B B C Radio 5 Live 15.04.08

[Killer Bunny]

Debate with Nicky Campbell and some VI economist - Ruth Lea

Listen again at 5 live breakfast show at 8.01am or so.

Edited April 15, 2008 by Financial Planner

[Alice]

Watch out for her! I've never heard anyone so apparently without soul. Comes over as very right wing, totally anti the UK education system and all in all with little empathy for the plight of the average worker!

[Killer Bunny]

Watch out for her!

Yes, thx. I know she's extremely economically right wing. Used to be at CBI and chucked out. Or IoD - too right wing for them!!!!!!! She apparently has told BBC that unemployment was high at the beginning of the last crash and that IRs were high. Clearly she knows as much as everyone else about the economics. Makes me sick! :angry:

[Alice]

Yes, thx. I know she's extremely economically right wing. Used to be at CBI and chucked out. Or IoD - too right wing for them!!!!!!! She apparently has told BBC that unemployment was high at the beginning of the last crash and that IRs were high. Clearly she knows as much as everyone else about the economics. Makes me sick! :angry:

Doesn't surprise me at all. People who shout as loud as her rarely know their stuff.

[SeenItAllBefore]

Yes, thx. I know she's extremely economically right wing. Used to be at CBI and chucked out. Or IoD - too right wing for them!!!!!!! She apparently has told BBC that unemployment was high at the beginning of the last crash and that IRs were high. Clearly she knows as much as everyone else about the economics. Makes me sick! :angry:

I'm sure you don't need reminding but just in case:

Housing sales volumes collapsed, like now.

Consumption slumped as a result, starting with big ticket items like, cars, bathrooms, kitchens, carpets etc like now.

This lead to job losses, like the ones that are starting now.

Which lead to the price collapse which, judging by the Halifax's results, isn't far away either.

Don't forget to point out that (a) the price falls in the US pre-dated the recession and that, although interest rates are lower, the debt repayment burden now is the same as it was when they were 15% in the early 90s.

Good luck.

[shindigger]

Watch out for her! I've never heard anyone so apparently without soul. Comes over as very right wing, totally anti the UK education system and all in all with little empathy for the plight of the average worker!

The former boss of the Institute of Directors. No less.

[Ash4781]

What's the debate on ?

[W12]

There'll be a series of interviews on various BBC local radio stations in the morning too. And I suspect the Today programme on R4 and BBC1 Breakfast will be mentioning the story......

[OnlyMe]

Yes, thx. I know she's extremely economically right wing. Used to be at CBI and chucked out. Or IoD - too right wing for them!!!!!!! She apparently has told BBC that unemployment was high at the beginning of the last crash and that IRs were high. Clearly she knows as much as everyone else about the economics. Makes me sick! :angry:

FP, great stuff on TV last night.

If you get the chnace ask her how by depressing wages of the majority and spurring on inflation any of the economic participants are going to do well as a result.

"Strong" companies with a bust workforce who can't afford the output of the companies they work for!

Ask her if even the companies themselves or indeed the CBI had though this one out or did they all think they were working in their own little bubble with no knock-on effect.

Edited April 15, 2008 by OnlyMe

[ruisort7]

What's the debate on ?

If Arsenal need to buy another striker.

[Methinkshe]

Yes, thx. I know she's extremely economically right wing. Used to be at CBI and chucked out. Or IoD - too right wing for them!!!!!!! She apparently has told BBC that unemployment was high at the beginning of the last crash and that IRs were high. Clearly she knows as much as everyone else about the economics. Makes me sick! :angry:

Did you read Ruth Lea's article in the Telegraph yesterday?

UK faces hard times but should avoid recession

I disagree with a lot of what she has to say. This bit, for instance:

Housing market bears point to the fact that the ratio of prices to average earnings (for men) is close to record highs and this will be a factor in driving down prices aggressively. But affordability, as measured by the ratio of mortgage interest payments to earnings, is surely more relevant. It has increased in recent years, but is still below the peak of the late 1980s and early 1990s, reflecting substantially lower interest rates.

Housing market bears are also making gruesome comparisons with the US, where the housing market has slumped. But conditions in the UK are different for two main reasons. The first is the over-supply of property in the US, which is not the case on the whole here, and, second, the lending practices in the US, not least of all concerning sub-prime mortgages, have been even slacker than in Britain. All in all, a repetition of the 1990s housing crash still seems unlikely, even though prices are slipping.

