Recession 2020 and Beyond

[Interestedobserver]

Re - we are still better off than 20 years ago.

In some ways for sure. Cheap cars are better than expensive cars then. Big TVs. Technology. Better food. Better leisure options.

If we can just get everybody off their mobile phones and social media

 

[Mr D]

That is just not true. Go back a little further and the entire trend over the past 40 years until now has been a transition between households of one wage earner (or one wage earner + a pin money job) to two wage earners to maintain the same lifestyle. Cheap electronics from Taiwan or China or Ryanair flights to Turkey for less than a train ticket from Glasgow to Brighton isn't prosperity. Hoodwinked some but the productivity increase vs real wage correlation (or lack thereof over the last 40 years) hasn't fooled all of us.

Perhaps I just mix in strange circles but a good paying job in the 90s/noughties was £40k. Perhaps I knew very wealthy people and my anecdotals don't stack up but they seemed normal enough to me. A good salesmen could pull that in, I knew plenty. Now 20 years later...and it is the same?

Stas hits the nail on the head. The illusion of wealth has all been making people debt slaves in an age where debt is embraced, not feared. Previous generations knew the consequences. Once that falls from experienced memory a new generation is destined to repeat the mistake. And we will. The tide will roll out and all this "better off"ness we will realise was just on the never never.

People choose to have the big houses, cars on lease, mobile phones, new kitchens every few years etc.
Great - but has to be paid for.

Full time nmw now is what? 1200 net? Somewhere round that?

Can run a house and car on that for a couple. Can run on less than that.

Living in a high rent area and needing a 70 quid a month phone, minimum payments of hundreds of pounds for cards, going clubbing every week, entertainment out, lots of tech stuff, a car lease, long distance holidays etc - trying to pay for all that then had better either have a high paying job or both people in the relationship bringing in a lot of money.

Wants have gone far beyond needs - great when you can afford to pay the price. Not so great when the money ends, the job goes, and we get 3 million plus unemployment level again.

 

[Mr D]

Re - we are still better off than 20 years ago.

In some ways for sure. Cheap cars are better than expensive cars then. Big TVs. Technology. Better food. Better leisure options.

If we can just get everybody off their mobile phones and social media

Unlikely to get them entirely off either. Just too useful.
We have a planet where lots are addicted to each.

 

[alan1302]

Re - we are still better off than 20 years ago.

In some ways for sure. Cheap cars are better than expensive cars then. Big TVs. Technology. Better food. Better leisure options.

If we can just get everybody off their mobile phones and social media

Better health care as well now - can do a lot more than we could in the past.

 

[Interestedobserver]

Better health care as well now - can do a lot more than we could in the past.

It sounds poor but way better TV shows and choice PLUS all the show's from 20 years ago as well

And for many that's their home leisure and entertainment sorted every day and night

They are being entertained better than ever

And sport wise once it's allowed to be played again - you can watch anything pretty much from anywhere in the world

 

[Interestedobserver]

Plus you can get pretty much anything delivered to your home

A UK with ongoing social distancing and less disposable income can still be a great place to live

 

[Newchodge]

It sounds poor but way better TV shows

Really? Which ones would you pick out?

 

[Interestedobserver]

Really? Which ones would you pick out?

The choice and range is huge and clearly better than 20 years ago as we've got 20 years more series and shows to watch Cyndy?

And we can watch them the hour and minute we choose without adverts.

My two personal favourites in recent years:

Breaking Bad
Peaky Blinders

 

[Stas Lawicki]

A society of extremes and excess.

Watch too much TV on your expensive streaming service, on your 4k TV, via fibre broadband, on an expensive sofa, in an expensive house, eating expensive crisps bought on a 29% Apr CC. Jump in the pcp motor to the expensive gym (that you see once a month), stop off and buy chocolate, back on that sofa. Get fat and lazy, get great medical care and carry on.
All the while loans, loans, loans rammed down your throat.

It will get to the point where there is so much stuff that the repo values will be worthless (already there in some respects). It won't be worth busting down doors or lifting cars. This time next year we may still be in an other CV lockdown, but with the recession ramping up, it'll be with many millions asking for money to keep their toys working

 

[Newchodge]

The choice and range is huge and clearly better than 20 years ago as we've got 20 years more series and shows to watch Cyndy?

And we can watch them the hour and minute we choose without adverts.

My two personal favourites in recent years:

Breaking Bad
Peaky Blinders

I agree there is increased choice and range, I am just not sure about better. I cannot imagine anyone 20 years ago, being fascinated by the reality TV shows that are so prevalent now. There are some good programmes but there always have been.

It is perhaps, partly, terminology. To me a TV show is a reality or quiz programme, while a documentary or drama is a programme.

