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bear_or_bull

Ok I'll Say It - It Is The End

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Ok. I’ll go first.

It’s time to be realistic. Before anyone gets all weird, let me clear about my position.

I think high house prices relative to earnings are the greatest threat to our society since WWII or the cold war. No, really. I s**t you not. They are the proximal cause of the “GFCâ€. They are incredibly destabilizing to today’s broad economy, but especially so to tomorrow’s. Today’s “wealthâ€, primarily concentrated in the older generations, is backed by the future labour and effort of new debtors. We have imported consumption from the future. Everyone thinks they are winners, but the price most will pay will be huge. New debtors have no idea what they have got into. Up to their eyeballs for years.This transfer of future money (and graft) to today represents the biggest peace time transfer of wealth in history. Ever.

The future will be so, so much poorer for most than they imagine. Higher debt payments, higher taxes, higher energy costs, lower services. All of this threatens the very viability of our system – our economy, our democracy, and our social contract. All in all, in case I’ve not been clear, high real house prices are bad.

But it doesn’t matter if it’s a good or bad thing. Bad things happen. The world doesn’t care what we think. For most of history life has been pretty cruel to the masses. There is no fair. It’s not at all Mr. Darcy. Take a look at the average person in the 18th Century and life was pretty short, brutish, and cruel. The background characters, the cook, the maid, the loveable street urchin, were the average folk. There were no options to advance through most of history because the economy was rigged. It was stasis. They knew their place. Likewise in ancient Greece, Rome, Spartan, the Dark Ages, Middle Ages, the Renaissance… you name it, the list goes on. Only in the Victorian era was there any hint of social mobility. The industrial revolution had made its mark, we had rapid growth, and there was a trickle of upwardly mobile factory owners and traders, and a few hardy souls who had made a substantial sum in the colonies. The new technology was truly disruptive... It’s arguable that all of this was only really empowered by the discovery of a cheaper alternative to working class & animal labour – coal and oil. But it was only after WWI, when returning troops said that "No" to knowing their place and lobbied (and fought in British streets) for a change, for no return to normal, that the concept of a British meritocracy began to have any chance of seeing the light of day. It took another war before that really happened. A fallen and broken economy building homes fit for heroes and medical care for all illustrates the pre-occupation of the day.

We lived in this progress-as-normal for almost 50 years. There were ups and downs. It wasn’t perfect. People still suffered. But for a while it mattered more what you did, how hard you worked, than who you were related to. Half the current government benefited.

But the people, without realizing it, don’t want it to be this way. The obsession with house prices transcends this. They wanted to draw up the bridge behind them. No one really likes a meritocracy. Crucially, the fixation of this obsession is on high house prices relative to earnings. It’s not about the digits, it’s about your wealth vs. your neighbours. Everyone wants to win without working. And they want their wealth to be secure.They’ve seen others do it and want a piece for themselves. Globalisation has been the catalyst. We find ourselves competing with offshore workers and our earnings have stalled, but we are able to buy ever more cheaply manufactured goods by the wheel barrow full. Global manufacturing capacity has surged. We can’t earn it, but spending it’s never been easier.

The only way to keep going is to fight for what’s left. The beauty is what’s left is the debt of others. By making the bubble a housing bubble they've forced everyone to play. And the stakes aren't just you're current savings, they are your future earnings.

So we’ve found our way into an Orwellian world of double-think. Peace is War. War is Peace. Debt is money. High house prices are great. Earnings are bad. More debt is better. Saving is bad. Let’s tax the populace to support the banks. Let’s make the banks lend more to the populace. Let’s make the populace get in more debt. Consume, consume, consume.

And who shouts for this? Not some over-arching elite. No… it’s the people. Everybody out there. Every pub conversation and dinner party bore. With our woeful financial education we get the economy we deserve. We get the politicians we deserve. If all you can cope with is soundbites you get soundbites.

The result is change. It isn’t sustainable as business as usual. But it might be sustainable - if the economy doesn’t give our social system will…

So your money has been taking from you. Your government services will be reduced. Your pension will be minimal. Your future earnings lower. Your standard of living reduced. All so house prices can stay high. The only winners are the asset rich today and their children. They’ve pulled it off. And just watch the applause.

What happens next is the banks start relaxing loan requirements. After all, house prices aren’t falling any more. Securitisation has already re-started. Reserve requirements have already been reduced. It’s smoke and mirrors. But no one knows, or cares. They only know property goes up.

