apom Posted November 16, 2005 Share Posted November 16, 2005 There is a sum to do here. 7% of homes change hands each year. In a healthy market.. the average house price is now £190.000 there are about 21,300.000 homes Say the mortgage to buy it is £170,000 so that is 1491000 homes a year changing hands. or an increase to the debt burden of £253,470,000,000 a year. The mortgages sliding of the end of the 25 year repayment were not so high.. in five years £1,267,350,000,000 oh.... did we just double the debt burden?? The massive debt burden that we are struggling with now... I think that perhaps house prices can go up more.... and there is low inflation.. Kept low... on purpose.... ahead of all other considerations.. So the debt isn't shrinking.. House prices dropped when the decision to keep inflation low was made.. since then.. you have been paying too much.. House prices stay where they are the debt burden crushes the economy.. Go on then bulls.. argue this one... debunk it.. say something... for christ sake.. this is not playgroup.. Primary school.. This is the real world.. and this is damned obvious I find it embarrasing that adults do not understand it. Quote Link to comment Share on other sites More sharing options...
Elizabeth Posted November 16, 2005 Share Posted November 16, 2005 Sorry apom, I'm not a bull, but I once tried to explain to a naive friend what a pyramid scheme was and why she REALLY REALLY shouldn't get involved (despite the dagger looks from the pyramid seller, who was also present!). And my point is? My explanation looked very much like what you have described. Quote Link to comment Share on other sites More sharing options...
apom Posted November 16, 2005 Author Share Posted November 16, 2005 Sorry apom, I'm not a bull, but I once tried to explain to a naive friend what a pyramid scheme was and why she REALLY REALLY shouldn't get involved (despite the dagger looks from the pyramid seller, who was also present!). And my point is? My explanation looked very much like what you have described. The most important thing to remember is that. THERE IS NO WAY THAT THE ECONOMY CAN SUPPORT CURRENT PRICES. NONE AT ALL CANT BE ARGUED AND PEOPLE ARE SO DUMB THAT THEY WILL TAKE THE ECONOMY AS FAR AS THEY CAN UNTIL IT GOES POP. Why don't I buy...? because we are in a country heading to very difficult times. being driven by stupid people and debt. Quote Link to comment Share on other sites More sharing options...
The Masked Tulip Posted November 16, 2005 Share Posted November 16, 2005 A friend bought a new Vauxhall people carrier last Dec. I told her that a newer model was coming out in the Spring so she should either wait for the new model or wait till January when the old models would be discounted and cheap finance would be available. She WOULD not wait. She bought with a loan from a bank. Come January the old model was both heavilly discounted and 0% interest deals were made available. The UK population is crap at finances. Women will not wait. Both together is a receipe for global recession. Quote Link to comment Share on other sites More sharing options...
BuyingBear Posted November 16, 2005 Share Posted November 16, 2005 The most important thing to remember is that. THERE IS NO WAY THAT THE ECONOMY CAN SUPPORT CURRENT PRICES. NONE AT ALL There is one way; hyperinflation, but obviously that brings its own problems. Quote Link to comment Share on other sites More sharing options...
apom Posted November 16, 2005 Author Share Posted November 16, 2005 There is one way; hyperinflation, but obviously that brings its own problems. true. Which is the natural result of what is happening. and this will be the only way out if the debt burden continues to raise. but don't forget.. the mpc sole job is to stop the inflation.. Quote Link to comment Share on other sites More sharing options...
a j Posted November 17, 2005 Share Posted November 17, 2005 true. Which is the natural result of what is happening. and this will be the only way out if the debt burden continues to raise. but don't forget.. the mpc sole job is to stop the inflation.. My big fear is that the Government may try to inflate their way out of trouble. Quote Link to comment Share on other sites More sharing options...
chevin Posted November 17, 2005 Share Posted November 17, 2005 just a small point. New mortgages aren't wholly new debt. Most people carry over an existing debt burden from an early mortgage. Quote Link to comment Share on other sites More sharing options...
apom Posted November 17, 2005 Author Share Posted November 17, 2005 just a small point. New mortgages aren't wholly new debt. Most people carry over an existing debt burden from an early mortgage. Damn good point... But if we have increased the debt burden by £600,000,000,000 in seven years.. and houseprices were inflating to current levels durring that time.. and now are at a peak.. then the debt load gained would be huge.. So the best way to calculate this would be to look at the increase in debt over the last two years.. extrapolate that out.. anyway.... Until debunked and quite accuratly so by Chevin my point was that we are struggling to pay the debt in the economy now. If house prices stay where they are.. the debt burden has to get massivly worse. and as for inflating theri way out of trouble. We are led to believe that the MPC remit is to at all costs stop inflation.. Granted they failed a bit on taxes and houses.. but convieniently they were dropped from the inflation calcs.. Question.. If people are too easily lied to do they deserve their debt? and at what point does government spin become lies? and how much damage do these lies have to do to the citizens of the country before these lies become treason.? Quote Link to comment Share on other sites More sharing options...
