The Business/Finance/Economics Thread | Page 9 | Vital Football

The Business/Finance/Economics Thread

British Airways to make 12,000 redundancies that’s 1/4 of the workforce.

Not surprising as I’ve always thought it must be a very baggy and high overhead company, although sad for a large majority who lose their job. Joy for those on expensive contracts coming into retirement who will get a big payout.
 
danvilla2 said:
British Airways to make 12,000 redundancies that’s 1/4 of the workforce.

Not surprising as I’ve always thought it must be a very baggy and high overhead company, although sad for a large majority who lose their job. Joy for those on expensive contracts coming into retirement who will get a big payout.
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The company’s obviously going through some turbulent times
 
Some interesting thinking here about the way forward economically once this crisis has been resolved.

Obviously, the global economy is taking it in the nuts at the moment.

The ECB has dropped their rates to 0, and they are happy to issue as much money to any of their constituent governments as they want.

Modern Monetary Theory says that governments who issue their own currency can create money as necessary as long as the supply side can cope and there is no inflationary pressure.

https://en.m.wikipedia.org/wiki/Modern_Monetary_Theory
 
How about we increase tariffs on Chinese goods then reduce the rate of VAT. In other words get China to pay for the reduction.
 
Fulford said:
How about we increase tariffs on Chinese goods then reduce the rate of VAT. In other words get China to pay for the reduction.
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Haha, you've been listening to Trump. Unfortunately, that's not how tariffs work.

If you want to get back at China, just stop buying stuff made there, if you can.
 
BodyButter said:
Haha, you've been listening to Trump. Unfortunately, that's not how tariffs work.

If you want to get back at China, just stop buying stuff made there, if you can.
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That's the problem, we are too reliant on their stuff. I'm just looking at ways of stimulating our economy and making our goods more competitive.
I avoid buying Chinese goods wherever possible.
 
BodyButter said:
Haha, you've been listening to Trump. Unfortunately, that's not how tariffs work.

If you want to get back at China, just stop buying stuff made there, if you can.
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I'm pretty sure we can increase import duty on certain things if we wish to.
 
Fulford said:
I'm pretty sure we can increase import duty on certain things if we wish to.
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Yes, but it's British people who end up paying the tariff, not the Chinese. It makes Chinese goods more expensive but with no British alternative, you are just making things more expensive because you don't like China.

We live in a globalised world. We aren't going back to the 1800s and the glory days of national industries.

If cheap crap isn't made in sweat shops in China, it'll be made in sweat shops in Bangladesh or Somalia.

The only way Britain can compete with China is to make JRM's dream come true and bring back the Victorian days of apocalyptic poverty when children work in factories because they can't afford to go to school.
 
BodyButter said:
Yes, but it's British people who end up paying the tariff, not the Chinese. It makes Chinese goods more expensive but with no British alternative, you are just making things more expensive because you don't like China.

We live in a globalised world. We aren't going back to the 1800s and the glory days of national industries.

If cheap crap isn't made in sweat shops in China, it'll be made in sweat shops in Bangladesh or Somalia.

The only way Britain can compete with China is to make JRM's dream come true and bring back the Victorian days of apocalyptic poverty when children work in factories because they can't afford to go to school.
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No it's not. Some goods can't be produced in the UK but some can. In my industry the UK produces some better products than the Chinese, but due to certain Chinese companies being state owned and selling at virtually no profit our companies can't compete on price.
 
BodyButter said:
Some interesting thinking here about the way forward economically once this crisis has been resolved.

Obviously, the global economy is taking it in the nuts at the moment.

The ECB has dropped their rates to 0, and they are happy to issue as much money to any of their constituent governments as they want.

Modern Monetary Theory says that governments who issue their own currency can create money as necessary as long as the supply side can cope and there is no inflationary pressure.

https://en.m.wikipedia.org/wiki/Modern_Monetary_Theory
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In theory yes if a government has its own currency it could always create more money to pay off any previous debt or to finance any operations - although doing so would most likely cause inflation. The only way to control inflation would be to remove money from circulation, which would be counterproductive if you needed to create money in the first place.

