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House Price Crash Forum


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Everything posted by mattyfc

  1. Sterling would have fallen further if all the other major economies were not in similarly bad shape. The US, unemployment, low growth, 1.3trn deficit, Eurozone massive imbalances, huge public debt in the periphery with recession and high unemployment. The euro will probably cease to exist within a decade. Japan, slow growth, strong yen, deflation, QE etc. The real run on Sterling started in late 2007 and has been going on ever since. Osbourne and King will be happy as they know we have to grow our manufacturing and try and get growth from our trade balance.
  2. He has already states they can print a week or two ago. The main obstacle to printing is inflation, at 3.1% (4.5% RPI) and looks set to rise further with higher commodity prices, the VAT rise and weak sterling. Merv admitted on Sunday he expects inflation to be over target till the end of next year. I think we will be looking at 4-5% by January. If they decide to print with inflation at such a high level the MPC will be completely discredited. I think you would see a nasty reaction from the markets. The US is in a much better position to print than us as inflation is much lower and the $ is more resilient. If growth slows down significantly and inflation falls under target we will definitely see printing. Until that happens the presses will remain on ice.
  3. The TV Licence is ridiculously antiquated. There is really no reason to watch any live TV with torrents and repeats available of anything worth watching / news available online. It is only a matter of time before people realise that it can’t be enforced, is based on threats that have no way of being enforced if you are remotely au fait with the law. A new way will have to be thought up to fund the BBC in the next 10 years.
  4. Agree. This problem has been created by the spending programs of the last 13 years. The idea that growth would increase for ever in a nice straight line. There would be no more boom and bust. Our fiscal policy was utterly delusional. The last two years seem to have been aimed at spending whatever is necessary in an attempt to hold on to power. Destroying our finances in the process, this is treason IMO and those responsible should face charges. We are borrowing £400 Million pounds every single day. We are paying £30bn a year in interest, completely wasted. We complain about the defence & other cuts yet have been happy to vote for the destruction of our public finances that caused them. The cuts are only phase one. We will have to run a surplus for several decades the bring the debt load back under control.
  5. From the article: Total rubbish. Affordable? 6 times income and some. The prices are not affordable. What has that got to do with the banks? Lucky children to avoid debt slavery. At least they realise they are over inflated. The last two quotes contradict each other. The economy has already grown by 1.6% this year.
  6. ( From http://uk.reuters.com/article/idUKTRE69G1T920101017 ) "Buyers and sellers are staring each other out, and it's a question of who will blink first," Shipside said. "Even if they wanted to, buyers cannot blink unless lenders release more funds for mortgages. "As that's not going to happen, there are likely to be some blinking sellers this winter."
  7. They have not done anything yet. The defecit needs to be turned in to a surplus and the debt paid back. Not easy. At least they are going to attempt to fix the problem.
  8. You seem to overcomplicating things rather. Thatcherism seem very simple to me: Work Hard, Get rewarded. Do not expect the Government to solve your problems for you. Everything else seems to be explaining basic human behaviour. Greed, Selfishness, Narcissism, etc. These really have nothing to do with Thatcherism. Such behaviour exists in all Structures & Societies.
  9. The same thing is also happening in Greece. The Eurozone structure is flawed. I can't see how there can be a sustained recover in any of the periphery countries. They have too much debt, are uncompetitive. Where is the growth going to come from? The situation will get worse and worse until the fundamental issues are addressed. These countries need to force a change as currently they are going to suffer considerably whilst Germany booms. Any sensible Irish politician would be formulating policy along these lines for the next election in / before 2012. The only plausible solution is for some kind of Eurozone Split, that enables the outer countries to regain competitiveness.
  10. By my calculation pensions take up about 24% ( 117bn 490bn ) of the entire UK tax income already . Up from about 17% (42bn out of 250bn) in 1995. If you look at the stats for population ageing: (http://www.statistics.gov.uk/cci/nugget.asp?id=949 ) The problem is going to get exponentially worse over the next half century. You can see that the % of people over 65 is increasing much faster than the working and main taxpaying population. What % of tax revenue will pensions reach before this ponzi scheme collapses. There will not be enough tax revenue for us to have a state pension. Should we not deal with the problem rather than ignore it?
  11. The point you make is correct. There is a floor under house prices that is employment. House prices will only fall slowly / stagnate as long as mortgages are paid and there is no wave of repossesions. The boom is over though, make no mistake about that.
