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House Price Crash Forum


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Everything posted by huw

  1. But not to net lenders who don't use the free facility; they are best served by NW charging for such services, while using the proceeds to maximise interest rates. Similarly, borrowers would hope to see the proceeds used to minimise their interest rates (both are members of the society and entitled to a share of the additional slice of pie, much as you or I might wish that lenders received priority in this )
  2. Fraud is a criminal offence; those who committed it should be prosecuted, no need to discuss further. For the rest ... given bubble-inducing credit conditions, the bubble is inevitable. Real blame lies with policy makers (internationally) who created the conditions.
  3. I wonder how long before they reform their bankruptcy laws so that this unrepayable debt can be cancelled. Is it even on the agenda over there? It needs to be, judging by the statement that an entire generation has had its balance sheet vaporised. It's hardly in the Irish national interest that the 30-40 generation should be largely reduced to debt-slavery for the next few decades.
  4. Once they've done that, chances are they're not locals any more i.e. they've asset-stripped their community and decamped to Spain or somewhere, leaving others -- including those who never had property in the first place -- living in the ghost town. You won't correct the "problem" of human nature that leads people to behave in socially counter-productive ways during economic booms. You might be able to correct the imbalances that lead to the boom in the first place.
  5. That model has the entire population living in London and the South East, or as close to it as they can afford -- hardly an efficient use of the resource that is the UK. We need to go deeper than "get on your bike" (though people should be prepared to do that, if genuinely necessary e.g. if their mining community has no reason to exist any more because the mine is played out). We need to look at why London has developed into such an economic hub. Personally I believe that the answer can largely be stated in two words: Banking Licenses. If you modified all banking licenses to add the terms that the businesses must be substantially based in Manchester, Manchester would eventually become the economic hub of the UK because Manchester would be where credit was created, and eventually interest rates would be set there, too. Which brings me to another part of the answer, the idea that Northern unemployment is a price worth paying to curb Southern inflation. That, together with the "on your bike" prescription, forces the Northerner to uproot themselves so that the Southerner can stay at home (though in increasingly expensive, unpleasant and crowded conditions). Trade and wealth-creation in the UK needs to be re-balanced across the regions and out into rural areas. Among other things that means that new rural build should NOT be aimed at commuters (i.e. slave boxes and "executive" homes), they need to be designed along different lines, maybe live/work units, houses with substantial gardens for families and food-growing, basically places where people do more than store their commuting vehicle while they regenerate themselves for a distant, disconnected life of PAYE.
  6. I never said they'd buy our stuff, however we could buy our stuff, which would be a step in the right direction. Re-balancing is more likely to come from some kind of debt repudiation (inflaton or default), than from Chinese demand for UK products beyond its IOUs. As long as they're prepared to keep rolling previous debt over, and lending more, that won't happen -- but those actions only postpone the day of reckoning and make it worse. Though I suppose you reach the point where it can't get any worse, maybe we're there already and should just keep enjoying the free stuff for as long as it lasts Hard to see what else we could do anyway, short of import tariffs and capital controls.
  7. An index of transaction volumes would add much-needed context to the price data. It could be calculated as a percentage of mid-2000s volumes, that being "normality"
  8. On the contrary, all else being equal this will lead to a weaker USD and stronger RMB, which is what the Americans have been calling for for some time (as discussed in the other currently-active China thread). Weaker USD/GBP will mean pain in terms of reduced consumption, but it's essential in the long term if Western economies (and the global economy in general) is to rebalance.
  9. Yes. However I think it will require several kinds of change in China, and it won't happen overnight. First of all there are practical considerations, such as the power demands that gadget-obsessed societies place on their power grid. Even the size of homes is significant if you want a room for the big flat screen TV, a study for the computer, separate bedrooms for the kids to play with their consoles, etc. More subtly, perhaps: can the Chinese political system tolerate advanced "computational" consumption in the first place? Chinese consumers don't even have access to Amazon afaiaa, let alone to the Kindle store, let alone to the DTP platform where Westerners can upload their work for sale. Yet it's this kind of information-ecosystem that drives demand for the corresponding gadget. How many people would buy Kindle/ipod/whatever if you could only buy content from a government approved list?
  10. Yes, they've cleverly swapped the sweat of their citizens, and the wellbeing of their country, for a pile of Western IOUs. A weak currency policy means business-as-usual: more labour exploitation, more environmental damage, more transient goodies for us, literally on the never-never. Hooray! The Chinese leadership are smart enough to know that our IOUs are largely unrepayable, and they know from their own country's recent history that sovereignty trumps foreign ownership claims. So why don't they do the obvious thing: stop buying our IOUs thus allowing the RMB to appreciate? The only credible explanation is that they daren't. The leaders of China are riding the tiger, probably even more than we are.
