Tuesday, Apr 29, 2008
unbelievable manipulation
bbc news: king wants to put houses in the basket
house prices not in the inflation basket during the boom not being put in the backet.
outrageous surely
Posted by taffee @ 11:06 AM (2241 views) Add Comment
44 Comments
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1. letthemfall said...
It would be one way to get instant deflation. However, it looks like King wants to do away with the narrow CPI measure, ie use RPI?
2. inbreda said...
I predicted this would happen quite some time ago - as did quite a few others here. It is the easiest way for the government to keep its inflation lies to rob prudent savers. What do you expect from such a non-socialist socialist government that is happy to start illegal wars and kill so many innocent people? Hardly upstanding moral human beings are they.
3. I Want A House said...
I'm first!!!
So, let me see if I'm getting this right? When we had 20% increases, we didn't include this as inflation. Now that we're going to have 20% decreases, we can now include then into inflation? Is this so we have less inflation and we can drop our interest rates to 0%?
4. Musicben said...
Disgusting but predictable. For sure they will get away with it. Time to leave the Country before the tax bailouts escalate.
5. jack c said...
This won't come as a shock to regulars on this site as it was widely discussed/predicted last year
6. growler said...
baby - bathwater: careful.
This is a good long term idea since we all have to buy houses. It is crazy that this proportion of inflation is NOT in the basket.
Had the boom have been in the inflation figures we would have seen counter-inflation policies much sooner - such as higher interest rates.
7. last_days_of_disco said...
Well we can't complain really, this is what we have been asking for ;-).
These guys are just politically smarter than us, its what they do for a living. Its very clever. The most cynical move would be to put the house prices in and not the cost of mortgages.
8. harold said...
Next they'll take out all food items (and DVD players made in China). Do you ever get the feeling that the government is not acting in the interests of the people who elected them?
9. uncle tom said...
I think our Merv has been pretty consistent - the switch from RPI to CPI was Brown's idea - not his, and he has identified shortcomings with the CPI methodology in past speeches.
There is no perfect way of calculating inflation, as different people and different age groups have different spending habits, but RPI is about as close to an honest measure as you can get.
What will be deadly at the ballot box is that pensioners and the less well-off are seeing more inflation than most. At the next general election, it is predicted that of those who actually bother to vote, the majority will be retired, and if those earning less than the median wage turn out in force to vote Tory, Labour will be demolished.
What puzzles me though is why the LibDems still reserve their fire for the Conservatives, when they stand a much better chance of unseating Labour MP's - even in their staunchest heartlands. I'm sure Vince Cable would appreciate a truce with the Tories, as his seat is on their target list...
10. mark wadsworth said...
What Inbreda says - they exclude house prices when they are rising and include them when they are falling. Complete and utter b4stards.
11. whiteknight said...
No different to the people that suddenly want to abandon mark-to-market accounting.
How about we schedule to put it in in around 2010? (no.. not eight-ten this evening)
How about putting it in a separate asset/commodity basket that is also monitored?
12. Dbc Reed said...
Not entirely helpful is it? If the MPC lump in house prices with other prices,they will try and control the lot with interest rates. So the demand for goods and services which the productive part of the economy provides will be hit by interest rates determined by the housing market which marches to a different drum;in the opposite direction.Decrease interest rates and the supply of most goods and services will surge but in the housing market the supply of land will not increase will it?So same number of houses :more expensive.There is an answer: tax land so its no longer possible to stash the money there but precious few people are talking about it.
13. d'oh said...
The problem with this is that they would be doing it at the peak of a house price boom. Disgusting, but predictable and expected.
When Henry Kissinger won the Nobel Peace Prize in 1973, the distinguished musical satirist Tom Lehrer decided that he could no longer perform. "It was at that moment that satire died," says Lehrer, "There was nothing more to say after that."
14. Rental John said...
Massaging the figures to suit their own aims - this criminal in the extreme...
What is included or not - in calculating the CPI / RPI see www.statistics.gov.uk/elmr/04_07/downloads/ELMR_April07_Wingfield.pdf
15. harold said...
"Labour will be demolished"
Maybe, but will actually Brown care? I think not as he will have done the job he was put in power to do. He's a Statist and has expanded the power of the state admirably.
16. whiteknight said...
Who was the chappy who on the MPC who said there was no sign that inflation was working its way through to wage demands?
My eyes might have deceived me, but did i see some civil servants and teachers on strike asking for more pay.
Or.. because it has thus far been resisted - does this mean the chappy was correct?
17. taffee said...
I've come to the conclusion that very few people(in power) do care,that's why its time for a bit of direction action imo
What ever happened to the pressure groups?or do they get quiety put aside by stalinist britain?
