Jump to content
House Price Crash Forum
Sign in to follow this  
disenfranchised

We Have To Learn To Live With Debt - Hamish Mcrae, Evening Standard

Recommended Posts

Was suprised nobody seems to have posted/commented on this piece in the ES yesterday...

http://www.standard.co.uk/business/markets/hamish-mcrae-we-have-to-learn-to-live-with-debt-but-lets-be-open-about-its-consequences-10034053.html

I particularly liked...

The other is that debt in the developed world is much higher than in the emerging world. The most-indebted Bric country, China, is the only Bric member with higher debt than the least-indebted G7 country, Germany. But you would expect this.

Developed economies have a lot more invested in all forms of infrastructure and housing than emerging economies.

Debts are the flip side of this investment. As long as the investment is productive, and interest payments can be serviced, there should not be too much of a problem.

The issue, unfortunately, is that a lot of the debt accumulated in the developed world has been to pay for past higher consumption, public and private, and so has not really been productive.

...so is housing debt OK & productive Hamish?

This suggestion, I expect we'll see more of...

There is no magic wand to waft away the debt mountain, but there are ways of chipping away at debt so that it becomes less of a drag on growth. These include better-designed mortgage contracts to try to cut defaults. So there could be risk-sharing between lender and borrower, sharing the bonus of rising house prices but also the pain if prices go down

....and then because the banks are underwritten by the taxpayer, their share of the ponzi debt load can be transfered on to all of us when it blows up - fabulous, thanks!

Share this post


Link to post
Share on other sites

"have a lot more invested in all forms of infrastructure and housing"

Certainly have, the bubble econmics mean even shitty minor extensions to train systems run to 10's billions.

This is not a positive to boast about, the far larger invested sums are a sign of how far out of whack the system is.

Share this post


Link to post
Share on other sites

An indebted economy is a financialized one.

I've just realised - boiled down to basics, public debt is just another instance where money taken in taxes is paid into the pockets of the rich, rather than being used for the good of society. It's the ultimate version of 'socialism for the rich'.

All that money taken with threat of force from people with nothing, and given to the people holding the gilt-edged pieces of paper.

Share this post


Link to post
Share on other sites

It's a bit late in the game to finally work out what's been going on, isn't it.

The trouble is, how do you stop 30 million people selling you up the river for their own gain?

Share this post


Link to post
Share on other sites

Hamish McCrae

So you want a never before experienced situation where banks voluntarily subsidise the risks that people take buying over priced houses? And how do you propose this be enforced? By law? In which case they'll simply stop lending mortgages. Or by govt direct subsidy? In which case you tax the productive to fund the unproductive.

Pray tell which of these genius options you prefer. Or do you not really care providing you can protect your housing equity?

Share this post


Link to post
Share on other sites
These include better-designed mortgage contracts to try to cut defaults. So there could be risk-sharing between lender and borrower, sharing the bonus of rising house prices but also the pain if prices go down.

Lock in the precious HPI for the the home-owner classes. Prevent mechanism for market value discovery. Protect Bloo's late entry cretin buyer victims who didn't know what they were doing paying £500,000 for a terrace and just wanted a home.

And thus lock in HPI for all the other home-owner classes, including BTLers and all those who own outright, their homes worth x2-x100 what they originally paid for them.

Share this post


Link to post
Share on other sites

Lock in the precious HPI for the the home-owner classes. Prevent mechanism for market value discovery. Protect Bloo's late entry cretin buyer victims who didn't know what they were doing paying £500,000 for a terrace and just wanted a home.

And thus lock in HPI for all the other home-owner classes, including BTLers and all those who own outright, their homes worth x2-x100 what they originally paid for them.

Exactly

The rationalisation is truly evil

Share this post


Link to post
Share on other sites

You can sense his bewilderment, can't you? The recovery should have happened by now. The neoclassical/New Keynesian presciptions ought to have worked!

The reigning dogma of optimising agents with infinite foresight must be true...

