Nick Clegg Admits That House Prices Are Still At Bubble Level

[Tired of Waiting]

It is clear in this interview that Nick Clegg knows that house prices are still at bubble level. And he basically admitted it, saying that the housing market went from "boom to... to boom"

On radio 4, Today Programme, he said that the previous model of growth:

" (...) was based on easy money, easy credit, very high levels of private consumer debt, not least as the housing market went from sort of boom to... to boom, and of course as the banking system went from boom to bust (...)"

Notice: "from boom to errr boom".

And he meant it, as he contrasted it with the banking system's boom to bust.

Listen here, at 2:14:40: http://www.bbc.co.uk/iplayer/console/b00y2sf0/Today_04_02_2011

.

Edited February 6, 2011 by Tired of Waiting

[Tired of Waiting]

and what was his solution to the problem ... I guess he didn't have one .... I haven't listened to it but I assume he has no plan of action.

They have the right diagnosis and are talking the right talk. The question is if they will have the balls and the economic and political power to fix it.

(Since the interview is just a few minutes long, IMPO it is worth listening to.)

[The Spaniard]

It is clear in this interview that Nick Clegg knows that house prices are still at bubble level. And he basically admitted it, saying that the housing market went from "boom to... to boom"

Ah, the Basil Brush theory of HPI

http://www.youtube.com/watch?v=zJn7NdoiMtg

[singlemalt]

Wonder if he'll drop the price on his house currently on the market?

[Georgia O'Keeffe]

and what was his solution to the problem ... I guess he didn't have one .... I haven't listened to it but I assume he has no plan of action.

i thought the coalitions solution to the housing/debt/lending bubble was to get the banks lending again

[Tired of Waiting]

Wonder if he'll drop the price on his house currently on the market?

Is it?!

There. Another sign that he knows that prices will fall from now onwards.

[mdman]

It remains coalition policy to keep interest rates low, encourage scams like shared ownership, endorse QE, favour BTL through the taxation system and ignore bank fraud to prop up asset prices. What Clegg said today is meaningless when weighed against their substantive actions

Edited February 6, 2011 by mdman

[Tired of Waiting]

It remains coalition policy to keep interest rates low, encourage scams like shared ownership, endorse QE, favour BTL through the taxation system and ignore bank fraud to prop up asset prices. What Clegg said today is meaningless when weighed against their substantive actions

I broadly agree.

I think the main problem is that they don't have economic and political power enough to fight the vested interests and the public opinion (most people still love high house prices), and to correct "this sucker" as fast as we would like. hence Shapps interviews, suggesting annual HPrice growth 2% below average wages, with affordable houses in 10 or 20 years... ...

[dances with sheeple]

As another poster often says. Look at what they do and not at what they say they will do.

And if you follow the votes then they will do whatever is necessary to stop prices falling.

? they have not done anything that has prevented volumes drying up as a prelude to the big collapse? Low rates just keep suckers hanging on, it eventually (this year and next IMO) has to go pop. Without buyers who believe prices can rise, and who have access to LOTS of credit, the market can only plunge? Clegg is just reminding sheeple who to blame.

Edited February 6, 2011 by dances with sheeple

[Executive Sadman]

and what was his solution to the problem ... I guess he didn't have one .... I haven't listened to it but I assume he has no plan of action.

The solution is surely doing nothing. Not extending SLS, not extending SMI, letting interest rates take their natural course without govt buying gilts to allow rates to stay down.

Isnt that the rub? You dont really need a plan of action other than not getting involved.

For politicians though, doing nothing is the hardest thing. They seem to thing the world will fall apart without them. In reality, it would probably be a much better place.

[Tired of Waiting]

? they have not done anything that has prevented volumes drying up as a prelude to the big collapse? Low rates just keep suckers hanging on, it eventually (this year and next IMO) has to go pop. Without buyers who believe prices can rise, and who have access to LOTS of credit, the market can only plunge? Clegg is just reminding sheeple who to blame.

I hope so.

[simonstock]

I think the main problem is that they don't have economic and political power enough to fight the vested interests and the public opinion (most people still love high house prices)

Isn't this the real nub of the problem? - until public opinion starts to shift on this, any incumbent administration will not dare to do anything that might offend the Daily Mail/BBC mentality that rising house prices=good/falling prices=bad.

