The UK and US present us with the model for how developed nation’s economic recoveries will play out. Their recoveries are built on the basis of more consumer and government debt funded by increases in taxes and debt monetizations artificially surpressing interest rates to stimulate more consumption and reductions in savings. Wages lag inflation so that, over time, living standards decline and hopefully competitiveness increase. These policies are working at every level it seems.

The policies are working as risk taking is back on the table for those with access to credit. Those without access to credit are excluded from the asset price bubbles. On each turn of the cycle those with access to credit appears to narrow.The polarizing effects on the ul’s population are horribly obvious to anyone that cares to look.

Here a few of video links on the indicators of this polarizing phenomina from the UK.

http://video.ft.com/v/1517641872001/How-is-the-economy-treating-you-

http://www.bloomberg.com/video/88624918/

And here below David Mills (BOE) recommending that mezzanine corporate finance methods should be introduced to the UK’s residential private sector mortgage markets. If they are, he suggests, we can expect house prices to out perform wage growth well into the future. Wonderful stuff from the UK’s central bank and now financial regulator. (The FSA’s role has been transfered from this year to the BOE).

http://www.telegraph.co.uk/finance/economics/9153363/House-prices-to-rise-for-years-says-BoEs-David-Miles.html

It is as if the disaster of 2007/2008 (where almost all the uk’s banks became insolvent) had never occured. It reminds me of some communist era alteration of the history books. But if you recall never have any politcal leaders in the UK or US stated that too much debt was ever the problem. If you dont learn from history you are doomed to repeat the same mistakes should be ringing in all our ears. (Thanks to AllanM on the forum pages for pointing this Telegraph article out).

Rich

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