18. taffee said...
I think chris eubank crashed into downing street to protest against the war and was put away for his own safety!!!!!!
The scottish guy(mp) who was completely correct about the false was continues to be hounded by the establishment..george gallaway?
19. mrmickey said...
I agree Harold we've got creeping totalitarianism which the majority of the population seem quiet happy with. Each generation seems to become softer and more dependant on the state a bit like the Eloi from "The Time Machine".
20. harold said...
mrmickey, yep.
21. renting2 said...
Where will the house prices be derived from? Very subjective whichever the source.
Better idea would be to measure council tax. After all that is based on house values. So as house prices fell, the tax should fall (? haha) and, as it applies to all houses and is actual verifiable figures then it would be accurate. If the tax didn't fall then nor would the inflation figure. Might keep them a bit more honest? Then tie council tax to Rightmove asking prices and you're there!
22. Chilli said...
I find Mervin's revelation that some people placed unwise confidence in certain complicated trading instruments rather disingenuous.
What?? Only now??? If Mervin was doing his job properly, these people would have woken up to the fact that they were risking the house long since.
I think that the central banks find themselves in an odd position when the 'geyser' starts gaining pressure. They can fire it off early and save us all a lot of heartache or they can let their capitalist friends continue to steal from the general public via inflation until it goes by itself. Firing it off early has the political risk that they would be blamed for the outcome. Letting it go by itself, is politically safer. A wonderful conclusion then; these guys preserve their jobs by not doing their jobs.
I don't believe for a second that Mervin wasn't well aware of this years ago. I believe the same about all the bigwigs in the City. Mervin's position is supported by the government, and given the level of support to the banks these days (50billion bailout, northern rock, etc), I think its reasonable to start thinking of all banks as government institutions. Therefore when these people commit gross negligence, as is the case, they should suffer the same punishment as say, members of the armed forces. They should be shot.
23. icarus said...
Moving to something else Swervyn said - "the problem isn't lack of liquidity, it's lack of confidence". Yeah, banks aren't confident that the other banks' collateral/assets/securities are......er.....liquid.
24. Rimmer said...
Utter Bas*ards
Basically lets look at things that are falling in price and include them and look at things that are rising in price and take them out.
Is it any wonder collectively we have no faith in Government or policies?
On a side note why is nobody at all ( all blogs and sites ) not worried about the £ i wonder, after all it is critical to the future and disappearing rapidly against other currencies
25. denzil said...
King said, "I think all of us - and I do not exclude the Bank in this - have learnt a lot of lessons from the last nine months"
One of those lessons is that Banks can indulge in high-risk activities and pay (in some cases) massive bonuses to their staff. When those high-risk activities turn sour the good old tax payer is used as guarantor.
26. cyril said...
Rents are already in CPI - Would be daft to include the capital cost of houses because these are investments. Might as well include share prices or antiques.
27. Planning4acrash said...
Uncle Tom @ 7, there IS a PERFECT way of calculating INFLATION. Its called money supply. M3 money growth is a good measure for example, but really, inflation should be the growth in all money types. In reality, probably the only way to manage inflation is a 100% gold or sterling standard.
Inflation is the growth in money supply. General price inflation is a cause of an inflated money supply, but the cause of something and its result are two different things.
ALL inflation figures NOT based on inflation or deflation of the money supply ARE political, because they express a choice over which price are and are not monitored. RPI, CPI, RPIX, etc are all ways of shaving out price impacts of money supply that do not co-incide with a given political position. They all are a way of sustaining self-serving asset price booms, to let banks and governments sustain a higher growth in money at their disposal (reducing the purchasing power of consumers with the same sleight of hand), and give governments justification to announce real term wage cuts to the public sector. For example, saying that public sector workers must put up with 2% pay rise, when RPI is at 4%+ and money growth has been trailing between 10&20% for some time now.
Get ready for a few years of intense industrial action now that people are beginning to feel the pinch. Unions have managed to shut down 50% of the UK's oil production for up to three weeks with a three day walk out. This returns to the truth that workers, not government are the most important and actually hold the power balance if only they are organised and are aware of their importance. The slowly boiled frog is trying to jump out of the pan!
28. hpwatcher said...
They will need to start cutting interest rates to see the benefit of adding house inflation into the CPI.
House price inflation was masked during the past few years by Gordon Brown, for no other reason than to make himself look like a success.
The result, can only be a slump and a HPC; naturally they will try and hide that as well.
29. voiceofreason said...
OUTRAGEOUS !
If they do this, then they MUST backdate it. Show the previous 7 years as massively inflationary !!
30. voiceofreason said...
Actually, on reflection, so long as they backdate it to cover the last 10 years as well, then this is a fantastic idea because it will prevent the next boom/bust.
