Cogs

I had a check, its in Dickens (The Pickwick Papers) and Orwell but not quite as I described it. Also its a "Two penny rope" or "Two penny hangover"; I guess thats House Price Inflation for you! The Twopenny Hangover. This comes a little higher than the Embankment. At the Twopenny Hangover, the lodgers sit in a row on a bench; there is a rope in front of them, and they lean on this as though leaning over a fence. A man, humorously called the valet, cuts the rope at five in the morning. I have never been there myself, but Bozo had been there often. I asked him whether anyone could possibly sleep in such an attitude, and he said that it was more comfortable than it sounded--at any rate, better than bare floor. There are similar shelters in Paris, but the charge there is only twenty-five centimes (a halfpenny) instead of twopence. Chapter XXVII Down and out in Paris and London

That article depressed me more than any property related article I've read in years. It reminded me very of much George Orwell in "The Road To Wigan Pier" and perhaps moreso "Down & Out in Paris & London" where he talks about the various ways poor people found to gain accomodation. He describes one place that would let you sleep on your feet in a long line of people, leaning between two ropes. Very little seems to have changed.

Imagining you did want to invest cash in such a way as to track/hedge property prices, surely there are loads of existing unit trusts/managed funds that invest in the sector? And you could use your ISA allowance as well. I can see how the companies involved will make money with this scheme, I just can't see what is really in it for the punter (ALARM BELLS!). The only angle I can see here is for the Beany-worshipping "property guru" who thinks they can pick "nicer" houses than other people. There are plenty of these muppets around and so far not one of them has had cause to realise their "superior eye" for a property has never in reality been tested in the HPI environment. So theres a kind of entertainment element maybe. Otherwise, it just seems a bit silly to me.

Heh, it would have to be La Rochelle if I ever moved to France. I'd be unable to speak to anyone in any other French town. I wonder if one "Jacques Prevert" (not the poet/screenwriter, I think it was a coincidence) is still at liberty because he always sounded like he lived up to his (close-anagram) name and he definitely spent most of his time asking teenage girls where the station was despite being a long-time resident. "Ooooooou est la garrrrrrrre madamoiselle?". It might have been just static from the tape recorder but I'm sure you could hear him rubbing his thighs. Thanks for nothing "Tricolore"!

I blame the CBI. I get their reports quite regularly and listen to them demanding this specific training and that specific training. The problem is their own members stopped spending money on training employees and apprenticeships are mainly government schemes rather than a natural part of a firm's long-term recruitment strategy. Time was you could work your way up from the tools to management (my father did that and I'm very proud of him) but that path isn't open now. So you have to consider the real options open to people, half-hearted government initiatives aside. I'm not sure about panacea for all ills, but the apparent options are few - I'm sure they exist but there is no system really because that would require commitment and money from the employers to be workable (look at what YTS degenerated into). Certainly if you've got a reasonable chance of getting into Uni and you think you can swing the finance, it seems to make more sense than the crapshoot that exists otherwise. The CBI froth at the mouth but being at the sharp end we have to ignore them because everything they talk about is short-term. If we jumped through hoops to supply the workers they think they need, by the time they graduated you'd find the rug pulled on them (see also medical imaging/physiotherapy in the NHS; huge shortage moaned about but hardly anyone in a graduating year will find a job). "Oh sorry, did we say Geologists? We meant Civil Engineers. Yes, thats right, I said "Electrical Engineers", we've got plenty of Civil Engineers, I can't imagine we'd be demanding more of them. So its settled then, we want Electricians, too many chiefs not enough braves. Thats spelt P-L-U-M-B-E-R. With programming skills in C++ and JAVA as a bare minimum. We need fifty thousand for next week or the country is at competitive disadvantage from which it will never recover, bye". A good recent example is they very suddenly got their underwear in a knot over "soft skills" such as answering phones. Nothing to do with the return of call centre business to the UK or anything...it wasn't a huge problem before that though. If Avian flu ever does transfer to the human population they'll be on TV lamenting the lack of grave digging skills and why weren't kids from the age of four spending a couple of hours a day learning how to dig a grave? Did we say grave digging? We meant nanotech manufacturing. etc etc So what they've created is a world in which they can't get skilled labour in the UK and they have to "reluctantly" hire cheap overseas labour or seek to import it and everyone else should feel very guilty about the state of UK PLC. Which is what they wanted to do in the first place, except now it is somebody else's fault rather than theirs and they can play the blame game and act like they are the wronged parties who have been let down. And people wonder why education is a mess? The whole system is, to mix a few metaphors, a political football kicked at shadows in this stupid game because businesses want something for nothing. Only they can't even make up their minds what it is they want for nothing. Private training, Private training, Private training. Bottom line: There is a reason that "training" and "education" are different words.

