SleepyHead Posted August 30, 2011 Share Posted August 30, 2011 (edited) Recently posted this as a comment on this page, I'd appreciate your views on how to clarify/improve it. http://news.sky.com/portal/site/skynews/menuitem.ee7913f6661fec1eb2221910413071a0/?vgnextoid=3983bd4834712310VgnVCM1000005d04170aRCRD&vgnextchannel=805b17a021297110VgnVCM1000009811d20aRCRD#commentForm Thanks! High house prices leads to... higher living costs leads to... pressure on salaries to keep up leads to... less competitive workforce, compared to low wage workers (Chinese, Polish temp labour) leads to... Jobs outsourced to low cost economies, or imported cheap workers. leads to... Higher unemployment, economic stagnation, home owners & politicians wishing further house price rises to supplement their dwindling income. Exacerbating the problem. eventually leads to... Total economic collapse. Edited August 30, 2011 by worst time buyer Quote Link to comment Share on other sites More sharing options...
Trampa501 Posted August 30, 2011 Share Posted August 30, 2011 Seems fine. Of course you left out (for example, I'm sure there are more)... Encourages dishonesty, as many are forced to falsify earnings to get a mortgage Diverts investment money away from business into property speculation Leads to unstable banks Quote Link to comment Share on other sites More sharing options...
SleepyHead Posted August 30, 2011 Author Share Posted August 30, 2011 Seems fine. Of course you left out (for example, I'm sure there are more)... Encourages dishonesty, as many are forced to falsify earnings to get a mortgage Diverts investment money away from business into property speculation Leads to unstable banks Good points. I definitely agree with all those. The 2nd point is massive. All that capital going into a "non-productive" asset. If I can figure out a way of working them in, and keeping it concise and simple, maybe the powers that be might be able to understand. ..... will have to be kept v simple though. Quote Link to comment Share on other sites More sharing options...
aa3 Posted August 30, 2011 Share Posted August 30, 2011 On the other hand in a weird twist, growing unemployment can cause high house prices. Rising unemployment, falling consumption, downward pressure on real wages, downward pressure on consumer prices, deflation.. slashing interest rates by the central bank. Which the lowest rates in the 300 year history of the BoE were 1.85%, before this recent crisis where they went down to 0.5%. With such low rates people can bid against each other for houses. Especially those people who either from regulatory protection or market demand still have their jobs and incomes. Quote Link to comment Share on other sites More sharing options...
OnlyMe Posted August 30, 2011 Share Posted August 30, 2011 On the other hand in a weird twist, growing unemployment can cause high house prices. Rising unemployment, falling consumption, downward pressure on real wages, downward pressure on consumer prices, deflation.. slashing interest rates by the central bank. Which the lowest rates in the 300 year history of the BoE were 1.85%, before this recent crisis where they went down to 0.5%. With such low rates people can bid against each other for houses. Especially those people who either from regulatory protection or market demand still have their jobs and incomes. Not causation, just desperation. Propping the pig up will create more unemployment over the longer term. Quote Link to comment Share on other sites More sharing options...
SleepyHead Posted August 30, 2011 Author Share Posted August 30, 2011 On the other hand in a weird twist, growing unemployment can cause high house prices. Rising unemployment, falling consumption, downward pressure on real wages, downward pressure on consumer prices, deflation.. slashing interest rates by the central bank. Which the lowest rates in the 300 year history of the BoE were 1.85%, before this recent crisis where they went down to 0.5%. With such low rates people can bid against each other for houses. Especially those people who either from regulatory protection or market demand still have their jobs and incomes. Good points. If I understand you correctly, you're saying that those first factors, "Rising unemployment, falling consumption, downward pressure on real wages" leads to "downward pressure on consumer prices" which is interpreted by policy makers (incorectly in my view) as "deflation" resulting in "slashing interest rates by the central bank" Leading to yet higher house prices. Yet again further exacerbating the problem. It's like watching a heroin addict trying to cure himself, but using heroin as his medicine. Quote Link to comment Share on other sites More sharing options...
RufflesTheGuineaPig Posted August 30, 2011 Share Posted August 30, 2011 Recently posted this as a comment on this page, I'd appreciate your views on how to clarify/improve it. http://news.sky.com/portal/site/skynews/menuitem.ee7913f6661fec1eb2221910413071a0/?vgnextoid=3983bd4834712310VgnVCM1000005d04170aRCRD&vgnextchannel=805b17a021297110VgnVCM1000009811d20aRCRD#commentForm Thanks! High house prices leads to... higher living costs leads to... pressure on salaries to keep up leads to... less competitive workforce, compared to low wage workers (Chinese, Polish temp labour) leads to... Jobs outsourced to low cost economies, or imported cheap workers. leads to... Higher unemployment, economic stagnation, home owners & politicians wishing further house price rises to supplement their dwindling income. Exacerbating the problem. eventually leads to... Total economic collapse. leads to... Profit! (All hail the U-P-G!) Quote Link to comment Share on other sites More sharing options...
