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Prescience

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    Accountant, businessman and company director.<br /><br />Writer and analyst on global economics and business.<br />
  1. Nonsense! ONS stats showed in the past three months, EU member states exported £23.8 billion pounds more to the UK than the UK exported to EU states. Many top major UK companies are owned by EU and US investors. You are therefore suggesting the sclerotic EU economy, already mired in unemployment, disastrous growth and forward prospects, will not just shoot itself in the foot, but blow both feet off and its legs as well, as a spiteful reaction? Even blobby fools such as Hollande aint that stupid! In any case, such hostile actions would immediately trip hostile reactions. Since absolutely nothing has changed since the results of the referendum were published, and nothing could until and unless the UK's elected government manage to gain a majority vote on a formal exit (which then still must receive approval from the Lords; all of which takes time), then any formal notice of withdrawal must be delivered to the EU Council of Europe and voted through its parliament etc; yet the sainted markets have already started massive speculation and value destruction on a knee jerk basis. Which demonstrates precisely why the core problem with Britain is politicians love of and myopic comprehension and continued defence of their beloved "City".
  2. Prescience

    Housing Uk; The New De Beers?

    Oh very amusing........... Not. Clearly you utterly lack the ability and focus to comprehend analytical synthesis.
  3. Prescience

    Housing Uk; The New De Beers?

    Not quite sure where you are going or what you are suggesting? In essence it would seem you are proving my core posit: the market is rigged against free supply and demand and against the interests of a majority.
  4. Prescience

    Housing Uk; The New De Beers?

    UK Mortgage Debt: 1,278,702,000,000 gross outstanding. (Source: B of E) 20% value loss = £ 255,740,400,000 30% value loss = £ 383,610,600,000 “The scale of the support currently provided to UK banks has fallen from a peak of £955bn to £512bn, but the amount of cash currently borrowed by the government to support banks has risen by £7bn [to a total of £124bn] since December 2009. The scale of the support currently provided to UK banks has fallen from a peak of £955bn to £512bn, but the amount of cash currently borrowed by the government to support banks has risen by £7bn [to a total of £124bn] since December 2009. “ Source: https://www.nao.org.uk/report/maintaining-the-financial-stability-of-uk-banks-update-on-the-support-schemes/# ____________________ Japanese Asset Crash. "By 2004, prime "A" property in Tokyo's financial districts had slumped to less than 1 percent of its peak, and Tokyo's residential homes were less than a tenth of their peak." 1986 to 1991 Japan and its banking system has yet to recover from this idiocy: when the Emperor’s Summer Palace in Tokyo was in theory, worth more than the whole of California! _____________ Let’s consider house prices. Average House Price: £186,325 Average Wage: £ 26,500 Traditionally, a mortgage applicant could expect 3.5 X gross earnings. Indeed the standard textbook valuation of residential property was 3.5 X gross Earnings. And rents should be expected to return capital cost in 10-13 years. Today after the 2007-08 financial hump it sits at circa 4.5 X gross earnings. “Ah!” I hear the cry “But normally there are two earners, a couple!” Indeed; however lenders will now usually consider 4.5X Gross earnings for one; and just 1X for the second. Thus lets say a couple both earn average wage: 4.3 X the first and 1 X the second = £140,450. Yet most would be buyers live in the South: South East: Average £ 350,000 East of England: Average £ 283,000. South East England has highest pro rata pop density, circa 9 million (However, let’s not forget Credit Score; plus existing debt, which is hugely significant as it is taken into account on the new post-2014 “Affordability” regime.) Back to the core argument: everyone, mostly agrees, the UK housing market is ludicrously dysfunctional. If 4.5 +1 (Gross Income) = value, then the average house price should be worth circa £145,750. If this corrected, in say the East of England (Case 1), then this would create a value capital loss of £137,250. In the South East (Case 2) it would be £204,250! Expressed in percentage terms, then: Case 1. 48% Loss. Case 2. 58% Loss. Now, let’s synthesise these resultants into the mortgage debt stats here we started. £1,278,702,000,000 gross outstanding mortgage debt. (Source: B of E) For argument and erring on the side of optimism I shall use the East of England calculations. If mortgage lenders suffered a 48% loss of hypothecated (Secured) value, then this would equate to equity depreciation in the region of £613,776,960,000. Makes the £124 Billion the government borrowed to support the dastard bankers look like small change! Finally consider rents: UK 40% of net income: Germany: 25% European Average: 28% I therefore, robustly support my contention in the Opening Post. Namely, the Bank of England, Government and the banks cannot dare allow a real market correction, since it would destroy the UK monetary and financial systems. Ergo, as with diamonds it is now a wholly contrived market and to believe the government could or would do anything major, rather than simply fiddle around the edges to placate the voters, is to believe Santa Claus and the Tooth Fairly will be riding to the rescue anyday soon....
  5. Prescience

