Author Topic: Firm economic growth expected for 2008?  (Read 83 times)

Elevz

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Firm economic growth expected for 2008?
« on: February 15, 2008, 12:49:29 PM »
THE HAGUE - Dutch Minister of Finance Wouter Bos expects "a firm economic growth" for 2008 to continue. He said that Friday after the council of ministers. All chattering about an economic recession "way outside of reality" according to Bos.
Bos referred to recent figures of the Central Office for Statistics (CBS), stating the Dutch economy has grown with 3.5 percent last year. According to a leaked framing for this year, the Central Planning Office (Bureau for Economic Policy Analysis) had plans to set this year's growth forecast to 1,75 per cent, but CPO-director Teulings Friday announced this figure will be adjusted upward.
Bos underlined how government financing is also doing well. Last year had a surplus of 0.4 per cent, whereas in the autumn a shortage of 0.2 was expected.

The economic growth is accompanied by a decrease of unemployment and an increasing number of job vacancies. The tension on the labour market leads to higher minimum wages in collective bargaining. Minister of Economic Affairs Van der Hoeven finds it necessary to prevent all wages from going sky high. She pleads for specific policies: "Consider the developments in the line of business of your own company, and adjust the collective labour agreements accordingly."

Source: De Financiële Telegraaf (The Financial Telegraph)

I used Babel Fish to translate this to English and corrected it somewhat, but my skills in financial English aren't exactly on par, so please don't hold any errors against me. :)


I don't know a whole lot about financing, but I know there's some people here who are pretty much into it, so I wonder...

So they're predicting a "firm economic growth" for 2008... How's that, when the international market is supposedly in a bad shape and there's a lot of pressure from the way things are going in the mortgage market in the US? Are these politicians just talking positively to keep the people optimistic about the financial market, or can we really expect financial growth? Because all I've noticed lately has been a huge increase of the prices of all sorts of food. Or is the economy growing, while the purchasing power is going down hill fast, meaning a growing economy doesn't really benefit the people in this case?
 

virtuoso

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Re: Firm economic growth expected for 2008?
« Reply #1 on: February 15, 2008, 03:57:25 PM »
Let me try and break this down in a simple manner and this is me simply going off the official figures. ...

Conservatively food prices in this country have risen by about 20% and this has due to a number of factors. For economic growth to have occurred, the economy must grow by more than the current headline rate of inflation now we know the official headline inflation rate is an absolute fraud because when prices begin to spiral in one particular product, they omit that product and instead look for alternatives, furthermore it misses so many other expenditures, that measuring the price of consumable products must be taken with a pinch of salt. However even with that being said, predictions, official predictions have cast doubt that an economic growth rate above 2.2% will occur this is this supposedly the fifth largest economy and in the world and even if it did, now the headline rate of inflation has almost risen to 3% and again this is according to the fixed figures lol. The important part to consider about this headline rate is that anything below this is a contraction in the economy.

If you read the reasons for the rocketing food prices it's attributed to 3 main things: an increase in world consumption, crop failures and the shift towards biofuels the process of which involves cutting down wheat crops, burning the crops to extract the energy within them and then fermenting it into ethanol. These 3 reasons are valid and the knock on effect has been a marked increase in the whole sale price of these foods but what is the primary cause is due to my government, your government, incrementally dismantling the argiricultural sector and instead focusing on imports. It is this which has caused the reliance and though we do feel the benefits when prices are low, well we are certainly feeling the sting from it now.

The stock market is being propped up by almost a trillion dollars of liquidity has been pumped in by the central banks of the world in an effort to try and spark the economy of the world into life. However all this really does in reality is give the stock market something of a crutch which holds up the slide long enough for those with mass investments to resposition. A lot of people are now repositioning into gold because it's seen as a tangible asset which does not depreciate in value and indeed if anything has been artificially held down by the central banks in order to stabilise currency. Jerome Corsi did an interesting article looking at what reserves are currently held by the central banks http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=59935. Of course, as has been witnessed by plummeting of the stock markets, this measure can not and will not prevent the slide of the stock market. The best way to look at it is like this, whatever the stock market is worth at a given period of time must then be assessed against the strength of the currency. For example if a 5% increase in the stock market coincides with a 10% slide in the value of the currency, it actually means the stock market has lost of it's value and has only increased at all because it takes more pounds, more dollars to buy that.