“In accordance to the principles of Doublethink, it does not matter if the economy is not real, or when it is, that perpetual growth is not possible…. The essential act of a modern economy is the destruction of the produce of human labor. A hierarchical society is only possible on the basis of poverty and ignorance. In principle, the economic effort is always planned to keep society on the brink of starvation. Economic warfare is waged by the ruling group against its own subjects…. “

Most people just don’t want to miss the boat. Smell the panic. LTVs will reach first 80%, then 90%, then 95%. People will PILE in. Wait for the headline in a few months “prices UP year on year†and watch it pan out. FTBs will not be needed. Rich familes will trade between themselves, even in a lower volume market. Families will pass wealth down the inheritance line. It is, my friends, the end.

Rates will stay low for a very, very long time because t-shirts and DVDs are made cheaply by our creditors in China. They’re pushing junk and lending us money to feed our habit. We are absolutely lapping it up.

Sibley et al will have you think this is a good thing. A great thing. The best thing for all. It is not. There is no free lunch. The piper must be paid. The cost is social change. It is back to the past. Welcome to New Victoriana, without the Empire. Without “noblese obligeâ€.

The renters of today are the parents of the future poor. The slums of east London are our future. We may be living through the biggest social change since the wars.

Terrible, but possible.

What will you do?

There aren’t many options:

- Leave – but credit conditions are the same in most places. It’s globalization, dummy.

- Fight – but most people don’t understand, or care… They’ll fight over football, but not over slavery. “If there is hope, it lies in the proles. If they could become conscious of their own strength, they would have no need to conspireâ€.

- Accept – it may be the only way. Do what you can to be on the winning side. Take no prisoners.

If you want a vision of the future, imagine a boot stamping on a human face -- forever

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To the OP. This is why the bulltrap is followed by the steepest declines. The last few people with enough cash pile in but after that there is NO-ONE left to buy.

The banks have NO MONEY. There is not a snowball's chance in hell that lending criteria will be relaxed sufficiently to keep prices rising.

100% Guaranteed. ;)

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To the OP. This is why the bulltrap is followed by the steepest declines. The last few people with enough cash pile in but after that there is NO-ONE left to buy.

The banks have NO MONEY. There is not a snowball's chance in hell that lending criteria will be relaxed sufficiently to keep prices rising.

100% Guaranteed. ;)

That's the way I see it as well.

To be fair though I think that buying should be cheaper than renting.

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So let me get this straight, you think high house prices are going up?

yup, in sterling terms yes... The banks don't need to have money, they now have the taxpayers.

Do you really think anyone's attitude outside of this site has changed?

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Guest happy?
Ok. I’ll go first.

It’s time to be realistic. Before anyone gets all weird, let me clear about my position.

I think high house prices relative to earnings are the greatest threat to our society since WWII or the cold war. No, really. I s**t you not. They are the proximal cause of the “GFCâ€. They are incredibly destabilizing to today’s broad economy, but especially so to tomorrow’s. Today’s “wealthâ€, primarily concentrated in the older generations, is backed by the future labour and effort of new debtors. We have imported consumption from the future. Everyone thinks they are winners, but the price most will pay will be huge. New debtors have no idea what they have got into. Up to their eyeballs for years.This transfer of future money (and graft) to today represents the biggest peace time transfer of wealth in history. Ever.

The future will be so, so much poorer for most than they imagine. Higher debt payments, higher taxes, higher energy costs, lower services. All of this threatens the very viability of our system �" our economy, our democracy, and our social contract. All in all, in case I’ve not been clear, high real house prices are bad.

But it doesn’t matter if it’s a good or bad thing. Bad things happen. The world doesn’t care what we think. For most of history life has been pretty cruel to the masses. There is no fair. It’s not at all Mr. Darcy. Take a look at the average person in the 18th Century and life was pretty short, brutish, and cruel. The background characters, the cook, the maid, the loveable street urchin, were the average folk. There were no options to advance through most of history because the economy was rigged. It was stasis. They knew their place. Likewise in ancient Greece, Rome, Spartan, the Dark Ages, Middle Ages, the Renaissance… you name it, the list goes on. Only in the Victorian era was there any hint of social mobility. The industrial revolution had made its mark, we had rapid growth, and there was a trickle of upwardly mobile factory owners and traders, and a few hardy souls who had made a substantial sum in the colonies. The new technology was truly disruptive... It’s arguable that all of this was only really empowered by the discovery of a cheaper alternative to working class & animal labour �" coal and oil. But it was only after WWI, when returning troops said that "No" to knowing their place and lobbied (and fought in British streets) for a change, for no return to normal, that the concept of a British meritocracy began to have any chance of seeing the light of day. It took another war before that really happened. A fallen and broken economy building homes fit for heroes and medical care for all illustrates the pre-occupation of the day.