Self Employed Youth Posted August 30, 2011 Share Posted August 30, 2011 It's like watching a heroin addict trying to cure himself, but using heroin as his medicine. The best way to get off heroin is to slowly wean yourself off it. Same with alcohol. If you just stop, you can die. Addictions tend to b replaced by other addictions. I'd like to see us wean ourselve off of house speculation and get addicted to housebuilding. If we build too many we can knock them down and build even better housing. Quote Link to comment Share on other sites More sharing options...
SleepyHead Posted August 30, 2011 Author Share Posted August 30, 2011 The best way to get off heroin is to slowly wean yourself off it. Same with alcohol. If you just stop, you can die. Addictions tend to b replaced by other addictions. I'd like to see us wean ourselve off of house speculation and get addicted to housebuilding. If we build too many we can knock them down and build even better housing. What if you're currently overdosing in heroin by a massive amount? I don't think slowly weening ourselves off it is an option any more. It seems to me the economy is so burdened by debt, and grown so reliant on debt, even a small drop in credit has the system in meltdown. Credit has distorted everything...... for the worse. Quote Link to comment Share on other sites More sharing options...
interestrateripoff Posted August 30, 2011 Share Posted August 30, 2011 Unemployment leads to lower house prices... Quote Link to comment Share on other sites More sharing options...
winkie Posted August 30, 2011 Share Posted August 30, 2011 Unemployment leads to lower house prices... High lending risk = higher house prices. Low lending risk = lower house prices. What you can't borrow you can't buy. Quote Link to comment Share on other sites More sharing options...
Confounded Posted August 31, 2011 Share Posted August 31, 2011 Recently posted this as a comment on this page, I'd appreciate your views on how to clarify/improve it. Timely topic. I have a small business and are we are expanding rapidly, however we are doing this through contracting labour on a daily rate from established businesses. Many of the services we use we could do in house if we employed another 4 or so people however we just do not want to take on this liability. Talking to one of the business owners we used for the first time yesterday, not only has he cut his workforce significantly he is also moving out of his commercial premisses and resuming working from home as he did 6 years ago. He is much more profitable this way. I was speaking to another business owner that we used last week and a few years ago he had 80 employees, he discovered that he was making less money with this number of employees than when he started out he is desperately trying to cut back to where he started from. He has the work demand to fulfil his old level of employment but just does not want it. It is not all house prices as tax and employments laws play there part, but I am convinced of the link to high wage demands. Also high house prices have made myself and business partner greedy in terms of what we want to earn to achieve the living standards we want. Employing people is more becoming a public service than part of a sound business plan these days. Quote Link to comment Share on other sites More sharing options...
(Blizzard) Posted August 31, 2011 Share Posted August 31, 2011 Timely topic. I have a small business and are we are expanding rapidly, however we are doing this through contracting labour on a daily rate from established businesses. Many of the services we use we could do in house if we employed another 4 or so people however we just do not want to take on this liability. Talking to one of the business owners we used for the first time yesterday, not only has he cut his workforce significantly he is also moving out of his commercial premisses and resuming working from home as he did 6 years ago. He is much more profitable this way. I was speaking to another business owner that we used last week and a few years ago he had 80 employees, he discovered that he was making less money with this number of employees than when he started out he is desperately trying to cut back to where he started from. He has the work demand to fulfil his old level of employment but just does not want it. It is not all house prices as tax and employments laws play there part, but I am convinced of the link to high wage demands. Also high house prices have made myself and business partner greedy in terms of what we want to earn to achieve the living standards we want. Employing people is more becoming a public service than part of a sound business plan these days. High house prices are a tax. Landlords are the government. They collect taxes, they make laws and you cannot opt out without paying them off or choosing another landlord. They have the same relationship with local govt. as local govt. has with Westminster and Westminster has with Europe. http://libertythinkers.com/education/a-landlord-is-a-government-the-libertarian-basis-for-land-rights/ This is known as the feudal system. At least the Westminster govt. spends some of the money on Health, Welfare and jobs. Landlords squander all of it on themselves. So, yes, the reason that the economy is screwed, the reason we have to work harder and for longer despite labour saving modern technology, the reason our children may be worse off despite all the progress, is that all wealth is ultimately siphoned off by unproductive landowners. Quote Link to comment Share on other sites More sharing options...
Ruffneck Posted August 31, 2011 Share Posted August 31, 2011 All bubbles eventually pop , the housing bubble is no different. http://www.perthnow.com.au/business/perth-property-prices-plunge-over-6pc-rp-data-rismark-index/story-e6frg2ru-1226126446835 Quote Link to comment Share on other sites More sharing options...
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