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lets get it right

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Everything posted by lets get it right

  1. Why's that then? As rates rise, savings rates rise and more people leave their money in the bank to get (what they think is) a risk-free return. Low rates make loans harder to get as people keep taking their cash out of the banks and buy property with it.
  2. It's not an excellent point. BTL on newbuild flats apart, BTL is a stabilising influence on the market. If the rent is covering your costs, would you sell in a falling market? I bloody wouldn't. I'd sit it out for how ever many years it takes to go up.
  3. I see that as being exactly the opposite - the elephant not in the room. First - people who 'invested' in BTL are not all leveraged up to the eyeballs. Secondly - their game plan is that the rent pays off the mortgage and, at the end of a mortgage term, they own the property outright - tenants having paid the mortgage for them. In fact, they are the last people that are going to panic and sell when the market goes down. They may panic - but they will hang on for the market to go back up again - for as long as people pay the daft rents they ask. This is the BIG FACTOR - the rents they get. As long as they get the rent, they won't sell, in a panic or otherwise. The massive BTL market is, as I see it, a bloody nuisance because it is a stabilising factor in the housing market. To coin a phrase, 'there is nothing new under the sun'. You'd be rash to compare the US housing market with the UK housing market. I really can't see a comparison. A vast country with a gung-ho attitude to property development, where new development ran riot - compared to a relatively tiny place (Texas is 7 times bigger than the UK I seem to remember from childhood geography lessons) with utterly restrictive planning laws, rife with nimbyism where new houses are like shoe boxes - meaning decent houses in decent areas always command a premium. Same with Ireland - went crazy with new developments - in an island with a population of 4 million (I think).
  4. A bit delusional? There's been plenty of private landlords and private property to rent for as long as I can remember. Dividing big houses up into bedsits to rent was all the rage in 1950s and 1960s. Like Rigsby. A few BTL mortgages allow margin calls. They are NOT nearly all purchased with debt. Lots of properties have been bought over the last two years - since the credit crunch - with cash, or mostly cash. These people really are in it for the long term. Looked at a house the other day, bloke lives in Spain. For some reason he decided to tell us he had two other BTL properties and, if he sold the one we were looking at, was going to go into the market, with cash, and buy two more (at the lower end of the market as he thought these were more effiicient at generating rent.) The rental income is his pension and he was outraged that having just had a problem tenant, he had 'missed out on 7k of my pension!' The rent is his pension. Simple as that. As long as people pay him daft amounts to rent - he is not going to sell. Why should he? It's nothing like the tech boom. Nothing like it at all.
  5. Seem to have managed it here for 10 years now. Property prices where I live were already nuts by 2000.
  6. Indeed. A 10% drop seems meaningless to me. Estate agent comes round and arbitrarily prices a property 5% higher than the last similar one that sold a few months ago, and it sells for 10% less than asking. So, 5% drop. It really is a war of attrition trying to get house prices down.
  7. I have to say that sort of language is terribly misleading - because it just isn't what happens. I've been an adult through the 70s onwards - saw the oil crisis in the 70s which led to a 3 day week and various house price corrections and recessions throughout the decades. I have yet to see PANIC in the housing market. People, for whatever reason, decide to sell. If they don't get an offer they move their price down GRADUALLY - if they NEED to sell. If they get an offer and sell, the market price for that type of property in that area is (temporarily) set. That is used as a benchmark when estate agents value other properties and, as we all know, lenders' surveyors ask estate agents for comparables when they value a property for a lender. The only real driver is repossessions as a result of unemployment. Repossessions are still relatively low. Unemployment whilst bad, is not terrible. Interest rates are low and look as though they will stay that way for a long time. The housing market is still functioning on very low transaction levels. Which suggest to me that PANIC will not set it.
  8. Think it said the audience were students. That would be Brown's correct level. Not sure he's up to university students though - high school would probably be more appropriate. His message - build 'growth' for 48 consecutive quarters (the longest period of successive growth in our history) - based on a massive increase in consumer debt at a time when globalization meant the inflationary pressures from loose credit were offset by deflationary pressure from cheap imports - and tax that growth to the hilt to employ another million people in the public sector - would surely be seen through by a 15 year old.
