Economics Nerd Central/ The Global Inflation Thread

[How bad boy]

The E.U. continuing to let the U.S. take the lead and do all the heavy lifting on global inflation but Americans are now spending 5% more than pre-C-19 as sales rise.

I hope I'm wrong, but it very much appears that the ECB are delaying on inflicting inevitable pain, making it more likely the problem will go from chronic to acute.

I think most people don't realise how weird the current interest rates are:

It's almost certainly what's driving insane property prices, folks tend to be pretty terrible at looking out too far in the future. a €500,000 mortgage only accumulates €10k in interest at 2% interest, which is generally fine for most people.
For almost all of the 70s, 80s and into the 90s, interest rates in Ireland were well above 10%, which is racks up €50k a year in extra interest costs on that €500,000.


Not saying interest rates are about to go above 10%, but applying the Taylor Rule, they really should be well over that mark by now. Giving Ireland a long term trend GDP of 4%, using the Taylor Rule, interest rates should be 14.25%*




*r = p + 0.5y + 0.5(p - 2) + 2
Where:

• r = nominal fed funds rate
• p = the rate of inflation
• y = the percent deviation between current real GDP and the long-term linear trend in GDP

r= 9.1 + 0.5 * (4-4.8) + 0.5 * (9.1 - 2) + 2

 

[How bad boy]

Bank of England hikes interest rates and says inflation will hit 13%

Base rate raised by 0.5 percentage points to 1.75%, as Bank says inflation will hit 13% in October

www.theguardian.com

As expected, Bank of England rate up by 0.5%, I fully expect it to keep going up for at least the next 6 months, inflation to hit 13% this autumn.

They're predicting an absolute shitstorm:
The longest recession since 2008 would begin by the end of this year, it added, with the economy contracting throughout 2023. The prolonged downturn is expected to push the unemployment rate from 3.8% to 5.5% by 2024, and will feature a record fall in living standards next year.

In a blow to the next prime minister’s ambitions to grow the economy, the Bank said gross domestic product would contract by 2.1% over five consecutive quarters to leave the UK growth rate negative in both 2023 and 2024.
...
In a review of the economy, the Bank said the UK would emerge from recession before the next election in 2024. But that by then living standards would have fallen by 5%, the biggest decline since records began in the 1960s, the Bank said.



Liz Truss bocht

 

[Stacky]

Bank of England hikes interest rates and says inflation will hit 13%

Base rate raised by 0.5 percentage points to 1.75%, as Bank says inflation will hit 13% in October

www.theguardian.com

As expected, Bank of England rate up by 0.5%, I fully expect it to keep going up for at least the next 6 months, inflation to hit 13% this autumn.

They're predicting an absolute shitstorm:
The longest recession since 2008 would begin by the end of this year, it added, with the economy contracting throughout 2023. The prolonged downturn is expected to push the unemployment rate from 3.8% to 5.5% by 2024, and will feature a record fall in living standards next year.

In a blow to the next prime minister’s ambitions to grow the economy, the Bank said gross domestic product would contract by 2.1% over five consecutive quarters to leave the UK growth rate negative in both 2023 and 2024.
...
In a review of the economy, the Bank said the UK would emerge from recession before the next election in 2024. But that by then living standards would have fallen by 5%, the biggest decline since records began in the 1960s, the Bank said.



Liz Truss bocht

Average income levels going back to almost 20 years ago.



The Tories will probably just blame the Bank of England and promise to dismantle it.

 

[How bad boy]

Average income levels going back to almost 20 years ago.
View attachment 13882


The Tories will probably just blame the Bank of England and promise to dismantle it.

Yeah, the independence of the BoE is definitely going to come under scrutiny

 

[How bad boy]

Yeah, the independence of the BoE is definitely going to come under scrutiny

Right on cue:
https://www.theguardian.com/politic...r-threatening-to-review-bank-of-england-remit

 

[Stacky]

Right on cue:
https://www.theguardian.com/politic...r-threatening-to-review-bank-of-england-remit

Every single thing is someone elses fault.

Britain could be the new Argentina if this political threat cimes true

 

[TheOutdoorThreadmill]

Every single thing is someone elses fault.

Britain could be the new Argentina if this political threat cimes true

They have gone full scouser

 

[Meridian]

Seems oil is going to go down in value again :

As crude drops below $90 a barrel, investors should bet on a steep drop in the oil price, Citi strategist says

"This is something that needs to concern companies while it is something very pleasant for consumers," Citi strategist Ed Morse said.

markets.businessinsider.com

 

[longbigandjuicy]

Current Mortgage boycott in China has all the hallmarks of the 2008 crash. People paying for mortgages of unfinished properties is madness with the promise of the property would increase in price. Ponzi scheme.

 

[Meridian]

And it continues to go down ;

Oil slips to six-month low as recession fears weigh

Oil hit a six-month low on Wednesday after a brief rally as concerns about the prospect of a global recession that would weaken demand overshadowed a report showing lower US crude and gasoline stocks.

www.rte.ie