Spend Spend Spend

[Hache]

Reports have been coming through in the last few days that europe is pulling out of recession. Growth has been forecasted for the end of this year and market spending has been increasing. Most markets are getting back on their feet.

The issue however, the danger, is whilst recession ends sooner and less painfully through government funding and printing money, once the recession has ended, growth begins, is it enough to cover the new debt??

It is better news than it sounds because Britain was predicted to be the last out of recession but we may end up the first, France and Germany are behind us now.

 

[Issaccs]

Not just that but is the recession really fixed?

Scrappage schemes across Europe have been shown to boost car sales (I'm not if similar policies are implemented in the U.S) and may have kept factorys open but will this simply collapse again if the schemes are revoked when the recession is believed to be open, never mind pay for itself again in the long term.

 

[Hache]

Good point but the proportion of people with 10 year old cars must be small anyway, so if their is economic stability, banks lend, people have credit again, safety in jobs, the hope is they will start spending again.

It's going to take a long time to be where it was, at least a decade for the car market to get back to where it was.

I imagine in the coming 18 months there will be some kind of push in the used car market. I know Audi have been approaching people saying they have a shortage of used Audi's!

 

[Issaccs]

Good point but the proportion of people with 10 year old cars must be small anyway, so if their is economic stability, banks lend, people have credit again, safety in jobs, the hope is they will start spending again.

It's going to take a long time to be where it was, at least a decade for the car market to get back to where it was.

I imagine in the coming 18 months there will be some kind of push in the used car market. I know Audi have been approaching people saying they have a shortage of used Audi's!

The scrappage was just an example, my point is I'm wary of any stimulus package that creates a temporary demand.

 

[Hache]

It's all to buy time for the banks, they caused this and it will be through the banks that this will end.