How does she work out that affordability is below the 1989/80 peak? And as for U.S. lending practices being slacker than UK ones, I wonder if she just hasn't heard of self-cert, liar loans and how pervasive they were.

[Methinkshe]

You nearly lost it there with Ruth Lea, F.P.! Can't say I blame you. She was wilfully ignoring and/or distorting facts.

It will be interesting to hear if there are any email responses from listeners.

[rettah]

These people seem to forget the basic fact about borrowing money - You have to pay it back!

[Griptool]

You've been on the coffee there FP? - sounds like she lit the blue touch paper at the beginning and you built to a explosive crescendo

[the primitive]

You nearly lost it there with Ruth Lea, F.P.! Can't say I blame you. She was wilfully ignoring and/or distorting facts.

It will be interesting to hear if there are any email responses from listeners.

A great listen! But it did rather remind me near the end of Kevin Keegan losing it on Sky, not sure that was quite so wise! Ruth Lea must have been making condescending and patronising faces at him to wind him up!

Why no mention of real interest rates? I thought the point was that while interest rates in 1990 were high, so were pay rises.

the other killer fact is surely the average size of a mortgage compared to income, which is higher now, (Isn't it?!)

Anyway, there can be very few people left in the UK who aren't at least vaguely aware of a housing slowdown. Great stuff.

[abharrisson]

I heard the piece, and actually I think the HPC chap balanced it wrong... it would have sounded a lot more reasonable if he were to have said over the next four years we expect inflation of around 4% and house price drops at the same time. During the period we expect a 20% drop in actual prices with a total inflation adjusted fall of 40%...... That would have been a reasonable way to put the point accross even though I personally do not think it will be that steep. (Note... I can't believe he meant a 40% drop in in actual prices over four years with inflation adjustment this would make 60%... the last one was only 13% in actual price falls with the rest being inflation adjustment).

Secondly I do think there is credence to the point that falls will be much higher in some pockets... eg new build city centre flat environment, those areas with large penetrations of those who are financially struggling (by the by this dovetails quite neatly with BTL penetration). In other words the fall won't be something we can judge nationally as different areas will have different characteristics even beyond the county level eg Suffolk will be dragged down by Ipswich.... Essex will be dragged down by colchester, chelmsford, southend etc).

So in summary I do think he could have made the point he wanted to just as clearly by perhaps firstly breaking down the inflation effect from the actual price drop and secondly making the point about regional differences.

My own view for what its worth is that there will be a blood bath in the new build flat sector and in those areas where people are more stretched financially..... and that this will create a gloomy national picture... however we will not necessarilly see dramatic falls everywhere, and some house types in some areas may not have much of a correction at all. I would say as I have before that there are plenty out there who want to buy, who can afford it and who I see every day, but financing is getting in the way.... if we can find a way to reduce the margin between the BOE rate and LIBOR back to a more healthy 50 basis points (traditionally about 30 basis points) then I think the financing situation will ease considerably.

[bobthe~]

I heard the piece, and actually I think the HPC chap balanced it wrong... it would have sounded a lot more reasonable if he were to have said over the next four years we expect inflation of around 4% and house price drops at the same time. During the period we expect a 20% drop in actual prices with a total inflation adjusted fall of 40%...... That would have been a reasonable way to put the point accross even though I personally do not think it will be that steep. (Note... I can't believe he meant a 40% drop in in actual prices over four years with inflation adjustment this would make 60%... the last one was only 13% in actual price falls with the rest being inflation adjustment).

Secondly I do think there is credence to the point that falls will be much higher in some pockets... eg new build city centre flat environment, those areas with large penetrations of those who are financially struggling (by the by this dovetails quite neatly with BTL penetration). In other words the fall won't be something we can judge nationally as different areas will have different characteristics even beyond the county level eg Suffolk will be dragged down by Ipswich.... Essex will be dragged down by colchester, chelmsford, southend etc).

So in summary I do think he could have made the point he wanted to just as clearly by perhaps firstly breaking down the inflation effect from the actual price drop and secondly making the point about regional differences.