So you believe that TV accurately represents entire generations (with a quick check at the travel agents). I suppose you are scared to go walking in the Dales in case you get run over by a pensioner in a bathtub careering down the hill as well. I'm surprised you are blowing money on new cars and skiing at 38 though, what about saving for the education of your kids and your own pension so you won't be a burden to them? You sound pretty irresponsible to me. Its just as well you got a cheap house when you could, prudent financial planning seems to be an anathema to you.

But hold on. Sit down. Brace yourselves. What's wrong with these people doing it themselves? They need to borrow up to the hilt to get a mortgage like the rest of us did. Short of an inheritance or a lottery win, people have always borrowed as much as they can to buy their first home. And their second and third too. . . That's what we do to ensure our future financial security in a property-owning democracy . We sign on the dotted line knowing we're going to have a rough few months. We rob Peter to pay Paul going from salary to overdraft to credit cards. No, "we" don't actually. That is the historic and tried and tested point of the 3.5 multiple. Quite clearly people haven't "always" done that at all, silly woman.

LOL. I can't see anyone raising rents in a falling market. If it becomes cheaper to buy than rent, they won't have any tenants. Which is as it used to be; renting was for students, unsettled young people and the poor. If renting was more expensive than buying, the market would be once again reduced to these groups. The market is inflated atm by "discouraged" FTBs but even now, with immigrant workers etc. (who will go in the event of a crash, no more construction jobs) there is over-supply. Additionally, I remember last crash there always used to be two boards per stick "For Sale" and "For Rent". The unshiftable property becomes rental accomodation. So no, I can't see the scenario playing out.

A Tale of Two Crashes. There are two distinct "crashes" that will occur. One in sentiment, one in the figures. They are obviously related and both feed into eachother in a loop but as someone, I think it was Michael Hudson, has pointed out, the first act of the "sentiment" crash actually looks like a sudden recovery, which is a lethal time for venal investor, the "missed the boat" BTL and maybe the desperate FTB. The problem is that the national stats will show the average price has rocketed up, so the first sign of the "sentiment crash" looks, in the figures, like its part of a resurgence or strengthening in HPI. The high trading on low volumes thing; basically rich people are getting the hell out of it. The poor overstretched strugglers will be amongst the last people to give in, Hudson says the banks are explicitly aware of this, basically the poorer the client the more likely they are to want to try to pay back what they owe. Rich people (a la Donald Trump) call their lawyer, get them to tell the bank they aren't getting their money and walk off to the golf course with an untroubled conscience. Personally I think a lot of BTLs will hold on way too long. After all, its been clear for years now that the recentish BTL crowd are suffering from [a] "I want some of what that other guy's got" stupidity and a huge lack of imagination (if you compare bricks and mortar and pathetic yields to the vast world of investments out there they have quite obviously never considered). Their own greed and lack of foresight will hold them back. I think they'll be surprisingly resistant to small declines but when they go, they'll go as a herd. So in the spirit of a crazy HPC prediction I will suggest in teh event of a crash there will be a bit of stagnation, then a slow decline then around the time the BoE etc. start trying to talk things up and the papers are talking about a few positive indicators etc. there will be a sudden and massive leap off the edge of a cliff as the amateur BTLs finally crack en masse. When that happens things will move lightening fast, buying one week will be a bad deal as compared to buying the next week which in itself makes people very jittery about touching property at all. And thus things fall even further and even faster. Those who think pent-up FTB demand will ride to the rescue don't understand the feedback loop between prices and sentiment that exists in a crash scenario. After all, if you get "paid" to buy in HPI, you also get "paid" not to buy in a HPC.

On his radio programme last week I heard Peter Schiff saying he'd already made money shorting the securitised debt from subprime mortgages. And no, I have no idea how the hell you do something like that but apparently he had. On another show (I get bored esp. when Radio 4 is being dull) I heard some guy explaining it was possible to track down the bundle that had your own mortgage in it and wind up buying your own mortgage for "pennies on the dollar" with a consortium of other mortgage holders, apparently this stunt had been achieved in past recessions. Which meant you ended up owing yourself your own debt which you owned at a discounted rate. I think you might need a good tax lawyer in that situation!

Ah! It all becomes clear now. Its a flat from the 24th Century. I think the idea is you get one of those new Halifax 340 year mortgages.

In retrospect the beginning of chav/selfish culture I fear. Lesson learned: graft like mad down a pit, and the reward is humiliation and poverty. Simultaneous lesson learned: be a spiv (city type or more general wideboy) and make loadsamoney. Thatcher's lesson to us all: working for a living is something that should be viewed with contempt and instead we should be a nation of home-owning shareholders. So I wouldn't be entirely surprised if nobody wanted to do it locally, look where it got their parents after all. Mug's game.