Unless of course they then take houses out of the index just as they start upwards again.
31. greytornado said...
This is disgraceful & King is a disgrace. Such a move would simply be for political purposes, for the simple reason that house prices are going to be in decline for some time to come. What a stunt!
32. plato said...
What better way to apparently stem the rise in prices, devalue Pensions and anything else associated with RPI ? Pure Evil !!!
33. paul said...
I'm with Uncle Tom on this.
I remember mentioning this possibility here last year at about the same time that the Telegraph was doubting the CPI measures. I don't think King would be able to get away with putting housing back into the basket right now - that would take a huge biting out of his already waning credibility.
I think he's talking about the general prospect of including house prices in the inflation basket, i.e. just like the RPI did!
His timing for this "revelation" is appalling though - he's either acting after the horse has bolted or he's making a candid admission of the current inflationary measures' failings over past years.
34. Rajd said...
"If they do this, then they MUST backdate it. Show the previous 7 years as massively inflationary !!"
Yes, and get Merv to write backdated letters of apology explaining why inflation was running so high. Would like to see his backdated explanations for inflated house prices. The bespectacled fool.
35. taffee said...
food,mortgages,house prices,utlities should always be in the basket
36. geed said...
Whack house prices in the inflation pot in 4-5 years please. If they decide that this is a good idea ( of course they will it will mean AD and GB can spout "low inflation" b0llocks again and cut rates further ), they will fast track it to ensure they capture the next few years declining house prices. Criminal, hell yeh! Politician are nothing but legal criminals.
37. Freefall said...
I think several people are forgetting that King is also responsible for financial stability - i.e. he has to act in the interest of the economy as a whole, and as such the majority of people in this country. The simple fact is that the level of personal debt in this country is enormous, and King HAS to act in the interest of people in debt to maintain a chance of financial stability. Savers are never going to get a look in until (1) they are in the majority, or (2) all hell breaks loose (which it probably will)
All IMHO of course....
38. george monsoon said...
Add in house prices when they are depreciating in value.. What a sneaky and cunning way to make CPI look good.
I wonder if they will remove some of the items that are shooting up in value, like um.. I dunno... food?
This is a very short term blinkered move and I am sure the next government will have to explain in 10 years time why inflation is so high, once houses start to rise again..
39. geed said...
For reference;
Rents, mortgage interest, council tax & depreciation (described as; price index for houses purchased with a mortgage), are all included in RPI. Of these listed above only rents are included in CPI.
All other service bills are in included in both indices which means the omission of council tax from CPI is a clear indication that the government and powers that be sorely wanted this great big housing bubble. Well they succeeded, I wonder if they want this great big crash just as much!
40. tyrellcorporation said...
C'mon George if house prices started rising again they'd quickly strip HPI out of the CPI again!
41. uncle tom said...
Cyril said:
"Would be daft to include the capital cost of houses because these are investments"
Er. No.
A consumer durable, yes - but no more of an investment than, say, a car.
42. sold 2 rent 1 said...
I sense the news blog moving from frustration to anger.
Every day now another handful of straw gets added to that camels back.
The fraud, corruption and deceit stories are building daily.
Time for a ReLovelutution?
Time for CHANGE?
Not quite.
OK. Bring on the next bail of hay then.
43. planning4acrash said...
Uncle Tom @ 7, there IS a PERFECT way of calculating INFLATION. Its called money supply. M3 money growth is a good measure for example, but really, inflation should be the growth in all money types. In reality, probably the only way to manage inflation is a 100% gold or sterling standard.
Inflation is the growth in money supply. General price inflation is a cause of an inflated money supply, but the cause of something and its result are two different things.
ALL inflation figures NOT based on inflation or deflation of the money supply ARE political, because they express a choice over which price are and are not monitored. RPI, CPI, RPIX, etc are all ways of shaving out price impacts of money supply that do not co-incide with a given political position. They all are a way of sustaining self-serving asset price booms, to let banks and governments sustain a higher growth in money at their disposal (reducing the purchasing power of consumers with the same sleight of hand), and give governments justification to announce real term wage cuts to the public sector. For example, saying that public sector workers must put up with 2% pay rise, when RPI is at 4%+ and money growth has been trailing between 10&20% for some time now.
Get ready for a few years of intense industrial action now that people are beginning to feel the pinch. Unions have managed to shut down 50% of the UK's oil production for up to three weeks with a three day walk out. This returns to the truth that workers, not government are the most important and actually hold the power balance if only they are organised and are aware of their importance. The slowly boiled frog is trying to jump out of the pan!
44. dohousescrashinthewoods said...
Filthy, filthy behaviour.