2. stillthinking said...

Unless of course the GB AD pair have realised that they are on a deflation time limit. House prices must bottom, and they must bottom as soon as possible. As soon as they start going up potentially the UK economy is saved, or at least not savaged so badly. Should deflationary expectations take hold then we are on over a decade of economic pain. While I don't think GB or AD fully or even partially understand this, I think they have advisors who do, and of course the banks must be whispering a certain something in the ears.
However, they are stymied by the reluctance of the sellers to accept the new conditions. Plucky Brits, at their best facing overwhelming odds, won't sell. But won't sell means that we don't find the bottom. Not finding the bottom means there is no more money going into housing.
House prices need to halve. Nobody wants to face up to or accept this, least of all sellers. So they will keep their houses on the market, go into renting, just dither even, and transactions will drop, so we have to wait for forced sales.
Forced sales will be too late. Quite aside from forced sales being the compliment of a recession. Nothing looks good at the moment. Consider that if the UK does go into a deflationary recession, people can't pay the outstanding loans back.
As an aside. If I sell my old Sony Walkman to some idiot on ebay for 2000 pounds, and subsequently that idiot can't pay, then I won't get the 2000 pounds, even though it is a booked transaction and recorded. If on the other hand, I sell my London studio flat for 250,000 pounds to some idiot who can't pay, then well done me, because I keep all the money and take it from the taxpayer instead. Great for me eh.
Given the complete failure of the existing system, I think that house sellers should bear some of the responsibility of their idiot buyers. Particularly for NR. Are you listening Mark ? Should the ridiculous amount of money they obtained for their slum not be forthcoming from their idiot buyer, supplied by NR, then they just don't get the money. The problem is paying the 100K winners after all.

4. paul said...

6. stillthinking said...

As in Mark Wadsworth. Our single line of communication to our political masters. Not some random Mark.
Either we as taxpayers pay, or the people who sold to those who subsequently couldn't pay lose the difference. There are few things more inequitable than forcing the taxpayer to struggle to pay for the gains of those who sold at the top. Of which there are many. If the banks cannot accept responsibility for the loans to the purchaser, then the seller must.

8. mark wadsworth said...

@ Stillthinking,

oh, that first comment meant me, fair enough. Question "Do I feel a tad guilty at selling to rent at the top of the market?", answer "No, not really. I wouldn't have expected much sympathy if I'd been wrong".

Question "Should taxpayer bail out reckless lenders and borrowers?" answer "No, of course not. Don't forget that I and Mrs W pay plenty of tax"

Question "Do I expect my handsome bank balance at NR to be guaranteed by the taxpayer?" Answer "I moved it all into National Savings & Investments anyway, and so should anybody else who worries about banks".

10. stillthinking said...

However, if we should, as looks probable, move into a situation where depositors money is only backed by the taxpayer. Deposits which are from the housing boom and unbacked.
After all, the borrowed money that went into the housing market still exists as deposits. Maybe it can't be paid back. It is still there in the accounts and the banks are obliged to pay out.
As this situation moves further on, more and more people cannot pay the banks the money they owe. In the world, the UK is worst.
Given that this money cannot be paid back, to what extent is the taxpayer obliged to pay money to people who accepted feckless profits ? There aren't many choices. We can pay as taxpayers, banks can go bust and the deposits disappear, or why not just oblige the sellers to accept that their buyers cannot come up with the agreed price.
Surely taxpayers cannot provide funds to those who will at the end get a house for nothing.
Look at the migration figures and extrapolate. If the taxpayer pays then taxes will go up and government services, already poor, will go down. We can pretend people won't leave, but they will. Houses are expensive and schools are bad. Canada and Australia are pro-immigration. People who want kids will have a pretty obvious choice.
I think this is going to be much worse than people expect. Basically, I don't see how the taxpayer can pay for the excesses of the housing boom, so either another way is found, or people will attempt to stop being taxpayers in the UK.

12. paul said...

Yeah, has Cameron been on a week-long bender or something? Or has he been sleeping one off?

14. Gregooo99 said...

By definition, unless you are mega wealthy and do it out of ego, sense of duty or whatever, politics will attract the losers. If they were winners then they would be CEO's of Fortune 500 companies or the UK equivalent. The only time politicians get "top" jobs is as board members in an "advisory" capacity when they leave office. Read- "I will get you in to see some old mate in government who owes me one".
Look at the list-Churchill (good in war crap at all else)-Atlee, Douglas freakin Home-Wilson, Callaghan, Major, Blair. Bleedin hell-how did we even survive? Maggie was the only semi-decent one and she had the PR skills of a stormtrooper. Now we have Brown/Cameron-what a sorry sorry state we are in. Here in the States we have a codger ready for the grave, but who's answer to everything is bomb the crap out of em, and a young guy wet behind the ears but with the gift of the gab. Brilliant.

16. notaneconomicsguru said...

Unfortunately, people are easily fooled by politicians with media cool but a vacuum between their ears. Once again it another of his populist snipes but he has no alternative policy of any substance. Camaloon time and time again reveals that he is a far, far cry from the commanding statesman what we need and want. His chancellor is of exactly the same mould - weak, wet and vacuous. Crap government. Crap opposition and they wonder why people can't be bothered to vote??

18. mytimeisnigh said...

I admit it, I'm a Conservative voter, but I really wish they would take notice of Vince Cable, because he is the only one that makes sense when it comes to housing.