Paging Dr Chomsky. Personally I think the whole issue is a red-herring and a classic bit of spin. They are controlling the terms of debate by discussing supply and building and whose fault that might be. They aren't ultimately bothered if the court of public opinion says it is their fault for not building enough because they can make argue about this til the cows come home. It keeps the issue well away from anything that they are actually worried about and the sheer number of nasty boomer NIMBYs effectively means they don't have a lot to lose anyway if it turns out they'd rather land was kept away from developers whatever effect is is held to have on unfortunate "discouraged" FTBs and the social fabric. The actual cause of the problem in this country is, as Eddie George owned up to (although it was obvious anyway) financial in nature and Labour have since the inception of the New Labour project in opposition been terrified of antagonising The City and the financial world in general. Mandelson, Blair and Brown did not spend their time in opposition courting the Union barons, they spent serious time in The City making promises (perhaps the only ones they've actually kept). I just don't think building is the issue, there are plenty of VIs wiht financial resources and the profit imperative driving them like Wimpey who are keen on lobbying in that direction for their own purposes anyway (ie. wanting to get their hands on land that isn't ruinously expensive to turn a profit on constructing on, this is as far as I can tell the main reason for the merger talk, their land holdings are very small indeed). It might be the case that supply is artificially constrained in this country but on the other hand I'm surprised nobody makes the link to motorways here. The government is loath to build more roads because they just encourage people to drive more. The capacity isn't there even in theory for enough roads that they could handle any increase in traffic density from the 60 million odd people in the country anyway, so from that perspective you can build as many motorways up to that point and the situation will never improve. So does anyone honestly think more new builds would help FTBs? I think in realistic volumes given the number of builders and physical space in this country they'd just encourage more BTL speculation quite honestly.

The numbers ring a bell looking at the old pay scales, I suspect they were probably being paid as RAs at the same time, this happens sometimes. So rather than being PhD students as such, technically they were RAs who were writing up their work into PhDs. Nothing wrong with it, in fact given a lot of supervisers treat their PhD students exactly as cheap RAs it seems only right to be paid the honest wage for the job. Where they presumbably got a good deal was their employer allowed the project they were working on to be their PhD work, not all are minded in that way (sometimes to the point of being utter b*st*rds about it, but I digress).

Well heres my answer and we can see if others agree while I'm in a gobby mood. Three years in theory, more like four in actuality, five or six if you're being employed on the side to do something else (e.g., programming computers for another project or a heavy teaching/tutorial load). During this time you got (when I did it) about 6 grand a year to live on and unfortunately because you are working silly hours absolutely no opportunity for a McJob of whatever. Unfortunately when you finish you have to do another few years before you can get more than six month or one-year contracts (and the money is like 17k or so) so finishing does not automatically herald house-buying time. Rule of thumb, I'd say it winds up being 5 years or so out of the market. ---> I should say it is very area dependent, no two PhDs are exactly alike even in the same field.

Heh. My objection to that otherwise interesting piece is that a 3/4 of the way through he says that these days he never gets invited to the homes of English people for dinner and his reasoning is that they are ashamed because they can no longer afford to buy meat to cook. I'll be the first to say HPI isn't very funny but I think he's pushing it a bit there. Maybe his "friends" just don't like him.

I'm surprised that are so many of us who went the PhD route and got burned for it by HPI. I always knew those years would be "lost" in terms of lost earnings and progress in the rat-race (not easy to run a fast car on a £6,800 stipend) but I didn't realise they would cost me being able to afford a home. I can only say "me too". But don't worry, Gordon Brown says we're the backbone of the knowledge economy! Which makes it all OK I'm sure you agree

House price inflation in England and Wales has hit its highest level for almost four years, according to new figures. Research from Hometrack found that in March the cost of a typical home jumped by 0.8%, up from a 0.7% rise in the previous month. It helped push the annual rate of inflation up to 6.7% - the highest year-on-year growth since June 2003. The price of a typical home in England and Wales in March was recorded at £173,400, the latest housing survey showed. Richard Donnell, director of research at Hometrack, said: "The headline figures continue to be distorted by a robust London housing market that appears largely disconnected from the rest of the country where the impetus for price growth is far more subdued." No bust, just boom.

