Is It Game Over?

[winkie]

I note nobody has commented on my refutation of Scepticus' basic economic assumption, i.e. there is only so much to go round. Anyone care to refute my refutation? It is, after all, germane to the argument.

With you on that one.

[tomandlu]

I note nobody has commented on my refutation of Scepticus' basic economic assumption, i.e. there is only so much to go round. Anyone care to refute my refutation? It is, after all, germane to the argument.

I'm still puzzling over the post in question (which I thoroughly enjoyed). I guess the way to resolve it is to take it to its extreme and ask "what would happen if housing was free?" My answer to that would be, wages would fall but our international trade and, consequently, balance of payments would go positive or reach equilibrium. So, no richer, but less tick...

[Injin]

I'm still puzzling over the post in question (which I thoroughly enjoyed). I guess the way to resolve it is to take it to its extreme and ask "what would happen if housing was free?" My answer to that would be, wages would fall but our international trade and, consequently, balance of payments would go positive or reach equilibrium. So, no richer, but less tick...

The thing is that there is no "our."

[swissy_fit]

I note nobody has commented on my refutation of Scepticus' basic economic assumption, i.e. there is only so much to go round. Anyone care to refute my refutation? It is, after all, germane to the argument.

There is so much bull in Scepticus's big post it's hardly worth refuting, he talks like a banker. The worst bits are here, below. Unbelievable, and dressed up as wisdom.

The point is of course that real housing costs cannot fall in aggregate for the UK, so we all have more disposable income, unless we have somehow all "got richer" in a real sense. And without cheaper energy or much more productive workforce, that can't happen. To think otherwise is the worst kind of self delusion. The UK economy, and pretty much all others have been deeply unfair since the Romans left, and the existence of markets and democracy have not changed that. Don't expect them to.

Yes, we could have price deflation in theory but only if the quantity of poor are maintained which must mean falling nominal wages, loss of savings deposits and an increase in real living costs (despite prices falling). There is no free lunch with price deflation.

quote]

[tomandlu]

There is so much bull in Scepticus's big post it's hardly worth refuting, he talks like a banker. The worst bits are here, below. Unbelievable, and dressed up as wisdom.

I'm not so dismissive (but then I'm pretty thick when it comes to economics). My take on it would be that more affordable housing on its own cannot make us, in aggregate, any richer (even with an increase in supply). Where he may well be wrong is that he ignores other changes that would arise from such a scenario.

[Injin]

I'm not so dismissive (but then I'm pretty thick when it comes to economics). My take on it would be that more affordable housing on its own cannot make us, in aggregate, any richer (even with an increase in supply). Where he may well be wrong is that he ignores other changes that would arise from such a scenario.

He's basically saying that we are just as rich now as when we were cavemen.

As I said before, he completely ignores the interaction with the real world. Guys either a shill or a ******wit. Avoid.

[Bloo Loo]

I'm not so dismissive (but then I'm pretty thick when it comes to economics). My take on it would be that more affordable housing on its own cannot make us, in aggregate, any richer (even with an increase in supply). Where he may well be wrong is that he ignores other changes that would arise from such a scenario.

he is looking at it from the point of view of the available accounted wealth.

Of course, if you have a 3 bed house, you have a 3 bed house. thats reality.

from the accounted wealth point of view, you may have a 3 bed semi, 100K of equity and 100K of debt. in effect, you have zero value in this 100% mortgage scenario.

doing away with mortgages, your equity will be whatever someone else could offer to pay...that is the accounted wealth you have..and this will vary on a number fo factors S+D, the value of money, jobs etc etc...

He seems to be saying that the accounted value including all the leverage in it would disappear, and so would your wealth...

To me, you could lose all the accounted wealth, and STILL have a house...If your wages now were used to buy things rather than support the price of the house, then the rest of the economy would benefit.

He therefore implies that serious inflation would follow and your accounted for wealth would once again balance out to where it was before. ie, no change.

Whilst I agree with the principle, I also see a major cost being removed...the banks skim. this would make everyone else a little wealthier,

and today, the banks skim is no small amount..

Edited July 30, 2013 by Bloo Loo

[easy2012]

There is so much bull in Scepticus's big post it's hardly worth refuting, he talks like a banker. The worst bits are here, below. Unbelievable, and dressed up as wisdom.

