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But what should someone do who doesn't think that it will be available for a lot less in a few years?

Each to his own.

Obviously, if you think house prices are going up, you should buy as quickly as possible. But, if, like me, you expect house prices to fall 30% or 40% over the next few years, renting and waiting would seem the sensible option.

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The bit I quoted? :rolleyes:

Which seems to ignore that price inflation is outstripping wage inflation at a fair rate of knots and that the risk on retail borrowing, even against property seems to be more against higher costs than continued falls in borrowing costs. I'm just not seeing how it 'will be easier' in 2 to 3 years than it is now. Do you expect 2012 vs 2015 to be as fortuitous as 2008 vs 2011?

Unsurprisingly neither are the general public.

Ah this is why I didn't understand why you pulled up my post, it's because we're talking at crossed purposes. I was remarking to the other chap that as long as you bear in mind that rates will eventually rise and so you don't overextend yourself (i.e. make sure that you can still afford a mortgage if it goes over 8%), then there is no problem with buying while rates are low. You seem to feel that I'm advising that people should buy now even if they can only just afford the repayments. Clearly I'm saying nothing of the sort.

It will be easier in 2 or 3 years time for exactly the reasons I gave in my post. You'll have gotten through a period where you have a lot of 'one-off' purchases and your finances will have settled back down. If you believe that interest rates are going to shoot up, then whether you buy now or buy in 3 to 5 years time, you will still be impacted by these rate rises, but at least someone who bought during a period of low rates will have gotten past that 'one-off purchases' stage.

For what it's worth, I think that we will continue to have low rates way beyond 2015. I think the problems the West faces with debt will not unwind for the best part of a decade and Central Banks won't rush to put up interest rates while their economies are still bumping along the bottom. We've had a sustained period of economic profligacy, this will not be repaired overnight, as we have seen already over the past 5 years.

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If Croydon is expensive it could be because as people breed in London if they cannot afford to buy they have to move outwards? HPI spreading like a cancer?

Re the link I googled "akelius london property 10,000" and the link was the second in the list and opens in a new tab

I still think London prices are unsustainable.

Thanks for the link to the Akelius thing.

Yes, worrying, but the timing may be important here: "(...) plans to have built up its 700-asset UK portfolio to 1,000 assets by the end of 2012."

So they will go slowly about it. Their plan is long term, and they can stop it if things look bad:

The all-cash acquisition of units across 26 sites in London and the southeast reflects the not-for-profit foundation subsidiary's plan to acquire 10,000 assets in "key locations in and around London" over the next 3-5 years to coincide with a forecast macroeconomic recovery.

:rolleyes:

They think London is at is bottoming out?? :lol:

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Maybe, but ripples lose power away from the centre. How can ... say Croydon (!) be so expensive?! :blink:

(Your link didn't work.)

I bought my first flat in Croydon in 1993. I assume people still buy in Croydon for the same reasons I did:

1. Couldnt afford anywhere in London

2. Fast train links from 3 stations into London (including London Bridge which is then a 10 min walk over the Thames into the City)

Not the best looking town but handy - shops/pubs. Also used to be really late trains from Victoria that stopped at East Croydon so you could get home after a late night in the West End (not sure if you still can)

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I believe Prof Mitchell explains satisfactorily in other parts of the website that a government in control of its currency (such as Japan) can control the yield curve without any problems indefinitely by having the bonds bought (1) in sufficient quantities to raise the price and lower the yield. This could have an effect on the currency, but given the yen has risen enormously against the dollar/pound/euro in recent years and its export industry is screaming, a drop in the yen would probably be highly desirable.

The chart shows that the payments are now at a level that they were in the mid-80s. (2) Perhaps you can dig up the articles from the mid-80s saying Japanese public debt was out of control, I'd be interested to read them. Mitchell clearly demonstrates in his article that the deficit is cyclical and was dropping in the early part of the 2000s as the Japanese economy recovered (you are doubtless aware that Japanese GDP per capita increased more than in the US and Europe froom 2000 - 2010). The point is that the deficit will ultimately take care of itself. (3) The point is to support the economy and go for growth and employment in a balanced economy, not cut away like a mad axeman and hope for the best. If you achieve that then deficits etc won't matter. We are letting the tail wag the dog (ie concentrating on the symptoms - a high deficit and not dealing with the disease causing it, high employment, low growth and high private debt which has been transferred onto the public sector balance sheet).