When you looking at economic growth, you also have to look at real wages, real wages in America have fallen by about $1000.00 since 2001 and in percentage terms, the real wage of the typical family in this country has fallen by more than 10% in the last 2 years. What has been driving the economy since the early 2000's was the surge in consumer spending, it was seen that the service sector offered great opportunities but there were 2 underlying characteristics of the service sector, the first was low paid jobs because the work itself in general only requires non skilled individuals but secondly and more importantly the sector itself was being driven by the credit boom. The ease of which any individual had access to credit led to a rocketing in spending and a promise that the growth in this sector would mean that jobs continued to be created and thus it would stave off the worry that some might have, that the bubble itself was not only reaching a point where it could cause serious concern but that it would spiral out of all fiscal controls. To put this into context because I am not familiar with the overall position in nations like Holland but am with my country's current credit position, our obsession with credit really took off in the earlier nineties and has accelerated since that point, the position itself has always been played down by government economic advisors but the accumulation of debt, which is after all what credit is, has reached head spinning levels. We currently have a personal debt of some 1.5 trillion sterling and indeed the situation has been acknowledged as being that serious by Financial Services Authority, that due to personal debt and out of control energy and food prices and the added burden of increased council taxes, they have estimated that there are 150.000 homes which are in danger of imminent repossessions and then estimate that it would not take a substantial increase in the costs I have just mentioned, for there to be a further 850.000 households falling into this same pit.

House repossessions have always occurred of course and in 1991 we had the black year of over 80,000 homes being reposessed but this forecast predicts that only will this be easily eclipsed, it will lead to a 12 fold increase or 1200% increase. One of the main reasons why this is becoming so prominent now and is suddenly in the forefront of economic news, is because many people hopped on to the property market when interest rates were low and mass amounts of liquidity were offered and of course they entered into adjustable rate mortgages, this was both a combination of being seduced by the prosperous economic predictions of the future and of course people's own naivety and assumptions. However those adjustable rate mortgages have come to or coming to their current agreements and people are now being faced with something of a paradox and that is, that although interest rates are still very low or at least the rates set by the central banks, the consumers are no longer benefiting from low interest rates because the central banks have been reducing the credit lines and so the banks are in turn forced to increase their interest rates. I don't think people entirely appreciate what a massive difference it makes to someones mortgage, when interest rates increase by even 1%.

The idea that the sub prime market is the main cause, has been something of a red herring but certainly it has contributed to the overall predicament as Jrome has pointed out, it did not matter to anyone about playing pass the parcel with the assets, (the mortgages) because whilst the credit was free flowing people could get rich very quickly and to hell with everyone else. Now again just referring to the mainstream figures 2.5 million homes in America are set to be repossessed and this of course discounts the high flyers who bought lavish homes again with the adjustable rate mortgages who face exactly the same problems.  It has been under reported because it has been important to try and play down what is unfolding by aiming the bullet almost squarely at the sub prime market and that way the blame could be placed on these small financial institutions but again this only creates a small part of the picture.

It's something I did mention briefly above, but another way of measuring the economy is of course through the strength of the currencies and to measure currency against currency and what is basically shown via this method, is that since the euros inception, the dollar has lost over 65% of it's value and although it seems like the sterling is very strong against the dollar, it has actually lost over 10% of it's value in the last 12 months. Fundamentally what has been happening in America is a move away from self sufficiency and replaced with flooding America with cheap imports, this has created a mass trade deficit and due to the mass increase in big government and the wars being waged, has led to a mass budget deficit, the dollar is plummeting because nothing is driving it anymore and the uncertainty in the dollars precarious position is leading to people dumping the dollar further driving down it's value. It's exactly the same here to, the strength of the sterling was largely due to the boom in house prices, however the boom was simply inflation but during that boom time, people could spend more because there was lots of equity in their homes, people could remortgage and the banks were happy to lend more money but since the stagnation of prices and the ominous warnings of a 30% fall in prices coupled with the things I have mentioned before, sterling is now slipping and sliding.

So when you analyse what is being sad here, I would suggest he is simply trying to put perfume on a pig, have you ever read 1984? it reminds me of the positive announcements given to the people of London and life for them becomes a matter of living hand to mouth. I am sure there are many issues which I have not even fully covered there but I think unfortunately all the indicators show that Europe is slipping into a deep recession and that America contrary to Alan Green spans bullshit about them possibly slipping into a recession, has been in a recession for the last few years but the full impact of this has been postponed for a short while due to the intervention of the central banks in the stock markets. Initially I was inclined to provide the response of that article is absolute bullshit but I thought I better elaborate a little lol.