 

[Interestedobserver]

A society of extremes and excess.

Watch too much TV on your expensive streaming service, on your 4k TV, via fibre broadband, on an expensive sofa, in an expensive house, eating expensive crisps bought on a 29% Apr CC. Jump in the pcp motor to the expensive gym (that you see once a month), stop off and buy chocolate, back on that sofa. Get fat and lazy, get great medical care and carry on.
All the while loans, loans, loans rammed down your throat.

It will get to the point where there is so much stuff that the repo values will be worthless (already there in some respects). It won't be worth busting down doors or lifting cars. This time next year we may still be in an other CV lockdown, but with the recession ramping up, it'll be with many millions asking for money to keep their toys working

Very true about repo values being worthless.

I've mentioned before car hire and lease firms are having to rent huge fields and space to put all the vehicles in people are returning and don't want/need any more

They would rather you keep the vehicles on lower fees than send them back now

Their problem is going to be their balance sheets in near future when the value of the vehicles plummets due to the fact supply far exceeds demand


My wife has a car on the drive she hasn't used for 10 weeks. My car has done less miles in 10 weeks than it would do in one week before.

And all the family have bought bikes

I haven't missed the driving to meetings etc one bit. And whatever the future brings for my businesses etc I know I will keep my travel to essential travel from now on.

Weve invested in our own home gym equipment as well. No more health club membership for us. And I've less than halved what we pay for satellite TV and leasing the TV we have. And getting pretty much the same as what we had before just by threatening to stop with them.

 

[JEREMY HAWKE]

Very true about repo values being worthless.

I've mentioned before car hire and lease firms are having to rent huge fields and space to put all the vehicles in people are returning and don't want/need any more

They would rather you keep the vehicles on lower fees than send them back now

Their problem is going to be their balance sheets in near future when the value of the vehicles plummets due to the fact supply far exceeds demand


My wife has a car on the drive she hasn't used for 10 weeks. My car has done less miles in 10 weeks than it would do in one week before.

And all the family have bought bikes

The values at auction recently have been depressed before the virus with a market saturated with off lease 3-4 year old vehicles
I cant wait for the action house to reopen as I may be looking for some hardware and maybe even another treat for me

 

[The Byre]

Yes, that means bad news for some people but we're all better off than we were 20 years ago. I don't see that trend changing much long term.

News to me!

Poverty in the UK -

Looking at the rise in living standards over extended periods can be interesting. Under the various Conservative and Labour governments from 1961 to 79 household incomes rose by ca 40% in real terms. The Thatcher/Major years saw a similar rise, but also a significant rise in inequality, under New Labout 97 -2010 saw a rise of 30%. Since 2010 we have effectively flat-lined and now that 30% may even be lost to debt.

I have seen many irresponsible and inept governments in my lifetime, here and elsewhere. The French government's belief in the 'lump-of-labour' fallacy cost that country dearly in the 90s. Postwar Labour's desire to nationalise anything and everything was only brought to a halt when the US heard of plans to nationalise all farmland and withdrew all offers of further lending.

But you must search far and wide to find a government that is as economically illiterate as that which the UK has had since 2010. The biggest mistake being their belief in the 'austerity fallacy' showing a complete non-command of the principles of fiscal multiplier theory. This is first and second-year stuff, but given a cabinet that was and still is dominated by Oxbridge arts and PPE graduates, that is hardly surprising.

 

[Interestedobserver]

The values at auction recently have been depressed before the virus with a market saturated with off lease 3-4 year old vehicles
I cant wait for the action house to reopen as I may be looking for some hardware and maybe even another treat for me

They've got such a huge backlog of cars to sell give it a few weeks until the prices really start to fall drastically.

 

[MBE2017]

The way he recalls his career I am quite sure most of that £50k was earned in the pub, that is where a lot of sales meetings took place in any case!

Same here, plus the golf club. Last job I took as an employed rep the company offered to match what I was getting plus 10% more, so I mentioned would they also match the £500 a month entertainment bonus I was getting?

They kindly did, which saved myself a fortune since I never had one before. A colleague at the new company got upset when I landed a large order on a golf game, the owners couldn’t careless if the order was signed at the office or at the bar.

Shame the simple way of doing things has gone, it used to be so much more civilised.

 

[Stas Lawicki]

Same here, plus the golf club. Last job I took as an employed rep the company offered to match what I was getting plus 10% more, so I mentioned would they also match the £500 a month entertainment bonus I was getting?

They kindly did, which saved myself a fortune since I never had one before. A colleague at the new company got upset when I landed a large order on a golf game, the owners couldn’t careless if the order was signed at the office or at the bar.

Shame the simple way of doing things has gone, it used to be so much more civilised.