I'd recommend you have a look around his website, it is very interesting.

(1) By whom?

I agree that it would be useful for exporters to lower the yen, but that would increase imports costs, increase inflation and consequently the cost to roll over the huge Japanese national debt - they have a lot of short-term bonds.

(2) Payments are going up fast. Actually it looks like it's snowballing.

(3) How?!

But they have been "stimulating" the economy with deficits for around 20 years! It has not worked!

I read enough from that blog to know that he is wrong. Look, a little math is essential here:

Inflation does erode a (fixed rate) national debt. But if the annual deficit is higher than the inflation this debt will still go up.

And if you do have inflation new bonds will be harder to sell.

And in relation to GDP, if the deficit is bigger than the the growth of GDP then the debt/GDP will grow as well.

Governments cannot just keep printing. It does not work in the long term.

Edited by Tired of Waiting
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(1) By whom?

Eh? :blink:

Central banks

http://en.wikipedia.org/wiki/Quantitative_easing

I agree that it would be useful for exporters to lower the yen, but that would increase imports costs, increase inflation and consequently the cost to roll over the huge Japanese national debt - they have a lot of short-term bonds.

The yen has been moving in a large range over the last 20 years. However inflation has been flat throughout, so I am not convinced that the value of the currency in the case of the yen is affecting inflation. I agree that they have a lot of short term debt. They should simply change that to long term debt. (By the way, when you make that sort of point concerning data could you please try to supply a link? You generally do, but some posters can be a bit hard and loose with the facts so if I don't have to double check what you said then that would be helpful. I will try and do so too. Cheers!)

saupload_Japan-Debt-Maturity-Timeline-2011_1.jpg

(2) Payments are going up fast. Actually it looks like it's snowballing.

Define snowballing - sounds a bit melodramatic to me

(3) How?!

But they have been "stimulating" the economy with deficits for around 20 years! It has not worked!

Define not worked. Japan's GDP per capita in last decade was better than much of Europe and the US and even in total GDP terms Japan matched Germany

http://www.economist.com/blogs/buttonwood/2012/03/economic-growth

They have also had consistently low unemployment and have maintained living standards. As you can see below, the deficit was naturally reducing during the better economic times prior to the economic crisis. It follows the economic cycles

Japan_Budget_Aggregates_Real_GDP_growth_1980_2011.jpg

I read enough from that blog to know that he is wrong. Look, a little math is essential here:

Inflation does erode a (fixed rate) national debt. But if the annual deficit is higher than the inflation this debt will still go up.

And if you do have inflation new bonds will be harder to sell.

And in relation to GDP, if the deficit is bigger than the the growth of GDP then the debt/GDP will grow as well.

Governments cannot just keep printing. It does not work in the long term.

Ok, so they are going to have inflation, even though they have not had it for 20 years and with a highly variable yen exchange rate. The problem you are going through the standard economic theories which simply do not fit what we are seeing. You say you don't understand Japan. Well, I would argue that this is because you are applying the standard economic theories which Japan has been consistently showing to be wrong for the last 20 years and the US and the UK are now proving wrong too. I am sure you have seen the articles in the paper stating that austerity economists wheeled out 2 years ago have now said that actually borrowing for investment is actually ok. When the data doesn't fit the theory, you need to change the theory.

I agree that printing will not work in the long term, you need to match it to productivity. The point is that you need to go for growth, over and above everything else. With growth, as you point out, the deficit will naturally reduce. You don't necessarily get growth by reducing the deficit, you get a reduced deficit through increased growth. By cutting government spending now, they are cutting a source of growth. Government spending does not all need to be 5 a day coordinators. The UK's infrastructure is piss poor and government led investment in this area would reap benefits.

