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Radio 4 - The Report

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Earlier this evening, "The Report" on Radio 4, about "Help to Buy". A report in a bit more depth than most of them.

The whole thing could've been produced by HPC. It starts with some people expecting to be helped, then ranges over the bigger issues (it even mentioned that the banks do offer 95% to people who are genuinely credit-worthy, it's only the sub-prime who can't get it). Then to put the boot in, it returns to the people being helped, and explains that it doesn't actually help them.

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Earlier this evening, "The Report" on Radio 4, about "Help to Buy". A report in a bit more depth than most of them.

The whole thing could've been produced by HPC. It starts with some people expecting to be helped, then ranges over the bigger issues (it even mentioned that the banks do offer 95% to people who are genuinely credit-worthy, it's only the sub-prime who can't get it). Then to put the boot in, it returns to the people being helped, and explains that it doesn't actually help them.

Good, good. :)

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I liked the lady selling her bungalow for nearly half a million, when asked if she would drop the price, replied, "I'm not giving it away".

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I liked the lady selling her bungalow for nearly half a million, when asked if she would drop the price, replied, "I'm not giving it away".

This housing bubble is a godsend not just for the retiring boomers but also for the govt re pensions and eldery care.

They ain't worried about 20 years or longer down the line as they won't be around then. More screwing of future generations.

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Please link if/when available ...

http://www.bbc.co.uk/programmes/b03bs384

"The government announced this week that it was bringing it's new help to buy scheme forward to start in a few days time. Its a policy designed to help get the housing market moving. But will it really be a lifeline for hardworking families wanting to get on the property ladder or will it drive up prices and cause a housing bubble? Helen Grady finds out who the scheme is likely to benefit and talks to people trying to buy and sell in York and London."

Edited by BarnetBear

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Would this programme have been made if Labour were introducing this measure?

Doubt it.

Another line of argument would be that whilst house prices were inflating and lots of people were MEWing out the increase, nobody wanted to hear a story about how it was all going nowhere good.

Now transaction volumes are much reduced. Even at intriguingly low interest rates houses are unaffordable, hence the saleable story gradually (very ***king gradually) moves towards a consideration of the brute fact that we've conspired to price ourselves out of our houses.

IMO this is not a Labour/Tory matter. This is the next reconfiguration of the economy following the Great Depression. During the Great Depression, letting banks go accentuated the problems and a point came where standing behind the banks created a situation where prosperity could return. IMO presently we are facing a situation where standing behind the banks is facilitating a significant wealth transfer from those whose financial interests are not allied to the banks towards those whose financial interests are allied to the banks.

In the UK this is principally happening because Osborne is fighting today's war with yesterday's tools. Where you have an honest market for government debt, then government should pursue policies that secure a favourable assessment from the collective wisdom of potential and actual investors in that debt. However, when you reconfigure that market to be a mirror that tells you only what you want to hear (QE) then you are ill advised if you take its opinion too seriously.

IMO the principal change that follows from the financial crisis is that we are now openly exploring the limits of fiat money and banking (in the absence of bank runs to provide some kind of health check) to provide increased prosperity in a world where money can expand without limit as debt increases and where banks don't fail because people lose confidence in them but rather banks only fail if a political decision is made that we can tolerate their failure. We've essentially moved to a novel system of money that isn't really money. I'd argue that House Price Inflation is a signal that the money is broken.

If you reckon on almost 100 years between the indications that something was awry before the Great Depression and the onset of our present troubles then hopefully you'll buy my present surmise, which is that the hpc analysis is bang on - it's all going nowhere good, but the time scales are quite long, so over even a 5 yr horizon, the fact that you're right might get lost in the noise.

In the end I favour a choice that is based on values not value. If the offer is rent or get balls deep in debt in the hope that some younger sucker can in due course be found to take on debts that make your debts look like a passing flirtation with material bondage and make you better off for being courageous about debt, (at the cost of them being worse off), I'd rather rent and take my chances.

If the only game in town is driving down interest rates so that more debt can be carried (and idiotic bubble asset valuations can be supported) then the only game on offer is the destruction of fiat money as an effective tool and with it our primary cultural tool for accurately communicating economic wants and needs.

But a good idea finds a way - hence all the hidden inflation. The problems are manifest when Bank of England legal tender stops acting like money when it comes to buying something you really need, like shelter.

Edited by ChairmanOfTheBored

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Another line of argument would be that whilst house prices were inflating and lots of people were MEWing out the increase, nobody wanted to hear a story about how it was all going nowhere good.

Now transaction volumes are much reduced. Even at intriguingly low interest rates houses are unaffordable, hence the saleable story gradually (very ***king gradually) moves towards a consideration of the brute fact that we've conspired to price ourselves out of our houses.

IMO this is not a Labour/Tory matter. This is the next reconfiguration of the economy following the Great Depression. During the Great Depression, letting banks go accentuated the problems and a point came where standing behind the banks created a situation where prosperity could return. IMO presently we are facing a situation where standing behind the banks is facilitating a significant wealth transfer from those whose financial interests are not allied to the banks towards those whose financial interests are allied to the banks.

