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Savers Vs Borrowers


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#1 ElPapasito

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Posted 05 March 2013 - 12:34 PM

Useful article from Ros Altmann:




http://citywire.co.u...r-fight/a662963



This comment is particularly illuminating:


[Quote]


Well Ross a degree in rocket science isn't forthcoming for this revelation is it. This is a perpetuation of the biggest Ponzi scheme on the planet, GOVERNMENT BORROWING!! The talk is now of negative interest rates for deposits which has been the case in both Switzerland and Japan so don't raise your eyebrows.

The biggest paradox ( read p*sser) is that we paid our mortgage of by 50 despite rubbish final years on endowments, we also saved, invested and put money in pensions, all the things that the Government say they want you to do to prepare for long retirement and a self sustaining old age AND WHERE IS THE BENEFIT WHAT A MIXED MESSAGE!!?? So at 58 I had to join the borrowers club again and took out the largest mortgage I have had in my life to put money to the crap returns we were getting on our savings to buy a block of buy- to-let's which are at least netting just under 5% to try and make some income rather than having to be a 'Fred at B&Q' sorry Fred, but I worked long hard and continuously and despite being made redundant twice never took a penny from the state. OLDER PEOPLE AND SAVERS WHERE IS OUR VOICE AND REPRESENTATION?!

[Endquote]

I imagine this story has been duplicated 10,000 fold over the last few years and will be one pillar propping up HPs when the fundamentals indicate they should be in freefall. The snake is eating its tail as good but not very rich people rent seek at the expense of their not very rich neighbours.

EP







#2 winkie

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Posted 05 March 2013 - 12:55 PM

This comment is particularly illuminating:



Well Ross a degree in rocket science isn't forthcoming for this revelation is it. This is a perpetuation of the biggest Ponzi scheme on the planet, GOVERNMENT BORROWING!! The talk is now of negative interest rates for deposits which has been the case in both Switzerland and Japan so don't raise your eyebrows.

The biggest paradox ( read p*sser) is that we paid our mortgage of by 50 despite rubbish final years on endowments, we also saved, invested and put money in pensions, all the things that the Government say they want you to do to prepare for long retirement and a self sustaining old age AND WHERE IS THE BENEFIT WHAT A MIXED MESSAGE!!?? So at 58 I had to join the borrowers club again and took out the largest mortgage I have had in my life to put money to the crap returns we were getting on our savings to buy a block of buy- to-let's which are at least netting just under 5% to try and make some income rather than having to be a 'Fred at B&Q' sorry Fred, but I worked long hard and continuously and despite being made redundant twice never took a penny from the state. OLDER PEOPLE AND SAVERS WHERE IS OUR VOICE AND REPRESENTATION?!

[Endquote]

I imagine this story has been duplicated 10,000 fold over the last few years and will be one pillar propping up HPs when the fundamentals indicate they should be in freefall. The snake is eating its tail as good but not very rich people rent seek at the expense of their not very rich neighbours.

EP


Ironically I could have written that....the bold bit has yet, but may yet still come to pass.....to be fair I would say most older people and savers couldn't care what their house is worth as long as it is fully paid for, all they want is for their cash savings, worked and saved over a lifetime of repaying debt and trying to provide for their future to maintain its value and their pensions are not seen to be blatantly stolen from them as they are now.


Now let me think, who are the real ones that benefit from high house prices.....certainly not the home owner that lives in their only paid for home or the saver, saving hard for a deposit to purchase a home of their own. ;)
What you don't owe won't worry you.

Less can be more.

#3 BlokeInDurham

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Posted 05 March 2013 - 04:20 PM

Mixed messages? No benefit of being sensible? Rubbish! Of course there is a benefit to saving and being forward-thinking, it's just that your advantage is not as big as you had hoped it would be.

The problem is that people bought into a kind of "defined benefit" mindset, i.e. put X% away a month and when you're old you will be able to do Y. Reality is very much a "defined contribution" deal, and people are finding a shortfall. Whose fault is it: the oldies for believing the spiel when they were younger? The financial industry for selling them the dream? Everyone for thinking that the prevailing national economic realities could never change? While you have to have some sympathy for people who trusted 'professional' advice which turns out to have been wrong, and in some way it is unfair for them to bear the results of the financial underperformace of their savings and investments (vis--vis their hopes/expectations), it seems several orders of magnitude more unfair for this perceived performance shortfall to be filled by a generation not even born at the time the investments were made.

Whether the inter-generational balance is soothed by rubbish savings rates for the oldies and low, low mortgages in the long-term (on fundamentally overpriced housing) for the young 'uns, or whether by an abrupt crash in asset prices leaving the oldies with good rates but no equity to release for their invalidity and the young 'uns with reasonably-priced houses to live in, it has to happen one way or another. It seems to me that far too much social friction is being stored up otherwise.