We lived in this progress-as-normal for almost 50 years. There were ups and downs. It wasn’t perfect. People still suffered. But for a while it mattered more what you did, how hard you worked, than who you were related to. Half the current government benefited.

But the people, without realizing it, don’t want it to be this way. The obsession with house prices transcends this. They wanted to draw up the bridge behind them. No one really likes a meritocracy. Crucially, the fixation of this obsession is on high house prices relative to earnings. It’s not about the digits, it’s about your wealth vs. your neighbours. Everyone wants to win without working. And they want their wealth to be secure.They’ve seen others do it and want a piece for themselves. Globalisation has been the catalyst. We find ourselves competing with offshore workers and our earnings have stalled, but we are able to buy ever more cheaply manufactured goods by the wheel barrow full. Global manufacturing capacity has surged. We can’t earn it, but spending it’s never been easier.

The only way to keep going is to fight for what’s left. The beauty is what’s left is the debt of others. By making the bubble a housing bubble they've forced everyone to play. And the stakes aren't just you're current savings, they are your future earnings.

So we’ve found our way into an Orwellian world of double-think. Peace is War. War is Peace. Debt is money. High house prices are great. Earnings are bad. More debt is better. Saving is bad. Let’s tax the populace to support the banks. Let’s make the banks lend more to the populace. Let’s make the populace get in more debt. Consume, consume, consume.

And who shouts for this? Not some over-arching elite. No… it’s the people. Everybody out there. Every pub conversation and dinner party bore. With our woeful financial education we get the economy we deserve. We get the politicians we deserve. If all you can cope with is soundbites you get soundbites.

The result is change. It isn’t sustainable as business as usual. But it might be sustainable - if the economy doesn’t give our social system will…

So your money has been taking from you. Your government services will be reduced. Your pension will be minimal. Your future earnings lower. Your standard of living reduced. All so house prices can stay high. The only winners are the asset rich today and their children. They’ve pulled it off. And just watch the applause.

What happens next is the banks start relaxing loan requirements. After all, house prices aren’t falling any more. Securitisation has already re-started. Reserve requirements have already been reduced. It’s smoke and mirrors. But no one knows, or cares. They only know property goes up.

“In accordance to the principles of Doublethink, it does not matter if the economy is not real, or when it is, that perpetual growth is not possible…. The essential act of a modern economy is the destruction of the produce of human labor. A hierarchical society is only possible on the basis of poverty and ignorance. In principle, the economic effort is always planned to keep society on the brink of starvation. Economic warfare is waged by the ruling group against its own subjects…. “

Most people just don’t want to miss the boat. Smell the panic. LTVs will reach first 80%, then 90%, then 95%. People will PILE in. Wait for the headline in a few months “prices UP year on year†and watch it pan out. FTBs will not be needed. Rich familes will trade between themselves, even in a lower volume market. Families will pass wealth down the inheritance line. It is, my friends, the end.

Rates will stay low for a very, very long time because t-shirts and DVDs are made cheaply by our creditors in China. They’re pushing junk and lending us money to feed our habit. We are absolutely lapping it up.

Sibley et al will have you think this is a good thing. A great thing. The best thing for all. It is not. There is no free lunch. The piper must be paid. The cost is social change. It is back to the past. Welcome to New Victoriana, without the Empire. Without “noblese obligeâ€.

The renters of today are the parents of the future poor. The slums of east London are our future. We may be living through the biggest social change since the wars.

Terrible, but possible.

What will you do?

There aren’t many options:

- Leave �" but credit conditions are the same in most places. It’s globalization, dummy.

- Fight �" but most people don’t understand, or care… They’ll fight over football, but not over slavery. “If there is hope, it lies in the proles. If they could become conscious of their own strength, they would have no need to conspireâ€.

- Accept �" it may be the only way. Do what you can to be on the winning side. Take no prisoners.

If you want a vision of the future, imagine a boot stamping on a human face -- forever

To quote Sybil Fawlty:

"Ohh, I know."

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you want a vision of the future, imagine a boot stamping on a human face -- forever

Is it a Doc Martin or a generic? Please, I want to know if I'm going to enjoy this fantasy or not.

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Ok. I’ll go first.

It’s time to be realistic. Before anyone gets all weird, let me clear about my position.

...../

If you want a vision of the future, imagine a boot stamping on a human face -- forever

Sadly, I think you're right bear or bull. You are right. But - as you say - very, very few people understand or even KNOW what is going on. It is depressing.

Well said my friend.

Edited by eric pebble

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Is it a Doc Martin or a generic? Please, I want to know if I'm going to enjoy this fantasy or not.