In the UK this is principally happening because Osborne is fighting today's war with yesterday's tools. Where you have an honest market for government debt, then government should pursue policies that secure a favourable assessment from the collective wisdom of potential and actual investors in that debt. However, when you reconfigure that market to be a mirror that tells you only what you want to hear (QE) then you are ill advised if you take its opinion too seriously.

IMO the principal change that follows from the financial crisis is that we are now openly exploring the limits of fiat money and banking (in the absence of bank runs to provide some kind of health check) to provide increased prosperity in a world where money can expand without limit as debt increases and where banks don't fail because people lose confidence in them but rather banks only fail if a political decision is made that we can tolerate their failure. We've essentially moved to a novel system of money that isn't really money. I'd argue that House Price Inflation is a signal that the money is broken.

If you reckon on almost 100 years between the indications that something was awry before the Great Depression and the onset of our present troubles then hopefully you'll buy my present surmise, which is that the hpc analysis is bang on - it's all going nowhere good, but the time scales are quite long, so over even a 5 yr horizon, the fact that you're right might get lost in the noise.

In the end I favour a choice that is based on values not value. If the offer is rent or get balls deep in debt in the hope that some younger sucker can in due course be found to take on debts that make your debts look like a passing flirtation with material bondage and make you better off for being courageous about debt, (at the cost of them being worse off), I'd rather rent and take my chances.

If the only game in town is driving down interest rates so that more debt can be carried (and idiotic bubble asset valuations can be supported) then the only game on offer is the destruction of fiat money as an effective tool and with it our primary cultural tool for accurately communicating economic wants and needs.

But a good idea finds a way - hence all the hidden inflation. The problems are manifest when Bank of England legal tender stops acting like money when it comes to buying something you really need, like shelter.

The market can stay irrational longer than you can stay solvent.

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If the only game in town is driving down interest rates so that more debt can be carried (and idiotic bubble asset valuations can be supported) then the only game on offer is the destruction of fiat money as an effective tool and with it our primary cultural tool for accurately communicating economic wants and needs.

But a good idea finds a way - hence all the hidden inflation. The problems are manifest when Bank of England legal tender stops acting like money when it comes to buying something you really need, like shelter.

Agree completely with your conclusions. For the majority, the concepts of wealth and money, which used to be connected, are no longer connected.

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But a good idea finds a way - hence all the hidden inflation. The problems are manifest when Bank of England legal tender stops acting like money when it comes to buying something you really need, like shelter.

So after all that you invest in ... gold?

I think the basic point on the price of accommodation is that all the inflation has already happened and that it must reverse.

The currency will do fine.

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I liked the lady selling her bungalow for nearly half a million, when asked if she would drop the price, replied, "I'm not giving it away".

Produced some laffs round the dinner table that one, and also gave me the concept of the phantom bubble Osbourne has created. With all his blather he has the people believing that house prices are going up, he'll make sure of it, but by gosh they ain't.

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We were looking at rightmove yesterday over in Somerset. It is still much cheaper to rent a 3 bedroom detached bungalow/house with a reasonable garden then it is to buy one.

Most of the rentals look like someone has died, and the property is being let out as is complete with furniture.

you are looking at £700pcm rent or £200,000 to £300,000 depending upon the mystical price of the area is. I noticed that Street and Glastonbury have a lot higher mystical figure than areas 3/4 mile away from there. I call it a mystical figure as I can't see and economical reason for it.

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This was great, thanks for sharing.

The Boomer lady who'd had her house near York on the market for 2 years with almost no interest because she wasn't "giving it away" provided a good bit of comic relief.

Incredible that in Walthamstow it is becoming normal for couples earning 2x£35k to buy houses over £300k. Sounded like very frothy jobs too, fashion and media.

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So after all that you invest in ... gold?

I think the basic point on the price of accommodation is that all the inflation has already happened and that it must reverse.

The currency will do fine.

Firstly, you need a personal surplus...

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We were looking at rightmove yesterday over in Somerset. It is still much cheaper to rent a 3 bedroom detached bungalow/house with a reasonable garden then it is to buy one.

Most of the rentals look like someone has died, and the property is being let out as is complete with furniture.

you are looking at £700pcm rent or £200,000 to £300,000 depending upon the mystical price of the area is. I noticed that Street and Glastonbury have a lot higher mystical figure than areas 3/4 mile away from there. I call it a mystical figure as I can't see and economical reason for it.

The real reason for the 1988 Housing Act and the AST IMO. Renting as a means of putting a brake on HPC and the ability to suspend the reality of 'mark to unicorn' house values. But there is a point where even renting might be reaching saturation.

This might be happening in my town and I think the massive growth in student accommodation might be the tipping point. Early days though.

Of course if you have inherited you have really nothing to loose by hanging on, even if the place remains empty. Only a few Councils like Brighton are active in trying to put empty homes to use, though the owners risk chasing the market down.

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I think that improving tenancy laws (for the benefit of the tenant) are a good way of deflating the bubble. The Tories have suggested this, but whether they'll go through it remains to be seen.

BTL politicians (and their chums) could get out before the legislation came in to force, it would be a vote winner for many young renters, and it would be a general vote winner for anyone who isn't invested in property.

I don't think the average Strictly watcher, who likes the value of their house to increase YoY would make the connection between these tenancy laws and house prices, so it wouldn't be threatening to the average "hardworking homeowner".

Probably won't happen though. Too many rentier VIs.

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