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Spike

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  1. I am sorry but ... NO NO NO!!!!! This is just plain wrong. Not a single person on this thread has suggested this. You have a misunderstanding somewhere and I suggest that you do some careful re-reading to understand what is going on.
  2. Asset bubbles are created by people being stupid basically. They get detached from fundamentals and just "look in the rear view mirror". I don't think a revolution in banking as you suggest would prevent people from just being morons if that is what they are.
  3. There is no "money out of thin air". Does this really sound like realistic thing to happen?? Banks would be laughing if it were true. Instead they have to compete for business and offer a service just like everyone else. What happens (as has been described above but seems to have been ignored/overlooked) is as follows (using a 90% ratio for simplicity). I deposit £100 at a bank. The bank lends £90 of this to someone else. Eventually this £90 ends up being deposited in banks somewhere. These banks than can lend £81 of these deposits to someone else. When this £81 finds its way back i
  4. The effects seem quite clear. If for every pound in deposits that the bank takes it can only only lend 50p then the gap between saving rates and borrowing rates would increase significantly for the bank to remain in business. Lower saving rates and higher borrowing rates don't sound too good to me.
  5. As far I can tell this IS what banks do. Only once a customer has deposited money can the bank then lend 90% odd of it to someone else. Just Yield and MoD are correct in my view. You seem to be suggesting something along the following lines. If someone deposits cash at a bank then this money can then be loaned to another customer. BUT if this customer then uses this money to buy something then the recipient of the "loaned money" cannot then deposit it at a bank as that bank would not be allowed to then lend this money out. This to me would be complete madness where what you do with Y
  6. They see it as their business due to the internal market rules preventing barriers to cross-border trade. Currently the different systems of financial regulation accross Europe make it hard for banks to lend to consumers accross these borders. They have already spent over 300,000 Euro thinking about it so it is about time we started hearing about it: http://ted.publications.eu.int/official/Ex...=EN&StatLang=EN
  7. There's more to it than that. If you look at the one year interest rate on the the euro and also on GBP, then by construction (interest parity) the one year EUR/GBP forward rate will not allow a risk free arbitrage so the difference in the interest rates will be the amount the forward rate differs from the spot rate.
  8. I think there is slightly more to it than this. If you have productivity growth then the "nuts" when unburied will be able supply more meals for the squirrel than they would have at the time of burying. It is not a case of other squirrels having to add to the pile of nuts, all that is required is for the squirrels to think of better ways of shelling the nuts so that there is less wastage or something like this. With productivity improvements, which have been common place in recent history (that is not to say that it will always be the case), it is therefore possible for everyone to earn a
  9. Yes thats the whole point - the buyer thinks paying the stamp duty is bad - but the vendor paying it for him does not make them better off!! Only if the buyer doesn't undertsand this (which seems likely for Joe Public) would they actually think an offer to pay the stamp duty for them was actually in their interests.
  10. I guess this also includes offers of paying towards the mortgage from new homebuilders - they would be better off taking the amount off the price so that for the buyer parting with the same amount of money would result in the seller receiving more. Can anyone else think of offers that are meant to be good deals but, when you think about it, aren't really? Edit: I should add that of course the buyer could flip the situation on itshead and take/share the benefits from getting rid of such offers and just paying a sensible asking price by offering the seller the same amount fo money they woul
  11. In my area a few houses are now advertised with "vendor will pay stamp duty". I just cannot undertsand this - the vendor and the buyer are both better off the lower the offer is, as less of their money goes in stamp duty. For example a flat for £170k where vendor pays stamp duty. Buyer pays 170k Tax man gets 1700 seller gets 168300 the seller would be far better trying to get an offer of £168,317 so that buyer still ends up parting with 170k when including stamp duty (buyer would be indifferent between the two). I know it is only £17 in this example but it is still better than noth
  12. http://www.rightmove.co.uk/edit_search.rsp...new&unique=true
  13. Ok correct me if I am wrong (I don't really need to invite anyone on this board do I really) but whether or not you include the massive bull run of recent years then house have risen above inflation in the long term (this reinforces my point?). If landlords don't sell when they should be due due greener pastures elsewhere that that is their problem and I and alot of you here are quite happy for them to subsidise our living. But being a landlord is a competitive market and eventually those that are inefficient will exit or go bust unless they wish to transfer some of their wealth to tennant
  14. Ok now we are talking. My opinion is that house prices will rise (long term not in the next few years) at around the rate of inflation (give or take). Therefore to make it worthwhile for landlords to keep their capital invested in the property (i.e. sufficient yield) the rental would also have to increase otherwise they would exit the market to gain better returns elsewhere.
  15. Yes, thats a good way of thinking about it. Do you expect interest rates to rise (in % terms not percentage points) by more than rental inflation? Over the short term at least I agree with you, too much supply on the market for any rental rises. But normal order will be restored eventually when the points I was trying to make should be thought about.
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