Converse. All Star. In tartan. Kinda ruins the image.

But seriously. Uncomfortable with the fantasy or not - you either believe house prices will come down or it's possible. You can't have our current society with rising prices. And it's not 100% guaranteed that it's the price part of that equation that will fail.

We already see some of the consequences - people in their mid 30s still renting, putting off families... unemployment. Serious harm.

I know it's dark. It's meant to be. But it may , just may, actually be happening.

You can be an ostrich if you like. I'd prefer it if you could point out where I'm woefully wrong. I know the reaction is to recoil and go "yeah, whatever... nutjob". I want to be wrong. I want to be overly melodramatic. But I might not be. There's no given that you get to have a house. What are the consequences of the trends in modern life. They're certainly not all honey and milk.

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To quote Sybil Fawlty:

"Ohh, I know."

Thanks for quoting a full wall of text

Ok. I’ll go first.

It’s time to be realistic. Before anyone gets all weird, let me clear about my position.

I think high house prices relative to earnings are the greatest threat to our society since WWII or the cold war. No, really. I s**t you not. They are the proximal cause of the “GFCâ€. They are incredibly destabilizing to today’s broad economy, but especially so to tomorrow’s. Today’s “wealthâ€, primarily concentrated in the older generations, is backed by the future labour and effort of new debtors. We have imported consumption from the future. Everyone thinks they are winners, but the price most will pay will be huge. New debtors have no idea what they have got into. Up to their eyeballs for years.This transfer of future money (and graft) to today represents the biggest peace time transfer of wealth in history. Ever.

The future will be so, so much poorer for most than they imagine. Higher debt payments, higher taxes, higher energy costs, lower services. All of this threatens the very viability of our system – our economy, our democracy, and our social contract. All in all, in case I’ve not been clear, high real house prices are bad.

But it doesn’t matter if it’s a good or bad thing. Bad things happen. The world doesn’t care what we think. For most of history life has been pretty cruel to the masses. There is no fair. It’s not at all Mr. Darcy. Take a look at the average person in the 18th Century and life was pretty short, brutish, and cruel. The background characters, the cook, the maid, the loveable street urchin, were the average folk. There were no options to advance through most of history because the economy was rigged. It was stasis. They knew their place. Likewise in ancient Greece, Rome, Spartan, the Dark Ages, Middle Ages, the Renaissance… you name it, the list goes on. Only in the Victorian era was there any hint of social mobility. The industrial revolution had made its mark, we had rapid growth, and there was a trickle of upwardly mobile factory owners and traders, and a few hardy souls who had made a substantial sum in the colonies. The new technology was truly disruptive... It’s arguable that all of this was only really empowered by the discovery of a cheaper alternative to working class & animal labour – coal and oil. But it was only after WWI, when returning troops said that "No" to knowing their place and lobbied (and fought in British streets) for a change, for no return to normal, that the concept of a British meritocracy began to have any chance of seeing the light of day. It took another war before that really happened. A fallen and broken economy building homes fit for heroes and medical care for all illustrates the pre-occupation of the day.

We lived in this progress-as-normal for almost 50 years. There were ups and downs. It wasn’t perfect. People still suffered. But for a while it mattered more what you did, how hard you worked, than who you were related to. Half the current government benefited.

But the people, without realizing it, don’t want it to be this way. The obsession with house prices transcends this. They wanted to draw up the bridge behind them. No one really likes a meritocracy. Crucially, the fixation of this obsession is on high house prices relative to earnings. It’s not about the digits, it’s about your wealth vs. your neighbours. Everyone wants to win without working. And they want their wealth to be secure.They’ve seen others do it and want a piece for themselves. Globalisation has been the catalyst. We find ourselves competing with offshore workers and our earnings have stalled, but we are able to buy ever more cheaply manufactured goods by the wheel barrow full. Global manufacturing capacity has surged. We can’t earn it, but spending it’s never been easier.

The only way to keep going is to fight for what’s left. The beauty is what’s left is the debt of others. By making the bubble a housing bubble they've forced everyone to play. And the stakes aren't just you're current savings, they are your future earnings.

So we’ve found our way into an Orwellian world of double-think. Peace is War. War is Peace. Debt is money. High house prices are great. Earnings are bad. More debt is better. Saving is bad. Let’s tax the populace to support the banks. Let’s make the banks lend more to the populace. Let’s make the populace get in more debt. Consume, consume, consume.

And who shouts for this? Not some over-arching elite. No… it’s the people. Everybody out there. Every pub conversation and dinner party bore. With our woeful financial education we get the economy we deserve. We get the politicians we deserve. If all you can cope with is soundbites you get soundbites.