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Printing then. Ok, I thought so, but as you wrote "buy" I wasn't sure.

The yen has been moving in a large range over the last 20 years. However inflation has been flat throughout, so I am not convinced that the value of the currency in the case of the yen is affecting inflation. I agree that they have a lot of short term debt. They should simply change that to long term debt. (By the way, when you make that sort of point concerning data could you please try to supply a link? You generally do, but some posters can be a bit hard and loose with the facts so if I don't have to double check what you said then that would be helpful. I will try and do so too. Cheers!)

saupload_Japan-Debt-Maturity-Timeline-2011_1.jpg

Since you are in Japan, and very interested in economics, I assumed you were aware of the well known and very serious problem with the Japanese debt profile.

BTW: "They should simply change that to long term debt."? So that would be simple? Easy? Why don't they do that then? Yes, it may be very hard indeed to sell long-term bonds to normal punters (would you buy some 10 year at 2%?), but why don't they sell them to the BoJ?

Define snowballing - sounds a bit melodramatic to me

Define not worked. Japan's GDP per capita in last decade was better than much of Europe and the US and even in total GDP terms Japan matched Germany

http://www.economist.com/blogs/buttonwood/2012/03/economic-growth

They have also had consistently low unemployment and have maintained living standards. As you can see below, the deficit was naturally reducing during the better economic times prior to the economic crisis. It follows the economic cycles

Japan_Budget_Aggregates_Real_GDP_growth_1980_2011.jpg

It hasn't worked because the debt grew more than the GDP. Debt/GDP kept growing. And it's accelerating now, as your charts show, curving upwards in these past years.

Ok, so they are going to have inflation, even though they have not had it for 20 years and with a highly variable yen exchange rate. The problem you are going through the standard economic theories which simply do not fit what we are seeing. You say you don't understand Japan. Well, I would argue that this is because you are applying the standard economic theories which Japan has been consistently showing to be wrong for the last 20 years and the US and the UK are now proving wrong too. I am sure you have seen the articles in the paper stating that austerity economists wheeled out 2 years ago have now said that actually borrowing for investment is actually ok. When the data doesn't fit the theory, you need to change the theory.

I agree that printing will not work in the long term, you need to match it to productivity. The point is that you need to go for growth, over and above everything else. With growth, as you point out, the deficit will naturally reduce. You don't necessarily get growth by reducing the deficit, you get a reduced deficit through increased growth. By cutting government spending now, they are cutting a source of growth. Government spending does not all need to be 5 a day coordinators. The UK's infrastructure is piss poor and government led investment in this area would reap benefits.

It's not just "standard economic theories", but logic. And I am very glad these more recently Japanese data shows that logic still applies.

Growth is essential, but it has to be sustainable growth. If you spend a lot to get a little growth, you just compound the problem for the next year.

And if you keep doing that you just compound the problem for the next generation.

In Britain our main infrastructural problem is housing, and we don't need public money to solve it, just a liberalisation of the planning system would suffice.

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Since you are in Japan, and very interested in economics, I assumed you were aware of the well known and very serious problem with the Japanese debt profile.

BTW: "They should simply change that to long term debt."? So that would be simple? Easy? Why don't they do that then? Yes, it may be very hard indeed to sell long-term bonds to normal punters (would you buy some 10 year at 2%?), but why don't they sell them to the BoJ?

When I arrived in Japan, I did so assuming that there would be a massive debt crisis but have since changed my mind. Being here has made me think more about what wealth is.

It hasn't worked because the debt grew more than the GDP. Debt/GDP kept growing. And it's accelerating now, as your charts show, curving upwards in these past years.

The point is it is cyclical. When the economy was growing, the deficit was reducing and had that continued then the debt/gdp would have started to reduce. Due to the financial crisis and the massive appreciation of the yen, the economy has slowed and the deficit has grown.

It's not just "standard economic theories", but logic. And I am very glad these more recently Japanese data shows that logic still applies.