On an intra-generational basis, yes hammering savers to save borrowers seems perverse. Inter-generationally, however, it's just what the doctor ordered and arguably less unfair than a sudden 'crash'. Whining from the point that the rates thirty or forty years hence that you were "promised" in the seventies haven't come true? Get stuffed (to be polite)!

#4 disenfranchised

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Posted 05 March 2013 - 11:00 PM

I wonder if the bloke would fancy a 25% hit on his BTL 'value' and a 5% base rate now?

#5 8 year itch

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Posted 05 March 2013 - 11:03 PM

Mixed messages? No benefit of being sensible? Rubbish! Of course there is a benefit to saving and being forward-thinking, it's just that your advantage is not as big as you had hoped it would be.

The problem is that people bought into a kind of "defined benefit" mindset, i.e. put X% away a month and when you're old you will be able to do Y. Reality is very much a "defined contribution" deal, and people are finding a shortfall. Whose fault is it: the oldies for believing the spiel when they were younger? The financial industry for selling them the dream? Everyone for thinking that the prevailing national economic realities could never change? While you have to have some sympathy for people who trusted 'professional' advice which turns out to have been wrong, and in some way it is unfair for them to bear the results of the financial underperformace of their savings and investments (vis--vis their hopes/expectations), it seems several orders of magnitude more unfair for this perceived performance shortfall to be filled by a generation not even born at the time the investments were made.

Whether the inter-generational balance is soothed by rubbish savings rates for the oldies and low, low mortgages in the long-term (on fundamentally overpriced housing) for the young 'uns, or whether by an abrupt crash in asset prices leaving the oldies with good rates but no equity to release for their invalidity and the young 'uns with reasonably-priced houses to live in, it has to happen one way or another. It seems to me that far too much social friction is being stored up otherwise.

On an intra-generational basis, yes hammering savers to save borrowers seems perverse. Inter-generationally, however, it's just what the doctor ordered and arguably less unfair than a sudden 'crash'. Whining from the point that the rates thirty or forty years hence that you were "promised" in the seventies haven't come true? Get stuffed (to be polite)!

Except the young need jobs to pay those mortgages.

There is no ladder.

JY


No need to sell up, the next phase of the economics cycle is going to be very positive for anyone that owns property.

All I'm sayings is, don't listen to the property bears people, they are wrong.


#6 billybong

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Posted 05 March 2013 - 11:52 PM

About 1 hour 53 minutes in.

http://

www.bbc.co.uk/programmes/b01r16m3

...that 0.5% BoE base rate - "miserable".

"Give us your ideas for a good investment". :rolleyes:

"A lot of people rush to gold don't they - even in a small sense".

#7 (Blizzard)

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Posted 06 March 2013 - 12:24 AM

...OLDER PEOPLE AND SAVERS WHERE IS OUR VOICE AND REPRESENTATION?!...


Yes, because our electoral system consistently fails to reflect the opinions of the elderly Posted Image

Edited by (Blizzard), 06 March 2013 - 12:24 AM.

"As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce. The wood of the forest, the grass of the field, and all the natural fruits of the earth, which, when land was in common, cost the labourer only the trouble of gathering them, come, even to him, to have an additional price fixed upon them. He must then pay for the licence to gather them; and must give up to the landlord a portion of what his labour either collects or produces. This portion, or, what comes to the same thing, the price of this portion, constitutes the rent of land ...." Adam Smith: The Wealth of Nations[17]

#8 Tired of Waiting

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Posted 06 March 2013 - 07:30 AM

I wonder if the bloke would fancy a 25% hit on his BTL 'value' and a 5% base rate now?


+ 1
.

High property prices increase: living costs; production costs; and government costs - hence all prices , and taxes!


This also reduces Britain's international competitiveness, impoverishing all of us, including property owners




And NIMBYism is evil.


.

#9 StainlessSteelCat

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Posted 06 March 2013 - 10:01 AM

Mixed messages? No benefit of being sensible? Rubbish! Of course there is a benefit to saving and being forward-thinking, it's just that your advantage is not as big as you had hoped it would be.

The problem is that people bought into a kind of "defined benefit" mindset, i.e. put X% away a month and when you're old you will be able to do Y. Reality is very much a "defined contribution" deal, and people are finding a shortfall. Whose fault is it: the oldies for believing the spiel when they were younger? The financial industry for selling them the dream? Everyone for thinking that the prevailing national economic realities could never change? While you have to have some sympathy for people who trusted 'professional' advice which turns out to have been wrong, and in some way it is unfair for them to bear the results of the financial underperformace of their savings and investments (vis--vis their hopes/expectations), it seems several orders of magnitude more unfair for this perceived performance shortfall to be filled by a generation not even born at the time the investments were made.

