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House Price Crash Forum


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Everything posted by Dorkins

  1. Thanks for the ad hom attack, care to defend your industry with some facts? I'm not some soft-headed Guardian reader who thinks bankers are good-for-nothing parasites, I understand that the financial sector has an important role in providing liquidity and allocating capital investment efficiently. Seems to me that banks (and individual bankers) have been doing a pretty poor job of it for at least 15 years though and charging a pretty penny in the process. Despite the ridiculous QE and bailouts, investors are waking up to the fact that most of these complex financial products are not worth the price and will stop buying them. The banks are going to lose a lot of money on toxic assets. Low sales and losses will lead to wage cuts, same as any industry. Edit to add: Another good one is that as house prices fall, new mortgages will get smaller and smaller. People are in general paying down debt. Yes the debt is going crazy right now, but in the longer term there will be less of it, same as post-1929. Less debt means less interest payments for the banks, and again less money for the bank means lower wages.
  2. Let's see what happens to banking wages when financial profits fall 3- or 4-fold back to historical (i.e. real and sustainable) levels:
  3. Reality set to bring bankers' pay down to Earth with a thump:
  4. It's just evil what the banks are doing at the moment... They want a 33% deposit from FTBs because like the people on this site they've run the numbers on wage multiples and they are pretty sure house prices are going to fall another 33%. The ultimate loser in all this is the parents who have to remortgage their house to hand over a huge deposit. They are going to end up working for years more instead of retiring so they can pay the deposit back to the bank (with interest). And when the house price falls, that money is gone gone gone and the winners are the bank and whoever was smart/lucky enough to sell now, before the inevitable big crash.
  5. Argh, don't agree with me in front of the other bears! I can see how it's easy to turn "global recession, 10-15% unemployment, 10-15% fall in GDP" into "OMG END OF THE WORLD CASH IS TRASH " in your head, it's just the same thing but more of it. Same sort of logical fallacy that had people predicting a £1m average house price by 2030 a few years ago. Yes, GDP is going to fall, but standards of living might actually get better once people spend less time working to buy a bunch of silly status symbols manufactured in the Far East (and bought on Far Eastern credit) and spend more time looking after themselves and their friends and family instead.
  6. The West is plenty rich and will remain so. Technology has given us highly efficient farming and manufacturing industries which are able to supply most people's basic needs on the efforts of just a small fraction of the labour force. We have a large and good quality housing stock as well as paved roads, reliable water and power supplies, and universal education and healthcare. Although our ability to buy worthless crap on credit is certainly going to fall, these basic facts are not about to disappear.
  7. Parents MEW 100k to give FTB kids as a deposit. Parents now owe bank 100k more (plus interest, and secured on a mostly-paid-off house), giving bank a lovely secure future revenue stream. Kids take out 200k mortgage from bank to buy 300k house with 100k deposit. Bank has yet another future revenue stream (25 years of mortgage payments from kids at a tasty FTB interest rate which they will probably be locked into by negative equity or low LTV after HPC), again secured against a house which would have to fall in price by 33% tomorrow to even begin to threaten the bank's investment. The bank has shielded itself from the risk of HPC and/or default by replacing 100k of a risky FTB mortgage with 100k of a safe parental mortgage. Clever bank. Stupid family.
  8. All this BOMAD stuff is great news for future social equality, families with money seem determined to lose it all on overpriced assets so they can join the masses who have to make their own way in life on their wages alone. An added bonus is that these huge deposits (many no doubt MEWed) are helping to recapitalise our stricken banks and building societies. Happy days!
  9. I doubt it's going to be as bad as people think. The thing about China and the others is that although they're fast catching up, they're unlikely to end up richer than the already-developed countries. The reason the developing countries are growing much faster than Britain ever did during the Industrial Revolution is that they're just installing the technology we already have, while we were inventing it as we went along. Once they've put everything in place that we already have, they have to join us on the much slower path of inventing new technology to enable economic growth. And yes, we are going to have to share primary resources such as oil, metals, food etc with them, but I think most of the pain can be avoided just by becoming more efficient in the way we use resources - everybody knows how wasteful Western society is and how unnecessary most of that waste is and how overconsumption never made anybody any happier. Basically, I think it's going to be okay.
  10. Looks like the age at which the first child born is levelling off, maybe to about 31/32 years old. That seems okay to me, as long as the average couple has a couple of kids close together in their early 30s before the late 30s fertility plummet.
  11. As long as you homeowners don't screw the pooch too badly this time, we'll be happy to!
  12. The system isn't (yet) broken to the point where a revolution has any chance of happening. As I said earlier in the threat, that is going to take severe economic hardship along the lines of food shortages, blackouts, fuel shortages and shutdown of public transport. If we reach that point, and democracy is not fixing the problem, then I'll be on the street. I'm young and have no dependents. But like I say, it hasn't got that bad yet.
  13. It's obvious who they are. They work in Canary Wharf and the City of London (and a few other financial centres around the country). The mob will surround the banks and demand their evacuation. I hope this can be bloodless, like the 1974 Carnation Revolution in Portugal. For the revolution to succeed, it is essential that the police and military support the popular uprising. That will only happen if the revolution is preceded by severe and widespread economic hardship, which is what would bring the people onto the streets in the first place. I personally think we've had quite enough "meritocracy" for the time being. People want something gentler to replace this cruel and inhuman madness.
