I started this blog in June 2007 asking these questions: Are we in a massive asset bubble that will blow up in our faces ??? - ANSWERED YES ! Is western and particularly British society on the verge of social collapse??? What are the best common sense long term investment strategies to keep you rich? When will consumption/debt bubble economics end and a real savings/production economy begin ???

Tuesday 17 July 2007

29 graduates chasing every new vacancy

Competition for degree-level jobs is so intense that every vacancy is being chased by 29 new graduates, according to the latest graduate recruitment survey.

Consumer brands companies such as Unilever and Procter & Gamble, lead the way with 104 applicants for every graduate vacancy, compared with 50 for insurance companies, 26 for investment banks and 10 for accountancy firms.

Carl Gilleard, chief executive of the Association of Graduate Recruiters, said that, with increased competition for the best talent, the majority of employers were asking for a 2.1 as a minimum qualification.

“With such large numbers of applications for every vacancy, employers have to find a way to reducing numbers to a manageable size.

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Krugman on the US housing bubble



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House Prices



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Thursday 5 July 2007

Debt costs 'reach record levels'

The burden of paying off household debts has reached record levels, a leading firm of accountants has said.
PricewaterhouseCoopers says repaying money borrowed, and the interest on it, now takes up 19% of the average UK household's disposable income.

That is more than the previous peak of the domestic debt burden, which was 18% of household income in late 1990.

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UK interest rates raised to 5.75%

The Bank of England has raised UK interest rates from 5.5% to 5.75%, its fifth rate rise since last August.
Its Monetary Policy Committee (MPC) warned that inflation remains a danger, saying "most indicators of pricing pressure remain elevated".


Some analysts have taken that to mean there may be a further rise this year.

The higher rates will add £16 a month to an average £100,000 repayment mortgage, but it could be good news for savers who should earn higher interest.

Charities have expressed concern that higher mortgage costs will leave many borrowers facing difficulties.

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Why inflation targeting is a bad idea.

Fifteen years ago, the UK exited from the ERM in humiliation. At the time, the failure struck at the very core of the Bank of England’s counter-inflationary strategy. By targeting the pound to the German DM, the bank hoped that it could hold down inflation. However, the Bank couldn’t maintain the target.

In the days following the ERM exit, the Bank of England faced the difficult question of “what now?” It came up with a barely noticed idea. From now on, the bank announced, we will target inflation directly. No more intermediate targets for us, the Bank declared. The Bank would no longer look at money supply growth, interest rates, or exchange rates; only the end result would matter. Inflation, and only inflation, would be the only target that mattered.

At the time, the implications of this new inflation targeting regime were only dimly understood. Superficially, it seemed like a sound idea. Its simplicity and clarity was appreciated by politicians. In 1997, the inflation targeting regime was further enhanced when the Bank of England gained policy independence from the Treasury.

However, inflation targeting had a deep dark side that only became apparent much later. The chosen target wasn’t price inflation, it was consumer price inflation. The Bank of England chose to target a subset of inflation. Crucially, the Bank chose to ignore asset prices, housing costs and indirect taxes.

Inflation targeting also meant that the Bank no longer paid much attention to other indicators, which could guide monetary policy. The Bank, in effect, threw away, monetary economics as a guide for policy. It ignored the money supply, interest rate policy and exchange rates.

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