The result is change. It isn’t sustainable as business as usual. But it might be sustainable - if the economy doesn’t give our social system will…

So your money has been taking from you. Your government services will be reduced. Your pension will be minimal. Your future earnings lower. Your standard of living reduced. All so house prices can stay high. The only winners are the asset rich today and their children. They’ve pulled it off. And just watch the applause.

What happens next is the banks start relaxing loan requirements. After all, house prices aren’t falling any more. Securitisation has already re-started. Reserve requirements have already been reduced. It’s smoke and mirrors. But no one knows, or cares. They only know property goes up.

“In accordance to the principles of Doublethink, it does not matter if the economy is not real, or when it is, that perpetual growth is not possible…. The essential act of a modern economy is the destruction of the produce of human labor. A hierarchical society is only possible on the basis of poverty and ignorance. In principle, the economic effort is always planned to keep society on the brink of starvation. Economic warfare is waged by the ruling group against its own subjects…. “

Most people just don’t want to miss the boat. Smell the panic. LTVs will reach first 80%, then 90%, then 95%. People will PILE in. Wait for the headline in a few months “prices UP year on year†and watch it pan out. FTBs will not be needed. Rich familes will trade between themselves, even in a lower volume market. Families will pass wealth down the inheritance line. It is, my friends, the end.

Rates will stay low for a very, very long time because t-shirts and DVDs are made cheaply by our creditors in China. They’re pushing junk and lending us money to feed our habit. We are absolutely lapping it up.

Sibley et al will have you think this is a good thing. A great thing. The best thing for all. It is not. There is no free lunch. The piper must be paid. The cost is social change. It is back to the past. Welcome to New Victoriana, without the Empire. Without “noblese obligeâ€.

The renters of today are the parents of the future poor. The slums of east London are our future. We may be living through the biggest social change since the wars.

Terrible, but possible.

What will you do?

There aren’t many options:

- Leave – but credit conditions are the same in most places. It’s globalization, dummy.

- Fight – but most people don’t understand, or care… They’ll fight over football, but not over slavery. “If there is hope, it lies in the proles. If they could become conscious of their own strength, they would have no need to conspireâ€.

- Accept – it may be the only way. Do what you can to be on the winning side. Take no prisoners.

If you want a vision of the future, imagine a boot stamping on a human face -- forever

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Brilliant post, bear_or_bull!

I was having a similar rant the other day. I likened the rescue of the banks as the slaves saving their dying owner, only to be put back to work immediately after. We had the chance to finish them off and be free, but we didn't as our bondage is invisible.

I hope you are wrong on the prices going back up. If they do, there will be civil unrest and upheaval sooner or later. When the young can't get a house, they will be very pissed off. When the disenfranchised become the majority, change will come. I only hope that more and more people wake up to the game that is being played with them.

Eventually, when the UK is so expensive to run a business in that few bother, when the credit taps are turned off (we're printing already - it is an illusion they are on, ffs!), people will watch with horror as the whole charade tumbles down. We live in a country of ignorance and obfuscation. It is not fair, just or forward thinking, but bitter, twisted and selfish. How can such a country continue for any length of time without revolution?

People need to act. Tell everyone you know about what is going on. Explain to them what is happening and how this is bad for the very fabric of the country. Do anything you can to make the changes in politics. People need to realise what is at stake before they can do anything about it, so we must give them the knowledge to help them.

Lastly, there is some hope. I get a feeling that people are stirring. They know that something isn't right, but they simply don't know what it is. Forums like this are helping to uncover the myths, make visible the flaws, provide solutions, but we will only reach people who know the system is wrong; most people seem to have no clue of this at all. In short, we have to help people see their invisible chains, help people understand the ongoing destruction of the country and guide them towards where the solution lies. There is too much at stake to just do nothing.

EDIT: spelling

Edited by Traktion

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The banks have NO MONEY. There is not a snowball's chance in hell that lending criteria will be relaxed sufficiently to keep prices rising.

The banks have tons of money. They are creaming off loads of money from the stimulus package and keeping it for themselves. The BOE keeps pumping more money in because, hey, inflation is low! So money keeps going in to support house prices whilst over prices drop. The BOE are taking a very one dimensional view to inflation and stimulus.

At some point the government will completely U-turn on banks (such as Lord Turner's new tax idea) and then round two of the craziness will kick off. Whether round two will be another recessionary dip, a further slant in house vs consumer goods prices, etc I don't know. But at least it will be interesting!

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Guest UK Debt Slave
To quote Sybil Fawlty:

"Ohh, I know."

