Sunday, May 09, 2010
Seeing as its a quiet day, let see what the Times' David Smith is blathering about ...
Times: Leaderless UK stokes crash fears
Let's just run through the logic here. If a housing market crash is a consequence of the UK being forced to raise interest rates and raising interest rates is a consequence of lack of investor confidence in the pound and the lack of investor confidence is a consequence of hung parliament and (stay with me ... !) a hung parliament is the expression of the UK's political will, have we collectively voted in favour of a housing market crash? I'd suggest the UK's aggregate wish is about to be granted. David Smith (who is usually wrong about anything he writes about) fears that interest rates may need to rise 'sooner than is good for the economy'. Well Smith, what's good for the economy is not necessarily good for your personal property wealth m'afraid.
16 Comments
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1. Fraccy said...
I can't stand this "the public have voted for a hung parliament" business. I don't remember seeing hung parliament as an option on the form. Must have missed it. Have we collectively voted in favour of a housing market crash? No. Is there such a thing as the UK's aggregate wish? No.
2. taffee said...
lets get some facts out here.......the housing market will fall cos its grossley overpriced and the euro is in problems cos the countries have borroed huge amounts of money they are struggling to pay back
nothing will change until these issues are tackled
1/raise interest rates
2/encourage saving
3/build council houses
There will be pain but the fact is we need to get back to basics of life....somewhere to live,food,friends,a hobby and some sort of income
3. house said...
@1 taffee
I agree but there are many who would not beacuse they would like to keep the perception of wealth going. Many do not realise that to be a real millionaire you need to have real equity of £10 million pounds to make an impression.
4. Open Minded said...
Some more facts...
(1) many on this site are fond of wheeling out the tired observation that avg. house prices are 5 or 6x the avg salary. It's meaningless when the avg. house is 3/4 bedrooms and the avg occupants are both likely to be working albeit one *may* work p/t if there are young kids involved. The days of yore when the woman stayed at home to look after hubby are long gone - society has evolved and I'd suggest it's also time for your thinking on this matter to evolve.
(2) raising interest rates will raise mortgage repayment costs and this will cancel out the effect of lower prices. The only people this would benefit are the savers but most savers also have a mortgage - so again the net effect is a big fat zero. I do sympathise with the older generations whose retirement income has been decimated in recent years.
(3) unless I've been living in an alternate universe where crows fly upside down and the rain tastes of cherry cola, council housing is the preserve of OAPs who planned poorly or suffered misfortune, the lowly paid, underachievers, alcoholics/junkies, social misfits and benefit scrounging scum. I don't know anyone who, given the choice, would want to live on a council estate. I certainly wouldn't want one built next to me and I defy anyone on this site to tell me they'd be happy to have one built near them.
@ house - I think your statement says more about you that it does about anyone else. Is that what you really think runs through a homeowner's mind or have you been watching too many property shows on the telly?
5. hpwatcher said...
If there was any kind of choice, I would rather have no government.
6. icarus said...
hpwatcher - I wouldn't mind having a government if politicians were forced to wear racing-driver jackets emblazoned with the corporate logos of their sponsors.
7. Crunchy said...
1. taffee
Have you ever wondered why this isn't happening? It will not happen because this system has been built for the few.
3. hpwatcher
Government isn't the route problem. The current central banking system is. Why can't government create the money and thus tax the working population less through not having to pay interest to banks for the fiat money they lend to government.
The solution is so simple that it is painful.
8. Crunchy said...
4. icarus
1913 was a bad year. Speaking of driving. What drives inflation? Let's get back to 1913 and bar the civil war.
Solution=Simples!! Clegg and Cameron?... LOL Why is the population so stoopid.
9. fallingbuzzard said...
I never believe anything when the word 'fear' is mentioned
10. paul said...
As the pound plunges further the question for me is - now that the Bank of England can make a truly independent decision on interest rates tomorrow, will they grasp the mettle by raising rates to combat the damaging effects of previous cuts on import costs or just try to kick the current problems into the long grass again?
11. iguana said...
When will the juvenile idiots get it? We do not trust any of them to govern and we are in an almighty pile of poo.
When in almighty piles, it is usual for the children in Westminster to put their toys down and govern as a coalition.
That is what has been voted for, so why do the idiots not get on with it?
12. markj69 str05 said...
@7... No-one voted for a hung parliament. That choice was not present on the voting form I used. For what ever reasons, we have a hung parliament. IE the masses are not convinced that any one party can govern satifactorily.
We have an election where we needed to vote in a new government. Yet - No one party would divulge the true state of the countries debt, etc.. (And most MP's are deemed to be lower that EA's!)
We have an economy in recession, and are expected to continue to spend. Yet - Personal debt is immense, pay- rises scarce (private sector), and job security less than secure.
We have a housing market which has been inflated to bubble proportions (hp= 6x salary). Yet - if prices were to drop to reasonable levels, (3.5x salary, say), then nequity and mortgage defaults would explode.
We are in the poo.
13. quiet guy said...
"No one party would divulge the true state of the countries debt, etc."
Yep. It's pretty annoying that none of the big three parties dealt with the deficit seriously in their campaigns. In my eyes, none of the parties have a proper mandate for the cuts that would be required to balance our finances. What a mess.
14. Wiltshire said...
If a housing market crash is a consequence of the UK being forced to raise interest rates and raising interest rates is a consequence of lack of investor confidence in the pound and the lack of investor confidence is a consequence of hung parliament and (stay with me ... !) a hung parliament is partly a consequence of people waking up to Labour's dreadful economic policies, not least in allowing the biggest housing bubble in history.........
15. markj69 str05 said...
So just to re-cap:
-We have to pay more for our houses.
-We have to spend more to aid economic recovery
-We have to save more (To keep banks liquid?)
-We have to put more into our pensions
-We have to pay more on fuel and services due to inflation
And we have to do all this with no pay-rise, no bonus, and a fear that the economic recession might even take our jobs.
Look on the bright side, summer's on it's way! ;)
16. Nic said...
Well if it took from 1929 to 2009 to put roughly 850 billion dollars into circulation and then from 2009 to today its been doubled to 1.7 trillion dollars, does that not tell you inflation is coming in a big way to a neighborhood near you... There no real way that other countries are going to be able to hold out against the dollar without also soon having to print vast amounts of cash to keep there currencies competitive against the US, so they be firing up those printing machines. So all in all what do you invest in because cash is not a good thing to be holding onto at all, it going to devalue to quickly. Most likely to me it makes sense to get your cash into something that will at least increase at the rate of inflation as a min requirement, at least you not going to lose. To me that means possible bricks and mortar, shares in mature firms like Coca-Cola etc, because you can be sure of one thing, salaries/wages will not be increasing at drastic rates....