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Selling up

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  1. MSW makes an excellent point: if the seller had priced at a realistic market clearing level, getting gazundered would be no big deal at all because (s)he always find another buyer quickly and easily. (And at a realistic market-clearing price level, of course, it wouldn't actually happen because the buyer would know that the seller would simply go with another of the would-be buyers)

    Gazundering is only a problem for a seller who has no other buyers waiting, and a buyer who knows (or guesses) this. The problem wouldn't exist if sellers lowered their price enough to attract more than one potential buyer.

  2. Taken to the extreme, using current substitution methods if you were reduced to a bicycle for all your transport and rice for food, your inflation rate for transport and food would be related only to the prices of those two items. When you look at such extremes that you can see how this metri is just a screen to hide the fiat money fraud system behind.

    Well put.

  3. The basket is meant to represent what people spend money on; when tinned pineapple becomes less popular, it is removed from the basket; when avocados become the salad fruit of choice, they are added.

    One difficulty with this is that price changes influence spending patterns. Suppose pasta is in the basket but smoked salmon isn't. One year a catastrophic pasta harvest quadruples the price, while a new salmon-on-steroids technology halves the price of salmon. People stop buying pasta and start buying salmon. So now salmon is added to the basket and pasta removed. But look - the item whose price has increased has been excluded from the index; the item whose price has fallen is now included. It is widely considered that this adds a systematic downward bias to the system (particular relevant in the case of electronics which get cheaper every year).

    The biggest problem for me with the inflation indices is the failure to reflect the fact that for many households, half their income goes on housing costs. Housing is included in RPI - I think, but in a very stupid way: mortgage interest on a £100,000 loan is included. Therefore if house prices quadruple but interest rates halve, housing is considered by RPI to have halved in cost. There is also an element of rental cost included, which seems to be better thought out.

    On the other hand, peoples' situations are so different that it's hard to be sure that "inflation" - a single figure applied across the economy - actually means that much. For instance, I have large savings in a bank account simply to buy a house. These savings dwarf any expenditure I might have on food, petrol, heating etc. So my personal inflation rate is actually the house price inflation rate. If food, petrol, heating triples in price but houses halve, CPI and RPI will go through the roof, but the spending power of my cash will have more or less doubled.

  4. I think AlfieMoon is right. I forget the details but I'm pretty sure there was a clear failure of the government to perform a duty to which they had committed themselves. Much as I dislike bailouts, I always felt this one was in fact justified (and remember that unlike the banks, this is a bailout of individual investors, not the institution.)

    Anyone remember the details?

  5. Yes I would have bought.

    I like to think I would have had the grace to continue to email ramping newspaper feature writers etc trying to educate them in the perils of bubble-nomics. And that I would have still voted for any party that promised to control house prices - though of course no party did use that platform except the party that presided over the bubble.

    It's like my public sector salary. I think it's too high. I accept it, but make my views clear in discussion with friends, web forums etc... though not with my boss. Does that make me hypocritical or more honest than most (who I presume wouldn't say so to anybody at all)?

  6. Oh and before you all start hating me, you don't need to tell me how lucky I've been to get into GP as it became disproportionately lucrative, and to have been in a position to buy a house before the peak. I'm very well aware of my good luck.

    However, I like to think that even if I hadn't had this luck, I'd still have been bold enough by now to start making more adventurous choices.

  7. Why stop at the 20s for kidulthood?

    Every year that passes I get more irresponsible.

    1992 age 18, rushed out of 6th form to medical school, desperate to qualify as a doctor as fast as possible. I was a seriously cautious, ********-retentive adolescent. Eventually became a GP partner.

    2005 age 30, looking around and noting that I had no particular ties (I'm not against marriage and family on principle, it just hasn't happened, which is fine by me), quit the partnership in favour of part-time locums and part-time hobby-work in music and theatre.

    2007 sold my house, being both a devotee of this site and seeing it as an unwanted tie.

    2009 moved to London to take a 1 year fulltime Masters degree in Musical Theatre.

    Now I've finished my degree. Am I going back into full time medicine? No chance. What next? I'll carry on looking for theatre work; I've started thinking about a new hobby (standup comedy)...

    Finally at 36 I feel the sense of adventure, freedom and possibility that I saw in my friends at 18, but never felt for myself!

    Anyway, if you want a substantive contribution to the thread, I think there are 2 key issues: housing costs and delayed marriage, which I think is due to sexual liberalism. Once it became socially acceptable to have sex outside a lifelong-committed relationship, it was pretty obvious that people (men??) might prefer to delay making a lifelong commitment!

    (Edit: Cute: the site automatically censors the word ********-retentive.)

  8. As far as I can tell from reading the linked article, this was not a survey put only to boomers. No age range is mentioned for the survey, so presumably when they asked "do you expect to hand wealth on to your children" they were asking adults of all ages, including todays debt-soaked graduates.

    I don't think you can therefore conclude anything about boomers spending the kids inheritance from this survey. For all we learn from the article, the boomers might have been passionately committed to passing on wealth, and the young poor (quite reasonably) doubtful about their ability to pass on wealth.