    Housing Uk; The New De Beers?

    Did you know, Soviet Russia reached a cabal-type agreement with De Beers/CSO and set-up its own marketing operation in Zurich? They sold exclusively to De beers. Later on, Russia developed artificial stones and mixed these in with the recovered stocks. De Beers knew this and continued buying. Well, it's taken a long time for "Fundamentals" to kick in! De Beers have been contriving the global diamond market since the 1800s, since Cecil John Rhodes managed to assemble his monopoly in Kimberly! Fundamental should tell us the USA is broke! Considering its total debt. Yet it still plods along issuing debt paper and bank notes which are valued as reverse assets almost everywhere. If someone is monetarily and financially wealthy enough, then it is they who control the "fundamentals". e.g. Rhodes; Goldman Sachs; John D Rockefeller, et al.......
  6. Prescience

    Housing Uk; The New De Beers?

    That is not what I am suggesting. I am however suggesting the Government, B of E and banks would move heaven and earth to prevent any serious depreciation of house prices, since such would seriously affect bank's asset position; remebering, despite Basel 2 and "Stress Tests" and because of out-of control Fractional Reserve Lending and banks creating credit money like fun, a major hit to their assets could perhaps would trip a meltdown of the essential financial and monetary systems which keep the whole UK charade afloat. Therefore, Government, B of E and banks would do almost anything (at everyone's expense!) to prevent this scenario. Thus the hoped correction galvanised by Supply-Demand will not be allowed to happen. More on this shortly.
  7. Prescience

    Housing Uk; The New De Beers?

    OK I'll guess. World Trade Forum? Westminster Tossers Folkclub? wtf, language code for the Watiwa language, a Trans–New Guinean language world taekwondo federation ????????? Some substantative debate would be rather more welcome, perhaps.
  8. Prescience

    Housing Uk; The New De Beers?

