Growing evidence that the downturn is upon us....
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Smith,
Yep, you're talking rubbish. Market driven economies are always cyclical between boom and bust. It's better than marxist economies, which are all bust and no boom except the guns of the secret police. I'll take the cyclical job shortages over the continuous ones any day. To think banks and corporations could moderate the the cycles or that government would be capable of moderating anything is a bit gullible and naive.
Yep, you're talking rubbish. Market driven economies are always cyclical between boom and bust. It's better than marxist economies, which are all bust and no boom except the guns of the secret police. I'll take the cyclical job shortages over the continuous ones any day. To think banks and corporations could moderate the the cycles or that government would be capable of moderating anything is a bit gullible and naive.
Its the force of creative destruction. In boom times there is easy capital and its relatively easy to start new businesses develop new markets and to expand existing ones.
Who could ever say when the optimum is reached?
So there is always a period of recession and this squeezes out the excess. It supresses the inflation and it kills of the weak sectors, the poorer ideas and the mismanaged.
Like a forest fire it has the effect of removing the dead wood. The strongest and fittest survive - both on the person and enterprise level to go into the next period of growth. Such is market evoltion as opposed to natural evolution. Booms and busts are a feature of free market capitalism.
Nobody has come up with a better system despite centuries or effort and millions of lives exploring the alternatives.
WWW
ps I'll find a working link to that graph - its a killer.
Who could ever say when the optimum is reached?
So there is always a period of recession and this squeezes out the excess. It supresses the inflation and it kills of the weak sectors, the poorer ideas and the mismanaged.
Like a forest fire it has the effect of removing the dead wood. The strongest and fittest survive - both on the person and enterprise level to go into the next period of growth. Such is market evoltion as opposed to natural evolution. Booms and busts are a feature of free market capitalism.
Nobody has come up with a better system despite centuries or effort and millions of lives exploring the alternatives.
WWW
ps I'll find a working link to that graph - its a killer.
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Cheers G SXTY, a very good post. Thanks to everybody to their input in this thread, it has given loads of new thoughts! And please continue
"If the Wright brothers were alive today Wilbur would have to fire Orville to reduce costs."
- Herb Kelleher, founder, Southwest Airlines. (1994)
"If the Wright brothers were alive today Wilbur would have to fire Orville to reduce costs."
- Herb Kelleher, founder, Southwest Airlines. (1994)
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As far as the housing market is concerned, the real indicator is in new build.
The house builders are really pulling back and many have stopped strating new developments and finishing of current developments.
The reasons for this are that a) Mortgages are hard to come by and people have less money because of rising living costs.
Just because interest rates are not at 15% does not mean things are better. Thats political spin.
when things were at 15% people borrowed less because the payments were so high and people borrowing are guided on what the monthly repayments are not the amount you could borrow.
A change of a couple of % when rates were 15% did not seem that much extra cash to pay out or have back.
If you have borrowed when rates were say 4% and have rates go up to 6% then that means a 50% increase in payments. A significantly different scenario.
when rates were 15% you might have borrowed £20,000. with rates at 4% you would have borrowed £120,000.
Now go figure.
The house builders are really pulling back and many have stopped strating new developments and finishing of current developments.
The reasons for this are that a) Mortgages are hard to come by and people have less money because of rising living costs.
Just because interest rates are not at 15% does not mean things are better. Thats political spin.
when things were at 15% people borrowed less because the payments were so high and people borrowing are guided on what the monthly repayments are not the amount you could borrow.
A change of a couple of % when rates were 15% did not seem that much extra cash to pay out or have back.
If you have borrowed when rates were say 4% and have rates go up to 6% then that means a 50% increase in payments. A significantly different scenario.
when rates were 15% you might have borrowed £20,000. with rates at 4% you would have borrowed £120,000.
Now go figure.
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To think banks and corporations could moderate the the cycles or that government would be capable of moderating anything is a bit gullible and naive.