  12. Thatcherism is the Thatcherism is the belief that those who work for a living should be rewarded for the effort they put in. That society should be a meritocracy. That the individual makes better spending decisions that the state. Thatcherism is the antithesis of never ending HPI. HPI should be a temporary consequence of wealth generation not the substitute for wealth generation itself. Fantastic to see these kind of Comments from the government. "the Government would try to ensure that property prices will rise more slowly than incomes so as to avoid another housing boom. ‘People should think of homes as a place to live rather than a pension," Rampant HPI is an extremely damaging economic force and it seems we have a government that "gets it". Rampant HPI is a symptom of new labour ideology, ignoring the potential long term damage to the economy in exchange for the short term good will of the electorate. We need stable affordable house prices / rents to maintain economic competitiveness and increase our long term standard of living through industry and real wealth creation. Not trading assets between ourselves with ever increasing levels of debt, 120% LTV Interest Only Mortgages, Buy to let and the rest. This will only end one way. Bust.
  13. There will be no state pension in 50 years. The state pension will become unsustainable. Any honest politician would start to phase it out now over the next 50 years. The numbers don't add up at all. UK Figures http://www.ukpublicspending.co.uk/downchart_ukgs.php?year=1990_2011&state=UK&view=1&expand=&units=b&fy=2010&chart=02-total&bar=1&stack=1&size=m&color=c&title= With life expectancy increasing / more pensioners for the working population to support. The whole scheme will become unaffordable. Most developed economies will have the same problem. Any policy to deal with the problem will be so unpopular we won't hear about it until the problem is much worse.
  14. If they declared martial law to keep order I am sure 5 million! barrels of oil a day would keep the agriculture / Military going. Forget the gas guzzlers, people would have to walk / bike. I doubt Canada could offer much resistance as well, The US already has plans just in case ( http://en.wikipedia.org/wiki/War_Plan_Red ) I am pretty confident they could feed themselves with minimal rationing as well ( http://en.wikipedia.org/wiki/Agriculture_in_the_United_States ). China would fold pretty fast I would think with half its exports gone and $1trn of US treasuries to use as toilet paper. They seem to be a large agricultural importer and mass starvation would probably take hold if world trade collapsed. The US is best positioned in case of a global meltdown due the massive military and ability to be nearly self sustaining if necessary.
  15. Imports, the US produces enough oil resources and has enough agriculture to prevent starvation in the event of a dollar collapse. Having a $700bn military would be helpfull as well. We on the other hand would be stuffed if sterling collapsed and would have no way of feeding the population.
  16. All our Gilts are issued in £? Merv can just enter £2 trillion in to his BOE computer and pay the lot off no problem. Just keep adding zeros for the index linked ones. Of course imports may get rather expensive! Not as much of a problem for the US I suppose.
  17. The complete lack of concern for long term consequences seems to be the main problem. That and the low level of understanding of economics in most of the country. You can borrow and spend like crazy for a while, everything looks great until the interest and repayments kick in. Unfortunately by this time the politicians responsible are gallivanting round the world raking in the cash from Book signings and speeches. There is no reason for the government to borrow money at all, other than for very long term infrastructure projects. Surely the solution is to prevent the Government from taking on any debt that is not related to such infrastructure projects. Plod should march in and arrest the chancellor if they try it. Politicians will run our credit right to the limit if they think they stand a better chance of election. This is treason and the law should be changed to encompass this crime. We will be forever doomed to the same cycle if nothing is done.
  18. Good to see the French are accepting reality. All they want to do is move the retirement age from 60 to 62. The idea that you have to work for a living seems to have alluded them. Good luck to Sarkozy with more "reforms"!
  19. We have problems no doubt. We are at least attempting to deal with though. The cuts are coming will have to last a decade or 5 to pay back all that borrowed cash. The US has similar debt issues. Currently there seems to be no plan to repay any of it. 1.5trn deficit per year, no plans for cuts. Plenty of plans to crank up the printing presses. No long term economic strategy other than print and spend to infinity. The $ will probably crash and be replaced by some other form of reserve currency that can't be printed. Eurozone has major structural issues trapping southern Europe in recession and debt deflation whilst Germany booms. No devaluation possible by these countries to combat German efficiency. No economy in history has recovered from the problems face by Greece, Ireland, Spain etc without a massive devaluation. There is no long term plan to fix any of this. The idea seems to be to hope for the best / keep lending money until southern Europe implodes.