  9. It's comments like that that give ammunition to those that want to regulate the internet.
  10. It would be very interesting to see the price of petrol at the pumps superimposed on that graph.
  11. I guess so. I read things like 4 times the globe's GDP is traded on currency exchanges once a fortnight (something like that) and, out of that action the lads are still walking off with multi-million pound bonuses, and think - why do we allow THEM to ru(i)n US.
  12. Given that is now crystal clear - why isn't banking run by the government. It strikes me that, in a sense, it is so vital for the functioning of the economy and affects people's lives in so many ways that it is too important to be left to private hucksters.
  13. My wife has worked in the public sector. I have worked for the public sector. To be fair to one particular organisation I have done work for, they seem to work bloody hard and are all committed to what they do. That said, you do get the old 'he's on holiday' - 'when's he back' - 'in 3 weeks' - 'who is making decisions while he's away' - 'no-one, time stands still while people are on holiday' 3 weeks holiday! I haven't taken more than a week at a time for as long as I can remember. And I usually take just one week a year. The joys of self-employment. I've seen enough of the public sector in action to know that what is needed is not oursourcing everything - all they need is the understanding that they are not on a gravy train. It's very simple. No automatic budget increases - ever - each increase base only on demonstrable need. And, to remove the bloat and get the public sector lean and mean, automatice budget decreases for 5 years. We've all seen it happen .... the replacement of a perfectly good carpet throughout the town hall offices - because there's 20k left in the budget and 'if we don't spend it, we'll get our budget cut next year' Chief Executives should be incentivised to reduce the size of their empire, not, as now, constantly try to expand it. The incentive should be shared between all staff.
  14. You hit the nail on the head there. And how many reviews, think tanks, consultants, proposals and feck knows what else will happen first and at what cost. You know before they start this is doomed to fail and certain to cost more. I have the answer and it is simple. Every local authority should be told: No-one earns over 60k Your pensions are changing so they cost half what they cost now Your budget will be reduced by 5% a year for 5 years (for a start). During this period you will save money by having a recruitment moratorium and thinking long and hard about every taxpayers' penny you spend. You will provide EXACTLY the same level of services that you currently provide or you will be replaced by people willing to do what is necessary. The problem with local authority is not that people are lazy, that people take too many sick days, that pensions are too generous, that there is no penalty for failure etc. etc. - although they are all factors - the problem is simple: THEIR BLOODY BUDGETS GO UP EVERY YEAR REGARDLESS OF HOW THEY DO. Cut their budgets and you cut the problem. If the Chief Executive of a council thinks he might lose his job because his team are not performing with the resources they have, he will have an incentive to make them perform. At the moment there is no incentive. Failure is rewarded with 200k salaries and massive pay offs.
  15. I'd like to thank you all for your answers. Althought this place can get a bit tiresome sort of arguing the toss all the time, it's very handy being able to access people who have a lot of knowledge of how finance/banks/the world works.
  16. If banks don't want to lend (and they certainly don't appear to want to lend) why would a bank convert its 'bond pile' into cash? Cash will sit there doing nothing (if they don't lend it out) whereas at least the bonds earn some interest. Either way, cash or bonds to hand, presumably their 'capital ratio' is not affected as government debt is regarded as being as good as cash (isn't it?)
  17. Why would it be any more than 1 week for each year or whatever the rule is these days.
  18. I knew I would be told to use Firefox ... and I do quite often. Just forget to ... habitually open IE. I know IE has its problems - but, generally speaking, I don't have issues with it on any other web site. This is the only one where cookies don't seem to work any more (always used to). Seems like issues are being addressed so just have to wait and hope.
  19. Thanks for that. What is 'base money'? And ... "QE could effect the banks, because the government can borrow more than a saturated market could deliver." ... could you explain that differently please?
  20. Thanks for the link. I've read his stuff before and have to admit a lot of it goes over my head. Which is why I was hoping someone had the gift for explaining this stuff in terms a simpleton like me would understand. So far I've got that the BOE create money to buy government bonds which puts a floor under bond prices and keeps the yields down, encouraging people to invest in business rather than government bonds. Not sure if that is right, but I can at least understand it! What I don't get is how this affects the retail (mortgage) banks and the housing market in general.