I have no training in economics or finance but at the moment I work in the retail sector, I remember asking my area manager the same question during the last down turn and our company had let a lot of people go.
His reply was, at any one time there is a finite pot of money available and big companies compete with each other for as big a share of that pot hence trying to get us to spend as much money as possible.
My theory is that when all that money was available, if credit card companies, banks etc had made it more difficult to gain credit, the pot would have been smaller and hence a more sustainable growth would have been achieved, and this could have been achieved by the government and the banks.
In no way am I trying to rewrite the economy books, just trying to fathom why we have boom and bust cycles. To me it seemed like a greed cycle, everyone wanting instant gratification. Now I understand that the boom and bust sorts out the fittest and streamlines the survivors it makes sense, but probably not to the guy whose just bought his first home, has two kids and a car and has just been handed his P45.
I'll get me hat and coat now
And the chilling part of it is that as of yet we haven't had the UK subprime crisis and still the UK banks have lost billions. There are tens of thousands of UK households who 2 years ago took out a 95%+ mortgage on a two year discount or interest only who are today in negative or neutral equity. Their discount or fixed mortgage is about to reset from 4.2% to 6.6% and the new mortgage has a £1,500 set up fee, Sir.
The wife has just had her hours at work cut, the gas bill is up £300 so is the council tax and it just cost the husband £72 to fill his car. The new mortgage payment will be an extra £350 a month and the 0% deal on the credit card only has a fortnight to run.
I think we can wave bye bye to one of the holidays this year.
All this before we even start the recession and get to the job loss stage.
On the other hand it is a beautiful day out there and the Webber is warming up for those sausages.
WWW
The wife has just had her hours at work cut, the gas bill is up £300 so is the council tax and it just cost the husband £72 to fill his car. The new mortgage payment will be an extra £350 a month and the 0% deal on the credit card only has a fortnight to run.
I think we can wave bye bye to one of the holidays this year.
All this before we even start the recession and get to the job loss stage.
On the other hand it is a beautiful day out there and the Webber is warming up for those sausages.
WWW
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On the other hand it is a beautiful day out there and the Webber is warming up for those sausages.
Anyway, I though the sun never shone in your world WWW.
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Eos ceases operations
Eos has just announced that it is ceasing operations.
http://www.eosairlines.com/
http://www.eosairlines.com/
Thats the fifth US airline bust this year. The US is about 9 months ahead of where we are with the the house price crash and subprime crisis.
This really is very serious for Wannabes. Protect yourselves - avoid debt.
WWW
ps The Weber has done its usual excellent job thank you. Do not mistake my views on the economy as being in any way reflected in my personal demeanor. I call it as I see it but its largely other peoples problem - not mine.
pps My condolences to anyone who has lost their job at EOS - its a terrible thing to happen to anyone and I think you had a wonderful product.
This really is very serious for Wannabes. Protect yourselves - avoid debt.
WWW
ps The Weber has done its usual excellent job thank you. Do not mistake my views on the economy as being in any way reflected in my personal demeanor. I call it as I see it but its largely other peoples problem - not mine.
pps My condolences to anyone who has lost their job at EOS - its a terrible thing to happen to anyone and I think you had a wonderful product.
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Closed shop USA
The USA is closed to most Europeans and most Americans can't or won't work in Europe so an American airline closing is not much of a problem in Europe when it comes to jobs.
However the fallout in loss of confidence in the sector I likely to have more effect than the reality of an American airline failing.
I am always sad for the employees when an airline shuts, having done that thing I would not wish it on anyone.
I do agree whole hartedly with WWW on one thing, a lot of peope are going to cut back on the second holiday, the weekends in Amsterdam or Budapest will be the first thing to get the chop. However the last thing the British working class will give up is the two weeks in the sun mid-summer.
It would seem to be those airlines most commited to the "weekend away" market that are most likely to be hit the hardest.