:lol:

Perfect!

Good post from the OP but it ain't telling me anything I don't already know.

The Orwell quote was all that was necessary.

That single sentance sums up our predicament.

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Is it a Doc Martin or a generic? Please, I want to know if I'm going to enjoy this fantasy or not.

Docs are generics themselves. Now made in China after they shut the UK factory about 10yrs ago.

Quality declined. Prices went up. I haven't bought a pair since.

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Converse. All Star. In tartan. Kinda ruins the image.

But seriously. Uncomfortable with the fantasy or not - you either believe house prices will come down or it's possible. You can't have our current society with rising prices. And it's not 100% guaranteed that it's the price part of that equation that will fail.

We already see some of the consequences - people in their mid 30s still renting, putting off families... unemployment. Serious harm.

I know it's dark. It's meant to be. But it may , just may, actually be happening.

You can be an ostrich if you like. I'd prefer it if you could point out where I'm woefully wrong. I know the reaction is to recoil and go "yeah, whatever... nutjob". I want to be wrong. I want to be overly melodramatic. But I might not be. There's no given that you get to have a house. What are the consequences of the trends in modern life. They're certainly not all honey and milk.

Home ownership is a historical anomaly. You've never had it so good. You're just crying over the relative decline. Given the expansion of economically active people on the planet this is to be expected.

Edited by Alan B'Stard MP

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People need to act. Tell everyone you know about what is going on. Explain to them what is happening and how this is bad for the very fabric of the country. Do anything you can to make the changes in politics. People need to realise what is at stake before they can do anything about it, so we must give them the knowledge to help them.

Lastly, there is some hope. I get a feeling that people are stirring. They know that something isn't right, but they simply don't know what it is. Forums like this are helping to uncover the myths, make visible the flaws, provide solutions, but we will only reach people who know the system is wrong; most people seem to have no clue of this at all. In short, we have to help people see their invisible chains, help people understand the ongoing destruction of the country and guide them towards where the solution lies. There is too much at stake to just do nothing.

EDIT: spelling

So what do I say to the people in my office? Other than my boss (who I believe is a stealth STR) everyone is a home owner. Two people are looking to buy now as they have kids and want to upsize before they start school. It will be interesting to see how they get on. One has had an offer rejected and another is planning to put in an offer of 15% off. If I tell them what I think I think most, if not all, will interpret it as "I want to make you poorer, I want the equity you have built up in your homes to be worthless".

How do I deal with that?

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Ok. I’ll go first.

It’s time to be realistic. Before anyone gets all weird, let me clear about my position.

I think high house prices relative to earnings are the greatest threat to our society since WWII or the cold war. No, really. I s**t you not. They are the proximal cause of the “GFCâ€. They are incredibly destabilizing to today’s broad economy, but especially so to tomorrow’s. Today’s “wealthâ€, primarily concentrated in the older generations, is backed by the future labour and effort of new debtors. We have imported consumption from the future. Everyone thinks they are winners, but the price most will pay will be huge. New debtors have no idea what they have got into. Up to their eyeballs for years.This transfer of future money (and graft) to today represents the biggest peace time transfer of wealth in history. Ever.

The future will be so, so much poorer for most than they imagine. Higher debt payments, higher taxes, higher energy costs, lower services. All of this threatens the very viability of our system – our economy, our democracy, and our social contract. All in all, in case I’ve not been clear, high real house prices are bad.

But it doesn’t matter if it’s a good or bad thing. Bad things happen. The world doesn’t care what we think. For most of history life has been pretty cruel to the masses. There is no fair. It’s not at all Mr. Darcy. Take a look at the average person in the 18th Century and life was pretty short, brutish, and cruel. The background characters, the cook, the maid, the loveable street urchin, were the average folk. There were no options to advance through most of history because the economy was rigged. It was stasis. They knew their place. Likewise in ancient Greece, Rome, Spartan, the Dark Ages, Middle Ages, the Renaissance… you name it, the list goes on. Only in the Victorian era was there any hint of social mobility. The industrial revolution had made its mark, we had rapid growth, and there was a trickle of upwardly mobile factory owners and traders, and a few hardy souls who had made a substantial sum in the colonies. The new technology was truly disruptive... It’s arguable that all of this was only really empowered by the discovery of a cheaper alternative to working class & animal labour – coal and oil. But it was only after WWI, when returning troops said that "No" to knowing their place and lobbied (and fought in British streets) for a change, for no return to normal, that the concept of a British meritocracy began to have any chance of seeing the light of day. It took another war before that really happened. A fallen and broken economy building homes fit for heroes and medical care for all illustrates the pre-occupation of the day.

