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Fishbone Glover

Is This Why House Prices Will Not Be Allowed To Fall?

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Just happened across this article on the FT site, allegedly busting economic myths, which makes interesting reading:

http://www.ft.com/cms/s/0/cc5d60d0-fefa-11e0-9769-00144feabdc0.html#ixzz1bzdnpR6F

So it appears that everything is OK, as consumer spending before 2007 and future economic growth is all based on increasing debt secured against increasingly valuable houses and not unsecured personal credit.

Move along, no ponzi here.....

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Just happened across this article on the FT site, allegedly busting economic myths, which makes interesting reading:

http://www.ft.com/cms/s/0/cc5d60d0-fefa-11e0-9769-00144feabdc0.html#ixzz1bzdnpR6F

So it appears that everything is OK, as consumer spending before 2007 and future economic growth is all based on increasing debt secured against increasingly valuable houses and not unsecured personal credit.

Move along, no ponzi here.....

Consumer spending kept down by everything-but-housing getting ever cheaper (thanks China). Government spending was the story.

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Such soothing words.

Sounds good, we were spending less, so we must have been saving the rest?

Eh? So we were spending less and saving less and credit card debt was growing until 2005.

Smells a little bit fishy to this casual observer... :blink:

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Hmm. This sounds a bit like inter-generational wealth transfer to me. Which is because it is.

And that transfer is by:

* young person going into debt on an asset that is over-valued and in the long term cannot rise above wages forever (and we are seeing it reach it's natural limits now)

* older person immediately having the other side of that debt realized to spend as they see fit

* bank collects ever more money in compound interest on the debt

So that's young people being forced into the end of a pyramid scheme.

Also whichever ***** wrote this is patronising. "Sounds much less scary".

Finally "household financial assets". We need investment in industry to generate real wealth, not pumping up assets that are in a bubble and will fall causing even more hardship to already pressed market entrants.

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they weren't earning it...

Yep.

Take out all the mewing and the economy was in recession every year since 2001/2.

Ok leave the mew spending, but take out the real growth in public spending - again, the economy is in recession.

Ok, we'll leave the mew and the above inflation increases in public spending, but take away the spending funded by the growth in corporate debts - again we are back in recession.

Hmm, it needed all 3 of the above to keep gdp positive. Of course it was unsustainable. 'No return to boom and bust' eh?

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Yep.

Take out all the mewing and the economy was in recession every year since 2001/2.

Ok leave the mew spending, but take out the real growth in public spending - again, the economy is in recession.

Ok, we'll leave the mew and the above inflation increases in public spending, but take away the spending funded by the growth in corporate debts - again we are back in recession.

Hmm, it needed all 3 of the above to keep gdp positive. Of course it was unsustainable. 'No return to boom and bust' eh?

I crunched those numbers on my blog back in 2008.

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Yep.

Take out all the mewing and the economy was in recession every year since 2001/2.

Ok leave the mew spending, but take out the real growth in public spending - again, the economy is in recession.

Ok, we'll leave the mew and the above inflation increases in public spending, but take away the spending funded by the growth in corporate debts - again we are back in recession.

Hmm, it needed all 3 of the above to keep gdp positive. Of course it was unsustainable. 'No return to boom and bust' eh?

So on the basis this is so obvious, why are our politicians not seeing it:

A/ They are totally criminally incompetent. :ph34r:

or

B/ They are compulsive Liars , sacrificing the British Public on their alter of greed. :ph34r:

Either way the Press must be in their Pockets .. absolute disgrace.. we must be a right bunch of Mugs to put up with it. :(

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I crunched those numbers on my blog back in 2008.

Just had a quick peep, looks really good, Ive often wanted to find all those figures together.

I may have to re-word some of my assertions based on your figures, but I was reasonably close; although I thought the turning point was 2001 - your figures indicate I havent checked back far enough.

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I crunched those numbers on my blog back in 2008.

Great stuff, thanks for the link.

Sorry to be a grammar nazi but in the third paragraph shouldn't this (IMHO):

First his first two years Brown followed slavishly the spending plans left behind by the outgoing Major administration

be this:

For his first two years Brown followed slavishly the spending plans left behind by the outgoing Major administration

Just saying, nothing against the content itself which is great.

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I crunched those numbers on my blog back in 2008.

Great article. You read and think "how could they not see this. It is so obvious. But BoE despite its army of economists,forecasters and consultants still don't get it. And the FT article in the OP still spouts the mantra that if house prices rise, we can borrow more and thereby become wealthier. It has become orthodoxy to the point that it won't be challenged whatever evidence is presented.

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I crunched those numbers on my blog back in 2008.

Nationalist, the problem you're having with your tables is too many <br /> (line breaks) in the content inside your tables. I'm not quite sure why it's causing such big gaps, but I can produce the same effect with a very cut-down bit of html (i.e. it's not a style-sheet issue).

Are you pasting the tables in from another application?

To fix the issue, you need to remove all instances of <br /> between table tags (<table> to </table>).

EDIT TO ADD

Just to clarify, the problem is the breaks between <tr> and <td> tags, and also between </td> and <td> tags. The only place where <br /> makes sense in a table is between an opening <td> and a closing </td> - i.e. in the actual textual content (this would also count for <th> and </th> tags, but you're not using them...)

Edited by tomandlu

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Great stuff, thanks for the link.

Sorry to be a grammar nazi but in the third paragraph shouldn't this (IMHO):

First his first two years Brown followed slavishly the spending plans left behind by the outgoing Major administration

be this:

For his first two years Brown followed slavishly the spending plans left behind by the outgoing Major administration

Just saying, nothing against the content itself which is great.

Thanks, I've fixed it.

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Thanks, I've fixed it.

Another minor typo, fifth table (subtracting public and private debt from growth figures). First line (1998) you have Actual Growth = -£25.9bn when it should be -£29.5bn.

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Who is teaching the economists?

It reminds me of when school teachers were taught to let children express themselves freely......look where that got us.

Common sense has left the building.

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Who is teaching the economists?

It reminds me of when school teachers were taught to let children express themselves freely......look where that got us.

Common sense has left the building.

not sure about common sense, but I think reality has left the building for many.

the thing about a really good scam, is that it is 100% beleivable....when you beleive that credit IS money, and that making more and more is great and has no effect on the real world, then common sense answers using this belief are bound to be strange.

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Another minor typo, fifth table (subtracting public and private debt from growth figures). First line (1998) you have Actual Growth = -£25.9bn when it should be -£29.5bn.

Thanks, fixed that too. Impressive attention to detail by some readers... :)

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  • 276 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%



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