Reply to: Economy

[AtW]

I've heard it reported that Trump couldn't care less about the size of the US debt because it's unlikely to be a problem while he's still in office. Perhaps Johnson & co are thinking along the same lines.

Erm, they ALL Generally think along the same lines, which is why the debt is so massive!

The only exception was recently when it was politically convenient to pretend it's a huge problem and cut mildly some expenditure pretending they are trying to balance the books.

[DealorNoDeal]

I've heard it reported that Trump couldn't care less about the size of the US debt because it's unlikely to be a problem while he's still in office. Perhaps Johnson & co are thinking along the same lines.

[Hobosapien]

Oh well, I guess they know what they're doing.

Not necessarily. I think successive governments just have a short termist view, only worried about their time in office, so do little to address any fundamental problems as it's not going to keep them in office come election time.

Seems to me that what's happening with national debt is similar to hyperinflation but without the drama along the way. Likely it will end with replacement of the currency.

Maybe they will replace it with digital currency, which has other benefits to them such as no untraceable cash transactions so they can get more tax, though cryptos will still prevail on the black market unless there is a global crackdown. That won't happen while the inept UN is the nearest there is to an actionable world government. Needs a USA/UK led new empire to bring the world in line with the world police, before the commies (China) take over totally.

[DealorNoDeal]

Oh well, I guess they know what they're doing.

[Cirrus]

Has this ever been tried before? It doesn't sound like the sort of thing that will end well.

They tried the opposite a while back

Between 1929 and 1932, worldwide gross domestic product (GDP) fell by an estimated 15%. By comparison, worldwide GDP fell by less than 1% from 2008 to 2009 during the Great Recession.[4] Some economies started to recover by the mid-1930s. However, in many countries, the negative effects of the Great Depression lasted until the beginning of World War II - Wikipedia

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[DealorNoDeal]

If all the big players in the world's economy are playing the same game (run up national debt with no intention of paying it back, keep interest rates low enough the house of cards doesn't collapse) then what is going to cause that to change?

Has this ever been tried before? It doesn't sound like the sort of thing that will end well.

[Hobosapien]

... the banks have run out of money and are not lending any more. ...

After the last credit crunch where this happened the central banks have been shaking the magic money tree (aka QE) so what events are likely to cause this to stop?

China have pumped billions into their system to make it look like GDP isn't falling due to their handling of the virus situation. It's all fake growth at the cost of currency devaluation, as far as I can tell, though I'm no expert.

If all the big players in the world's economy are playing the same game (run up national debt with no intention of paying it back, keep interest rates low enough the house of cards doesn't collapse) then what is going to cause that to change?

[AtW]

After a stock market crash all shares are at "distressed" values. That's why it is called a crash.

The point is that if company gets taken over the share price gets fixed at its distressed level, or if it goes bust then ti goes down to zero - buying double isn't guaranteed winning strategy.

[BlasterBates]

Nice theory of hw one can’t lose.

In practice companies can go bust or get taken over at their distressed share validation level, thus fooking smart investors over.

Invest in stock market only money you can afford to lose.

After a stock market crash all shares are at "distressed" values. That's why it is called a crash.

Always steer clear of the sector that brought the whole thing crashing down, i.e. tech stocks in 2003 and banking stocks in 2009. In 2009 lots of good stocks at low prices for companies that had nothing to do with the crash but were at low prices because everything else was. If you have a stock portfolio inevitably companies you own will go bust; not a problem, you diversify.

[AtW]

Nice theory of hw one can’t lose.

In practice companies can go bust or get taken over at their distressed share validation level, thus fooking smart investors over.

Invest in stock market only money you can afford to lose.

[BlasterBates]

If you sit on the sidelines waiting for a crash, you could be waiting an awful long time and when it does crash it will still be worth more than the cash on the sidelines, not to mention all the dividends you could have earned. Currently there are stocks out there with 5% dividends.