We lived in this progress-as-normal for almost 50 years. There were ups and downs. It wasn’t perfect. People still suffered. But for a while it mattered more what you did, how hard you worked, than who you were related to. Half the current government benefited.

But the people, without realizing it, don’t want it to be this way. The obsession with house prices transcends this. They wanted to draw up the bridge behind them. No one really likes a meritocracy. Crucially, the fixation of this obsession is on high house prices relative to earnings. It’s not about the digits, it’s about your wealth vs. your neighbours. Everyone wants to win without working. And they want their wealth to be secure.They’ve seen others do it and want a piece for themselves. Globalisation has been the catalyst. We find ourselves competing with offshore workers and our earnings have stalled, but we are able to buy ever more cheaply manufactured goods by the wheel barrow full. Global manufacturing capacity has surged. We can’t earn it, but spending it’s never been easier.

The only way to keep going is to fight for what’s left. The beauty is what’s left is the debt of others. By making the bubble a housing bubble they've forced everyone to play. And the stakes aren't just you're current savings, they are your future earnings.

So we’ve found our way into an Orwellian world of double-think. Peace is War. War is Peace. Debt is money. High house prices are great. Earnings are bad. More debt is better. Saving is bad. Let’s tax the populace to support the banks. Let’s make the banks lend more to the populace. Let’s make the populace get in more debt. Consume, consume, consume.

And who shouts for this? Not some over-arching elite. No… it’s the people. Everybody out there. Every pub conversation and dinner party bore. With our woeful financial education we get the economy we deserve. We get the politicians we deserve. If all you can cope with is soundbites you get soundbites.

The result is change. It isn’t sustainable as business as usual. But it might be sustainable - if the economy doesn’t give our social system will…

So your money has been taking from you. Your government services will be reduced. Your pension will be minimal. Your future earnings lower. Your standard of living reduced. All so house prices can stay high. The only winners are the asset rich today and their children. They’ve pulled it off. And just watch the applause.

What happens next is the banks start relaxing loan requirements. After all, house prices aren’t falling any more. Securitisation has already re-started. Reserve requirements have already been reduced. It’s smoke and mirrors. But no one knows, or cares. They only know property goes up.

“In accordance to the principles of Doublethink, it does not matter if the economy is not real, or when it is, that perpetual growth is not possible…. The essential act of a modern economy is the destruction of the produce of human labor. A hierarchical society is only possible on the basis of poverty and ignorance. In principle, the economic effort is always planned to keep society on the brink of starvation. Economic warfare is waged by the ruling group against its own subjects…. “

Most people just don’t want to miss the boat. Smell the panic. LTVs will reach first 80%, then 90%, then 95%. People will PILE in. Wait for the headline in a few months “prices UP year on year†and watch it pan out. FTBs will not be needed. Rich familes will trade between themselves, even in a lower volume market. Families will pass wealth down the inheritance line. It is, my friends, the end.

Rates will stay low for a very, very long time because t-shirts and DVDs are made cheaply by our creditors in China. They’re pushing junk and lending us money to feed our habit. We are absolutely lapping it up.

Sibley et al will have you think this is a good thing. A great thing. The best thing for all. It is not. There is no free lunch. The piper must be paid. The cost is social change. It is back to the past. Welcome to New Victoriana, without the Empire. Without “noblese obligeâ€.

The renters of today are the parents of the future poor. The slums of east London are our future. We may be living through the biggest social change since the wars.

Terrible, but possible.

What will you do?

There aren’t many options:

- Leave – but credit conditions are the same in most places. It’s globalization, dummy.

- Fight – but most people don’t understand, or care… They’ll fight over football, but not over slavery. “If there is hope, it lies in the proles. If they could become conscious of their own strength, they would have no need to conspireâ€.

- Accept – it may be the only way. Do what you can to be on the winning side. Take no prisoners.

If you want a vision of the future, imagine a boot stamping on a human face -- forever

Are you Gordon Brown? every day I`m hearing conversations from people that are becoming more and more AWAKE, the game is up for the consumption elites, they can`t put Humpty back again. People are quietly paying down debt, or defaulting, switching off TV`s and getting more prepared to opt out of the Game.

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of course prices are going up. they always do..till they dont.

10years of rises, followed by 12 months of falls and the biggest financial crackup in history...and people say its all over.

in GC1 we had the same...periods of rises followed by steeper falls...it went on for 5 years.

this is from the US, but it is very pertinent here...Mr Mortgage:

On Monday July 25th I released a report on the Case-Shiller index and why it — along with most other house price tracking and reporting indices — can’t be trusted in this unprecedented housing market.

