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About Princeofpounds

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  1. If you think about the numbers, it's a nothing story. August was 'the fastest rise in a year'. I.e. since last august. So basically pretty similar to last year. I don't know if august is seasonally a strong month, probably as all the student rentals and graduate places come up for review. I too am sceptical about these rental ramping stories.
  2. Whilst what she said might or might not be perceptive, don't think Horlick is some kind of economic heavyweight. Her expertise is more in self-promotion than anything else.
  3. This is exactly the point. I despise the phrase 'bank of mum and dad', because the truth of the matter is that over the last 15 to 20 years the good British people have been wholesale looting the bank of son and daughter. Either directly through accumulating excessive levels of sovereign debt to minimise their tax burden in working life, or pension schemes where you write a cheque to yourself and leave the bill to the next generation of workers Or indirectly by using interest rate policy to 'rescue' a housing market bubble and force the following generation into bailing them out through extracting rent. A policy that does nothing more than transfer wealth to debtors (mortgage holders) from creditors (everyone else, savers and those with no savings but who may wish to purchase an inflated asset). I don't think there is an evil plot here- any generation would probably have done the same given the circumstances placed in front of them. But it should be resisted and pushed back. Especially snide and arrogant articles on the grauniad.
  4. http://www.timesonline.co.uk/tol/news/uk/article484468.ece Milibands and tax schemes
  5. One of the easier tax dodges, although I think the tax itself is stupid (not in terms of taking money, in terms of form and structure). If I recall correctly, the Miliband family used something similar to avoid taxes (cgt? Inheritance? Stamp? Can't remember the details but there is a good article about it somewhere) on more modest, but still million pound plus, properties.
  6. As another poster once said (and I paraphrase a long post here): 'The incredible horror of suburban sprawl... or as others might call it, decent homes with a decent amount of space around them'. Planning is clearly too restrictive. It has raised the kind of barriers that can only be got around by the big corporate developers who have the firepower to employ planning consultants and get 'close' to councils. I don't know a single person who has been able, as an individual, to buy a plot of land (which is not an urban brownfield) and build a simple house, without some kind of agricultural or holiday home restriction.
  7. Thanks for all the replies. Reading through them it sounds like a lot of people are basically blaming financial incentives but it seems like not many people know much about the real process involved. It's one of things I've found - it's just so opaque and almost secretive. I have a feeling that the system might be more along these lines - soft rather than hard bribes. I.e. 'let's have a discussion about the extension the building zoning in the next masterplan, and maybe we'll think about making you our consultant sometime'. Or consultants in the firms going to the planners and saying 'If you approve zoning on this set of fields we can make sure you'll hit your targets for affordable housing in one swoop'. Basically the mix of relationships and the policy-speak code which makes it a closed shop. Development margins tend to be 20% or so, although it's very volatile because prices can go up or down in the time it takes to complete a project. Most value over time accrues to the people who manage to upgrade the planning permission on the land, not the builder (although most of the big corporate builders try to do precisely this). The big builders still suffered in the crisis for a couple of reasons - although the had made stacks of money on land and building, that money was all recycled back into land at ever-higher prices. So they were looking at making big losses once prices looking like falling on their existing landbanks, even if development could still be profitable if you could buy land and magic a house into existence at spot prices. They also suffered not from being unprofitable but from being unable to manage their cashflow - they had borrowed too much short-term money, which the banks wanted back midway through projects even if those projects might have generated profit even in a depressed situation.
  8. Interesting question. I'm tempted to say yes, although I'm not too confident in my answer. Although you can't escape inflation (assuming constant goods amount and monetary velocity) through the identity MV=PQ, in this circumstance you are not looking at a closed economy. M might be increasing but it is being taken away by the country exporting to you (I think that would actually be recorded as a decline in velocity), and they are importing increased ampount of goods for the remaining money to chase. But I don't think it would happen, because really all this situation means is that you are paying for your goods with paper - money isn't useful if it isn't actually used, especially if it's real purchasing power is being eroded by printing. And if you did find a country that illogical then they'd eventually go out of business so it would never be sustainable (but then no imbalances are in perpetuity) It reminds me of Porsche, who used to finance themselves with bonds that their customers bought. The certificates were a work of art, like numbered prints. So of course the bondholders often never surrendered them to get their coupon interest or principal returned. Very clever way to sell art - it can literally be justified as an investment on purchase! I like the boiled frog analogy, although the process is not always slow. If you look at the history of Turkey for instance (which always has a large trade imbalance and therefore currency account deficit because it has to import most of its energy) they have repeated severe currency devaluations and inflation, which is why the old lira became a joke with so many zeros until it was replaced. There's a bit more to it than that but it's just an example.