And now for the good news today I did the first flying lesson for a guy who is intending to go for the ATPL by the modular route.............. his presant job is a trader for a big bank in the city, at least someone sees a bright future in aviation!
However the fallout in loss of confidence in the sector I likely to have more effect than the reality of an American airline failing.
I am always sad for the employees when an airline shuts, having done that thing I would not wish it on anyone.
I do agree whole hartedly with WWW on one thing, a lot of peope are going to cut back on the second holiday, the weekends in Amsterdam or Budapest will be the first thing to get the chop. However the last thing the British working class will give up is the two weeks in the sun mid-summer.
It would seem to be those airlines most commited to the "weekend away" market that are most likely to be hit the hardest.
And now for the good news today I did the first flying lesson for a guy who is intending to go for the ATPL by the modular route.............. his presant job is a trader for a big bank in the city, at least someone sees a bright future in aviation!
However the last thing the British working class will give up is the two weeks in the sun mid-summer.
On March 8th 1991 the then second biggest UK Charter airline, Air Europe, went bust in the midst of a serious recession. Dan Air (largely holiday charter) lost £35m which ultimately sealed their fate the year after. Providing package holiday flights is no particular safe haven in a serious recession.
I don't see any airline sector being immune. From Fractional through Legacy to Low Cost and Charter - less discretionary spending and less business travel will hurt them all.
The failures in the USA are merely indicative of what will happen in Europe as the US house price crash and economic recession are replicated here.
Wannabes need to protect themselves.
WWW
On March 8th 1991 the then second biggest UK Charter airline, Air Europe, went bust in the midst of a serious recession. Dan Air (largely holiday charter) lost £35m which ultimately sealed their fate the year after. Providing package holiday flights is no particular safe haven in a serious recession.
I don't see any airline sector being immune. From Fractional through Legacy to Low Cost and Charter - less discretionary spending and less business travel will hurt them all.
The failures in the USA are merely indicative of what will happen in Europe as the US house price crash and economic recession are replicated here.
Wannabes need to protect themselves.
WWW
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WWW
You seem to quote lot of economic history and the USA today Europe tomorrow is a thread that runns through your thinking.
The US economy is not as dominant as it was in the late 80's & early 90's, the rising economic stars are in the far east and the world economy is far less dependant on the USA, In the UK we don't have three million unemployed.
I to would issue a word of caution to wannabes but it would be a word of caution not tails of economic imploision.
Yes there is a an economic downturn but what better time to start a modular ATPL course, Keen prices from the training providors, keep your current job to help pay for it all and in two or three years you will be ready for a job just as the market picks up.
This time next year we will see who is right but I would guess that at least one UK lo-co won't have enough pilots and will be parking aircraft & cutting routes all because they have had a panic and stopped recruting now.
The US economy is not as dominant as it was in the late 80's & early 90's, the rising economic stars are in the far east and the world economy is far less dependant on the USA, In the UK we don't have three million unemployed.
I to would issue a word of caution to wannabes but it would be a word of caution not tails of economic imploision.
Yes there is a an economic downturn but what better time to start a modular ATPL course, Keen prices from the training providors, keep your current job to help pay for it all and in two or three years you will be ready for a job just as the market picks up.
This time next year we will see who is right but I would guess that at least one UK lo-co won't have enough pilots and will be parking aircraft & cutting routes all because they have had a panic and stopped recruting now.
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Inflation
I'm sure we can all agree that there has been a considerable rise in the cost of living in the UK in past couple years. I am no expert on economics and was wondering if anyone could shed some light on how the government claim that inflation is something like 3% pa and is only about 0.2% (or something like that) above what their target is?
I tend to look at simple things like household energy bills being almost double what they were 2 years ago, petrol being up as much as 30% and some food products being double.
Keen to get an insight into this!
I tend to look at simple things like household energy bills being almost double what they were 2 years ago, petrol being up as much as 30% and some food products being double.
Keen to get an insight into this!