Growth is essential, but it has to be sustainable growth. If you spend a lot to get a little growth, you just compound the problem for the next year.

And if you keep doing that you just compound the problem for the next generation.

In Britain our main infrastructural problem is housing, and we don't need public money to solve it, just a liberalisation of the planning system would suffice.

The "logic" is Japan has a big debt to GDP ratio therefore it is fecked. The "logic" is that we should hack up spending and throw the youth out of work. The "logic" is that you cannot run massive deficits indefinitely and you need to privatise everything in sight. Well, the data is in and the neo-liberals are wrong. They should be bust by now according to mainstream economics, but they are not.

I don't see that Japan is spending a great deal. As this chart shows, it is significantly below OECD averages.

Japan_OECD_debt_interest_pc_GDP.jpg

The UK's only problem is not housing - the roads are potholed, the trains are shocking, airports are rubbish, the list goes on.

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When I arrived in Japan, I did so assuming that there would be a massive debt crisis but have since changed my mind. Being here has made me think more about what wealth is.

The point is it is cyclical. When the economy was growing, the deficit was reducing and had that continued then the debt/gdp would have started to reduce. Due to the financial crisis and the massive appreciation of the yen, the economy has slowed and the deficit has grown.

The "logic" is Japan has a big debt to GDP ratio therefore it is fecked. The "logic" is that we should hack up spending and throw the youth out of work. The "logic" is that you cannot run massive deficits indefinitely and you need to privatise everything in sight. Well, the data is in and the neo-liberals are wrong. They should be bust by now according to mainstream economics, but they are not.

I don't see that Japan is spending a great deal. As this chart shows, it is significantly below OECD averages.

Japan_OECD_debt_interest_pc_GDP.jpg

The UK's only problem is not housing - the roads are potholed, the trains are shocking, airports are rubbish, the list goes on.

Neo-liberal? You are talking about ideology? I am not. You got me very wrong. My political and ethical criteria is the greatest good for the greatest numbers. Quality of life of the general population, and sustainable.

Look at it, government bonds and interest payments since 2010:

Japan_interest_trends.jpg

It is not sustainable.

And talking about inter-generational politics, I bet the Japanese political choice in these past 20 years, choosing deficits, fecked the young, to the benefit of the older.

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The UK's only problem is not housing - the roads are potholed, the trains are shocking, airports are rubbish, the list goes on.

As a keen cyclist in London I am very up on potholes. The degradation in the quality of London roads is +very+ bad. I can't imagine what it will be like after this winter if we have a lot of freeze/thaw.

These are on well-used roads. At some point such cuts will catch up with us and instead councils will have to either start deficit spending again or stop paying themselves massive salaries / pensions and instead provide services.

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Neo-liberal? You are talking about ideology? I am not. You got me very wrong. My political and ethical criteria is the greatest good for the greatest numbers. Quality of life of the general population, and sustainable.

Look at it, government bonds and interest payments since 2010:

Japan_interest_trends.jpg

It is not sustainable.

And talking about inter-generational politics, I bet the Japanese political choice in these past 20 years, choosing deficits, fecked the young, to the benefit of the older.

When I look at that chart, I see the debt payments being below that of the 80s for much of the 2000 - 2010 period, only heading upward in the global recession. I see the deficit increasing during the economic bad times and reducing during the good. With global growth, we should head back to the situation of the 2000 - 2010 period. You appear to simply assume no growth and a continuation of the global problems, I think this is a false assumption.

Again you assume that the choices of the past 20 years has been to the detriment of the young. Well, it is a mixed bag. They have had a housing crash. Youth unemployment and unemployment generally is very low. Japan has some of the lowest taxes in the OECD, allowing the young to save (and plenty of room to raise taxes to lower the deficit if they really wish to force the issue). There aren't as many jobs for life as previously, but the Japanese in the aggregate have a higher level of income and live in a country with a higher level of infrastructure and general convenience. I would argue that the Japanese youth have it tougher than their forebears, but anecdotally I'd say you are far better off being a young Japanese than a young Brit or young European.