    Care to dignify your unconnected gibberish with some empirical evidence? Facts and figures? Doesn't the sheer reality of UK's residential housing stock representing 63% of TOTAL capital value, enjoy any significance to you?
  9. Many members of HPC seem hellbent on believing a price crash is just around the corner... Some proponents of such believe the UK residential property market has been restricted by excessive planning policies and preservation of the much vaunted Green Belt. They suggest that if the suppply of housing approached demand, then prices would fall, basing this argument on the core economics law of Supply & Demand. There is a core flaw to such hypothesis, sadly. Consider the ONS annual analysis of Britain's capital wealth, just published. http://www.ons.gov.uk/ons/rel/cap-stock/the-national-balance-sheet/2015-estimates/stb-nbs-2015.html I have tracked these reports since the early 2000s: and the proportionate value of UK residential housing hasn't altered much since then. Residential property remains a basic balance sheet asset of banks and mortgage lenders. A significant property price crash would mean all UK banks were insolvent; inter alia, the UK's financial and monetary system also would implode. As with De Beers and the CSO (Central Selling Organisation), if the price of diamonds crashed, then so would many banks as what are called Investment Stones (top quality diamonds of multi-carat weight, complete with geological certificates, X Ray Crystallography reports etc), live permanently in bank's vaults as bastions of reserve and investment value. However, De Beers and others have millions of carats of fine recovered diamonds sitting in their vaults too: since if they dumped this stock onto the global market, then the price and value of diamonds would crash. In other words, an utterly contrived and synthetically contrived and controlled market. (I had some considerable experience of this way back in the late 1970s: and became rather frightened for my own safety!) The stark conclusions are, sadly inescapable: If government and the Bank of England really saw a massive growth in potential new build development, then they would rapidly realise the very monetary and financial system and government itself would be effectively extinct. Clearly, whilst the basic Economics law of Supply and Demand does actually function in true open markets (There is no such animal as a Free Market: since most major markets comprise a series of cabals and effective monopolies. e.g. oil and gas; gemstones; coffee; etc), where and when any commodity becomes a keystone of a financial and monetary system, then it will be ruthlessly controlled, contrived and restricted. Happy New Year!
  10. Except right now, the whole Western monetary and financial system, is skewed, horribly, by intrinsic false values. Ergo, if potential tenants are willing to pay exorbitant rents, simply to have somewhere to live (since supply is totally outstripped by demand: the boring, yet immutable economics law of Supply and Demand), then whatever one consider "Good Value" is wholly academic in the equation. Take the lesson further: if rice as a food commodity shoots up (as it did some years ago), then consumers turn to other sources of food carbs. Sadly, with accommodation, choices are rather limited! Huts: Tents: Caravans: Anglo-Saxon Round Houses: the real choice is rather limited! Mainly since planning law proscribes one pitching up to, say, a common, and pitching a tent/parking a caravan etc.
  11. Since the B2L tax hike, the popular press has been alive with posts from anarchists who hate landlords with a passion. They share one common myopic dream: B2L landlords will be flogging off properties for pennies as they won't be able to scramble out quick enough! Dream on! What caused the latest (Blair-Brown) boom-bust and house price bubble? Well, we already know most of the why: cheap money and slack money; base rates being set at a 50 year low. People suffer a short term memory. Speculative house building in the UK came really, in three primary phases: Phase One was in the mid-to late 1930s, when estates of nasty "Jerry Built" little bungalows and houses sprang up in Kent, particularly, on disused orchards and agricultural land, mainly built from frame and concrete walls. Phase Two was the mid to late 1960s ending in the early 1970s Boom Bust, engineered by Heath-Barber, caused by slack money and no proper lending restrictions. the subsequent crash effected commercial and well as residential property. Phase Three was the Thatcher- Lawson, Boom-Bust, created by again, slack money and encouraging speculative insanity. The subsequent Blair-Boom Bust was the grandaddy of all; and simply continued the Thatcher-Lawson strategy, in spades. This time, however most of the money, as I earlier stated, was short term interbank debt, where the subsequent mortgage was bundled, re-packaged etc. Back when I wert young (!!), those wanting to buy needed to save like fun, first and go without any luxuries and adopt a meagre lifestyle, until over the early hump of repayments: furthermore mortgages were normally around 17 year tenor, older houses (slate roof, damp, dry rot etc) were not mortgagable. The only non-repayment mortgages were Endowment Backed, Sum Assured, where the obligor paid the interest, and the maturity of the endowment earned significant annual and reversionary bonuses sufficient to discharge the debt and leave a nice surplus. They were more expensive to service and were for higher salary earners only. Then the cowboys came to town! One of the first being Mark Weinberg, Hambro Life. He and others persauded mortgage lenders to accept insurance products which lacked a Sum Assured, but would (in their dreams) earn such significant bonuses during their life yada yada yada. And we know what happened here..... The main problem was post Big Bang, when banks whined Building Societies (BSs) enjoyed an unfair tax advantage, and the laws were changed. As the Thatcher-inspired greed got under way, more and more BSs de-mutualised and became banks: and we know what happened here, too! Now BSs, acted in the reverse operational modality to banks: they borrowed short and lent long; whereas banks traditionally, always borrow long and lend short. Well they did, until financial engineering and rocket scientists invented more and more venal products to convince idiots lead could be turned into gold etc. BSs, were the exemplar of probity and rectitude, their "spread" (Difference between borrowing rate and deposit rate) was very small: yet by prudence and good management they prospered and amassed huge reserve capital. Can't have that said the markets, let asset strip 'em! Etc. Banks looked at the mortgage market and decided "We'll have some of that!". and so that entered a mad, frenetic competition to garner a larger share of that market. Income multiples rose to 8.5 X: Tenors (life) of mortgages exceeded 30 years! and L to Vs rose up to 130%. Well, quelle surprise! it was not sustainable. Now sadly, the young and the older have been brainwashed into expectations of entitlement, well above their earnings and disposable income. And the only way It COULD be sustainable is if either the average house price fell to circa £84,000 (Income gross X 3): or wages and salaries gross rose to £92,000 per annum. Let us suppose however, there will be a crash: (The founder of this site actually believed it and indeed, was interviewed on TV and radio promulgating his, fallacious, belief!). What would happen? Well first critical aspect to bear in mind is residential housing represents in excess of 60% of the Total Capital Value of the UK! (Source: ONS Annual Wealth of GB Statement 2003/4 and >). This is mainly employed by banks and mortgage lenders to prop up their balance sheets: however, they are already underfunded and under-resourced in terms of reserve assets and liquid funds, thanks to excessive Fractional Reserve Banking and credit money creation. http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11945083/Banks-to-face-tougher-annual-stress-tests-to-protect-against-future-collapses.html Now if banks etc themselves crashed (which they would in the event of a severe property price correction), savings would be worthless and there would be no mortgage funds anyway! A more likely scenario is banks and mortgage lenders themselves becoming landlords: as their asset, property, would be lead on the market. Wroth realising too, that in order to fund the last insanity, a majority of the money used to fund it, initially, was imported via the global interbank market and borrowed short term; and then the debt packaged securitized and sold on as investment class MBSs, etc. In truth, Britain has not created fresh new wealth since the late 1950s/early '60s. And much wealth has been exported after Thatcher repealed the Exchange Control Act 1948, in 1979! Also don't believe the UK Government would step ito the breach! It has no money and circa £1.3 trillion of sovereign debt. If thousands of non-incorporated B2L owners liquidate and pack up, then major cash rich property companies would step in and this would include foreign buyers, such as the Chinese, Indians and Russians. Since however one crumbles the cake, there is a massive shortfall of housing in the UK: therefore the primary economics law of Supply and Demand holds true.
  12. Prescience

