Jump to content
House Price Crash Forum
Timm

Brace Yourself For The Hurricane

Recommended Posts

http://www.newstatesman.com/economy/2010/09/construction-growth-recovery

(...)

The recovery is clearly slowing in the UK, where the housing market seems to be turning down again. Nationwide reported that house prices had fallen by almost 1 per cent in August, and poor lending data suggests more house-price drops are on the way...

President Obama is likely to announce further stimulus measures shortly, but Britain's Chancellor, George Osborne, is doing the opposite. This is a giant risk, without historical precedent.

On 2 September, Martin Wolf argued in the FT: "If the government were wrong on its gamble on recovery through retrenchment, the result would be a disaster for the country, not to mention the coalition." Even Boris Johnson has expressed worries about a double dip. The data suggests that a rough economic hurricane is barrelling down on the British Isles. And the chances are this isn't going to be a sideswipe. It's heading straight for the coast. Watch out.

Share this post


Link to post
Share on other sites
This is a giant risk, without historical precedent.
The economic situation in 1920 was grim. By that year unemployment had jumped from 4 percent to nearly 12 percent, and GNP declined 17 percent. No wonder, then, that Secretary of Commerce Herbert Hoover—falsely characterized as a supporter of laissez-faire economics—urged President Harding to consider an array of interventions to turn the economy around. Hoover was ignored.

Instead of “fiscal stimulus,” Harding cut the government’s budget nearly in half between 1920 and 1922. The rest of Harding’s approach was equally laissez-faire. Tax rates were slashed for all income groups. The national debt was reduced by one-third. The Federal Reserve’s activity, moreover, was hardly noticeable. As one economic historian puts it, “Despite the severity of the contraction, the Fed did not move to use its powers to turn the money supply around and fight the contraction.” 2 By the late summer of 1921, signs of recovery were already visible. The following year, unemployment was back down to 6.7 percent and was only 2.4 percent by 1923.

LINK

Share this post


Link to post
Share on other sites

Is your test-tube half full or half empty?

laugh.gif

I'm not sure, it's hard to tell.

It seems to be full of bubbles...

Share this post


Link to post
Share on other sites

I'm not sure, it's hard to tell.

It seems to be full of bubbles...

That will be the copper sulphate - or the resultant of Jim Jenkins shoving it down his underpants.

Edit: Oh yeah "bubble" - now I get it ! :lol:

Edited by Alan B'Stard MP

Share this post


Link to post
Share on other sites

there is still this slly view that falling house prices cannot persist alongside a growing economy - 1992 to1996 exhibited falling house prices, whils the economy recovered from recession

Share this post


Link to post
Share on other sites

there is still this slly view that falling house prices cannot persist alongside a growing economy - 1992 to1996 exhibited falling house prices, whils the economy recovered from recession

Well they would say that wouldn't they?

Share this post


Link to post
Share on other sites

Sounds logical

If the business that I am looking at no drop 30 I will buy one 1-2x takings rather 3-6 (at the moment most business I look at do not make financial sense nor could they pay the finance needed for a 50/60 percent loan).

If houses fall less than rental cost I will buy one.

If houses fall so that you get 8-10 percent yield maybe I will buy some of those also and maybe pay some guys to fix them up.

Everything has a price for every asset there is a potential purchaser its just at what level.

What is illogical is taking my money I have from not getting into the shit on propping up prices that I cannot afford..... asset squatting

Share this post


Link to post
Share on other sites

there is still this slly view that falling house prices cannot persist alongside a growing economy - 1992 to1996 exhibited falling house prices, whils the economy recovered from recession

Its not silly if you are a banker...as Blanchflower is...but bankers think the world revolves around them...it doesnt.

Share this post


Link to post
Share on other sites

Isn't the 1980s monetarism a historical precedent? Hmmm, didn't spending actually go up under la Thatch, tho, despite rhetoric?

And Reagan decided to go on a huge spending spree in the mid 80's as well and set the whole ball rolling for the current position we find ourselves in.

Share this post


Link to post
Share on other sites

That's the truth that dare not speak its name - the opposite of Keynesian economics. In fact the only one that works. The USA will fare far worse by more bail outs than just getting and facing the consequences of the debt encrusted truth. The UK will have a vile 2011-13, but then emerge in much better shape by 2014, so long as they do not take fright and want to inflate on printed money. Your link is very interesting Bart!

Edited by plummet expert

Share this post


Link to post
Share on other sites

Isn't the 1980s monetarism a historical precedent? Hmmm, didn't spending actually go up under la Thatch, tho, despite rhetoric?

Wasn't that largely the windfall from the north sea oil & gas though? It's easy to spend free money.

Share this post


Link to post
Share on other sites

I suspect this is one of those nice little stories that gain currency on the internet - without a thought as to whether the spending was in nominal or real terms.

Remember they were trying to bear down on inflation at the time.

I suspect the figures which gave gave birth to this nice but possibly misleading story, are indeed NOMINAL.

You're wrong.

During Margaret Thatcher’s premiership public spending grew in real terms by an average of 1.1% a year, while during John Major’s premiership it grew by an average of 2.4% a year.

It dropped only 85-6 and 88-9, presumably because a booming economy meant that the welfare bill had dropped.

Share this post


Link to post
Share on other sites

The idea that economies can keep growing seems silly to me, finite planet? something has to give sooner or later? "The drowned world" by J G Ballard keeps popping into my mind.

economic growth in developed economies mainly comes from increased efficiency eg the use of machinery on farms. this frees up people to do other things such as offer more services or manufacture other goods.

The planet and its resources are finite, but we have an almost infinite source of energy in the sun, and we are not even close to harnessing everything out there yet.

Also an economy with a declining population doesn't need to grow, it is only the increases in population over the last centuries that have made economic growth an imperative, provided that we don't want living standards to decline.

Share this post


Link to post
Share on other sites

The idea that economies can keep growing seems silly to me, finite planet? something has to give sooner or later? "The drowned world" by J G Ballard keeps popping into my mind.

Exponential growth, I mean what can possible go wrong?

Share this post


Link to post
Share on other sites

And Reagan decided to go on a huge spending spree in the mid 80's as well and set the whole ball rolling for the current position we find ourselves in.

Yeah, everyone's fault but Gordon's!!

Share this post


Link to post
Share on other sites

The idea that economies can keep growing seems silly to me,

In real terms per capita they mostly don't grow. The very rare period of technological change aside ( most periods of tech change actually just speed up the use of finite natural resources - co chnage to overlal wealth just to allocation and timing of use of it).

But nominal growth is essential to delude the masses they are getting richer when in fact they are getting relatively poorer vs. the elite.

Share this post


Link to post
Share on other sites

economic growth in developed economies mainly comes from increased efficiency eg the use of machinery on farms. this frees up people to do other things such as offer more services or manufacture other goods.

The planet and its resources are finite, but we have an almost infinite source of energy in the sun, and we are not even close to harnessing everything out there yet.

Also an economy with a declining population doesn't need to grow, it is only the increases in population over the last centuries that have made economic growth an imperative, provided that we don't want living standards to decline.

good points but entirely wrong conclusion.

money makes nothing in itself.

GDP is the base measure for economies...it measures money.

GDP only needs to grow for those that handle money...thatll be the banks. its the ONLY way they can make honest money....everything else they do is able to go infinite...because like infinity...its impossible except in the mind.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 145 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.