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5 "Tells" that the Stock Markets Are About to Reverse

Labour Government Ends 2009 With Britain's Greatest Economic Depression

Economics / Great Depression II Dec 24, 2009 - 12:57 AM GMT

By: Nadeem_Walayat

Economics

Best Financial Markets Analysis ArticleUK GDP for the 3rd Quarter was revised marginally higher to minus 0.2% from the earlier ONS estimate of minus 0.3%. The year has witnessed 'think tanks' and academic institutions flailing in all directions as optimistic forecasts of earlier in the year proceeded to be continuously revised lower in terms of economic contraction and then by late summer in advance of third quarter GDP data starting to anticipate an economic recovery in the third quarter with consensus for a 0.3% growth which failed to materialise.


Britains Great Depression

The GDP trend for the UK economy has been accurately mapped out in the in depth analysis and forecast of 17th February 2009 (UK Recession Watch- Britain's Great Depression?), that both called for severe peak to trough economic contraction of -6.3% at a time when the likes of the UK Treasury were forecasting contraction of less than half at -3%. The analysis also concluded in a strong debt fuelled economic recovery during 2010 to coincide with a summer 2010 General Election. As of the revised ONS GDP data (ABMI Chain linked at Market Prices) total peak to trough contraction is now 6.23% virtually exactly inline with the forecast for -6.3%. Annualised contraction for the third quarter is at -4.56% with trend on target for -4.75% for the fourth quarter.

However not stopping there and at least 6 months ahead of the mainstream press and academic economists, the February analysis also suggested a probable second dip recession during 2011.

Subsequent analysis throughout 2010 has further proceeded to map out the course of the recession, as the Labour Government proceeded to ensure the delivery of a scorched earth economy to the next Conservative Government.

The UK Economic GDP in depth analysis and forecast for 2010 and several years beyond will be completed in the coming week, following on from UK inflation analysis / forecast; UK interest rate forecast as part of the inflation mega-trend scenario. To ensure you get this in depth analysis and precise forecasts in your email in box ensure you are subscribed to my always free newsletter.

UK Inflation Forecast

Deflationary forces as a consequence of the the bursting of the asset bubbles has fulfilled the deflation forecast for 2009 as per the original analysis of December 2008 - UK CPI Inflation, RPI Deflation Forecast 2009 that forecast Deflation into Mid 2009 targeting RPI of -1.2% and CPI of +0.9% to be followed by an uptrend into year end back into RPI inflation of +0.9% and CPI of +1.6% as illustrated by the below graph.

UK Interest Rates

The UK base interest rate is being kept artificially low so as to enable the bankrupt banks to rebuild their balance sheets by overcharging customers against the base interest rate and the interbank market rate of 0.59% as the real market interest rates have been in a steady climb since March 2009 which has increasingly meant that the base interest rate has become irrelevant to the retail market place as explained in the article - Bailed Out Banks Not Lending, Sitting on Tax Payers Cash.

The outlook remains for rising market interest rates charged to retail customers regardless of the base rate having been held at 0.5% into the end of the year, which is inflationary in terms of rising mortgage costs.

To ensure you get the depth analysis and precise forecasts for 2010 and beyond in your email in-box ensure you are subscribed to my always free newsletter.

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-09 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 400 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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