« Last Edit: February 15, 2008, 07:32:54 PM by virtuoso »
 

Trauma-san

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Re: Firm economic growth expected for 2008?
« Reply #2 on: February 16, 2008, 09:47:19 PM »
Generally, Virtuoso, you're a pretty pessimistic guy... about everything you talk about.  Pessimism is never totally based in reality, it's just a frame of mind.  So of course you look @ the economy from a pessimistic point of view.

Personally, I'm an optimist.  I made more money last year than I've ever made, I didn't have any problems with my home mortgage because I have a traditional mortgage, I didn't have any credit card issues because I pay cash for things I buy and don't fuck around with interest loans to myself and other bullshit ways to trade debt, and I didn't have a problem in the stock market because all my investments are properly diversified in mutual funds.  I live a frugal life so I didn't care when gas prices or food prices went up, because I'm living well below my means.  I FULLY expect to earn more money this year, than I did last year, and so far it looks like that's exactly where I'm headed.

Let me say this, as well.  Statistics are bullshit.  In a unique situation, the statistic is always 0% or 100%.  You're either employed, or unemployed.  You're never 5% unemployed.  Personal Responsibility tells me that I can beat ANY statistic.  If I come out on the bad side of a statistic, there's opportunity in failure as well.  Life is what you make it.  Make it good.

Another thing, I think people ignore history too much.  They tend to think that right now is the most important time that has ever been, so they dramatize everything.  They think it's got to be really bad right now, but if you look @ it in perspective, things are better now than they've ever been.  We're in a war, but look how much of a designer war it is.  We didn't even need to fight it.  We're spending massive amounts of money, but yet people still live their lives.  We've had 4 or 5 thousand people die.  We're fighting over things people said.  Compare all that bullshit, pussy ass war info with what was going on just back in Vietnam, or much worse in world war II or world war 1.  Those were wars fought over real shit, with real casualties, and real sacrificies here at home.  Even our wars now are easy to take.

I'm just saying, we have it far too good for me to bitch about interest rates on a half million dollar house. 
 

virtuoso

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Re: Firm economic growth expected for 2008?
« Reply #3 on: February 17, 2008, 05:49:06 AM »
I am just laying out the bare facts and unless your income has increased by more than the dollar has devalued, then you haven't made any money, in fact you have taken a big loss. Meanwhile, your food prices if they haven't already, will rapidly increase, as will all of your imports, why is it so difficult for you to understand that you are losing money.
 

Elevz

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Re: Firm economic growth expected for 2008?
« Reply #4 on: February 17, 2008, 08:05:09 AM »
Wow, virtuoso... That sure was a detailed way to argue for what I already suspected. Really insightful... Major props!

Before posting the article, I was basically thinking how the daily costs for living have increased in a major way. I believe potatoes are now 30% more expensive than they were half a year ago. Dairy products and bread are becoming really expensive; vegetables are becoming unaffordable when compared to a simple pasta meal. The result is that I'm spending crazy amounts of money on food, yet I'm not eating as healthy as I'd want to. You can say what you want, but what use is it when the prices of flat screen tv's are dropping, when I'm already spending all my money on bread and butter?

To think that the global economy is irrelevant for one's everyday life is to negate the fact that you're not living on a deserted island. There's lots of patterns to be discovered in the way the world is evolving - it's extremely naive to assume these developments don't concern you. Once it's hit you over the head, you won't know what hit you.

Pessimism is never totally based in reality, it's just a frame of mind. [...] Personally, I'm an optimist.

As if optimism isn't a frame of mind just alike? The difference is, optimism is rather naive by its nature. At least a pessimist will know what's going on when something happens.

Let me say this, as well.  Statistics are bullshit.  In a unique situation, the statistic is always 0% or 100%.  You're either employed, or unemployed.  You're never 5% unemployed.

And you cannot belong to that 5% of the nation which is unemployed? In other words, there's no way to look at statistics because they supposedly represent unrealistic collections of people? And the status of those other people and society around you has no influence whatsoever on the world you live your life in?

I FULLY expect to earn more money this year, than I did last year, and so far it looks like that's exactly where I'm headed.

Will it, if the world around you stops cooperating? Because that's exactly what a stagnating economy does. That's exactly why these things matter. You can't live succesfully on your very own, when the world around you is collapsing.

Another thing, I think people ignore history too much.  They tend to think that right now is the most important time that has ever been, so they dramatize everything.  They think it's got to be really bad right now, but if you look @ it in perspective, things are better now than they've ever been.

Kinda contradicting yourself there, huh? All of a sudden perspectives and patterns do matter?

