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House Price Crash Forum

aa3.1

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About aa3.1

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  1. In Britain the printing has been strong enough that the country is still in inflation. But look at America as an example. Clearly there has been deflation over these last 5 years. By far peoples biggest cost is housing, and not only has the price of houses fell substantially, but the interest rates have meant a 50% fall in payments.
  2. This is where demand side management comes in. Should the poor masses have the lights on at night with the curtains closed.. they should be resting for the next day of work, not wasting energy and causing rising carbon emissions.
  3. You guys are highlighting a big reason why people buy property and rental houses. At least they own it, it goes up with inflation.. and they don't have to put their faith in the integrity and intelligence of the city boys for their retirement.
  4. I remember when Gordon Brown increased the top marginal rate from 45% to 50%. But it was a head smacking moment for Labour when they realized that 90% of the people in Britain in that bracket, work for the government. Everyone from senior change agents, to productivity consultants, to regional directors of communications strategy were hit.
  5. It is the crazy world Labour and friends like the Tories have created.. where everyone is a very important person with a prestigious title. It is like a friend of mine's sister is a 'vice president at HSBC'.. at first I said no way that is incredible. Then I found out they have dozens of vice presidents just in one city. She sells mutual funds, and is very successful at selling them in fairness to her.
  6. Don't worry 3 seconds after a bank fails the politicians will blink and bail out their buddies. But they are talking big now when it is all talk.
  7. As Bloo Loo predicted at the start of austerity several years ago, when the Tories announced salary freezes to get a control on spending(in 2009).. they would be unable to enforce it on the ministries. First off each level people are on has many tiers that they can move up. So even with a freeze on the tier pay rates, people move up each year. Secondly the ministries make positions higher level than before. For example what once was the lowest level file room clerk, become file room manager, and then regional director of information management. Same job - different level. Throughout the empire days the rank of Captain was a huge Naval rank.. you really made it if you rose to that level in your career. A Captain was in charge of a whole ship. Now I read the Navy has more admirals than ships. How can this bureaucratic insolence be overcome? Only by basically fear of the leader. A bureaucrat 5 levels down has to feel the will of the leader. And as much as the bureaucrat wants to build his little empire, greater than that is fear that to defy the intent of the leader could be a career ending decision.
  8. Money looks so simple to understand when you first learn about it. But the more you learn, the deeper the rabbit hole goes. Look at how on this forum, using common sense it seems to a bright young person the goal is to save your money, take responsible levels of debt, and pay down that debt as fast as you can. Yet that strategy fails miserably time and again.
  9. I see your points about venture capital, but I don't want to say without security. Like say they were funding a wood cutting enterprise, everything from the timber license, to the land title, to the equipment, mills, roads, ships is going to be secured in case of default. Even for Columbus the investor paid for 3 ships with his loans, but the ships became the collateral. The problem with the investor model is it only works for small stuff. Like we see venture capital funding several million investments in apps. The growth of Britain's colonial empire was financed by fractional reserve banking. We were the first to figure it out and carry it out on a big scale.
  10. Ten years ago I worked in banking, and one reason I was sickened was their risk aversion. If it wasn't a piece of real estate securing the loan they were not interested. I argued in futility that throughout history banking has been built on commercial loans - the riskier the better. Even Christopher Columbus had a banker backing his expedition. This risk aversion by all the banks, leads to a systemic risk. Which when the systemic risk eventually blows up the bankers get criticized for taking too much risk. The reason for the need of risk taking, is exactly what you say, it is the reason we have banks. The role of banker in the growth Britain was to make educated gambles on which ventures would be the most profitable adjusting for risk. This business can be very lucrative, like a mine in the frontier at 20% interest rates. While with mortgages they are battling for a razor thin spread. In the pathetic role they are trying for, the middle man between families and housing charging a huge monthly fee.. it takes no skill, no knowledge, adds nothing. So in the end is not a profitable enterprise. (any profit simply gets arbitraged to nothing by all the others who want easy money). I had some good conversations with old time bankers, now long retired.. they were saying they knew it was doomed when everything went to algorithms and credit scores and automated approvals or disapprovals. Real banking cannot be reduced to a formula. The formula would of course said no to Christopher Columbus' voyage, but yes to Christopher Columbus buying a nice 3 bed, 2 bath semi.
  11. We have seen the Euro authorities attempt to disprove Keynes by going for austerity in the midst of a credit deflation.
  12. The leaders in China cannot cling to ideology when it stops working, because a dictatorship ironically must answer to its people. When the world economy got hit so hard in late 2008, the Chinese leaders moved with incredible speed to find real jobs for the 40 million people who had lost their jobs as their export model no longer worked. Dictators like Mubarrak and Ghaddafi who failed to find jobs for their people, are dead or in prison now. If some Chinese are getting super rich and investing in capital plant, creating jobs, taxes and opportunity in China, then it is promoted. If wealth is excessively pooling and simply being used for speculation, with many being left outside, then a responsible government can move against that. So right now there is a credit crunch emerging in China, with over-leveraged speculators being caught out.. and like here demanding the government bail them out. The central banker said too bad, they can eat the losses. If the Chinese government wants they can wait til a bunch of the speculators go bankrupt, then step in with liquidity once they have seized the assets.
  13. Destroying the formation of stable families and the conception of the next generation.. is a small price to pay to keep house prices high.
  14. The responsibility is a tell-tale sign. Obviously if an auto or steel company is failing, responsibility must lie at the top. But today we blame the bottom, the workers for the failures. When I worked in banking there was a unified code among the managers to never blame each other for any failure. Targets were missed, because staff were not properly cross-selling products to customers. Large losses on loans, were because frontline staff did not perform proper due-diligence. Managers who consistently missed targets.. were promoted - because after all it was not their fault. From the perspective of staff, the dream was to ascend into the management.
  15. It is pretty obvious that the managers have seized control of the government. In the days of strong leaders like Atlee or Churchill, when orders were given, the bureaucrats largely carried out those orders(sure they were also trying to empire build but it was risky). Today when the modern political leaders give the bureaucracy orders, the managers just laugh in their face. The corporations are the same. The widely held public corporation model has failed, because no shareholder had enough power to control the managers. So today even the boards of directors have managers from other corporations. They don't even pretend to represent the shareholders. So you see 100% of the profit of the corporation goes to bonuses and salaries to the managers. -The idiocy of the banks giving record bonuses while reporting quarterly losses. It is not an easy thing to fix, because the managerial class works like a collective to protect each other. Like when managers bankrupted many of our public corporations, managers in the government bailed them out. People are good at 'sensing' when something might threaten their position and moving aggressively to quash it. Perfect example of their collaboration. The regulated monopoly utilities have regulators which approve or disapprove rate hikes. Well the utilities are always giving generous pay increases to managers and hiring additional managers. So one might think the regulator would step in and say we are not approving a rate hike as we find those unnecessary. Yet the regulator is itself full of managers who are getting generous pay increases and approves the rate hike.
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