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Lies damn lies and statistics
It all comes down to the above. From my limited university level understanding (and can't be ar*ed googling) of inflation you have a kitty of what the government determines that the "average family" consumes each month. Each of these items are then given a weighting as a proportion of the total kitty. Some items might get more than their own representative share in the kitty. How they get the average monthly prices for each I have no idea. What is in the kitty I have no idea. Is the kitty representative of what you or I may consume each month - probably not. But like all things it gives them a benchmark. So long as the goal posts don't move each month then they have a yardstick.
Incidentally I seem to remember a story a few years ago in the UK that the treasury discovered that they had been excluding something that should have been in the kitty but wasn't and therefore all their statistics were wrong! Can't remember the exact reason but fills you with confidence in the ability of the entrusted. Mind you if they can't keep hold of a CD or laptop then how they can do a inflation calculation is beyond me
Incidentally I seem to remember a story a few years ago in the UK that the treasury discovered that they had been excluding something that should have been in the kitty but wasn't and therefore all their statistics were wrong! Can't remember the exact reason but fills you with confidence in the ability of the entrusted. Mind you if they can't keep hold of a CD or laptop then how they can do a inflation calculation is beyond me
In order to keep the house price boom running and thus maintain a feelgood factor allowing Labour to win the 2005 General Election, Gordon Brown changed the MPC inflation target from RPI to CPI.
CPI excludes housing costs. You know, that little bill each month called the mortgage. So whereas portable sat navs and DVD players were falling in price houses could boom and the official inflation target would be low and it would be met even though real Interest Rates were too low. The house price bubble was stoked quite deliberately by the Chancellor.
If you want a full breakdown of the official CPI basket it can be found in detail in the link below, note the basket is constantly being changed, brie cheese removed - probiotic drink added etc etc.
http://www.statistics.gov.uk/elmr/04..._Wingfield.pdf
A&C I know we don't have 3 million unemployed. Would this because we have 2 million on Disability Allowance and 1 million Unemployed? There may not be so much of a spike in the official unemployment figures this time around. If you are one of the 2,000 Northern Rock staff about to lose their jobs would you:
a) Sit around for 12 weeks doing nothing until you are allowed to sign on. Then do so to claim your £44 a week for which you will be required to attend any job interview they arrange for you even if it is as night shift meat packer?
b) Get your backside down to McDonalds/Supermarket and start earning £44 a day which retains some dignity and allows you to keep pretty much all of it through the tax credit system plus other allowances now you are a low paid worker. Your CV will show continuous employment and you've never shirked work in your life and don't want to start now.
It'll be b) nearly every time.
Despite employment being strong for now, don't expect that to be the case by the end of the year.
If you look at the raw unemployment figures during the 1990s recession, the number of unemployed people was actually falling right up until May 1990, a good year or so after house prices started to fall. It then rose sharply from about two million to reach a peak of just above three million in January 1993, before starting to fall again.
WWW
House prices are opinion, the debt it real.
CPI excludes housing costs. You know, that little bill each month called the mortgage. So whereas portable sat navs and DVD players were falling in price houses could boom and the official inflation target would be low and it would be met even though real Interest Rates were too low. The house price bubble was stoked quite deliberately by the Chancellor.
If you want a full breakdown of the official CPI basket it can be found in detail in the link below, note the basket is constantly being changed, brie cheese removed - probiotic drink added etc etc.
http://www.statistics.gov.uk/elmr/04..._Wingfield.pdf
A&C I know we don't have 3 million unemployed. Would this because we have 2 million on Disability Allowance and 1 million Unemployed? There may not be so much of a spike in the official unemployment figures this time around. If you are one of the 2,000 Northern Rock staff about to lose their jobs would you:
a) Sit around for 12 weeks doing nothing until you are allowed to sign on. Then do so to claim your £44 a week for which you will be required to attend any job interview they arrange for you even if it is as night shift meat packer?
b) Get your backside down to McDonalds/Supermarket and start earning £44 a day which retains some dignity and allows you to keep pretty much all of it through the tax credit system plus other allowances now you are a low paid worker. Your CV will show continuous employment and you've never shirked work in your life and don't want to start now.
