per year!!!!!!!!

Unless Gov help is forthcoming very soon, the don’t pay movement will grow enormously as those letters and emails start arriving over the next week or two.

Bearing in mind that is just the 'average figure'. There are about 4 million households on pre-payment meters. Usually those on the lowest incomes. The price cap for them is much higher.

 

[The Byre]

The cost of commercial lending is about to go through the roof and for millions who do live credit heavy lifestyles or are over exposed on low rate mortgages the chickens are about to come home to roost .....

I have no idea how the car finance market here works, but I have heard that the US market for the resale bundles of car finance is grinding to a halt because all the triple-A rated loans are turning out to be people who bought luxury cars on credit, made the downpayment using their stimmy cheques and then realised that they could not afford to actually run the car or make the payments.

In other words, the car finance market is looking like the 2006 housing market - triple-A rated garbage! Add to that a sharp increase in credit card debt in the US and we have the makings of another 2008.

There has to be something very wrong going on here as well, as I have just seen a homeless woman living in emergency accommodation and the only way she could get a car was to buy one new. That is a totally upside-down situation that is unsustainable.

I am also seeing a large number of commercial credit going on day-to-day costs and not on assets that generate profits. SMEs bridging shortfalls in turnover/profits with credit and heading into a recession is hardly a sign of financial health.

 

[Justin Smith]

Then they went to the wrong place in cornwall, or didnt look around

I just spent 10 days there, worked from home about 1/3 of it, went sea kayaking, wild swimming, body boarding and lots of long walks. Was based just above Tavistock but went into cornwall for the sea bits (Seaton and Polzeath), spent about the same as I do at home. I of course had a zero cost lodge and tent space to use but even without those I could have done it for sub £200 by not staying in a tourist trap

Was that in the school holidays ?

 

[Justin Smith]

Bearing in mind that is just the 'average figure'. There are about 4 million households on pre-payment meters. Usually those on the lowest incomes. The price cap for them is much higher.

It is disgusting that prepayment meters are more expensive, if anything they should be cheaper as the power company gets its money up front.
TBH I think the energy price cap is a gimmick, what the government should be doing is making it illegal to charge more for prepayment meters (as well as keeping coal fired power stations open and reopening the Rough gas storage facility and filling it whilst gas is available in the summer....)

 

[Justin Smith]

One thing that has kept inflation down for years is the importation of ultra cheap consumer good from China. But that is ending now that their wages are rising and their standard of living also going up, plus the cost of transport is far higher AND they're still having lockdowns.
We're screwed.
HELP !

 

[fisicx]

We're screwed.

Only if you keep buying stuff you don’t really need. Bloke next door buys a new telly every year. Ours is 5 years old an still working. Car is even older. The trick to saving money is not spending.

 

[Justin Smith]

Only if you keep buying stuff you don’t really need. Bloke next door buys a new telly every year. Ours is 5 years old an still working. Car is even older. The trick to saving money is not spending.

I agree, our TV is way over 5 years old, in fact it's a CRT and I repaired it the other week. A repair which, BTW, gave me a great deal of satisfaction (I thought I'd forgotten how to....) particularly because I found a component which was definitely faulty, and would normally cause that fault. Most TV repairs aren't like that...... Even better I was able to use some of the spares we never need any more since we stopped fixing TVs about 12 years ago !
But if demand collapse the economy then goes downhill.....

 

[MBE2017]

We are not screwed, unless we believe we are.

That said many people are going to have a worse standard of living. Where too import goods from is the least of potential worries you should have.

 

[Casually made]

Many of my peers who are indeed over leveraged on various credit purchases / assets are still in complete denial we will even have a recession

One old acquaintance who is up to his eyeballs in buy to lets told me the economy can't crash "people have never had it so good " and another corker " nobody is poor anymore"

I tried to point out that was perhaps the most worrying aspect of the current economy but the point seemed to go over his head....

He has bought 8 buy to lets in the last 5 years on very low mortgage rates ...... can't seem to understand how higher rates are going to effect him?‍

 

[MBE2017]

He has bought 8 buy to lets in the last 5 years on very low mortgage rates ...... can't seem to understand how higher rates are going to effect him?‍

At least he has income producing assets, interest rates are still low, despite being on the rise. I would imagine he has 25-50% equity in those houses, his biggest potential problem is a bad tenant and or voids, and possibly utility bills if included in the rent.

I’m sure he will do better than most.

 

[Jasondb]

And just like Ukraine, they do the dying for us !
I am not saying the Western allies had no deaths in WWII, but it was a low number compared to the Russians. Much of that was because we fought the war in a slow methodical highly mechanised and very well supplied way that minimised deaths. Plus the fact we waited so long to got back into Europe, when the Russians had blunted the German army for us.

Well we fought the Germans in the desert and my grandfather was also wounded in 1941 in a commando raid in German occupied France. Don't forget the supplies we gave to Russia, the 55 planes earmarked for Singapore went instead to Russia meaning British troops surrendered to the Japanese.

On Ukraine both Kissinger and Chomsky (intellectual opponents) both said a short while back a deal has to be reached with Russia before things deteriorate too far.

Biden has gambled Russia can be brought down economically, Imran Khan of Pakistan has been kicked out while India still trades with Russia and of course China. I don't think the Tories can win the next election with inflation so high so would expect a Labour led coalition to win and bring in more taxes.

Some may rejoice at that though think about how they might have handed the lockdown.........

 

[MBE2017]

Some may rejoice at that though think about how they might have handed the lockdown.........

The Tories lockdown offering went beyond what Labour expected and had started to call for, so much so I thought we had a change of Gov in secret.

 

[Jasondb]

I think Labour might have gone the way of Australia or NZ with extended lock downs.

On my previous point re WWII and the Russian sacrifice consider the Allied landings in 1943 in Italy the difficulties experienced there were major learning points for 1944.