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I would argue that the Japanese youth have it tougher than their forebears, but anecdotally I'd say you are far better off being a young Japanese than a young Brit or young European.

Ageism is rampant in the Japanese workforce. Demographically there are less and less young people too. The combination of those two facts should ensure the young a reasonable chance at half-decent employment.

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When I look at that chart, I see the debt payments being below that of the 80s for much of the 2000 - 2010 period, only heading upward in the global recession. I see the deficit increasing during the economic bad times and reducing during the good. With global growth, we should head back to the situation of the 2000 - 2010 period. You appear to simply assume no growth and a continuation of the global problems, I think this is a false assumption.

Again you assume that the choices of the past 20 years has been to the detriment of the young. Well, it is a mixed bag. They have had a housing crash. Youth unemployment and unemployment generally is very low. Japan has some of the lowest taxes in the OECD, allowing the young to save (and plenty of room to raise taxes to lower the deficit if they really wish to force the issue). There aren't as many jobs for life as previously, but the Japanese in the aggregate have a higher level of income and live in a country with a higher level of infrastructure and general convenience. I would argue that the Japanese youth have it tougher than their forebears, but anecdotally I'd say you are far better off being a young Japanese than a young Brit or young European.

Maths is essential here: A debt to GDP over 200%, means that if interest rates (IR) are just 2%/y, then interest payments (IP) are over 4% of GDP. If IRs = 3%/y, IP = 6% of GDP. If IR = 4%/y, IP = 8% of GDP. 5%/y = 10% of GDP. Etc. They are on a knife-edge.

And Japan has to refinance a quarter of their debt ( = 50% of GDP) every year, due to their horrible debt profile.

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Maths is essential here: A debt to GDP over 200%, means that if interest rates (IR) are just 2%/y, then interest payments (IP) are over 4% of GDP. If IRs = 3%/y, IP = 6% of GDP. If IR = 4%/y, IP = 8% of GDP. 5%/y = 10% of GDP. Etc. They are on a knife-edge.

That assumes that the interest rates cannot be controlled, however they clearly can. You have not shown any evidence that is not the case. It also assumes that Japan does not grow or raise taxes, but frankly that is by the by, interest rates being key.

And Japan has to refinance a quarter of their debt ( = 50% of GDP) every year, due to their horrible debt profile.

That is interesting - could you send me the link? I had a bit of difficulty getting the debt profile stats

You might be interested the article below. It appears to refute your arguments even assuming that the markets dictate Japanese interest rates, which they don't

http://www.economist.com/node/21538745

To be sure, its government is a large debtor; its net debt as a share of GDP is one of the highest in the OECD. However, the public debt has been accrued not primarily through wasteful spending or “bridges to nowhere”, but because of ageing, says the IMF. Social-security expenditure doubled as a share of GDP between 1990 and 2010 to pay rising pensions and health-care costs. Over the same period tax revenues have shrunk.

Falling tax revenues are a problem. The flip side, though, is that Japan has the lowest tax take of any country in the OECD, at just 17% of GDP. That gives it plenty of room to manoeuvre. Takatoshi Ito, an economist at the University of Tokyo, says increasing the consumption tax by 20 percentage points from its current 5%—putting it at the level of a high-tax European country—would raise ¥50 trillion and immediately wipe out Japan's fiscal deficit.

Edited by FaFa!
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That assumes that the interest rates cannot be controlled, however they clearly can. You have not shown any evidence that is not the case. It also assumes that Japan does not grow or raise taxes, but frankly that is by the by, interest rates being key.

That is interesting - could you send me the link? I had a bit of difficulty getting the debt profile stats

You might be interested the article below. It appears to refute your arguments even assuming that the markets dictate Japanese interest rates, which they don't

http://www.economist.com/node/21538745

They may keep IRs low while they QE, but they can't keep doing that forever, and when they stop, the higher debt/GDP will be very expensive to finance via normal punters.

Again: How much interest/year would you require to lend to the Japanese government for 10 years?

