Pensions Debate...

[paradox]

Have you noticed how the mainstream press is banging on about the pensions problem?

Have you noticed how politicians are now quite worried about it - and that some scaling back of pensions in the public and private sector is probably inevitable?

Have you noticed how we will all have to work longer and save more?

Any yet have you noticed that NOBODY has linked this to the fact that so much of our cash that we should be saving is tied up in depreciating property?

NOBODY has suggested some form of credit tightening, or dare I say it credit rationing, to force us to save.

It is all palmed off as individual responsibility when, as we all know, the mind of the individual is largely made up by the spin and gloss emenating from magazines, TV, the neighbours etc. That is why we behave in herds, hunt in packs, get rich together (the 1990s) and get poor together (the 2010s?)

[Milkshock]

Have you noticed how the mainstream press is banging on about the pensions problem?

Have you noticed how politicians are now quite worried about it - and that some scaling back of pensions in the public and private sector is probably inevitable?

Have you noticed how we will all have to work longer and save more?

Any yet have you noticed that NOBODY has linked this to the fact that so much of our cash that we should be saving is tied up in depreciating property?

NOBODY has suggested some form of credit tightening, or dare I say it credit rationing, to force us to save.

It is all palmed off as individual responsibility when, as we all know, the mind of the individual is largely made up by the spin and gloss emenating from magazines, TV, the neighbours etc. That is why we behave in herds, hunt in packs, get rich together (the 1990s) and get poor together (the 2010s?)

restrain credit and governments will be forced to provide basic things that people won't be able to afford like erm houses..........

Edited November 24, 2005 by Milkshock

[MarkG]

Any yet have you noticed that NOBODY has linked this to the fact that so much of our cash that we should be saving is tied up in depreciating property?

And high taxes.

If you take the amount of tax you pay every year and consider the returns if you could make 5-10% a year by investing that money instead, you get some impressive sums at the end of a working lifetime. Admittedly inflation would eat into the real value of that money and you'd have to pay some of it to private companies to replace tax-funded services, but it's possible that taxes in this country cost people more than they'll earn in their entire lives when you include the compound interest if they'd saved the money instead.

[paradox]

But also restrain credit and the price of houses will drop quickly - thus freeing up more money for people to save.

Restrain credit and renting becomes a long term option, allowing people to save and eventually buy (if they want to) a house with a large deposit and a small mortgage.

Restrain credit and tax second homes and BTLs. Houses immediately become a different type of commodoty alltogether. God knows there are enough box like barratt homes to go round, they should be dirt cheap, and they would be if the market was fixed differently.

We fix the market for Alcohol, for Tobacco, for Gambling, for selling Firearms and Guns and for countless other things.

Why cant we fix the market for houses???

In my opinion part of the reason is because a large part of the current political classes are financially tied un to the housing boom. This is just a function of their age and middle classness - but we all pay the price for their inability to recognise the true nature of the British economy.

[Milkshock]

But also restrain credit and the price of houses will drop quickly - thus freeing up more money for people to save.

Restrain credit and renting becomes a long term option, allowing people to save and eventually buy (if they want to) a house with a large deposit and a small mortgage.

Restrain credit and tax second homes and BTLs. Houses immediately become a different type of commodoty alltogether. God knows there are enough box like barratt homes to go round, they should be dirt cheap, and they would be if the market was fixed differently.

We fix the market for Alcohol, for Tobacco, for Gambling, for selling Firearms and Guns and for countless other things.

Why cant we fix the market for houses???

In my opinion part of the reason is because a large part of the current political classes are financially tied un to the housing boom. This is just a function of their age and middle classness - but we all pay the price for their inability to recognise the true nature of the British economy.

i know what you are saying but historically in times of tight credit, there has also been high unemployment - who is going to house/feed/cloth these people without income? bingo - the government. assets will be under control but the social issues that arise from a moneterist scenario are unwelcome - think britain 79-81, france today.

its easier for them to have the average punter look after himself than have them pay for him., hence the current preference for "personal responsibility"

[London Landlady]

But also restrain credit and the price of houses will drop quickly - thus freeing up more money for people to save.