    (Later, a conclusion is indeed drawn by the survey organisers about the 45-54 demographic, but it is unclear whether and how this is related to the headline statistics.)

  9. Editorial:

    House Prices: Heading South

    Contrary to what you might read in some newspapers, falling house prices would be a blessing. The house bubble of the noughties has handed billions of pounds to the older generation from young people who have had to take on giant mortgages to buy their homes. That was unsafe both for the purchasers and for the wider economy. But runaway prices also served to reinforce the wealth gap as rich parents were able to bung their kids big deposits, while middle- and working-class children got no such leg-up. An end to that unfair, unsafe regime can only be a good thing.

    Fantastic to see this in the editorial section.

  10. have you actually *SEEN* your gold, or are you just assuming they've bought it?

    When you buy shares in a manufacturer, have you actually made the journey to SEE the factory? Or do you trust the information in the public domain and the contract?

    When you buy bonds, have you actually SEEN a pile of money in a vault with which you will be paid back? Or do you trust the information in the public domain and the contract?

    Virtually no investment in a sophisticated economy can be transparently assessed by the investor. (Physical gold is an exception, if you are prepared to pay to have your own assay done.) The question is whether gold companies are uniquely risky in this regard. I don't see that they are.

  11. Wrong. The recession has no affect on many bankers. i.e. The recession has not affected (caused effects to happen) many bankers.

    Not so, LGIR.

    Effect (noun) = result

    There is a noun 'affect' but it's a piece of psychiatric jargon meaning emotion: the patient showed flatness of affect. The word affection comes from this root.

  12. No but you can identify lots of trends which put downward pressures on wages.

    Outsourcing, automation and insourcing destroys UK jobs, or pushes the pay lower.

    I can only see that these pressures will continue and increase. A mate told me about this super duper intergrated accountancy system quite recently. It was a super linked up system whereby it linked the shop floor with suppliers and stock.

    The CEO and board could press a few buttons and a real time updated financial analysis came up with various projections. As a result the cheif accounts people were to be made redundant.

    Ken, you usually talk sense but:

    Yes you can identify trends today. But to extrapolate for 31 years? It's lunacy. Here are some other factors any of which could arguably influence age of FTBs in 2041:

    Financial sector regulation

    GDP

    Immigration policy

    Life expectancy

    Birth rate

    Marriage, cohabitation and divorce rate

    Job security

    Promotion prospects

    Social unrest / revolution

    Withdrawal from EU / further integration

    Government debt levels

    War

    Interest rates

    New building

    Asset prices

    Pension policy

    Benefits policy

    Disease epidemic

    It would be like a professor in 1905 giving a press release estimating FTB demand for property in 1936. To have a hope of being in the right order of magnitude, he would have to correctly predict WWI, spanish flu, the great depression etc.

    You cannot forecast such a compex system over almost half a lifetime!

  13. We probably only went to the Dr's when it was really neccesary...

    Well, it's not so much that as:

    GPs (and I was one until very recently) are now paid to identify and actively manage chronic "pre-disease" such as high cholesterol or borderline blood pressure.

    10 years ago, I couldn't give much of a **** who had borderline cholesterol, borderline kidney disease, borderline blood pressure. I believed that the downside of medicalising such non-conditions outweighed the upside.

    Today I couldn't give much of a **** who has borderline cholesterol, borderline kidney disease, borderline blood pressure. I believe that the downside of medicalising such non-conditions outweighs the upside. BUT my contract requires that I test for these things, and, when found, advise, follow up and perhaps prescribe.

    So 10 years ago most of the appointments could be used to see people who wanted to see the Dr. Now half the appointments are used to 'manage' stuff that is doctor-payment-driven, not patient-demand-driven.

  14. I read a fascinating history of the tube called 'the subterranean railway'. I gave away my copy but from memory: The original East London line is very old - the Thames tunnel was built by Isambard Kingdom Brunel.

    But the line was always a white elephant; it connected places that few people had any need to go, and failed to connect to any important transport hub or commercial centre.

    I don't see that anything much has changed.

  15. The data also show the average value of mortgages is falling. In July, the average mortgage value was stg148,500, down from stg150,600 9n June.

    Interesting but consistency demands that we don't argue that this has anything to do with prices. (I know, you didn't say it did, I just want to avoid people over-interpreting)

    Recently the figure has been rising and the consensus on this site is that this is not a sign of rising prices, but of less activity at the bottom end of the market.

    So either the average value of mortgages says something about prices or it doesn't. If it doesn't when it's rising, it doesn't when it's falling.

  16. I'd have thougth anyone making an acceptable offer would be suitable !

    But this REPORT shows houses are staying on the market for less time than a year ago, which seems contradictory (pretty much every other county is the same)

    It's not contradictory. The home.co.uk survey is methodologically so flawed as to be meaningless.

    It measures the average time on market of properties which have sold. If only one property out of 100,000 sold this month, and it sold 2 hours after being put on the market, home.co.uk would show an average time on market of 2 hours.

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