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Posts posted by laurejon

  1. I believe the QE we are seeing is paying for the inflation we have already had. Maybe they will be able to take it one step further when things stabilise, but its going to take a lot of time, and possibly a bit of deflation before people have a feel good factor again.

    Darling just off to get a pint of milk.


    Any student of German history knows that the hyper-inflation of 1923 was a traumatic experience for the German people. What started as a financial crisis ended as a tragedy that undermined the experiment in democracy of the Weimar Republic. At the end of WWI the Reichsmark was trading at 9:1 against the US dollar. By January of 1922 the ratio of marks to dollar was 192:1. By the time the Rentenmark was introduced in November 1923 the exchange rate was 4 four trillion marks to the dollar and the German middle class had been wiped out. The Weimar inflation was a period when Germans became impoverished while foreigners lived in luxury hotels for next to nothing. Children were begging on the street while women were forced into prostitution to feed themselves and their families - under barter arrangements of sex for food. Those living on fixed incomes and pensions, including over a million war widows. suffered greatly, while speculators took advantage of easy credit to amass assets and created new industrial empires. The social despair created by the hyper-inflation led many Germans - especially the disenfranchised Bourgeoisie - to renounce democracy and embrace extremist ideologies.

  2. That's a bit mixed up, as we clearly haven't been in a recession for the last 10 years, and demand has been strong up until 2008.

    I know what you're getting at though, the problem is that government spending based on debt appears is the GDP figures... you're right about the debt masking something, it's been masking a structural imbalance. We have been importing too much, exporting too little, but still as a nation and as individuals been wanting to spend regardless.

    The debt has been used to try and disguise our current account deficit, and to enable us to live above/beyond our (real) means.

    We can't spend our way out. We need to start leaving banks and other financial institutions to fail, to start cutting spending (already underway) and to start supporting the exporting sections of the economy and build other export sectors.

    Unfortunately, this is going to take a decade (or more, after all it took us 20-odd years to get here), and there is no way to avoid pain along the way.

    Unfortunately the pill you prescribe is the correct measures however it is known as Thatcherism and therefore a bitter pill to swallow.

    We have a couple of generations in the UK that are now educated under the misguided belief that money is always available, credit always available, and if you have a problem you simply throw more money at it. Schoolboy economics would show that paying off debt with debt is a circular process and you will simply exacerbate the issue until such time as you no longer have the credit line to borrow.

    Governments have been doing this for several years, but also house owners who have year on year payed the mortgage with salaries and lived on credit only to consolidate the loan year and and pay off the cards and start again. This line of credit remains available today, but its going to get pulled very soon.

    I spent some time on here a few years ago explaining that when houses are cheap, they are cheap because banks are not lending. Therefore waiting for houseprices to fall is a lost cause. Today the mortgage market is open to exclusive VIP members only. 50% deposit and a good job history else you will be shown the door.

  3. laurejon are you really being serious. :unsure:

    Looking at the problem with a business hat on, yes I am being serious. If you free up the labour markets and make them mobile you can place that resource at the coal face.

    In reality its going to be bad news for the UK operating as an independent state, but good for Europe as a whole. For the people on the ground in the UK its going to be devastating, the standard of living will plummet and young people will be left to wander the streets.

    For anyone that has travelled around Europe, in particular Eastern Europe you will have noted five years ago that the streets were littered with unemployed young people, the standard of living was low, and the prospect of gainfull employment was nil.

    Unfortunately in moving labour around the EU that is going to be the case with the UK. The UK in the future will be the poor man of Europe with mass unemployment and services such as the NHS non existent.

    In my view we will not get to the juncture. I firmly believe the UK will leave the EU within the next decade and that will be brought about by civil disturbance brought about on a previously unknown scale. 40% of young people are unemployed and the austerity measures have yet to kick in, and will get much worse.

  4. Ask not for whom the bell tolls..

    Given that Germany is refusing (at the moment) to allow direct ECB printy printy, the only other way is to take it directly from you and me.

    So they will either start mandating that people with savings must put it into bonds (or some other tax on idle savings in some way), or they will use the

    to force your goverment to hand over money on demand.. which, given that goverments don't actually have any money, comes from erm.. you and me.