  9. I'm not sure that any answer I give you will be much better than simply looking at a few basic references on balance of payments. http://en.wikipedia.org/wiki/Balance_of_payments http://www.khanacademy.org/video/floating-exchange-resolving-trade-imbalance?playlist=Current%20Economics etc. And it's a little hard to know what your question is as it's hard to know what the book has told you and what it has left out. However, simply speaking when you talk about us running 'large deficits' in the west you are, I think, talking about the trade balance or exports minus imports. And that is part of the current account, which is one of the key factors of the balance of payments. It's usually the most important, depending on the structure of economy that you have, so we can ignore the others for now. The fact that the balance of payments should in fact balance is almost definitional (ignoring errors and omissions, and certain types of central bank action, which can be significant for some economies but are not typically a defining factor), so you are right that there has to be something offsetting it. That tends to be the financial account. So you kind of hit on the answer yourself: "- Countries holding many £s" Yes, they can do. That's why a country like China has huge foreign exchange reserves at its central bank, for example (this is a by-product of the trade balance being in surplus AND the central bank buying up those dollars being collected in China and selling renminbi in return in order to prevent RMB appreciation). "- Countries are lending us the money back? (possible, but they say we owe most of our money to ourselves)" If other countries are sitting on a huge stash of currency then they will want to use it rather than see it just lose value, so they can either buy USD-denominated assets or lend in USD. The latter in particular means that they are essentially financing consumption of their exports by the deficit country. - We're just printing more (unlikely, other than recent) You can't just print more to run a deficit, because that would devalue your currency through inflation, which would mean that you have less international purchasing power in that currency, meaning you could afford to import less, not more. This isn't directly relevant for the balance of payments, but it is relevant for the situation where we are now, when the imbalances have resulted in large reserves on the surplus side and large debt on the deficit side. The balance sheets of national economies cannot be directly compared to those of individuals. Although it might sound great to be a creditor nation the reality is that you are in trouble if the debtor nation cannot pay, just in different ways. A nation can print loads more currency to pay its debts to you, but your reserves will quickly be worthless paper unless you jack up interest rates you lend at to compensate. This can kill the economy in the debtor nation and trash their currency. Suddenly they can't afford to buy anything from the 'virtuous' creditor and are a cheaper place to manufacture and so compete with you like never before. So your economy, which is based on exporting to these debtor nations, also gets a good trashing in return. Not good for anyone. A lot of the 'China is going to buy your mother and the kitchen sink' chat is based on pretty poor economic understanding, it's doesn't work so simply as debtor pays and creditor enjoys the rewards. - The BoP calculations are not correct There are errors and omissions and these get published because they are the 'plug' number needed to reconcile the balance of payments to zero. For some countries they can be large, but they aren't a key factor for most.
  10. Been reading the thread on land ownership in the uk, and one where Bovis was talking about buying more land in the 'resilient' south east, and it got me thinking... Why is our country so utterly dominated by corporate mass-builders? And why so little self-build? By self-build, I mean the loosest possible definition. I very familiar with France and Belgium, and it seems that in most suburban or semi-rural areas almost all the houses are built by the owner (using architects, builders and project managers perhaps, but owner-initiated). Many of these are even semi off-the-shelf designs, but unlike the uk where you have row upon row of identical houses since Victorian times you might be individual in your street but maybe the same as a house in the next village. The cost and effort involved is presumably similar, so the difference I thought must lie in the ease of access to land and planning permission. So why so little of this in the uk? The corporate building firms seem to have no trouble getting permission for thousands of units a year, on agricultural land, yet I don't know a single individual in the uk who has managed the same. Is the mass process somehow easier? Does it allow councils to micromanage to their targets and avoid working on individual sites? Is it just because they have planning consultants to tick all the boxes? Is it all bribes? Or are people just not trying to build their own places? Anyone ever been through a build on a site that isn't total brownfield, or work for a builder or in Planning with an insight?
  11. Just one point I want to make here; I actually agree that there are bad examples of management, practice and efficiency in both the public and private sectors. The difference is that the rubbish gets periodically purged in the private sector, either on purpose or simply through businesses failing to compete. Case in point- during the 08/09 credit crunch all sectors of the economy contracted. Except one; the public sector. It's easy enough to see- look at the GDP composition figures. For the state, there was NO recession. All the whining we hear from the public sector now is nothing more than dealing with the realities the private sector has already adjusted to.
  12. You do have a point. The problem is that the plan (loose monetary, tight fiscal for 5 years or so) requires such a long period of political will to stare down the public sector, and a dose of luck in that we don't get an external growth shock of large size either. So whilst it has worked surprisingly well so far it's based on future promises we might find it hard to meet. That's why every time I see Balls or Miliband mouthing off I seethe; they helped create the problem and now want to destabilise a solution.
  13. In the short run, credit price and availability are the major determinants of demand. Whilst physical supply and demand are key factors in the long run, the rate of house formation and building is barely perceptible compared to the existing stock over a shorter period like a year. There is probably also an important 'Gifford good' element; people's willingness to buy houses can even increase as they see prices climb.
  14. Also the theory was that LHA tenants would negotiate on rents, motivated by the ability to keep the surplus. This would dampen the effect of LHA providing an artificial floor to the rental market (remember it was set at the average cost for a particular type of property!) Didn't work great, though I sympathise with the idea.
  15. Many universities say they will charge top rates because to do otherwise damages their brand image. I suspect that once they find out that not many people will actually pay the costs to go to 'solihull polytechnic university' et al then we will see much more differentiation in pricing, but perhaps via bursary rebates than a cut in headline fees. Truth is though that for many courses that isn't too far off the actual cost of the course, forget profit. If people aren't willing to pay the real cost then unproductive courses will wilt away, which is probably a good thing. Although I would love everyone in society to have a leisured and interesting education there is something immoral in taxing/extorting the money to fund it from others. It's a bit much to ask society to make an investment in you when you aren't prepared to do it yourself. As for debt, well it's not too complicated really, the boomers are choosing to use the money that used to be spent on their education to service debt, keep them in public sector jobs etc. They will pay for it when the younger generation can't buy their BTL 'pensions' from them for the value they thought they were worth, and maybe we'll even get some reneging on the gold plated pension deals they signed themselves giving us the bill.
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