    The Moral Primacy Of Debt.

    Oh, real distribution of wealth occurred indeed: via taxing the middle earners to pay for the social state et al, whilst the uber rich sheltered their wealth. Which is precisely how and why, for example, Gerald, Duke of Westminster sits on leashold and freehold assets of in excess of $12.i billion........ If IHT in all its incarnations had actually worked, then this wealth pot would have been utterly impossible to achieve. However, more to the point, you posited the social state was introduced to prevent a sort of 20th siecle Peasant's Revolt. Which clearly didn't happen................ on either side of your proposition.
  13. Prescience

    The Moral Primacy Of Debt.

    Perhaps one must separate "Debt" of real specie, from "Debt" related to Credit Money Creation: i.e. illusory "money"? In the case of "Money" created by sleight of hand, rather than from honest toil and real measurable growth, (e.g. money borrowed from friends, parents etc), then Mickey Mouse money aint money! And this is surely the core problem? The Western financial fiat monetary system has been created by a mix of venality and chicanery and urgently needs to collapse, that social order might be returned. Otherwise, we face revolution, anarchy and a complete collapse of ordered society. Or indeed, a takeover of Europe (and eventually, the USA) by Asia. Since it is now only Asia which creates real new primary wealth: as against imagined "Wealth" based upon speculative and transitory possession, mainly of debt instruments. (n.b. I leave out Gulf State et al "Wealth" since it again is transitory and a fast diminishing natural resource-based asset.)
  14. Prescience

    Fixing Marxism

    In order to properly understand "Communism", one must first, study the works of Dr Karl Marx. Most commentators on the topic do not. Marx concluded, early on, if he was to realise his dream then he had to harness the joint power of what we might call today, SME owners as well as workers. Most nation states which call their system "Communism", are lying; their imposed system is simply a combination of collective inefficiencies added to a sort of quasi-Fascism. Soviet Russia proves the best exemplar. "For each, according to his needs: to each according to his abilities!" Dr Karl Marx
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