Debt profile - you posted a chart with it, above.

To increase VAT from 5% to 20%:

1) It is a huge jump, and would contract the economy.

2) It would just balance the books (if the economy didn't contract), eliminating the deficit, not the debt.

But these are minor points if IRs spike upwards. You cannot QE forever. (If you could, no country would have had hyperinflation ever.)

The moment of reckoning (having to go to the markets) will arrive, sooner or later.

Edited by Tired of Waiting
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They may keep IRs low while they QE, but they can't keep doing that forever, and when they stop, the higher debt/GDP will be very expensive to finance via normal punters.

Again: How much interest/year would you require to lend to the Japanese government for 10 years?

Debt profile - you posted a chart with it, above.

To increase VAT from 5% to 20%:

1) It is a huge jump, and would contract the economy.

2) It would just balance the books (if the economy didn't contract), eliminating the deficit, not the debt.

But these are minor points if IRs spike upwards. You cannot QE forever. (If you could, no country would have had hyperinflation ever.)

The moment of reckoning (having to go to the markets) will arrive, sooner or later.

The debt chart above is a year out of date so I am struggling to understand how you came up with the assertion that Japan rolls over 25% of its debt every year.

Anyway I think we have argued enough. I will make a prediction however. IRs in the US, UK and Japan will remain low until such time there is a sustained economic recovery. I suspect this will mean that IRs will be low in 2020 and you will doubtless still be confused why this is and worried about the collapse any day now.

Edited by FaFa!
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As a keen cyclist in London I am very up on potholes. The degradation in the quality of London roads is +very+ bad. I can't imagine what it will be like after this winter if we have a lot of freeze/thaw.

These are on well-used roads. At some point such cuts will catch up with us and instead councils will have to either start deficit spending again or stop paying themselves massive salaries / pensions and instead provide services.

Labour inflated council salaries, the coaltition are also printing to keep them high. As time goes on there will be two lots to pay, inflated salaries and then the pensions of those who have retired. We are going to have to pay more and more council tax for less and less services. The fat cats at the top will keep cutting services and jobs at the bottom to protect their pay and pensions.

A Freedom of Information request here showing pension contributions took 48.5% of Dundee's Council Tax though the council prefer to say it is 6% of total income. http://www.whatdotheyknow.com/request/council_tax_and_pensions_4

Plus of course we now have councillors using our council tax to fund FTB deposits

http://www.housepricecrash.co.uk/forum/index.php?showtopic=165526&view=findpost&p=909096079

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Ah this is why I didn't understand why you pulled up my post, it's because we're talking at crossed purposes. I was remarking to the other chap that as long as you bear in mind that rates will eventually rise and so you don't overextend yourself (i.e. make sure that you can still afford a mortgage if it goes over 8%), then there is no problem with buying while rates are low. You seem to feel that I'm advising that people should buy now even if they can only just afford the repayments. Clearly I'm saying nothing of the sort.

It will be easier in 2 or 3 years time for exactly the reasons I gave in my post. You'll have gotten through a period where you have a lot of 'one-off' purchases and your finances will have settled back down. If you believe that interest rates are going to shoot up, then whether you buy now or buy in 3 to 5 years time, you will still be impacted by these rate rises, but at least someone who bought during a period of low rates will have gotten past that 'one-off purchases' stage.

For what it's worth, I think that we will continue to have low rates way beyond 2015. I think the problems the West faces with debt will not unwind for the best part of a decade and Central Banks won't rush to put up interest rates while their economies are still bumping along the bottom. We've had a sustained period of economic profligacy, this will not be repaired overnight, as we have seen already over the past 5 years.

Had I bought 3 years ago, it would not be easier to pay my mortgage now because of all the sorts of reasons I gave in my earlier post.

Things may look fine if you joined the pyramid scheme pre-2008 but now you are struggling for a new bunch of mugs to join you.

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Had I bought 3 years ago, it would not be easier to pay my mortgage now because of all the sorts of reasons I gave in my earlier post.