Restrain credit and renting becomes a long term option, allowing people to save and eventually buy (if they want to) a house with a large deposit and a small mortgage.

Restrain credit and tax second homes and BTLs. Houses immediately become a different type of commodoty alltogether. God knows there are enough box like barratt homes to go round, they should be dirt cheap, and they would be if the market was fixed differently.

We fix the market for Alcohol, for Tobacco, for Gambling, for selling Firearms and Guns and for countless other things.

Why cant we fix the market for houses???

In my opinion part of the reason is because a large part of the current political classes are financially tied un to the housing boom. This is just a function of their age and middle classness - but we all pay the price for their inability to recognise the true nature of the British economy.

BTL's are taxed.

There is tax on the income, and capital gains on the apprecaited value.

What more do you want?

[paradox]

Didnt we have credit controls in the 50s and Harold Macmillan told us we never had it so good.

Tight credit can be an effect of weak economic activity etc. But it doesnt have to be.

This is because you can fix it any way you want. You could just tighten credit for mortgages - it used to be a lot more difficult than it is now to get a mortgage.

I am not talking about credit for investment etc.

In France it is almost impossible to get an overdraft. If you made it very difficult for the individual to get credit for consumption and housing, but made it easy to get credit for investment and even for housebuilding for sale and for rent, then you would have a benign housing environment.

In such an environment the prices would fall quickly from their current levels to a new equilibrium. This new level would be based on the actual cost of building a house, plus premiums for location etc.

Therefore in a crappy location the house would be priced at the level of the construction cost plus a profit for the builder.

Around 70,000? or less??

[nobody]

I haven't linked or suggested anything

[London Landlady]

Didnt we have credit controls in the 50s and Harold Macmillan told us we never had it so good.

Tight credit can be an effect of weak economic activity etc. But it doesnt have to be.

This is because you can fix it any way you want. You could just tighten credit for mortgages - it used to be a lot more difficult than it is now to get a mortgage.

I am not talking about credit for investment etc.

In France it is almost impossible to get an overdraft. If you made it very difficult for the individual to get credit for consumption and housing, but made it easy to get credit for investment and even for housebuilding for sale and for rent, then you would have a benign housing environment.

In such an environment the prices would fall quickly from their current levels to a new equilibrium. This new level would be based on the actual cost of building a house, plus premiums for location etc.

Therefore in a crappy location the house would be priced at the level of the construction cost plus a profit for the builder.

Around 70,000? or less??

Isn't the difference between UK & France the amount of available land? prices in Paris are still expensive where land is scarce.

Also, the French have an entirely different view to property - maybe something to do with the french revolution?

Land is cheaper in many areas in France & they do not like doing up houses. - Maybe that is why so many Brits are buying French proerties?

[Milkshock]

Didnt we have credit controls in the 50s and Harold Macmillan told us we never had it so good.

Tight credit can be an effect of weak economic activity etc. But it doesnt have to be.

This is because you can fix it any way you want. You could just tighten credit for mortgages - it used to be a lot more difficult than it is now to get a mortgage.

I am not talking about credit for investment etc.

In France it is almost impossible to get an overdraft. If you made it very difficult for the individual to get credit for consumption and housing, but made it easy to get credit for investment and even for housebuilding for sale and for rent, then you would have a benign housing environment.

In such an environment the prices would fall quickly from their current levels to a new equilibrium. This new level would be based on the actual cost of building a house, plus premiums for location etc.

Therefore in a crappy location the house would be priced at the level of the construction cost plus a profit for the builder.

Around 70,000? or less??

I don't think its hard to get credit for business purposes now - doesnt mean its flourishing - in fact businesses are not doing so well.

hence 25% public sector employment.

i presume you will cut public sector spending in your credit control fantasy?

that's 25% of the workforce thrown out on the scrapheap - the government will face the responsibility of feeding housing and clothing them.