My own view for what its worth is that there will be a blood bath in the new build flat sector and in those areas where people are more stretched financially..... and that this will create a gloomy national picture... however we will not necessarilly see dramatic falls everywhere, and some house types in some areas may not have much of a correction at all. I would say as I have before that there are plenty out there who want to buy, who can afford it and who I see every day, but financing is getting in the way.... if we can find a way to reduce the margin between the BOE rate and LIBOR back to a more healthy 50 basis points (traditionally about 30 basis points) then I think the financing situation will ease considerably.

We only saw 13% last time nationally because it was pretty much all in the south east of england. This time it is national.

Flats to fall nationally by more than the 44% that mine lost in Great Crash 1, which I think we need to rename "Minor Blip 1".

If there is a blood bath in the new build sector, how will current flat owners get onto the next rung of the ladder?

[babesagainstmachines]

Brilliant.

Need to start attacking that "interest rate" meme. Point out the fallacy of cutting rates in an inflationary environment. What do the average household spend on mortgage interest? If it's less than 50% of net income, cutting rates does not help, it hurts.

[DoctorJ]

Blimey FP! you really gave it some this morning. All sheeple listeners are going to be cacking it after listening to that - or perhaps was that the plan FP

[Killer Bunny]

http://www.bbc.co.uk/radio/aod/mainframe.s...l_breakfast_tue

Go forward to just after 8am i.e. just over 2 hours

[bemused40]

I thought Jonathan Davies made a complete **** of himself.

"When will the media wake up to the fact that the country is facing the biggest housing market crash ever"????

The media has been talking about little else for months - that's why this bloke is rarely off our screens these days, though what his credentials are for being regarded as an "expert" are (other than this site which, lets not forget, has been getting it wrong for nearly 5 years!) I'm not sure.

Even if he gets his "30-40%" correction, we'll only be back to roughly where we were when he started his ranting.

[Killer Bunny]

Even if he gets his "30-40%" correction, we'll only be back to roughly where we were when he started his ranting.

Except that I only started to make public comments c 2 years ago.

[Tinman]

I had to laugh. FP you went a little bit Darlek there.

" There WILL be a crash - EXTERMINATE!! EXTERMINATE!!"

Judging by the " we are all doomed" texts afterwards though, the message got through.

[Dominic]

How is it that the BBC on 5 live allow idiots like that Jonathan commenting on a house price crash quoting a 40% crash it is totally irresponsible and Journalists banging the drum every day is completely against the well being of millions of home owners.

I view this uncontrolled irresponsible reporting dangerous to Britain’s economy and much more serious than insider trading the Government should step in to stop uninformed unqualified reporting to what is people’s largest investment. As a property expert I am sick to the back teeth listening to the twaddle the BBC churn out every day.

There is only one reason why people are starting to panic and that stems from uninformed Journalists banging the drum every day. In the last recession pockets all over the country were affected and many pockets not. As like topics on Europe on other subjects no balance. If you take London the prime areas of Knightsbridge, Belgravia, Marylebone, Soho and Covent Garden were unaffected in the last recession.

BBC have like so many companies Journalists that have not got a clue and entertain a hypothetical line that has no bearing in the current prime London market with 5% interest rates and low unemployment, people should not believe all they hear from uninformed Journalists. In the last month I have seen five closed bid situations with prices ranging from 1M-4M

Agitated

[shindigger]

How is it that the BBC on 5 live allow idiots like that Jonathan commenting on a house price crash quoting a 40% crash it is totally irresponsible and Journalists banging the drum every day is completely against the well being of millions of home owners.

I view this uncontrolled irresponsible reporting dangerous to Britain’s economy and much more serious than insider trading the Government should step in to stop uninformed unqualified reporting to what is people’s largest investment. As a property expert I am sick to the back teeth listening to the twaddle the BBC churn out every day.

There is only one reason why people are starting to panic and that stems from uninformed Journalists banging the drum every day. In the last recession pockets all over the country were affected and many pockets not. As like topics on Europe on other subjects no balance. If you take London the prime areas of Knightsbridge, Belgravia, Marylebone, Soho and Covent Garden were unaffected in the last recession.

BBC have like so many companies Journalists that have not got a clue and entertain a hypothetical line that has no bearing in the current prime London market with 5% interest rates and low unemployment, people should not believe all they hear from uninformed Journalists. In the last month I have seen five closed bid situations with prices ranging from 1M-4M

Agitated

HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA

HAHAHA.

You clueless tosser.