At the moment due to the collapse in demand across the economy inflation is unlikely so central banks / governments have room to spend spend spend, although when things recover if there’s suddenly vast quantities of extra money in circulation could be the next problem. I think the government previously announced £300bn of extra spending / debt issuance, and that the Bank of England would effectively be buying £200bn of this government debt through quantitative easing so in essence £200bn extra will now exist.
 
david-avfc said:
In theory yes if a government has its own currency it could always create more money to pay off any previous debt or to finance any operations - although doing so would most likely cause inflation. The only way to control inflation would be to remove money from circulation, which would be counterproductive if you needed to create money in the first place.

At the moment due to the collapse in demand across the economy inflation is unlikely so central banks / governments have room to spend spend spend, although when things recover if there’s suddenly vast quantities of extra money in circulation could be the next problem. I think the government previously announced £300bn of extra spending / debt issuance, and that the Bank of England would effectively be buying £200bn of this government debt through quantitative easing so in essence £200bn extra will now exist.
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This is essentially right.

What is interesting to me is that we have had an unprecedented period, since 2008, of extremely low interest rates. Making borrowing extremely attractive and has fuelled incredible amounts of corporate debt.

I think that bubble could pop very soon.
 
Pangloss said:
This is essentially right.

What is interesting to me is that we have had an unprecedented period, since 2008, of extremely low interest rates. Making borrowing extremely attractive and has fuelled incredible amounts of corporate debt.

I think that bubble could pop very soon.
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Yes one of my biggest concerns in financial markets right now is BBB rated corporate bonds - the lowest “investment grade” debt. These companies could default or [perhaps more likely scenario] be down rated to junk status forcing large scale sell offs by investors and asset managers who are only permitted to hold safer debt instruments (BBB or above). There is a huge proportion of the bond market at BBB, 40-60% depending on specific market which means in essence potentially over half of corporate bonds are on the edge of being classed as junk if something happens.. and certainly this coronavirus could be the trigger for that
 
Pangloss said:
This is essentially right.

What is interesting to me is that we have had an unprecedented period, since 2008, of extremely low interest rates. Making borrowing extremely attractive and has fuelled incredible amounts of corporate debt.

I think that bubble could pop very soon.
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And consumer debt, car finance companies must be getting worried. It feels like over the last couple of decades we’ve gone from saving to buy, to buying to paying a bit later, to buying and paying off over years. The next expense for that cycle to continue, is borrowing (rather than owning) say a car or expensive technology, and renting it at an even higher interest rate.

We were income rich, asset poor with cars and credits cards full of debt. Now we’re going to be income poor again.

It’s interesting how each generation has a sob story, it’s those with low incomes and no assets who will suffer the most as usually happens.

Incidentally, a surplus of cash in the economy in my simple mind just ends up even higher inflated asset prices.

We need the cash cycle to improve, we need people of all wealth bands spending money again. Instead of quantitative easing, why not increase personal allowance to £20k so that we have another £10k of tax free earnings?
 
I admit to not having a great grasp of higher financial affairs. My philosophy is based on the economics of Mr. Micawber. So I wonder how good an indicator markets are of approaching economic dangers. The markets certainly seemed to anticipate the seriousness of the impending damage Corvid-19 was about to wreak long before governments, and certainly our own, wised up to the coming storm. Do markets anticipate or react?
 
ironside said:
I admit to not having a great grasp of higher financial affairs. My philosophy is based on the economics of Mr. Micawber. So I wonder how good an indicator markets are of approaching economic dangers. The markets certainly seemed to anticipate the seriousness of the impending damage Corvid-19 was about to wreak long before governments, and certainly our own, wised up to the coming storm. Do markets anticipate or react?
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The stock market that makes all markets is NYSE. They are still bullish on the situation. I think we are going to see a big "correction" when companies start reporting their quarterly earnings for Q2.
 
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