The point is of course that real housing costs cannot fall in aggregate for the UK, so we all have more disposable income, unless we have somehow all "got richer" in a real sense. And without cheaper energy or much more productive workforce, that can't happen. To think otherwise is the worst kind of self delusion. The UK economy, and pretty much all others have been deeply unfair since the Romans left, and the existence of markets and democracy have not changed that. Don't expect them to.

Yes, we could have price deflation in theory but only if the quantity of poor are maintained which must mean falling nominal wages, loss of savings deposits and an increase in real living costs (despite prices falling). There is no free lunch with price deflation.

What he said is slightly flawed but convey an important point. The question here for you is that if a house cost £50k each and the salary stays the same what would likely happen to the extra cash now freed up?

[Panda]

He's basically saying that we are just as rich now as when we were cavemen.

Good to see you back my old friend, where you been, its a better place to have you mixing it up on here......

[Bloo Loo]

What he said is slightly flawed but convey an important point. The question here for you is that if a house cost £50k each and the salary stays the same what would likely happen to the extra cash now freed up?

before, or after, the correction...we arent starting from scratch here.

[easy2012]

To me, you could lose all the accounted wealth, and STILL have a house...If your wages now were used to buy things rather than support the price of the house, then the rest of the economy would benefit.

He therefore implies that serious inflation would follow and your accounted for wealth would once again balance out to where it was before. ie, no change.

Whilst I agree with the principle, I also see a major cost being removed...the banks skim. this would make everyone else a little wealthier,

and today, the banks skim is no small amount..

The rest of the economy will benefit only if it gears up its capacities to absorb the extra cash. But as now everyone can easily afford a Semi and a Car, why bother with the extra shift or extra job as opposed to watching Chelsea vs Totthem or Desperate house wives or go fishing?

The bank skim issue is an important want, but it talks about the division of the real wealth within the system (i.e. bankers get to buy the extra champagne). Total economic capacities remain the same (more or less & skimming creates no new wealth, just redistribute existing ones)

[FrozenOut]

I've got a 3 year respite from all this misery - as you can see, I've been here forever as well.

I now live at a house owned by my boomer parents - they purchased my grandmothers house in the original right to buy scheme back in the 80's - the house has been done out and I can save now for 3 years, but I don't expect much to change myself in the market by that time. They quite simply will stop at nothing to keep this beast alive. I'm voting UKIP at the next election only because they will deal with the 'supply' problem by stopping immigration which essentially is what keeps this pozi scheme running. I simply won't vote LIBLABCON again, they're all masks on the same face.

[easy2012]

before, or after, the correction...we arent starting from scratch here.

New equilibirium will be reached eventually.

But just let's say the AllocatorCentralProcessor 1 found a way to build houses at £50k and go out to build as many houses as possible and to pin the house prices at £50k (and will build more to meet any new demand). (It is allowed to take lands as it likes).

Describe the effect / price levels of the rest of the economy after the above is implemented.

[Bloo Loo]

New equilibirium will be reached eventually.

But just let's say the AllocatorCentralProcessor 1 found a way to build houses at £50k and go out to build as many houses as possible and to pin the house prices at £50k (and will build more to meet any new demand). (It is allowed to take lands as it likes).

Describe the effect / price levels of the rest of the economy after the above is implemented.

depends entirely what people decided to spend their excess on...maybe they wouldnt spend so much on their numero uno asset, maybe theyd buy a new car every 3 years, maybe theyd have a holiday.

Many would see job losses and pay cuts...it would, as you say all balance out, as it must..

But the SKIM is gone..

[easy2012]

depends entirely what people decided to spend their excess on...maybe they wouldnt spend so much on their numero uno asset, maybe theyd buy a new car every 3 years, maybe theyd have a holiday.

Many would see job losses and pay cuts...it would, as you say all balance out, as it must..

But the SKIM is gone..

I would say the skim will be reduced. But don't forget the second source of skim - the state may well fill up the vacuum.

[Injin]

I would say the skim will be reduced. But don't forget the second source of skim - the state may well fill up the vacuum.

The skim won't be reduced.

What will happen instead is that some people will go homeless, or in extremis, killed off.

[Bloo Loo]

The skim won't be reduced.

What will happen instead is that some people will go homeless, or in extremis, killed off.

Lots of possibilities...but the biggest danger is Government greed...but that is happening as we speak anyway...there is nothing that can be done about it by plebs like me.