Things may look fine if you joined the pyramid scheme pre-2008 but now you are struggling for a new bunch of mugs to join you.

I'm afraid I don't really think I understand your reasons, sorry. I had assumed that you have decided not to buy because you were afraid of interest rates rising in future, hence my point about them rising regardless of when you buy but at least you might get a few years respite while you renovate or over pay (or both). Apologies if I have misunderstood your reasons (you'll have to put them into laymans terms for me I'm afraid.).

As far as the second half of your post, I'm not struggling for anything. I certainly don't see why people are 'mugs' if they have made the decision to buy a house, just as I don't see them as 'mugs' if they choose not to. Everyone makes their decision to purchase on their own criteria, such as family reasons (school catchment area, settling down to have kids) or financial reasons (renting more expensive than buying, etc.) or whatever. If people have decided to buy (or not) then it's based on their individual criteria and as such the timing may be perfect for them.

If you have decided not to buy because of future rising rates, then I guess you're saving up a larger deposit so that you're not as impacted by rates? No problem with that, it's your criteria and your decision.

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I certainly don't see why people are 'mugs' if they have made the decision to buy a house, just as I don't see them as 'mugs' if they choose not to.

But what if it is an enormous Ponzi scheme, that has already made the banks insolvent? What if prices couldn't be sustained at current levels or anywhere near current levels given stagnant earnings and a massive reduction in the availability of mortgage lending?

What if all this was now well known and meticulously documented throughout the mainstream media, for anyone who cared to look and read?

What if you'd already seen nominal falls in 2008 demonstrating that there was nothing impossible about nominal falls? What if the financial crisis seems more intractable in 2012 than it looked in 2008? What if there were significant nominal falls in some parts of the UK market right now?

Wouldn't buying into that market make you a mug, regardless of whether you could support the interest payment on the borrowings you took out to acquire the asset in question, given that you could rent the same thing?

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But what if it is an enormous Ponzi scheme, that has already made the banks insolvent? What if prices couldn't be sustained at current levels or anywhere near current levels given stagnant earnings and a massive reduction in the availability of mortgage lending?

What if all this was now well known and meticulously documented throughout the mainstream media, for anyone who cared to look and read?

What if you'd already seen nominal falls in 2008 demonstrating that there was nothing impossible about nominal falls? What if the financial crisis seems more intractable in 2012 than it looked in 2008? What if there were significant nominal falls in some parts of the UK market right now?

Wouldn't buying into that market make you a mug, regardless of whether you could support the interest payment on the borrowings you took out to acquire the asset in question, given that you could rent the same thing?

Are there significant falls in the UK right now?

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The debt chart above is a year out of date so I am struggling to understand how you came up with the assertion that Japan rolls over 25% of its debt every year.

Anyway I think we have argued enough. I will make a prediction however. IRs in the US, UK and Japan will remain low until such time there is a sustained economic recovery. I suspect this will mean that IRs will be low in 2020 and you will doubtless still be confused why this is and worried about the collapse any day now.

:rolleyes:

Table 2: https://www.imf.org/external/pubs/ft/fm/2012/01/data/fmdata.xlsx

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Are there significant falls in the UK right now?

You've changed your tune - I thought it was all about interest rates staying low, and by implication prices were irrelevant? Now "significant falls" might be worth considering?

A fall of 2.46% YoY for two years will wipe out a 5% deposit on some slave box new build and put you in negative equity. That would be "significant" for me, if I then needed to sell and move to seek work.

Yorkshire and Humber

July 2010 127,216

June 2012 117,908

2 year fall = 7.3%

[source: Land Registry Custom report]

And without rampant HPI to take the sting out of them, the associated transaction costs are going to make an impression if you do have to sell and move, even without a price fall on the asset.

Of course, nobody is going to be losing their job in this economy. Everything has gone back to the boom-tastic pre-2008 days and everything is going to be perfectly fine.

I'm really not convinced that buying subject to your initial caveats is the no-brainer you suggest it is. Have you recently arrived from another planet?

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  • 415 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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