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Guest_GradualCringe_*

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  1. Points 2 & 3 contradict. Where I am buying and renting are both absolutely dreadful, did I not make this clear in my previous posts? I'm looking for a way out and buying outright in a much cheaper area, although not ideal, is one way to mitigate future losses (it would also allow me some space, a garden, and some decent neighbours). For example, buying a naff, cramped, 3 bedroom semi in the South East, in some areas is £300,000+, if that halves in value, the absolute loss is £150,000. In some places further from London, it seems possible to buy 3 bedroom semis for under £130,000, if that halves in value, then the absolute loss is £65,000, however some of the areas I'm looking at, have already had some pretty decent falls (I think Khards posted a chart showing regional house price falls), and I might be lucky enough to get away with losing only a third for example, or £43,000. Renting the equivalent house where I am now could easily cost me that sort of money in 3 years, assuming that I could afford it in the first place. You are correct when you say that another down turn is on its way in the next 2-5 years, and I've accepted that the response from the politicians is going to be even more extreme, and arbitrary. I think everyone is going lose as a result, second guessing how it will unfold and responding appropriately is not so easy.
  2. Where I am that just doesn't hold true, the interest paid on the savings required to buy the home I'm currently renting would cover about half the rent. Annecdotely I've noticed that friends and family who have been renting the same place for years, have not had their rents raised in line with the market and are paying significantly below market rates. Everyone else seems to be doing their best to make a choice between space, neighbourhood and distance to work, of which there is very little room to wriggle, in order to afford to live.
  3. Last point first, I don't find that with renting at all. Anything other than a toilet in a bad part of town, and land lords are asking for half of my income every month. Renting 2-3 bedroom house with a garden is impossible, and I've spent most of my adult life living in cramped flats with bad neighbours. Did you read the end? It's a way out for me. I expect to lose some money at some point in the future, but with the government doing what it is doing, we are all going to lose, the trick is to lose as little as possible, which is difficult when it all hangs on trying to second guess the politicians.
  4. Not at all, certainly round my way rentals are very expensive, such that renting anything other than a disused toilet burns through most of my income, making it almost impossible to save. I'm sure Bruce Banner will point out that the rent he pays is very cheap, and has been for many years, however, would he still say the same thing if he was looking to rent a property on the market at the moment? For me it's an absolute nightmare. I could understand why someone, if they had toughed out a cheap horrible rental and saved over several years, why they would want to buy with little or no mortgage, rather than face renting a nicer property and throwing all their income at a land lord. The question is, if someone were to purchase a house now, would the money saved between now and a crash in prices, minus the value lost on the house, exceed the amount that would have been paid renting an equivalent home? It's not an easy call to make, particularly given that the government will do literally anything to prop-up the rotting zombified corpse of the UK economy. In terms of purchasing a home, I would question doing so in the South East, particularly London, with prices being so high, as the potential capital losses are huge. Looking further a field however, particularly where prices have continued to fall, where the relative losses following a fall in house prices would not be so large, it's not so clear.
  5. From the article: "Mr White said the world has become addicted to easy money, with rates falling ever lower with each cycle and each crisis. There is little ammunition left if the system buckles again. “I don’t know what they will do: Abenomics for the world I suppose, but this is the last refuge of the scoundrel,” he said."
  6. The key difference is that in a command economy the winner is judged by committee via some abitrary measure, not by a system of prices.
  7. Which is the crux of the argument against centrally planning complex processes, and why a company will often split itself into inividual business units to avoid this problem. It's also why this doesn't work for the NHS, because the smaller units of the NHS don't get to generate or allocate revenue. There's no real measure of success or failure.
  8. To be bloody minded, individual employees may well compete with each other for better pay and conditions i.e. a greater share of available resources from the company. On a large scale however, a company will direct man power toward products that are selling successfully, over those that aren't.
  9. A command economy is one organised purely by arbitration (whatever that might be, be it a moral code, dice, or a plan formed by such heuristics), rather than market prices. There is competition within large companies, resources are strongly organised along the lines of "Those that produce product A", and "Those that produce product B". Clearly if Product A is a runaway success and generates lots of revenue, the company are going to direct resources to further Product A, further, supporting infrastructure and staff will be broadly organised (IT, etc.) along those lines too. In very large companies, Product A and Product B will often be split into business units and each will support themsevles directly from the revenue they generate. There can never be proper internal markets within an organisation such as the NHS, because revenue really is rationed from the top down, and not generated from the bottom up.
  10. From the article: Has the person who wrote this article ever worked for a proft making company? I don't know of any activity within a company I've worked for/had a hand in running that wasn't constrained by prices and/or a budget of some sort i.e. decision making was guided by market prices. For the quote to be true, i.e. for a company to successfully stay in business and ignore prices i.e. continually do any old thing because the managing director thought it would be a good laugh for example, it would have to have the ability to call upon an abitrary stream of revenue.
  11. No company can command a revenue stream (i.e. go round to peoples homes with a big stick and ask for donations). Ultimately it has to rely on budgets, prices, and their customers (i.e. the market)
  12. No company can be fully command and control unless it can forcibly command a revenue stream too, without which of course, re-organisation of production within a company, although initiated by a manage or director, will ultimately be constrained by a budget.
  13. Internal markets don't work in the NHS and such like is because they are a form market socialism (see the work of Oskar Lange, of which there are some very persuasive critiques), not ultimately governed by prices and markets. I don't know of any company that can ignore prices, profitability and revenue streams, unless it can call and rely upon sizeable government back handers. The logical conclusion of the article is that a company over a certain size can create products and services nobody wants (even do nothing at all) and remain in business. And before anyone mentions banks, they are the recipients of possibly the biggest tax payer bail out in history.
  14. The economy seems to operate over cycles of credit which vary in length between 7-10 years. The last downturn begain in 2008, the UK is now 5 years into the cycle i.e. top of the economic boom. Given a 7 year duration in this cycle the next down turn will start in 2015, however given a 10 year duration, the next down turn is not due until 2018. All of the booms in the last 30 years have been helped by the government making credit ever cheaper. This recovery is no exception, worse still, as the private sector have deleveraged the government have increased public sector debt at the same rate to compensate. The UK has effectively swapped expensive private sector debt with cheaper public debt. It would seem that the private sector is possibly beginning to borrow once more, and hence talk of recovery. When the next down turn occurs, and it undoubtedly will, the UK will have even greater levels of debt in aggregate (after a few years worth of lousy rates of growth that politicians will no doubt crow about all the same), financed at some of the lowest rates in history, and I dread to think of the crazy policy response that our equally crazy politicians will attempt to "save the world" with.
  15. It's not London, how anyone is able to live there I do not know (the £850 per month 1 bedroom flat, in Deptford, with the bed jammed in at an angle, and absolutely no storage space springs to mind, was featured in the Daily Mail having a laugh at "messy" tenants). Thankfully since the summer break has finished a bunch of properties have come on to the local lettings market, at less than the rent I'm paying now, for the same size property. I was panicking a few weeks back because there was so little on the market, and all of it more expensive. I'll give the agents a ring shortly, and highlight the cheaper properties. p.s. Flashman (I saw your debate with him on the main blog) is full of it and extremely condescending. Have you not noticed on his insistence that other OP provide statistics, whilst he never does the same?
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