[paradox]

BTL's are taxed.

There is tax on the income, and capital gains on the apprecaited value.

What more do you want?

What more do I want?

If I was chancellor I would say this...

Folks, we have an ageing population and a pensions black hole. We have a younger generation priced out of housing. This younger generation will also have to pay more for the pensions of aforesaid ageing population.

Therefore we are going to have to take some action to encourage people - many people - most people to save. The BTL phenomenon absorbs resources, creates debt that has to be serviced over many years, and it pushes property prices up to unsustainable levels. This is not an economically efficient way of meeting housing demand. Therefore we shall set a policy environment that makes BTL financially unviable and we shall set a policy environment that encourages saving.

Housing need will be met by lower prices, housing associations, and..yes... the return of the council house! We shall remove the restrictions imposed on local authority construction of housing.

There is a practical economic case for this. It is just unfashionable and untrendy so it will not be done.

By the way - I have lived in a council house and been an owner occupier. My council flat was lovely and it is now worth more than the flat I bought when I gave the keys back to the council.

Thats life

[London Landlady]

What more do I want?

If I was chancellor I would say this...

Folks, we have an ageing population and a pensions black hole. We have a younger generation priced out of housing. This younger generation will also have to pay more for the pensions of aforesaid ageing population.

Therefore we are going to have to take some action to encourage people - many people - most people to save. The BTL phenomenon absorbs resources, creates debt that has to be serviced over many years, and it pushes property prices up to unsustainable levels. This is not an economically efficient way of meeting housing demand. Therefore we shall set a policy environment that makes BTL financially unviable and we shall set a policy environment that encourages saving.

Housing need will be met by lower prices, housing associations, and..yes... the return of the council house! We shall remove the restrictions imposed on local authority construction of housing.

There is a practical economic case for this. It is just unfashionable and untrendy so it will not be done.

By the way - I have lived in a council house and been an owner occupier. My council flat was lovely and it is now worth more than the flat I bought when I gave the keys back to the council.

Thats life

But dear Mr Prescott has set up a policy to create affordable housing and apparently most of it is empty.

[paradox]

I don't think its hard to get credit for business purposes now - doesnt mean its flourishing - in fact businesses are not doing so well.

hence 25% public sector employment.

i presume you will cut public sector spending in your credit control fantasy?

that's 25% of the workforce thrown out on the scrapheap - the government will face the responsibility of feeding housing and clothing them.

I am just talking about fixing the housing market and about personal credit. The argument about overall public sector spending is very different. It is only the Anglo Saxon economies that are so liberal about personal debt.

Public spending is actually higher in some continental economies where personal debt is lower. I dont think the two are directly linked from a policy perspective.

From an economic perspective they obviously are. Isnt it strange that in the 80s M3 was the all important measure and money supply had to be controlled at all costs. As part of this general monetary tightening local authorities were no longer allowed to borrow on capital markets and were prevented from building homes. Yet now, through the massive expansion of debt, the money supply has increased dramatically and yet people still talk about limiting public expenditure.

Even the PFI initiatives (new hospital coming to a town near you) have been financed through debt instead of through old fashioned public expenditure.

By the way, I am not arguing for massive public expenditure increases, just putting it into context.

Bizarre!

London Landlady..

Prescotts policy is toothless and does not go far enough - it just amounts to building these stupid shacks and to encouraging people to part buy and part rent. This does not get around the main problem which is that there is a housing bubble.

Any responsible government would establish a policy environment to ***** it as soon as possible.

And France... once again the difference is, as you say, largely cultural. They have more responsible lending regime and a more stable housing market because it seems that they have old fashioned values about economics and concentrate on productive activity (making and selling food, cars, arms and hot air).

It is a gross generalisation to say that "the French dont like doing up houses" Some do, some dont. However due to aforementioned housing bubble plenty of Brits have picked up bargains and also do them up. If the situation was reversed you may find loads of French people colonising places like the Yorkshire Dales etc.