  14. Erm, I believe as per usual we would be revolting against the Establishment, in our case the politicians (pick your favourite primary colour) and business leaders of the UK. They mostly come from families in the top 10% of earners and are now without exception in the top 1% of earners and know very little about life on an average wage. Their children often go to school together and, unchecked, will form the next generation of the Establishment. The ties between mainstream politicians and the business world are very close, either through old friendships or family ties, or even being the same people moving from business to politics and back again. Every society has always had its ruling classes, but the problem is that in the last 30 years ours have turned malignant. There is now a universal mindset with which to approach every social problem: more competition, more efficiency (i.e. wage cuts), more meeting of targets, more performance-related bonuses, more rewards for high achievers. Charge as much as you can for everything you can, but for God's sake keep the wage bill down. Make sure you can sack your employees the second you feel the urge, or keep them on short term contracts. That keeps them working, they'll be grateful just to get a paycheque and forget about its size. This is why the wage share of national income has fallen while the share taken by capital as profits has risen (see graph). Basically, the plan worked. Of course we now realise that competition only really applies to those of us in the bottom 90%, as those at the top are 'too big to fail'. They will carry on receiving taxpayer funded 'performance related' bonuses regardless. Never mind that the drive for productivity and willingness (even desire) to let the weak fail has created higher income inequality, lower social mobility, more crime, more drug addiction, more homelessness, more financial insecurity, more divorce, weaker community ties, more banal homogenisation of British towns by soulless chain stores. Never mind that our public spaces and public transport are in a dire state - since when did the elite go anywhere by public transport? They can tell us that we were richer in 2007 than ever before, but we all know the truth: the rich got richer and everyone else was down, and falling. This is why we need a revolution, to get rid of a ruling class which hates and fears the general public. They find it easier to scare us with immigration and threats of global competition than to even try to give us the things we really want: lower economic inequality and instability, cheap and reliable public services, respectable towns and cities. My own view is that this is only going to happen by reducing the size of organisations back to a human, manageable scale. The corporate tax burden should be much higher for large businesses than small ones. Towns should have much more control over their own transport, education, health, and planning arrangements. Uncompetitive oligopolies such as finance, utilities, and supermarkets need to be broken up. Britain should try to reduce its dependence on imported food and energy so that our own economy will be better protected from external speculative shocks. Our central bank needs to have more respect for our currency. It should be government policy to aim to balance imports and exports. We need to start planning, in a serious way, for the ageing of the population. None of these things are in the interests of our elite.
  15. We like our gloom... It is our precious and it loves us.
  16. Maybe Norton is trying to protect you from being infected with EA bullsh1t... No more BBC news for you!
  17. People who don't plan ahead much financially will just keep doing what they've always been doing until the day the P45 lands on their desk. "I've still got my job, why should I change my lifestyle?" Many of these people are going to learn from painful personal experience what a little research and common sense could have told them anyway: all good things must come to an end, and when times are good it's a wise idea to put a little aside for a rainy day. However, my feeling is that a lot of the apparent business on high streets is masking real changes. People are doing more window shopping or downgrading to cheaper alternatives.
  18. To-may-to, to-mah-to... What you need is for people to be angry enough to risk their lives to get the [email protected] out. Who takes over then, well, that's down to luck. As much as people might dislike our 3-party Thatcherite consensus, not many would be willing to die to get rid of it.
  19. There are almost no FTBs able to buy without parental help and the bank of mum and dad is running out of capital.
  20. Seems to me that this will be a good thing in the long run as when it becomes widespread it will eventually bankrupt anybody who is trying to predict share prices based purely on the intraday price movements. That particular game is nothing but predicting the irrationality of other people in the market - real value in companies cannot possibly change that fast. The less human irrationality there is in the markets, the fewer bubbles there will be.
  21. I doubt there will be a revolution until a significant number of people are going hungry, especially males age 18-40. However, if/when that happens, revolution is pretty much certain.
  22. I definitely agree, the headline 2% inflation figure is almost meaningless against the noisiness of the real world. When prices for life's essentials (food, energy, housing) go up the pain is felt much more than when prices for luxuries go up. RPI and CPI are made up of sub-baskets for leisure, transport etc but these are too rough to distinguish the needs from the wants.
  23. The dictionary definition of inflation is changes in prices. It normally implies price increases. Deflation is identical, but in the opposite direction. If I could buy an apple in 2008 for £0.50 and it costs £0.55 in 2009, the annual rate of apple inflation that year was 10%. If it had fallen to £0.45, the rate of apple inflation would have been -10% (i.e. deflation). 'Inflation' usually refers to the change over time in how much it costs (in £) to buy goods and services. Statisticians normally estimate the rate of inflation using a basket of representative goods and services. Many laypeople (and professional economists) mistrust the official measures. Unfortunately, nobody can really tell you who is right. Wage inflation is the change over time in how much it costs (in £) to get somebody to work for you. Pay rises = wage inflation. There is a tendency among many posters on here to make claims such as "inflation is a growth in the money supply" and so on, but this is not the definition of inflation. Inflation is simply numbers on price stickers, which occasionally get crossed out and changed. The interesting question is what causes the person responsible for setting the price of an apple/car/house to change the number on the price tag and in which direction. In general, the economic factors which cause inflation are poorly understood and inflation is difficult to predict.
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