    We should not all be best chuffed at all this.

    Edit: given that the ESM is planned for mid 2013, the technocrats job is to keep the system from collapsing until then. At the point when the ESM is activated, everybody's wealth can then be funelled into the Eurozone, no questions asked.

    There is in fact a solution however it would be unpalatable to most people. That solution which is currently being considered is to use the enourmous pension funds that are sitting idle in the fund managers accounts. The EU has to convince the fund managers to buy up the bonds which is becoming difficult. Of course what goes on behind closed doors we will never know however it could come to a shove with the fund managers being held to ransom if they dont buy in.

    The other plan being bandied about is to extend the retirement age which again would free up trillions across Europe to buy the EFSF bonds.

    Currently the ECB is buying up its own debt. An analogy of that is a snake eating its tail until it becomes invisible.

  5. Not sure if it as clear cut in regards the end game, banking placemen have been parachuted into top position in these countries, they must have a fix in mind, but it could go a number of routes. I reckon they will still try and bluff out austerity to keep the whole edifice together whilst trying to keep the popualtions af all countries involved in the dark as much as possible as to the scale and real cause and fault that led to the current situation.

    I think we can all look upon these banking placement as the liquidators sent in to identify the key assets and liabilities before they wind up the company/country.

    In my view over the next decade the UK will leave the EU. That process will be driven by the public when they realise that the austerity measures and hardship they are enduring is to bailout other EU nations and the bankers.

    The whole worlds economic system is failing, it would be a fool that thinks they could somehow become immune to the effects.

    What is happening in the world today whilst Europe is sleeping.

    Obama and the worlds real economiies are meeting in Hawaii and creating a free trade area in the Asian Pacific Region that is going to exclude much of Europe and put the US at the forefront of the economic area. So much for standing shoulder to shoulder, the US is casting the sick people of Europe aside and has new friends with money.

  6. forgive me, but parking cash in a declining asset is something the wealthy do?....how did they become wealthy?

    The proof is in the pudding.

    Ask anyone who has owned a house for 25years today how they have faired with regard to Renting V Owning and I am sure they would be enthusiastic about owning. We should all learn from history and history shows that over the longer term property ownership beats renting hands down.

  7. The European Finance Stability Fund was announced to stabilise the markets. Its actually a huge big lie. Having made public statements that the banks will take a 50% haircut on greek debt it was later revealed that not one single bank had agreed to it and that remains the case today. The stability fund of 1tr Euros announced was also work in progress which had designs of the Chinese using their soveriegn wealth funds to finance it. However after spending a couple of days in China the answer was a resounding NO.

    So in essence the real truth behind all of this charade of smoke and mirrors is that Greece is going to be given the push, as is the case with Italy. There is no fund currently in place however the reports that there is a fund in progress is keeping the markets happy whilst the backroom boys work out how to cast off the dead wood without crashing their own markets.

    What we are seeing here is massively under reported and hugely missunderstood. We are seeing the breakup of the European Union and its going to be very very messy with lots of finger pointing, and huge civil disobedience that is effectively going to border on anarchy.

    Hopefully the UK has a contingency plan when the time comes to shut the borders and bring the UK back into the real world.

  8. The beauty of the EU is that it is a grouping of geographic locations known as "States" This setup allows the labour force to become liquid whereby the labour resource can be utilised in areas of demand and scaled back in areas that no longer have a requirement for that particular labour resource.

    The EU is going to be of great benefit to the UK, Germany, France as they utilise the cheaper labour available from the EU Labour pool to bring their economies back into the black. The USSR is looking on with envy having had their model of states broken up and no longer competative in the world markets.

  9. I think renting can become more affordable for young people if they are prepared to share. Long gone are the days when you can have an entire 2bed flat to yourself and your partner. In todays dynamic market place young people are thinking outside of the box by sharing with shift workers who work nights and use the beds during the day and often advertising their sofa for rent on gumtree known as couch surfing. All in all the expectations of many professionals are now changing with the times and the perception of space to myself at all costs is becoming something of the past.

  10. I voted to block the reforms as I believe they would indeed slash the price of home ownership which in turn would crash the UK's banks and set the UK on a path to poverty for generations to come.