It'll be b) nearly every time.
Despite employment being strong for now, don't expect that to be the case by the end of the year.
If you look at the raw unemployment figures during the 1990s recession, the number of unemployed people was actually falling right up until May 1990, a good year or so after house prices started to fall. It then rose sharply from about two million to reach a peak of just above three million in January 1993, before starting to fall again.
WWW
House prices are opinion, the debt it real.
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How i see it
Thanks for the explaination WWW, makes a lot of sense. 'If you can't score a goal then change the goal posts!'
I can think of 5 reasons for less people flying:
1) You get a lot less for your pound in Europe.
2) Less money is being lent and hence less money going around to be spent on holidays.
3) Fuel prices are up and the cost of travel will increase.
4) The cost of living is up relative to income, hence less disposable income.
5) There is a 'fear factor' about the economy which influences peoples' discretionary spending.
With all these factors combined i can see a lot of operators going down and the market being flooded with experienced crew, which will make a fresh minted fATPL like myself a lot less attractive!
I just hope the expert opinions about 'the industry bouncing back quicker than before' will mean i will have a prime position next time round, especially as less new pilots are likely to qualify due to lack of funding (i hope).
I can think of 5 reasons for less people flying:
1) You get a lot less for your pound in Europe.
2) Less money is being lent and hence less money going around to be spent on holidays.
3) Fuel prices are up and the cost of travel will increase.
4) The cost of living is up relative to income, hence less disposable income.
5) There is a 'fear factor' about the economy which influences peoples' discretionary spending.
With all these factors combined i can see a lot of operators going down and the market being flooded with experienced crew, which will make a fresh minted fATPL like myself a lot less attractive!
I just hope the expert opinions about 'the industry bouncing back quicker than before' will mean i will have a prime position next time round, especially as less new pilots are likely to qualify due to lack of funding (i hope).
Last edited by HN1708; 28th Apr 2008 at 13:47.
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WWW
Do you know the number of people that claimed diability allowance in the early 90's?
During that period I had few personal friends who were unemployed now I know on one who is! I would like to see the numbers to see if your line on this issue is valid.
During that period I had few personal friends who were unemployed now I know on one who is! I would like to see the numbers to see if your line on this issue is valid.
According to figures from the Department of Work and Pensions, as at 31 May 2004, there were 1.5 million people in receipt of IB. Some 7% of the UK’s working age population claims IB, compared with 2.1% in Germany and 0.3% in France. The average amount paid is £85 per week.
Todays figure is for 2.6 million Incapacity Benefit claimants...
In April 1992 the Unemployment claimants stood at 2,645,115.
Funny how as a society we are getting healthier, living longer and work has become less manual - yet somehow - there as many Incapable of work today as were Unemployed 15 years ago... Of course Incapacity Benefit pays £20 a week more than Job Seekers Allowance AND you don't have to attend those pesky job interviews all the time.
I think the numbers speak for themselves.
The government reclassified the unemployed and then let a couple of million Poles in to do all the work. Its really that simple.
WWW
Todays figure is for 2.6 million Incapacity Benefit claimants...
In April 1992 the Unemployment claimants stood at 2,645,115.
Funny how as a society we are getting healthier, living longer and work has become less manual - yet somehow - there as many Incapable of work today as were Unemployed 15 years ago... Of course Incapacity Benefit pays £20 a week more than Job Seekers Allowance AND you don't have to attend those pesky job interviews all the time.
I think the numbers speak for themselves.
The government reclassified the unemployed and then let a couple of million Poles in to do all the work. Its really that simple.
WWW
Dear WWW - please try to avoid epic levels of thread drift and restrict yourself to more modest forays.
Thank you,
WWW
Thank you,
WWW