In fact in 40 years time the Chinese probably will be doing that, and we will be reduced to cleaning their shoes and putting on "cultural shows" for their entertainment.

[London Landlady]

I'm sure you are right about the French - but they do have a completely different attitude to possessions - like their houses, boats, cars etc. I know it's a generalisation - but there are huge cultural differences.

[bpw]

Paradox - you are either delusional or older than 50? Which one?

The quote below is most dangerous and misleading. Why? While you are correct that the UK social system is based on a ponzi scheme in which people at the start of the chain make a profit (i.e. state pensions, 'free' health care, years of subsidised council housing etc.) the fact is we have nearly reached the base of that pyramid with unsustainable promises made to tens of millions, all at the expense of post 1960 babies like me. I would guess you are like the rest of us in that you want reasonable living standards and care for all, but the fact is we are being asked to pay for others to have what is now already being denied to us. Take pensions, we polled and know that most here believe the government are preparing us for bad news. The starting point was cheating us into contracting out of SERPs. Then suddenly people are being offered either no company pension, or one based on contributions and not final salary. I would guess employees are unwittingly saving in to pensions that are favouring others. To add to our woes we are all being enouraged to use private health care so that an overloaded NHS system can catch up with demand. Who are the biggest users? Clearly the elderly - your tax pays for them to have free care that you will likely have to pay for through private insurance when you retire.

I've been accused to being pathalogically against the elderly, a cheap jibe aimed to distract us all from the fact that we are slowly being cheated by a system that is biased to the views of the most active and vocal. You guessed it the elderly. So why are you delusional? The reality is that todays younger generation do have the experience to see into the future. It is not beyond the relms of imagination that the future pensioner will be debt ridden, and denied access to free health care and the kind of social support that todays pensioners enjoy. The reality of that scenario will be a struggle to pay bills, sliding standards of health care, inability to pay for essentials like heating and a lifetime of financial slavery. All to provide something that MAY be denied to you. Wake up and tell your friends there is a battle for equity to be fought. If SIPPs are anything to go by then this government are thinking of their own retrirements and not yours. It still befuddles my mind just how slimey and immoral that one act has been.

BPW

What more do I want?

If I was chancellor I would say this...

Folks, we have an ageing population and a pensions black hole. We have a younger generation priced out of housing. This younger generation will also have to pay more for the pensions of aforesaid ageing population.

Therefore we are going to have to take some action to encourage people - many people - most people to save.

[paradox]

Under 50 so maybe delusional.

I actually agree with you. I was trying to argue for housing market reform and increased savings for MY OWN pension.

I am with you on the generational thing. I think it is a real issue that is not being addressed

[Europa]

Also, the French have an entirely different view to property - maybe something to do with the french revolution?

The price of land in France soared in the years after the revolution; people were desperate to put their cash into a fixed asset in an era of hyper-inflation

[nobody]

The man is a moron, plain & simple.

Jilted John from sometime in the eighties (I think)

Edited November 24, 2005 by nobody

[Mushroom]

Ah yes, the YouGov poll I completed today had a large section asking my attitudes towards pensions, both private and public sector.

[Dames]

Ah yes, the YouGov poll I completed today had a large section asking my attitudes towards pensions, both private and public sector.

Had an NOP guy knock on my door the other night , interesting when it got to inflation

Dames

[libitina]

http://business.guardian.co.uk/story/0,16781,1650354,00.html

[Casual Observer]

It is absolutely disgusting of Gormless Brownhole to increase the level of tax burden by stealth, smile politely and then tell everyone they're not saving enough.

The man is a moron, plain & simple.

Some sort of 'forced' saving scheme will be next - tax by another name (same as NI).

Buckers

I don't get this line of Bear argument. Most Bears wish for higher IRs to reduce affordability so that it will lead to price falls. Don't tax rises do exactly the same?