    The housing problem can simply be resolved by adjusting the perception of home ownership away from something that is a birthright and elevate the roles of the Landlords from the media inspired fagan identity and more of what landlords do which is to provide an excellent service to the community by allowing people to put their efforts into the workplace and their work rather than having to trouble themselves with the complexities of home ownership.

  11. Yes you are right mr troll, when you no longer have a sqeaky bum nor your overbearing debt to a financial institution and interest rates have some resemblance to normallity and house prices have fallen (lets face it with the food/fuel inflation they have engineering house prices aint going up) then buying will be better than renting. As it goes now, we who are not tied to bricks and mortar can up sticks and get out of dodge, in the meantime our capital is put to work in precious metals, foreign currencies and stocks, each gaining ground on an illiquid asset whose procurement for the plebs depends on high leverage-something that is unlikely to return in this generation.

    And ignore.

    Edit for. And I just love the thought of all those home owners renters off the bank suffering the opportunity cost of being tied to an illiquid asset B)

    The beauty of property ownership is that you can live in the investment of which the banks and ultimately the taxpayer takes all the risks save for the deposit which can easily be ferreted away by the use of extended credit lines based on the property value (MEW).

    If you have 300k of cash then you would be a very brave man/women to put it into precious metals or foreign currency. Given that the worlds economists, bankers, governments, and so called experts have got it all so wrong it would be foolish to think that investing in the markets today is the way to go. It is a lottery where even the architects of the lottery manipulation no longer know where it will end.

    A safe haven for any cash is property with a 50% deposit the balance by way of mortgage and then rented out in what is increasingly becoming a growth area as many people will not be in a position to buy not just today, but in their entire lives. Factor in the UK's international obligations for immigration, the need for cheaper workers to pull the UK out of the doldrums and increase productivity, and a big UK and you have the catalyst for a very bouyant rental market where low paid workers will be entirely dependent on the provision of fairly priced rentals.

  12. http://www.telegraph...he-economy.html

    Wealth generators? More like wealth hoarders, these are the people that need to get spending but the problem because they have so much wealth getting it released into the wider population is difficult.

    Removing the lower rate tax band might be a better move, although it won't solve the UK's growth problem. We will default either via the printing press or via a write off.

    Once more though we do see in the press it's all Europe's fault. The blame game is a go.

    Why would anyone want to create jobs in the UK ? The current focus of both this current government and that of the past has been to happily wave jobs offshore. You would have to be stark raving mad to want to create jobs in the UK when even the government doesnt support jobs in the UK.

    If you were to start a business then start it in India, or China which is where the British Government have provided grants to setup call centres for British Banks in order that companies can move overseas more easily.

  13. I had a similar idea some time ago. I was thinking that parents could be loaned money on the future earnings of their grandchildren. This money would be ring fenced solely for the purpose of purchasing a house but the purchase would attract stamp duty of ten percent so that there is something in it for the taxman.

    In years to come when the grandchildren have grown up it could be written into the deeds of the property that they would be allowed to pop over for afternoon tea and a slice of cake, and also clean up the commode.

  14. Divide and Rule.

    Funny how everytime we have a government that put people out of work as part of the Austerity measures to repair the previous parties damage it comes with TV programmes showing the police clamping down on rioters, benefits claimants, disabled people, and anyone else the previously welcomed with open arms.

    I am guessing that the Government are going to be peddling the mass immigration story, whilst simultaneously waving them in.

    Looking at the UK from a distance I can see that no matter what party is in power, they are all following the same path and destination. in essence, your political system is corrupt.

  15. Was this an investment property?, where have you lived in the meantime? If you've been accumulating property since 1998 then you where pretty well off to start and/or very old. In the bigger picture of gross inequalities of wealth between generations and the prospects for the young this is all just part of the problems Britain faces today: low productivity (growth in productive capital) v over leverage and the financial drain of overpriced and unproductive housing.

    The point is that shares offer a pathetic return. I read today of a fantastic fund in the UK that performed so well it made 6% for its investors in an entire year!!!!

    Here in Australia we can bank our money and be guaranteed 6.5% and its the safest banks on planet earth.