  21. Thank you for your reply. So, please bear with me while I try to absorb this, out loud, as it were. The BOE creates money (electronically or by printing) and uses it to buy Government debt. So, the government needs to finance its spending plans by borrowing money, so the BOE 'creates' the money and lends it to the government by buying its bonds. Am I right in thinking they are not buying new issues? (Seem to remember reading that somewhere) If this is true, I guess their action is putting a floor under bond prices? Putting a floor under bond prices prevents the yield from rising and, therefore, exerts effectively a downward pressure on interest rates by ensuring the price of bonds does not fall so low that the yield goes up to 5% or more? Is this all correct? So, when you say the idea is to encourage people to invest in productive capacity - are you saying the idea is .... 'Look, bond yields are low (because the BOE is buying them with invented money) so you might as well invest in business rather than buying bonds'? Is that it? If that worked to the nth degree, why would anyone buy new bond issues? If the idea is that, one day, the BOE sells the bonds back into the market and thereby cancels out the money it created to buy them in the first place, what happens if the bond matures before the BOE sells them? The government has to give the BOE £100 for a bond which the BOE bought with money it created. I guess this must make sense to someone, just wish I 'got it'.
  22. Sorry, I know this is off topic and will be moved - but I just want to list it here so the mods see it. Are you aware of the things this site does (for me anyway) using Internet Explorer 8? It used to be you couldn't edit posts - but, thank heavens, you've fixed this. Now I find: Cookies don't seem to work - I have to log in every time now - have done for some weeks When you start a thread, your first post never goes off the screen, the screen just freezes with the progress bar moving at a snail's pace at the bottom of the window. If you give up and click to go somewhere else, you see your post has been recorded When editing posts, the formatting doesn't work properly. If you quote someone and, for example, highlight something they have said in a different colour and you then want to make some text bold in the answer you have made below the quote - when you click to make your text bold, it makes the text whose colour you have just changed bold instead. As this forum software is widely used, it puzzles me it is so buggy.
  23. What's your answer to the question 'Are we going to have inflation or not, and how much of it?'. I think you are right, that is the only question. I used to think we could not afford inflation - as a country that trades globally and which cannot run a huge balance of payments deficit forever. But that was in the old days when balance of payments seemed to matter. Now China and India have property booms and inflation heading towards double digits. Against this backdrop maybe we can have 5% price inflation - followed in a few years by some wage inflation - accompanied (strangely) by low interest rates. In which case no housing 'crash' need occur. Maybe a correction of some sort, followed by stagnation, followed by growth in line with inflation - during which time the debts are paid down (to some extent). People used to get a good kicking on here for daring to suggest 'it's different this time' - I used to help with the kickings myself. But, the longer this goes on, the more it does look different. I can now see almost no similarities between the situation now (and over the last 7 years) and the 88-90 property crash and subsequent recession.
  24. Sorry, I've asked this before and been pointed to links on the BOE web site etc. - which I have read. Still don't get it. I know what government bonds are. The government issues bonds which people buy in return for a promise of X% interest every year until the bond matures - at which point people get their money back. I understand that bonds are tradeable and that a bond bought for £100 might fluctuate up and down in price. If the price of the bond goes up the yield goes down, and vice versa. I read that QE is the BOE using 'money' to buy bonds. So, anyone able to provide a simple explanation of how QE is supposed to work? How it affects banks? How it affects us? Where the money comes from? Is it borrowed? Does it have to be paid back? Why don't we do it all the time if it's that easy? etc.
  25. At the moment if you go into a park and see the litter bins have been emptied over the kids' playground - you ring the council and they let the 'Parks Officer' know. Parks Officer tells the 'Buildings/Parks/Maintenance/General Doer of Odd Jobs' guy and he jumps into his council van, goes and clears up the mess. The Buildings/Maintenance/General Doer of Odd Jobs guy goes back to the office/yard and, hopefully, gets on with whatever he was doing - maybe organising for a banner to go up across the High Street advertising the May Fayre - maybe dealing with some graffiti. Alternative ... you ring the council and the Parks Officer logs a call with a contractor who won the 'Buildings/Parks/Maintenance/General Odd Jobs' tender and they put in a bill for a call out charge and 2 hours work at £x per hour. They may or may not have resources immediately available. The rubbish may stay littered all over the kids' playground for 2 days. An invoice must be raised, checked and paid by the council's 'Accounts Officer'. And so it all goes on. Ad nauseam. Which is better? Which is cheaper? Which is less prone to corruption? How long is a piece of string?
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