Reminds of my last jobs. If I didn't have a £1k month expense bill, I wasn't entertaining enough people! Certain events would costs us 10s of thousands in bar and restaurant bills... Not always as fun as it sounds, but mostly!

 

[Interestedobserver]

Reminds of my last jobs. If I didn't have a £1k month expense bill, I wasn't entertaining enough people! Certain events would costs us 10s of thousands in bar and restaurant bills... Not always as fun as it sounds, but mostly!

I'm expecting most organisations won't be allowed to offer or attend networking events any more. Their health and safety guys will produce guidelines and entertaining clients will be very restricted if at all

Will be tough on sports hospitality and dinners and events etc as even if people are allowed to attend their organisations will restrict this

In the last financial crisis they restricted attendance purely because it didn't look right to be spending money on entertaining clients when the economy was struggling

Now it's compounded by the health risks

 

[RobinBHM]

The biggest mistake being their belief in the 'austerity fallacy' showing a complete non-command of the principles of fiscal multiplier theory.

During the last 10 years wages for the highest paid earners have increased by vast amounts.
Its only been austerity for the poor.

 

[Mr D]

I'm expecting most organisations won't be allowed to offer or attend networking events any more. Their health and safety guys will produce guidelines and entertaining clients will be very restricted if at all

Will be tough on sports hospitality and dinners and events etc as even if people are allowed to attend their organisations will restrict this

In the last financial crisis they restricted attendance purely because it didn't look right to be spending money on entertaining clients when the economy was struggling

Now it's compounded by the health risks

Even if government changes its social distance requirements it does not mean everyone will follow - a male in his 50s may well take a different view of risks than a female in early 20s.
So entertaining may still be problematic.

 

[SillyBill]

Same here, plus the golf club. Last job I took as an employed rep the company offered to match what I was getting plus 10% more, so I mentioned would they also match the £500 a month entertainment bonus I was getting?

They kindly did, which saved myself a fortune since I never had one before. A colleague at the new company got upset when I landed a large order on a golf game, the owners couldn’t careless if the order was signed at the office or at the bar.

Shame the simple way of doing things has gone, it used to be so much more civilised.

Indeed...it was almost like we were human...and relationships led to solid business and trust. A real shame a lot of the fun has gone now. Anti-bribery policies for big firms killed off a lot of it. For sure an element of pushing someone to feel obligated to you but for the most part people do business with people. We can still wine and dine some SMEs we're friendly with the owners with but generally we don't even bother asking corporates now. The booze run at Xmas is a fraction of the size too.

 

[MBE2017]

Indeed...it was almost like we were human...and relationships led to solid business and trust. A real shame a lot of the fun has gone now. Anti-bribery policies for big firms killed off a lot of it. For sure an element of pushing someone to feel obligated to you but for the most part people do business with people. We can still wine and dine some SMEs we're friendly with the owners with but generally we don't even bother asking corporates now. The booze run at Xmas is a fraction of the size too.

Booze run, lol, my last one was £1200, one client with forty buyers. Didn’t cost my old company a penny, all on myself since they decided to renage on the booze run to save money one year. I had left and gone to a competitor.

I keep to my word, so supplied said client, who when dropping the booze off thought it was from my new company, soon realised I was serious about keeping my word. So he then suggested I expected them to change suppliers to my new company. When I mentioned he had my number if he ever needed myself, but nothing expected in return, just keeping my word for a very good previous year, decided to switch on the spot.

I couldn’t have planned it better.

 

[The Byre]

During the last 10 years wages for the highest paid earners have increased by vast amounts.
Its only been austerity for the poor.

That is in no small measure because the political right are wedded to the trickle-down fallacy in much the same way that the political left are wedded to the lump of labour fallacy.

It is what happens when political dogma replaces reality. When that happens then the 'It stands to reason . . . ' argument is trotted out.

"It stands to reason that if I only work for 30 hours a week, that allows someone else to have an extra 10 hours of employment." (The deadly lump of labour fallacy.)

"It stands to reason that if the rich are allowed to get richer, they are going to be able to employ more workers and boost productivity." (The equally deadly trickle-down fallacy.)

"It stands to reason that if we cut back on government spending, the nation will be richer." (The austerity fallacy - aka the austerity delusion.)

Behind most economic fallacies is the mistaken belief that what is true for a small economic unit (family, village, company or person) is also true for an entire country - and what is true for one person in one specific situation must be true for all people in all situations.

An analogy is if I stand up in the audience, I can see the play better, therefore if everybody in the audience stands, we all get to see the play better.

If a poor man has more money, he can buy a pair of shoes from the local cobbler, so if a rich man has more money, he will buy 10 pairs of shoes from the local cobbler.