    No matter what the situation bricks and mortar will always be the best investment...............and the brilliant thing is that it is functional so you can live in your investment rather than living in the park hoping your 1k in cash will increase 6% less tax, less admin charges, less inflation at 5% + per annum.

  16. I always find it fascinating that people can see the above, yet don't see the following.

    Property has a capital value and produces an income.

    Other things, like shares, can have a capital value and produce an income.

    The potential for capital growth and income growth are broadly the same in general terms, though both require timely purchase.

    Therefore buying shares might be just as good a provision for retirement.

    If you're going to buy shares you might as well do so as tax efficiently as possible.

    So buy them in a tax relieved shelter.... a pension!

    But no, pensions are BAAAAAAAD!!! The daily express said so. :rolleyes:

    I purchased a property in 1998 using 1k of my own money. Today that property is worth around 450k and the mortgage now stands at 25k having been overpaid using rental income.

    So I guess my 1k investment has returned me 425k. I am not familier with the share markets, maybe you could give me a ball park figure of what my 1k in shares would be worth today had I tracked the FTSE 100 ?

  17. I do laugh at it all. It's a crazy situation that we've found ourselves in, 60 years after WW2. Waves of muppets all wanting to live the American dream on 25k a year...... :lol:

    The last laugh will be on those who have mortgages. I can't wait for it all to go down the pan here, just like the PIIGS of Europe.

    Unfortunately it is those that have mortgages that are prospering and it is yourself that is paying for that. You are paying for it because you are either unemployed which keeps wage inflation down, or you are working and paying for it via the tax system.

    inflation erodes debt and with interest rates at record lows today has never been a better time to own a house, and if its a rental property then its doubly happy days.

    The one thing we can all be certain of. There is no way any country in the Eurozone is going to let house prices fall, they have too much riding on it and will do whatever it takes to keep the money invested in property safe.

  18. link

    Lol. Those life expectancy numbers are fiddled more than an MP's expense account.

    It is going to happen though, that you will statistically not live to be old enough to collect a pension, especially for all the fatties and drinkers.

    Who is going to be employing all these geriatrics? There is no job function a 60 year old can do that a 30 year old can't do better, outside of one requiring a decades of critical thinking, but sadly most people in their 60's simply cannot perform certain tasks, that has been empirically proven.

    Scary times eh?

    Why pay into the pension system at all now?

    I am not seeing these young 30 something high flyers sitting in the boardroom............have they popped out to check their facebook updates leaving the geriatric idiots at the helm ?

  19. With interest rates around at 2% fixed I would suggest that no time is a good time to buy for some people.

    Todays potential house buyers are missing something and I can't quite put my finger on it. Armed with a fantastic degree in a huge range of disciplines they still seem to be losing out to graduates from overseas who are poorly educated and speak English as a second language.

    I wonder what the problem is ?

  20. Muppet. My boy is doing a bsc in economics at Cardiff (Russell Group look it up) and to compare it to the 11+ is plain stupid. I run my own biz have an OU MBA and the stuff he is doing I can't even get near understanding.

    False exaggeration for effect devalues your point entirely. Muppet.

    Unemployment in the 18-25 group stands at 40% I guess you have a theory surrounding that fact ?

    BTW an economics degree is nothing to brag about, clearly the tutors are doing something wrong given our current circumstances.

  21. Define successful? (not successfull btw)

    Surely if your assertion is correct then the boomers inherited a world where growth was still the paradigm, energy was cheap and expansion was the order of the day... no wonder there was mass employment.

    Of course when it became obvious to the boomers that we are facing an energy poor future, having spunked away our hydrocarbon inheritance, decisions were made by the boomers (who were now top politicians, civil servants, top bankers and CEO's) to create the mother of all bubbles - the credit bubble. Unsurprisingly the bubble lasted *just* long enough for the very same boomers to retire in their multi million pound 4 bed semis with a BTL empire and gold plated final salary pensions.

    I am generalising of course, many boomers (including my parents) have ended up retiring with absolutely nothing, however they are the exception that proves the rule.

    The decline of the nation has always been at the hands of the Labour party and its affiliation with the international Labour movements. The solution to the current global crisis was devised by Thatcher and although that is the medicine people dont want to take, its the only medicine left on the shelf.

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