[Tired of Waiting]

Isn't this the real nub of the problem? - until public opinion starts to shift on this, any incumbent administration will not dare to do anything that might offend the Daily Mail/BBC mentality that rising house prices=good/falling prices=bad.

Yep. This is the "nub of the problem". People always want something for nothing. Actually that is why many years ago, after the inflation crisis of the 70s, world academics and then politicians concluded that they had to give independence to central banks, and inflation targets. This would, indirectly, put a limit on total credit and levels of indebtedness, via interest rates. (Kind of a long story.) It worked well, for a long time, and for all countries, but it failed miserably mainly in the UK and USA after 9-11.

Both central banks had to lower IRates, OK, but then they left it too low for too long. In the USA because official inflation was low - since their inflation index didn't include housing costs. In Britain our index was better, and it started to go up in 2003. But then Brown (or Balls?) removed housing costs from it, to stop the BoE from raising the base rate in 2004 (a pre-electoral year). The rest, as they say, is history... IRates were kept too low, and the bubble continued to grow.

.

Edited February 6, 2011 by Tired of Waiting

[Bruce Banner]

Cameron, Cable and now Clegg. Senior Cabinet members are preparing the people for the falls to come .

[Tired of Waiting]

Cameron, Cable and now Clegg.

True.

Senior Cabinet members are preparing the people for the falls to come .

You may be right. I hope so.

Though Clegg was very / too subtle there.

Well they all were. Cameron said it in the past tense. Maybe for political reasons.

Shapps with his 10-20 years at 2%/year... jeeez...

[mattyfc]

i thought the coalitions solution to the housing/debt/lending bubble was to get the banks lending again

I think the plan to get banks lending is mainly aimed at businesses not HPI, that and political posturing. Cameron, Clegg and Cable have all given speeches and interviews about the housing bubble. Cameron's speech in Davos was barely mentioned in our press from what I can see. Clegg mentioned the market being let rip on TV a week ago as well.

The problems associated with HPI and the bubble seem to have been identified by the government. The mantra of HPI good for the is long gone. The HPC is on, it will be a slow grind downwards as sensible lending, high deposit levels and rising interest rates strangle the life out of the market. 50% real falls may not happen overnight but seem almost certain to happen long term as far as I can see.

Admitting that an economy based on HPI, Debt, Public spending and consumption leads to a massive bust is the first step. Fixing it is going to very difficult and take a long time.

[Tired of Waiting]

I think the plan to get banks lending is mainly aimed at businesses not HPI, that and political posturing. Cameron, Clegg and Cable have all given speeches and interviews about the housing bubble. Cameron's speech in Davos was barely mentioned in our press from what I can see. Clegg mentioned the market being let rip on TV a week ago as well.

The problems associated with HPI and the bubble seem to have been identified by the government. The mantra of HPI good for the is long gone. The HPC is on, it will be a slow grind downwards as sensible lending, high deposit levels and rising interest rates strangle the life out of the market. 50% real falls may not happen overnight but seem almost certain to happen long term as far as I can see.

Admitting that an economy based on HPI, Debt, Public spending and consumption leads to a massive bust is the first step. Fixing it is going to very difficult and take a long time.

Yes, we had threads about Cable and Cameron also. ( Cable: http://www.housepricecrash.co.uk/forum/index.php?showtopic=158276&view=findpost&p=2868971. Cameron: http://www.housepricecrash.co.uk/forum/index.php?showtopic=158647&view=findpost&p=2876772 )

Sadly, I agree that there is a possibility of a very slow grind downwards. I just hope that we have at least most of the correction in a few years, in a typical bubble bursting shape, allowing us to buy a home. I don't mind much if in the following years we have smaller falls.

[gf3]

Just watched the Cameron speech. He is very good.

[Tired of Waiting]

Just watched the Cameron speech. He is very good.

Yes, it was excellent. Refreshingly sensible, grounded, wise.

Couldn't be more different from Labour/Brown/Balls/Miliband - deranged lunatics by comparison.