In any case, they arent ever going to ban mortgages on private residence, cut Public salaries by 50% over 25K, cut public sector pensions and other benefits until they really screw things up..

I suspect the Injin Scenario will take place.

[Blue Nose Bear]

Hi Spoony,

Sorry your thread seems to have been hijacked.

Haven't posted for a while but your original has prompted me, as I can sympathise with your position, but have now realised that in the Uk, the £ and property prices are linked by a very short elastic.

The crash you and I were expecting hasn't and wont happen, not in the terms that I (and sorry if I do you an injustice) you, would recognise.

You see the linkage between UK Houseprices and the £, is fundamental to the way successive governments have manipulated the electorate in raising the 'feel good' factor at key election periods and the situation remains, as it is a key motivator to the majority.

Unless you were extremely fortunate to be a successful boomer (Trust me, not all boomers are living in out right owned houses they bought for thrupence). Or if your really clever (if you haven't already guessed, I'm not!) The key is to step out of the UK Housing/£ linked market and into other investments at the right time ( Yes that is a hat tip to the gold bugs, who read it right), you are not ever going to see an HPC, that I would recognise.

Must admit, I haven't read the whole thread, but there has been some good advice from what I've read.

Didn't catch what your 'trade' is, if you metioned it, but I'd seriously consider emigration if I were you.

And don't be down hearted about your last 10 years, there are some loonies on here, but also some wise people, your original post and experience indicates that you are in the latter.

Use your experience to your advantage.

Best Regards and Good Luck

BlueNose

[Tired of Waiting]

(...) I also see a major cost being removed...the banks skim. this would make everyone else a little wealthier,

and today, the banks skim is no small amount..

"Skiming" is indeed the main brake on our real, productive economy, but not only by banks: by landlords as well, millions of them, residential and commercial. If our productive sectors (workers, businesses, and government services) were not saddled with so much dead weight . . see my sig . . .

[swissy_fit]

What he said is slightly flawed but convey an important point. The question here for you is that if a house cost £50k each and the salary stays the same what would likely happen to the extra cash now freed up?

Only partially relevant, if the interest rates are in the real world the 50k house (which is an exaggeration anyway, the average price would not fall so low) will not be quite as "cheap" as it appears.

Every single argument Scepticus makes is in justification of what has been done (ie the elimination of moral hazard, socialisation of bankers debts and money printing) which is why I think he works for a bank or in finance.

[scepticus]

Every single argument Scepticus makes is in justification of what has been done (ie the elimination of moral hazard, socialisation of bankers debts and money printing) which is why I think he works for a bank or in finance.

I have often talked openly about what I do for a living on this site. It ain't banking or even remotely connected with finance.

Various people here can consign your unworthy speculation above to the dustbin.

[slacker]

The crash you and I were expecting hasn't and wont happen, not in the terms that I (and sorry if I do you an injustice) you, would recognise.

It can't not happen.

Government is going to risk all to hold off until 2015. Base rates are only going up not down. A sizeable demographic has to cash out to retire in next few years - that will become a stampede for the door. Credit will cost 9%+ in 2016.

Under 40s won't want a property - and when they get in to government are going to be taxing the arses off the older generations as payback for the mess they've been left.

Property won't be a pension - and the state won't be giving you one either - we'll be the generations that mortgaged their future and they're not going to let us forget that.

[Bloo Loo]

"Skiming" is indeed the main brake on our real, productive economy, but not only by banks: by landlords as well, millions of them, residential and commercial. If our productive sectors (workers, businesses, and government services) were not saddled with so much dead weight . . see my sig . . .

thats because they use and encourage private landlords to use rent as a percentage of the current value of the house...and BTL expect to make a margin...so rents become forced into a function of mortgage costs.

If there are no mortgages, then rent becomes a function wages and competition.

oh, and government permanent handouts.

[scepticus]

depends entirely what people decided to spend their excess on...maybe they wouldnt spend so much on their numero uno asset, maybe theyd buy a new car every 3 years, maybe theyd have a holiday.

Many would see job losses and pay cuts...it would, as you say all balance out, as it must..

But the SKIM is gone..

[Injin]

I have often talked openly about what I do for a living on this site. It ain't banking or even remotely connected with finance.

Various people here can consign your unworthy speculation above to the dustbin.

If not shill then idiot.

Question resolved!

That was easy.