Sadly, the inconvenient truth is that there's little or nothing in the standard micro- and macro-economic texts that's of value in understanding real markets. Economists simply have not understood how to model markets mathematically in an empirically correct manner, where noise trading rather than foresight is the prevailing condition.

Share this post


Link to post
Share on other sites
Guest Jemmy Button

Well, the Evening Standard is a London rag. I suppose all it's readers, those London shoebox debt slaves must be living the debt dream. That must be why whenever I visit London, the place is festooned with miserable people.

Share this post


Link to post
Share on other sites

Lock in the precious HPI for the the home-owner classes. Prevent mechanism for market value discovery. Protect Bloo's late entry cretin buyer victims who didn't know what they were doing paying £500,000 for a terrace and just wanted a home.

And thus lock in HPI for all the other home-owner classes, including BTLers and all those who own outright, their homes worth x2-x100 what they originally paid for them.

exactly.

but identifying the cretins makes me the devils own.

Share this post


Link to post
Share on other sites

Stupid neo-liberal shill.

+1

Read his articles in the Independent years ago, then gave up after the Banking Crash in 07/08 when he was crying for bailouts to save his City chums.

He'd been saying for years that China will drive the next expansion - well that's not worked out well , has it ?

He now takes the Oligarch shilling and will write anything to mask the truth.

Share this post


Link to post
Share on other sites

The other is that debt in the developed world is much higher than in the emerging world.

The correlation is so strong (debt/"developed") that you have to question whether the words "developed" and "emerging" are accurate descriptions.

Share this post


Link to post
Share on other sites

I'm happy to live with debt. Debt that I have chosen to take on having made a balanced risk/reward analysis. And if it goes wrong, I'll service that debt until it is paid.

I have a major problem living with debt because a bunch of ******tards chose to live beyond their means. I have a major problem living with debt because a group of sociopaths chose to buy a client class to achieve political office. I have a major problem living with the debts of a generation(s) that went before because they pi$$ed the North Sea oil money away and beggared my generation, and my children's generation.

Share this post


Link to post
Share on other sites

...Protect Bloo's late entry cretin buyer victims who didn't know what they were doing paying £500,000 for a terrace and just wanted a home.

And thus lock in HPI for all the other home-owner classes, including BTLers and all those who own outright, their homes worth x2-x100 what they originally paid for them.

It's not about protecting or 'victims' but dissonance works both ways.

One group's prophecy fails. Rather than being wrong or altering the outlook, they double down on the belief because financial and emotional investment is so great, attempting to persuade and enlist more support.

Another group's prophecy hasn't failed but could, on a far greater scale. Rather than altering the outlook for risk of being wrong, they also double down because financial and emotional investment is even greater, desperate to persuade and enlist more support.

Regardless of rights/wrongs, it's human nature and the story of man. An investment or working or social life lasts a bit longer than a few years so little has been locked in for most beyond accounting entries. If this is something that can't go on forever it won't.

Share this post


Link to post
Share on other sites

Well, the Evening Standard is a London rag. I suppose all it's readers, those London shoebox debt slaves must be living the debt dream. That must be why whenever I visit London, the place is festooned with miserable people.

The Standard is usually quite pro-building and bearish on the price bubble from the editorial end

Share this post


Link to post
Share on other sites

The Standard is usually quite pro-building and bearish on the price bubble from the editorial end

That'll be the same rag that has a 40-50 page property supplement every Wed ?

The same rag that gives Boris J page after page to promote his housebuilding mates' new projects. Shoe boxes for foreigners for £500K or more ?

It's pro building , I agree. But not for the ordinary Joe.

Share this post


Link to post
Share on other sites

I don't know which London paper it was in but wasn't there a story last week that 54,000 £1+ flats were under construction. Whilst only about 4000 £1+ sales had been recorded in London.

If that is the case then we're going to be needing a special London super HTB otherwise those construction firms are going bust. Time to short the home builders?

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   206 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.