  20. All these “spending cuts damage the economy” articles seem to conveniently forget the government has no money of its own to spend. Government spending cuts simply move resources from the public sector back to the private sector through lower long term tax rates. They also seem to ignore the fact that borrowed money supporting the deficit will have to be paid back eventually. Once the interest payments kick in (40bn and counting) the country will be crippled for the next few decades dealing with all the debt. No sane administration acting in the long term interest of the country would have sanctioned a £400 million a day deficit. The deficit is only stage 1 of the problem. Paying the debt off will be even harder. 30%~ of all income tax is going straight down the toilet on debt interest already. Utter Madness. Brown should be up on charges. There is going to be some serious pain because of the shocking financial mismanagement of the country for the last 13 years. The more we borrow the worse it is going to be.
  21. Nice to hear something sensible from a BOE policy maker for a change. The Halifax figures are almost certainly a product of very low sales volume distorting the index. Would a similar rise surprise anyone next month? House prices are going down though; ultimately employment and income will provide a floor for steady decreases. I doubt we will see large annual falls unless unemployment rises significantly. Any objective person can see interest rates need to slowly rise. Posen would have to be mad if he voted for more QE when inflation had been 50% over target for 7 months straight. The BOE inflation reports seem to be propaganda to prevent them taking any action. Waiting to see on the 20th.. The idea we are anything like Japan circa 1991/2 is ludicrous. The scale of this bust is beyond our comprehension. Our HPI graph looks like a mole hill in comparison. (http://theinflationist.com/stocks/nikkei-1989-vs-sensex-today-vs-dow-jones-2007) House prices dropped 99% in some parts of Tokyo. Prices were $1 Million a Sq Meter at the top. Compared to about $20-30k in central london now. (http://wapedia.mobi/en/Japanese_asset_price_bubble) Japanese culture is completely different from ours. There was / is no way of fixing the deflationary problems of Japan with monetary policy. The problem is psychological, rather than economic and eventually ( a generation or two ) the Japanese will recover. We are nothing like Japan, savings culture?, huge trade suplus?, Strong stable currency? Give us money and we will spend it, and keep spending until the credit runs out. Academic economists need to pull their heads out of there arses. Economics is not just numbers on a spreadsheet. The remit of the BOE is to keep inflation at 2% to prevent the economy being destabilised by high inflation. They clearly need to be reminded of this .Osbourne should be reading King the riot act.
  22. I think the nominal level of spending they are aiming for would be very similar to what was spent in 2005. Hardly the dark ages. They will set out the cuts as originally planned. They will be back loaded so 60% of the cuts will occur 2012-15 I would think. They will be aiming to get the deficit down to 20bn. This will happen naturally anyway as it takes time to implement. The economy is going about as well as they could have expected so far. They will have a plan b in case they economy gets flushed again / there will be some flexibility I am sure. If the economy keeps growing at any level they will keep to the original plan. Quite right too. This debt problem needs to be dealt with now, delaying will make things much worse 5-10 years down the line. Nice to see some policy aimed at the long term rather than sweetening the electorate for the next election. Of course we will have to run a significant surplus for a decade or two as well to get did of our 40bn a year interest payments and 1trn (and counting) of debt. This is really only stage one of fixing the problem. We will be paying for the last 13 years of prosperity for a long time to come.
  23. CPI was barely above 3% 1995/96 - Mid 2008. Since the depths of November 2008 it has bounced back to it's previous trend over 3%. If the BOE are serious about inflation they need to raise rates slowly now. Inflation is always one step ahead of the MPC, they only react after they have a problem. http://www.tradingeconomics.com/Economics/Inflation-CPI.aspx?Symbol=GBP
  24. This magic bullet school of economics makes me laugh. QE will decrease growth and increase inflation in the long term and is a frankly mad. You can't create long term growth and jobs with government spending. All you create is waste and debt. There is a reason the USSR is no longer with us. There is too much debt, private & public, significant deleveraging needs to take place before we will see growth at pre recession levels. This will reduce growth, and house prices. Eventually we will be in a position to start the cycle again. There is nothing policy makers can do about this; they should stop pretending there is.
  25. Inflation is high and I can see it increasing even further. We have the VAT rise coming, commodities are increasing and sterling is a dog. Inflation will be 5% by January at this rate. Interest rates need to start rising gradually now. More QE would clearly be mad at this stage. Government deficit spending and printing money does not create jobs or long term growth. The US seems to be slowly waking up to this. It will stifle the private sector with excessive taxation to pay off the debt long term and reduce growth significantly. All Our economic policy seems focused on the extreme short term will little thought of the longer term consequences.
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