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spivT

The Deficit And House Prices....looking Forward

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we know [or atleast some know] that a govt. that has to run a substantial budget deficit, indicates conversely that a private sector [including housholds] that wants to net save. the deficist is think a counter stabiliser to what the private sector is doing.

If the private sector shows a desire or incliniation to go on a debt-binge, which we can note happened at the start of the last decade culminating in a peak and then global financial hiccup, then the govt. finances counteracts by going into surplus or at the very least a balanced budget.

Now, if we in the UK are going to have a record 13% of gdp budget deficit, and we're not looking at a balanced budget for some years, then that to me does not indicate a private sector that will be taking on the required level of debt to reinflate a housing bubble, surely ?

have i missed something out here. Other than i have no data on correlation between govt. deficits and house price inflation.

i do know that the US ran a budget deficit for some years under bush [following 2001 i think] but that deficit wasn't on the scale of what they [and we] are looking at now...

comments pls from those who understand this stuff.

Edited by spivtastic

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Now, if we in the UK are going to have a record 13% of gdp budget deficit, and we're not looking at a balanced budget for some years, then that to me does not indicate a private sector that will be taking on the required level of debt to reinflate a housing bubble, surely ?

yup - broadly my opinion. A generational decadal fall in real house prices, accomodating lower net incomes paying off this national debt.

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