There are three significant factors occurring that are influencing the outcome of reported house prices pushing them higher. None have anything to do with true house price appreciation in the historical context.

I have been waiving warning flags about this statistical house price appreciation for a few months now — since CA house prices started moving up in April — and finally this month some of the larger research shops have started to point to the same things. These are absolutely unprecedented in nature and are wreaking havoc with reported house prices.

Below is an except from yesterday’s report covering one of my three reasons, which I have seen nobody comment on yet.

*This note was first published as part of the Mortgage Pages research series on 8.25.09

Mid-to-High End Sales – Very Important. Not Representative of True Market

More mid-to-high end sales are occurring this year than last. They are not anywhere close to the bubble years due to the catastrophic loss of affordability through exotic finance but they have increased as prices fell. They are occurring at significant discounts to list prices and previous year’s sales as I have highlighted many times. At the same time, foreclosure-related resales are falling as demand from first-timers and investors who have carried the market for a year has peaked.

This seasonal mix-shift is almost exclusively responsible for the significant house price appreciation in any CA MSA’s over the past 90-days. Mid-to-high end sellers and buyers are the most seasonal of all. As soon as the summer warm months are over and kids are back to school these sales will drop considerably allowing foreclosure resales, which are not seasonal, to reclaim this mix. This will drop reported median and average house prices as early as September, which will be reported in October.

Who is the Mid-to-High end Seller? Why Is This Important?

Now, think about those that are selling these mid-to-high priced houses. It is not the person who bought from 2005-2007 on a Pay Option ARM with 5% down because they can’t sell. It is the person who bought years ago that has enough equity to dump the price, sell, and have enough left over for the down payment on the house they plan to steal in the desert.

Even with the price dump, a person who bought in 1999 for $450k — who saw their house price rise to $1.5 million by 2007 and subsequently drop to $700k — realizes a price gain and so does CS. Even though CS reduces the weighting of pair sales the longer ago they occurred — when this is all you have selling — it carries most of the weight.

The bottom line is that Case-Shiller reports what sold, period. It is my opinion that the real estate market is so thin and bifurcated that what is selling today is not representative of the true real estate market.

It likely is not accurately representing properties purchased during the bubble years that are now worth a fraction of their purchase price because they are not transacting.

But the homeowner who bought at the peak in 2005 is sure feeling the negative-equity pain from the comparable sale at $700k. So much so, he is at an exponentially greater risk of loan default and foreclosure.

DataQuick Confirms That Recent House Price Gains are Abnormal and Likely Temporary

Proof in point comes from DataQuick’s recent Bay Area House Sales report below. This is the first monthly report in which they cite many of the same premises that we have been waiving flags over for months as the reason for abnormal house price movement.

Bay Area home sales hit 4-year high; median price up again

August 21, 2009

La Jolla, CA.—-Bay Area home sales rose last month to the highest level for a July in four years as deals above $500,000 continued to accelerate. The median sale price climbed above the prior month for the fourth consecutive month, lifted by the combination of more high-end transactions and fewer sales of lower-cost, lender-owned foreclosures (my emphasis), a real estate information service reported.

The median price paid for a home in the nine-county region rose to $395,000, up 12.2 percent from $352,000 in June, but down 16.0 percent from $470,000 in July 2008, according to MDA DataQuick of San Diego.

Although last month’s median was 36.2 percent higher than the current cycle’s low of $290,000 in March this year, it was still 40.6 percent below the peak $665,000 median reached in June and July of 2007.

The median’s $43,000 gain between June and July was mainly the result of a shift toward a greater portion of sales occurring in higher-priced neighborhoods. The trend has been fueled this summer by several factors, including: More distress in high-end areas, leading to more motivated sellers; more buyers sensing a bottom could be near; and increased availability of larger home loans, which had become more expensive and far more difficult to obtain after the credit crunch hit two years ago (my emphasis).

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Wow those commie secondary modern teachers did a great job on you. More disturbing yet is the round of applause.

"But it was only after WWI, when returning troops said that "No" to knowing their place and lobbied (and fought in British streets) for a change, for no return to normal, that the concept of a British meritocracy began to have any chance of seeing the light of day."

Some of you might want to visit the National Gallery sometime and actually read those little cards they put next to the paintings.

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Home ownership is a historical anomly. You've never had it so good. You're just crying over the relative decline. Given the expansion of economically active people on the planet this is to be expected.

There is loads of land, loads of spare hands and plenty of building materials. There is no reason why houses shouldn't be cheaper, regardless to what is going in the rest of the world.

I can understand this argument for many other things we need, but not a house.

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