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bobalicious

London: The Parasitic City

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http://www.economist..._parasitic_city

"...Keep that in mind when you read stories about Britain's struggling economy; its lagging growth and productivity performance, and its difficulties raising exports. It's largely down to those great vampiric beasts that bestride London's economy. You know, the homeowners."

Interesting external view clearly showing the damage done to the broader economcy by artificially inflated asset prices.

Similar observations (though less extreme) could be made of broader UK property market.

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UK needs to exit the London zone, and the sterling zone to regain competitiveness.

Or kick London out - which would be the simplest solution.

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The parasitic city

There's no mention in the article but it needn't be quite so parasitic if the government didn't follow housing policies that seem aimed at making it extremely even more so. Unrestricted purchases from overseas and Help to Buy and so on.

Edited by billybong

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There's no mention in the article but it needn't be quite so parasitic if the government didn't follow housing policies that seem aimed at making it extremely even more so. Unrestricted purchases from overseas and Help to Buy and so on.

Also falls into the trap of thinking that London's other industry is productive, when it is also, to a large extent, parasitic and/or taxpayer funded.

Still, not a bad article.

Edited by (Blizzard)

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Also falls into the trap of thinking that London's other industry is productive, when it is also, to a large extent, parasitic and/or taxpayer funded.

Still, not a bad article.

Indeed. The word "productive" was used but the article didn't clarify what it meant by that.

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UK needs to exit the London zone, and the sterling zone to regain competitiveness.

Or kick London out - which would be the simplest solution.

Unless the rest of the UK identified the financial/political forces that created the London parasite and found a way to stop them, another London would just grow somewhere else. Soon everybody would be complaining about the Birmingham-centric press and how Birmingham was sucking all the wealth out of the economy.

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Also falls into the trap of thinking that London's other industry is productive, when it is also, to a large extent, parasitic and/or taxpayer funded.

+1. Including cuts that are going to begin affecting many of those working in the law.

the consumption amenities in the city are very nearly unrivalled. And the city is also extremely productive, in financial services of course but in other businesses as well.

Expanding on what is meant by 'consumption amenities' in the article, although there has to be a limit of prices and values property can reach however nice and historical a city is. I'm surprised so many businesses still choose to stay in London with its high-costs, when costs are cheaper elsewhere, including Manchester, but Germany along with others wants a piece of our financial sector iirc. The prices are mostly a function of credit imo, China's massive monetary reflation recently hasn't helped.

looked at 150 metropolitan areas around the United States and found hat those rich in what they called "consumption amenities" - the things that make a city delightful, such as parks, historic sites, museums, and beaches - "disproportionally attracted highly educated individuals and experienced faster housing price appreciation."In other words, urban growth and prosperity have less to do with transportation links and industrial infrastructure than the patterns that govern behavior at a social mixer: Beautiful and charming cities draw a crowd, while the featureless and unattractive wilt like wallflowers.

http://www.boston.com/bostonglobe/ideas/articles/2008/12/28/urban_playground/?page=1

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I recently read some article discussing the Ernst and Young annual survey of the attractiveness of the UK for foreign direct investment. The survey found that London received 45% of the projects attracted to the UK. It's and incredibly high figure when you think that London doesn't have anywhere near 45% of the UK's population. Scotland's share was on a par with it's population share while Wales was slightly lower than it's share. However, both did better than many of the English regions although I think the north west of England did better than both Wales and Scotland. Anyway, what I'm interested in is why does London receive such a high level of FDI? Do these FDI figures also include house purchases?

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Odd how productive London needs constant liquidity support.

sort of in a Ponzi sort of way.

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From the 2012 UK Attractiveness survey link.

The top three attributes that make the UK attractive to overseas investors are: quality of life, culture and language; the stable political environment; and technology and infrastructure

Quality of life?

Some investors must come from places with even worse congestion - but have no worries the UK is getting there.

Edited by billybong

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From the 2012 UK Attractiveness survey link.

Quality of life?

Some investors must come from places with even worse congestion - but have no worries the UK is getting there.

thats 6 reasons....the 7th is the fact that maths is not required.

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From the 2012 UK Attractiveness survey link.

Quality of life?

Some investors must come from places with even worse congestion - but have no worries the UK is getting there.

I should just record this once - quality of life for almost anyone raised in Asia is heaven in London in comparison if you have 'made it' and have money. The gvt is not going to take it off you, policemen and officials don't shake you down every day for small change, and pollution is fairly low. They speak english, which you do 99 times out of 100. The courts are fair, but byzatines enough to be able to fight any efforts by your old government to get you. You don't have to pay any more tax that you want to, once you are rich enough to employ accountants. Finally, the locals have shown no signs of attacking rich foreigners in their homes.

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They need to spread out jobs from the media, finance, tech and politics. e.g. In USA, these are spread out over LA, New York, San Francisco and Washington DC. In the UK, it is all in the capital city.

Edited by blackgoose

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They need to spread out jobs from the media, finance, tech and politics. e.g. In USA, these are spread out over LA, New York, San Francisco and Washington DC. In the UK, it is all in the capital city.

....the cash/prosperity/action/business etc is spread out more evenly amongst the main towns in lots of countries Germany for example.....here it is all lopsided....having said that with the positives also brings with it the negatives. ;)

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Talking to some oldies from Pakistan on the weekend.

They all own apartments in London, use them every year to get away from the heat in Lahore - approaching 50 C in May.

Pakistan is apparently fewked - electricity and water running out, temperatures rising year-on-year. It is cheaper to fly to London for 2-3 months than stay at home and run a generator to keep the air conditioning on the go. War over the Indian dams inevitable.

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London’s Forced Renters Fuel Apartment Investing Boom

Londoners are increasingly becoming renters whether they like it or not after the U.K. capital’s average home price passed 500,000 pounds ($778,000) last month.

With first-time buyers having to borrow more than ever and save longer to afford a down payment, leasing demand is set to soar, and developers and investors are building like never before. The Greater London Authority estimates households renting privately owned apartments or single-family homes will increase to 37 percent by 2025 from 25 percent last year.

“It’s one of the most exciting, if not the most exciting asset class in the market today,” said Nick Joplin, executive director of Grainger Plc (GRI), the U.K.’s largest publicly traded residential landlord. “Institutions are recognizing that too.”

:rolleyes:

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Low interest/mortgage rates are a transfer of wealth form the regions to London. They have the highest house prices, so the largest mortgages, so benefit the most from low mortgage rates. Savers all over the UK are seeing their income given to Londoners to fuel a housing boom.

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Finally, the locals have shown no signs of attacking rich foreigners in their homes.

Yet.

I read somewhere that most serious social change comes about when the middle class get shafted- which is happening just about now.

They are just starting to figure out that their 'friends' in finance do not have their best interests at heart.

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  • 238 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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