Good it is true that at the moment the stock market is high so you want to wait for corrections to wade in. Autumn 2015 was a good time, so was the end of 2018.

The trick is not have everything in stocks, you need some money on the sidelines. A good rule of thumb is 25%. i.e. your stock portfolio drops by 50%, which is a pretty bad crash, you can then double your portfolio and within a few months you'll be up. In fact if you do have cash on the sidelines you can actually be very relaxed about a crash because on average 2 years after a crash where you double your portfolio at the bottom, you'll be much better off than if there hadn't been a crash.

Some might say how do you know when you've hit the bottom. That is actually easy, it's when everyone has run out of money and the stock market bounces around for 3-4 months at really cheap levels. A crash happens when there is a liquidity crisis, i.e. fund managers are forced to sell stocks to get at cash. They know those stocks are very undervalued but they have no choice as the banks have run out of money and are not lending any more. They still need to pay the bills. Anyone with cash can clean up buying stocks at "distressed" valuations.

[TestMangler]

I'm in a better financial state to outlast the Corona Virus due to this surprise email I received this morning from 'HMRC'......soooo pleased at this surprise

Notice from HMRC


Dear test,

We are sending this email to announce that after the last annual calculation of your fiscal activity we have determined that you are eligible to receive a tax return of £1042.00 GBP


Description

Reference ID ROCJADSEGM248761KZ
Issued Date: 16/02/2020
Refundable Amount : £1042.00 GBP
United Kingdom

Note:

You can submit an application to claim your refund by clicking on "Ger your payment" below.

Get your payment

Currency £ GBP

Tax Return #8GB82761KZ 1042.00
Delivery: Electronically by Card
If you don't create a government gateway account, you will not receive your refund.This email was sent from a notification-only address that cannot accept incoming email. Please do not reply to this message.


Sub Total 1042.00
Delivery 0.00

Total £1042.00
Payment method: Online

Crown Copyright

[rogerfederer]

It's not high when you take into account the devaluation of the currency the prices are based in. All assets look expensive and in a bubble.

<snip>

I'm going to stay diversified and look for opportunities as the year progresses. i.e. normal procedure.

Probably the best way. I just have an overwhelming suspicion that the last financial crash and its suppressed aftermath will result in a real issue further down the line due to an unexpected event.

The tools available to combat monetary issues are now mostly used up. Although I ignore much of Adam Curtis' "HyperNormalisation" documentary the section on the way in which New York city became subservient to the banks is intriguing as it seems a mirror image of what has happened in the UK. Finance still rules and is reported by graduates as being the most desirable industry to go into.

Perhaps a reset wouldn't be so bad and could allow more diversification into other industries. I'm sure plenty of contractors here have worked in finance and can similarly comment on how many places have a truly toxic 'culture' whilst producing very little of true worth.

[rogerfederer]

@rogerfederer if you are concerned about financial safety, buy gold. There are plenty of companies in London running gold vaults. I don’t see how using a foreign bank makes you safer?

One thing that's clear is is that the number of gold bond issues and custom gold funds can't possibly exist. It's a bit like manuka honey:
10 times more is sold than is factually produced. Why? It has a huge markup and is worth faking if people will pay such a large price mark up for it. For the record, if you want bioactive honey, Scottish Highland Heather honey was found in university research to be the most biologically active in terms of anti-bacterial ability.

I would recommend only purchasing physical gold that you can view and store it in a vault or secure area, depending on the quantity you are purchasing.

[tomtomagain]

*FACTCHECK*

Nope.

Flu has a mortality rate of 0.1%
COVID-19 is 2 - 3%

The Spanish flu pandemic was more deadly than COVID-19 but that's not a normal seasonal flu.

DON'T GET FACTS FROM THE DAILY MAIL

We cannot calculate the COVID-19 mortality rate because we don't have accurate data on how many people have had it.

The Chinese are counting the people who turn up & test positive. However, if you don't feel ill enough to go to a hospital, you won't appear in the statistics.