  11. I suspect that many in China already suffer from shortages of what we'd consider essential goods. In terms of ramping up industrial production, China seems to have got up to speed pretty quickly, and we'd be starting from a much higher level than they did. What will clobber such efforts IMO is is primary resource shortages, rather than a lack of cellphones and PCs whose most important function (apart from being the building blocks of a thriving web development sector ) is as retail tokens, exchangeable for debt within a miracle economy.
  12. It's our problem too, because they suppress their currency and keep us "solvent" by buying our debt -- i.e. their policy is one of continual credit expansion, which is not leading anybody to a good place. In the meantime, try buying RMB (please let me know if you find out how ) But it's all good I guess, as long as they don't get stroppy about the inevitable defaults.
  13. The nature of our democracy and voting patterns means that it will always be the older generation making decisions that affect people in school or at university. ALL the vocal NL supporters I knew in 1997 -- the ones who fell for the line that things could only get better -- were in their early 20s, had benefited from free tuition, and were pulling up the ladder
  14. We'll never know for sure. IMO there would have been a hiatus, how bad it would have been would have depended on how good the planning and implementation were. Banks were broken up and taken into new ownership without operations being interrupted (B&B for example, iirc). On the panicking markets: a co-ordinated announcement of decisive, credible action would have had a calming effect, since the panic was caused in the first place by the perceived insolvency of the global banking system, the very problem that was being corrected by the "good bank" plan. It obviously wouldn't have reassured anybody with a stake in a "bad bank", but that's what the plan was all about -- letting insolvent banks fail, and not having to save their investors. Instead, we've shoveled their losses onto our sovereign balance sheets. The consequences of that are still unfolding, the anger expressed in this radio programme may be no more than foretaste of what's coming.
  15. They didn't have to go into meltdown, they could have been broken up and nationalised in an orderly way protecting vital financial services and depositors, while handing losses to the risk-takers who signed up for them. It would have required internationally co-ordinated action though, among all countries with systemically important failed banks. BTW food and energy are already rationed edit to add a snippet from Willem Buiter:
  16. Nah, there has to be more to it than that, they're ahead of is in tertiary education numbers, but not that far ahead. And you can get a degree without being particularly articulate or well-informed, nowadays
  17. With the difference that the extraction of dividends isn't likely to affect the motivation of most of the assets ... plant, salaried employees, business models etc. can be expected to perform the same before and after the IPO. The company's original owners might be demotivated by the dilution of their stake, but then investors in a corporate IPO presumably understand that the life-long commitment of the founders is not part of the deal. Maybe, though we're talking about the creme-de-la-creme here, who's to say they'll need corporate employers? Also, I suspect there would be employers and jurisdictions where competitive advantage trumps doing the right thing by an employee's equity-owner.
  18. The same could be achieved with a traditional loan -- differential interest rates for basket weavers and drivetrain engineers. TBBs may well be a misnomer. They have a lot more in common with an equity stake, than with a bond. A disadvantage compared to a proper bond is that the "investment" is relatively less incentivised to produce wealth, since the more wealth he creates, the greater his liability becomes. With a regular loan or bond, the finance costs remain constant. Obviously, someone who doesn't expect to do well will prefer the former arrangement ... but is that the kind of person you want to attract into the scheme? Another potential problem (with any scheme to go "long on labour") is that people can move to a new jurisdiction that doesn't recognise the bonds, or set up one of their own. Imagine if you'd had TBBs on Americans in 1776
  19. They don't need to be for him to be (broadly) right, if our trade deficit gets recycled back into our "high order" money supply in the form of mortgage-backed securities and similar instruments. Which seems very likely -- how else is our excess consumption to be funded?
  20. Just that name suggests "malinvestment" to me I wonder how many such enterprises were built to service the UK's miracle economy?
  21. Continues the usual glib conflation of students' incomes with that of their parents.
  22. That makes a lot more sense, though I did enjoy the concept of a poverty tax
  23. The measures they're complaining of hit everyone, e.g. the 5% electricity levy, and "poverty tax" whatever that is -- a tax on being poor? And it all seems exacerbated by what they perceive as "let them eat cake" behaviour on the part of their political and banking elites, who are telling ordinary people to tighten their belts and/or being bailed out at public expense. Refreshing to hear articulate, informed people making such points. Puts a lot of UK phone-ins to shame, I'm sad to say.
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