munro Posted November 17, 2005 Share Posted November 17, 2005 I'm beginning to think that what's underpinning a lot of this, and is beginning to go hideously wrong, is central banks' obsession with inflation targetting. Two reasons: 1. People have adjusted their economic behaviour to low interest rates but NOT to low wage inflation. The first without the latter is a recipe for a long, slow, and very painful readjustment, as debts just don't get eroded in the way that folk myth (what people have had drummed into them by their parents all their lives) is now WRONG WRONG WRONG. 2. In creating a climate of stability central banks show that they will take whatever action is necessary to shield the economy generally from speculative excess. The consequence is that speculators know they can move into a market, ramp prices, suck in new muppets with sophisticated financial engineering, and so on and so on, KNOWING that they have an insurance policy against the consequences - because they know the central banks will maintain a stable backdrop whatever the cost. Where this cost is borne by us collectively so it looks like a victimless crime. This myth of stability is truly dangerous because it looks like a one-way bet and I'm sure the really smart money is ruthlessly exploiting this trend. This mania for stability at whatever cost has distinguished recent central bank policy round the western world and I see Bernanke is committed to it - even more so than Greenspan. So the speculators are delighted with him as they know he'll continue to compensate for their excesses at our expense while they can get on with screwing us over for mega-bucks. Can't think of any other rationale for the current madness. Quote Link to comment Share on other sites More sharing options...
AteMoose Posted November 17, 2005 Share Posted November 17, 2005 (edited) People no longer see debt as debt, its just a 'fixed' payment and the end of the mounth, they live from mounth to mounth, they know how much goes in, how much goes out and they get debts that match up the difference in repayments.... It doesnt matter how big the loan is if your living from mounth to mounth. On of my team members, a young lad lived like this, he had a two seater MG, loads of debts was always buying electric items and clothes on credit and always had no money, he struggled at the end of the mounth to make it to the next mounth. ALOT of people in the uk are living like this. Of course these people are in for a big shock if the fixed payment increases because of interest rates, if they loose there job, or there car breaks down or the need something essential. Edited November 17, 2005 by moosetea Quote Link to comment Share on other sites More sharing options...
Elizabeth Posted November 17, 2005 Share Posted November 17, 2005 (edited) A friend bought a new Vauxhall people carrier last Dec. I told her that a newer model was coming out in the Spring so she should either wait for the new model or wait till January when the old models would be discounted and cheap finance would be available. She WOULD not wait. She bought with a loan from a bank. Come January the old model was both heavilly discounted and 0% interest deals were made available. The UK population is crap at finances. Women will not wait. Both together is a receipe for global recession. Your right. Were back to the instant gratification discussion. This is (once again) an entire population unable to take into account delayed risk v reward (and that one is between lifespan development target 4 to 6 ) and driven by a lack of impulse control (8 and 9!) and So effectively this is a nation of emotional 8 year olds (which also coincidentally (or not ) corresponds with the target reading age of the red top newspapers). Basically a nation in arrested development (well, its not fair to lay it all at Blighty's feet, Australia is just the same) Edited November 17, 2005 by Elizabeth Quote Link to comment Share on other sites More sharing options...
English Rose Posted November 17, 2005 Share Posted November 17, 2005 A lot people don't really think through the financials when they buy a house. Sad thing is, they they think that financial stuff and leave it all to the 'friendly experts' who are telling them this is a great time to buy, we're being flexible with the amount we'll lend you etc etc. Quote Link to comment Share on other sites More sharing options...
apom Posted November 17, 2005 Author Share Posted November 17, 2005 I mentioned the possibility of rates rises at work... I got a knowing smile from an over mortgaged idiot... "I think we both agree the high interest rates are a bad thing..." I replied that I was only suggesting by a quarter.. and that would still leave us way below average.. and personally thought that higher rates would be fab for my saving.." "What about people who have bought and have high mortgages...?" "you would have to be an idiot to.. never mind... I had shut up and wandered of.. Quote Link to comment Share on other sites More sharing options...
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