It's exactly because we refuse to ignore history that we look into these perspectives, so predictions can be made. History is not something that's past and done, something to just look back on. History evolves by every new sunset, and every breath you take. These patterns keep emerging, and right now with the way things are going, the stability of global life isn't exactly what it should be. Now with these politicians talking as if there's nothing but a bright future ahead of us while the facts and analyses prove them wrong, it's more than ever time to sit upright and pay attention to what's going on. You don't want to turn into a sitting duck simply because you've been told everything was going to be perfect.

So when you analyse what is being sad here, I would suggest he is simply trying to put perfume on a pig, have you ever read 1984? it reminds me of the positive announcements given to the people of London and life for them becomes a matter of living hand to mouth. I am sure there are many issues which I have not even fully covered there but I think unfortunately all the indicators show that Europe is slipping into a deep recession and that America contrary to Alan Green spans bullshit about them possibly slipping into a recession, has been in a recession for the last few years but the full impact of this has been postponed for a short while due to the intervention of the central banks in the stock markets.

That's exactly what I've been thinking. Especially with the current times of big corporate media and information being everywhere around you, it's easy for them to drill you with propagandistic manners. It's easy to say things seem safer now than ever before, when really it's become easier than ever before for them to deceive the masses. Thank God for the free internet.
 

Elevz

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Re: Firm economic growth expected for 2008?
« Reply #5 on: February 17, 2008, 11:07:53 AM »
So when you analyse what is being sad here, I would suggest he is simply trying to put perfume on a pig, have you ever read 1984? it reminds me of the positive announcements given to the people of London and life for them becomes a matter of living hand to mouth. I am sure there are many issues which I have not even fully covered there but I think unfortunately all the indicators show that Europe is slipping into a deep recession and that America contrary to Alan Green spans bullshit about them possibly slipping into a recession, has been in a recession for the last few years but the full impact of this has been postponed for a short while due to the intervention of the central banks in the stock markets.

That's exactly what I've been thinking. Especially with the current times of big corporate media and information being everywhere around you, it's easy for them to drill you with propagandistic manners. It's easy to say things seem safer now than ever before, when really it's become easier than ever before for them to deceive the masses. Thank God for the free internet.

I should have made more obvious that the last sentense there was not intended as sarcasm. With the current stance of globalization and media being everywhere, we're blessed to have the internet around. It's an important place where the people can ventilate their thoughts and communicate freely - exactly that's necessary to prevent us from living in a propaganda controlled world. Imagine if the internet suddenly became inaccessible...
 

jeromechickenbone

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Re: Firm economic growth expected for 2008?
« Reply #6 on: February 17, 2008, 05:05:34 PM »
Generally, Virtuoso, you're a pretty pessimistic guy... about everything you talk about.  Pessimism is never totally based in reality, it's just a frame of mind.  So of course you look @ the economy from a pessimistic point of view.

Personally, I'm an optimist.  I made more money last year than I've ever made, I didn't have any problems with my home mortgage because I have a traditional mortgage, I didn't have any credit card issues because I pay cash for things I buy and don't fuck around with interest loans to myself and other bullshit ways to trade debt, and I didn't have a problem in the stock market because all my investments are properly diversified in mutual funds.  I live a frugal life so I didn't care when gas prices or food prices went up, because I'm living well below my means.  I FULLY expect to earn more money this year, than I did last year, and so far it looks like that's exactly where I'm headed.

Let me say this, as well.  Statistics are bullshit.  In a unique situation, the statistic is always 0% or 100%.  You're either employed, or unemployed.  You're never 5% unemployed.  Personal Responsibility tells me that I can beat ANY statistic.  If I come out on the bad side of a statistic, there's opportunity in failure as well.  Life is what you make it.  Make it good.

Another thing, I think people ignore history too much.  They tend to think that right now is the most important time that has ever been, so they dramatize everything.  They think it's got to be really bad right now, but if you look @ it in perspective, things are better now than they've ever been.  We're in a war, but look how much of a designer war it is.  We didn't even need to fight it.  We're spending massive amounts of money, but yet people still live their lives.  We've had 4 or 5 thousand people die.  We're fighting over things people said.  Compare all that bullshit, pussy ass war info with what was going on just back in Vietnam, or much worse in world war II or world war 1.  Those were wars fought over real shit, with real casualties, and real sacrificies here at home.  Even our wars now are easy to take.

I'm just saying, we have it far too good for me to bitch about interest rates on a half million dollar house. 

It doesn't matter if you made more money last year.  Your buying power is less.   How do you think retirees and those on fixed income feel about inflation?