I've noticed people are becoming more robot like, just following a script. It is hard to explain, but switch on (if you dare, I don't) to the Apprentice or similar "talent" shows. Everyone has the same spiel "I'm super-confident!" "I'm going to make it!" "Nobody is going to stop me realising my dream!" Which would be all very well but nobody means it. If your singing career begins and ends at a TV show audition, you weren't serious about it were you. If you'd got off your rear and been singing in clubs and pubs for a decade taking any old gig, hassling agents, going to auditions, lessons, etc. I'd believe it but the people who actually do that don't go around gobbing off. Similar thing with The Apprentice, how many programmes and seminars and advice shops are there for the small businessman these days? How many corporations can you approach for a job? How many business courses can you take? But no, a TV show is the way to do it for the "serious" person. Its like a weird kind of negative self-affirmation but ultimately its empty. This weird stuff is, I've noticed, leaking through to ordinary people in quite inappropriate situations (ie. where there is no camera crew trying to build up a bit of pace or tension). And of course they are unhappy because they are going to fail to meet their lofty goals because they have no real intention of working towards the more realistic intermediate goals along the way. They just believe if they keep saying these things about how committed they are, how ambitious, how ruthless etc. something will magically happen without hard work. But of course they believe step one along path is to be a complete #### because that is how winners behave isn't it?

I know a few people in that position. The cause is waiting until kids have "flown the nest" and maybe got through Uni before getting the long needed divorce after years of misery. A feature of HPI is that the supposedly typical solution of one partner buying the other partner out of their half of the house has become impossible given the market values of property, so they both sell and then try to find somewhere with their chunk. Typically they find things just a little out of their league and take on a small mortgage. Perhaps that isn't typical of the sample the report is talking about but I've seen it happen a few times now.

Most significant thing there is the Rectorship. If you know Scottish universities you'll know the Rector post is in modern times a semi-honorary position normally given to someone of importance (trending towards "famous" these days) who serves as a kind of patron of the university with a leaning towards the student body rather than the administrators (the VC etc). The post technically carries some heft and gives rights to attend meetings and vote on things that are by convention, not used. Indeed, many rather disappointing Rectors have failed to show up at all but they typically make the odd guest appearance. The student Gordo got somehow elected to that post and sat in every meeting and used every single last power, vote and right he could find. Draw your own conclusions!

House price inflation. I thought you might have heard about it, its been in the press a lot the last few years.

Well it was quite clearly a troll posted to get attention and bag "bites". Statements like: "If you want a house or a flat, then buy one ! Just where is your problem ?" "These rich 'boomers' did not make their 'big quid' by picking their acne spots and making bleating posts to internet forums." "What they did was to get off their @rses and actually do something to improve their situation in life. A concept that seems to be increasingly strange to your generation." Are uncivil, inappropriate and clearly not posted to further any debate. No intelligent adult attempting to covince a (probably) hostile audience would argue in such terms. "Kids" (relative to the alleged vintage of the poster, ie. nearly everyone) are sophisticated these days with regard to the postings of internet trolls. As late as 1998/99 that would have got you lots of replies from furious people but I think these days such obvious attempts fall by the way side and trouble relatively few people. Most people are by now jaded and familiar with this kind of faux-blowhard posting. A good troll post actually serves a useful purpose if it causes people to question the concensus and "group think" that builds up around established internet forums. A poor troll, such as this one, is just junk really, it doesn't do anything but waste bits and bytes.

I give this troll 3/10. Shows promise but you need to be a little more subtle if you want traction. The kids are quite sophisticated these days, grandad.

The gap for me is getting to wide and either prices drop or rentals rise, many landlords must now be feeling the pinch and doing the sums and seeing not all adds up. Many say that if rentals rise many will just return home, I don't think so......If rentals rise many will have to take it on the chin or buy. Above a token sum LL's can't raise rents in most parts of the country, it doesn't work like that any more (maybe in London but their insanity is not the rule). In the 1930s maybe they could do this, not in 2007. In the rental market, the relationship between supply in demand is rather different (far more sluggish and weakly coupled) than it is in the purchasing market. If I want to buy in a city, there are maybe only a couple of areas I'll think about. Supply and demand are quite strongly coupled. To rent, there might be half a dozen or more, maybe think about a suburb, especially if I view it as temporary. So not only is the supply of BTL rentals quite high anyway, but the relationship between S&D is of a different order. So if one landlord puts the rent up, that affects "supply" but its negligible really and pitches that place against 20 or 30 properties in the region. It only takes one of them to be a better deal and we can send the LL to void city for the month. One of the great overlooked things about this burst of HPI is that you have a new class of people who never existed before: hundreds of thousands if not millions of middle class tenants who know how to negotiate, won't be pushed around and are happy to be geographically mobile. The landscape has changed, we are no longer talking about peasants who call their landlord "sir" who can put up with nonsense. Quite the opposite. Give it six months to a year and you'll be able to recognise a BTL landlord from his dirty knees from pleading with his tenants to stay just a month longer...