Whether the inter-generational balance is soothed by rubbish savings rates for the oldies and low, low mortgages in the long-term (on fundamentally overpriced housing) for the young 'uns, or whether by an abrupt crash in asset prices leaving the oldies with good rates but no equity to release for their invalidity and the young 'uns with reasonably-priced houses to live in, it has to happen one way or another. It seems to me that far too much social friction is being stored up otherwise.

On an intra-generational basis, yes hammering savers to save borrowers seems perverse. Inter-generationally, however, it's just what the doctor ordered and arguably less unfair than a sudden 'crash'. Whining from the point that the rates thirty or forty years hence that you were "promised" in the seventies haven't come true? Get stuffed (to be polite)!


Even as a net saver (who finds the current below inflation returns somewhat galling) I have a lot sympathy with this view. Also find it depressing that the old are deciding that becoming a rent seeking parasite is the default way forward.

Edited by StainlessSteelCat, 06 March 2013 - 10:05 AM.

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#10 sombreroloco

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Posted 06 March 2013 - 10:27 AM

Who cares about savers? As long as we banksters can get free money from the BoE.

#11 easy2012

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Posted 06 March 2013 - 01:49 PM

On an intra-generational basis, yes hammering savers to save borrowers seems perverse. Inter-generationally, however, it's just what the doctor ordered and arguably less unfair than a sudden 'crash'. Whining from the point that the rates thirty or forty years hence that you were "promised" in the seventies haven't come true? Get stuffed (to be polite)!


Well, a glide path to a correction might well have been acceptable, QE1 might have been necessary, but a constant flow of BoE printing is all together another matter.

All transactions have two parties - a buyer and a seller (or a borrower vs a lender) and using central bank (and state) power to protect one over the another / picking winner is not really something the state should not be doing.

Edited by easy2012, 06 March 2013 - 01:54 PM.


#12 Executive Sadman

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Posted 06 March 2013 - 02:15 PM

They constantly hammer in this false 'savers vs borrowers' line.

Its really everyone vs. a small amount of borrowers.

If you get paid in s, you are suffering.

If you have to put petrol in a car, you are suffering.
If you have to heat a house, you are suffering.
If you have to buy food, you are suffering.

One cost, mortgages, has fallen due to currency debasement. Every other cost has risen.

I dont believe for one minute the former comes anything like close to offsetting the latter.
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#13 mrtickle

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Posted 06 March 2013 - 11:16 PM

About 1 hour 53 minutes in.

http://

www.bbc.co.uk/programmes/b01r16m3

...that 0.5% BoE base rate - "miserable".

"Give us your ideas for a good investment". :rolleyes:

"A lot of people rush to gold don't they - even in a small sense".


You could have warned us it was Shelagh Fogarty :(







#14 Austin Allegro

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Posted 07 March 2013 - 04:15 PM

Mixed messages? No benefit of being sensible? Rubbish! Of course there is a benefit to saving and being forward-thinking, it's just that your advantage is not as big as you had hoped it would be.

The problem is that people bought into a kind of "defined benefit" mindset, i.e. put X% away a month and when you're old you will be able to do Y. Reality is very much a "defined contribution" deal, and people are finding a shortfall. Whose fault is it: the oldies for believing the spiel when they were younger? The financial industry for selling them the dream? Everyone for thinking that the prevailing national economic realities could never change? While you have to have some sympathy for people who trusted 'professional' advice which turns out to have been wrong, and in some way it is unfair for them to bear the results of the financial underperformace of their savings and investments (vis--vis their hopes/expectations), it seems several orders of magnitude more unfair for this perceived performance shortfall to be filled by a generation not even born at the time the investments were made.

Whether the inter-generational balance is soothed by rubbish savings rates for the oldies and low, low mortgages in the long-term (on fundamentally overpriced housing) for the young 'uns, or whether by an abrupt crash in asset prices leaving the oldies with good rates but no equity to release for their invalidity and the young 'uns with reasonably-priced houses to live in, it has to happen one way or another. It seems to me that far too much social friction is being stored up otherwise.

On an intra-generational basis, yes hammering savers to save borrowers seems perverse. Inter-generationally, however, it's just what the doctor ordered and arguably less unfair than a sudden 'crash'. Whining from the point that the rates thirty or forty years hence that you were "promised" in the seventies haven't come true? Get stuffed (to be polite)!


I think there is some truth in this. Many boomers bought into the 'ever rising living standards' myth (too much utopian socialism in their childhoods plus Thatcher's miracles in the 80s) and thought that retirement (which would happen at 55) would mean endless rounds of golf in the Algarve and lots of cruises. I think more people in my generation (early gen.x) have 'got it' and downsized everything, including their expectations.
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#15 winkie

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Posted 07 March 2013 - 04:22 PM

The governments are having to sacrifice the savers to save themselves and the lenders......I don't think it is to save the borrowers, the borrowers just happen to be in the right place at the right time...hey ho. ;)
What you don't owe won't worry you.

Less can be more.




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