Financial illiteracy

[One-percent]

4 hours ago, ftb_fml said:

 most simply default to the "oh, they'd only ever do what's best for me, won't they?" mentality; when of course "they" are there solely to rob you of as much as they can.

Of course, this is just the way the establishment want it..

I used to think like that too.  When you are unplugged from the matrix and actually start thinking about what is actually happening, it is very disconcerting. I suspect a lot of people guess this and so decide to keep themselves plugged in, accepting what they are told in the face of massive evidence to the contrary staring them in the face.  Cognitive dissonance 

[long time lurking]

2 minutes ago, Democorruptcy said:

They may not have been switched to IO, it could be like my neighbour. Around that time he was telling me how great RBS were for letting him extend his mortgage until he was 73, to reduce his payments.

That`s what i thought they had done and i hope you are right ,but it only come up when the husband said all mortgages pay off "everything" you owe nothing at the end (first he thought i was talking about endowment mortgages which ironically he knew were no longer available so he could not be on one of them was his claim ,his miss`es then  said ours is IO and the balance goes down after every payment....inferring i was wrong about what i was saying about IO ,when i said i can guarantee you i`m not ..the conversation/atmosphere  got a bit uncomfortable his wife deals with all the bills and the like so i left it at that 

 

[long time lurking]

15 minutes ago, Bland Unsight said:

Don't forget that there are what the industry call 'part and part' (part interest-only, part repayment basis). About 500k of those in the stock of lending in 2014 (linky).

Could be but, IO was the trigger that brought his miss`es into the conversation 

[Maynardgravy]

4 minutes ago, One-percent said:

I used to think like that too.  When you are unplugged from the matrix and actually start thinking about what is actually happening, it is very disconcerting. I suspect a lot of people guess this and so decide to keep themselves plugged in, accepting what they are told in the face of massive evidence to the contrary staring them in the face.  Cognitive dissonance 

I wonder who's got it right sometimes. I'm amongst those 'unplugged' who get it but realise there's nothing you can do except try and anticipate what the elite will do next.... let's face it, we're all along for the ride on the 1% rollercoaster. I'm just a lot more informed/educated than I was previously.

[interestrateripoff]

34 minutes ago, EnglishinWales said:

Surely with interest-only mortgages the clue is in the name. How can people still not get it.

Requires brain being put into gear.

[One-percent]

8 minutes ago, Maynardgravy said:

I wonder who's got it right sometimes. I'm amongst those 'unplugged' who get it but realise there's nothing you can do except try and anticipate what the elite will do next.... let's face it, we're all along for the ride on the 1% rollercoaster. I'm just a lot more informed/educated than I was previously.

True and what is happening appears to defy both sense and gravity. How long have we all been wrong on here? 

still, the only endgame I can see is a Weimar reset 

[EnglishinWales]

Middle class seems to be all about compliance. The elite make their own rules and the underclass are screwed whatever they do.

[zugzwang]

Steve Keen explains why the bank should pay your mortgage.

http://www.smh.com.au/business/markets/steve-keen-rebel-economist-with-a-cause-20170104-gtluez.html

Quote

Private debt in Australia is now equivalent to around 210 per cent of GDP, from 180 per cent in 2007. Australian households are more indebted than ever, the RBA says.

Keen is perhaps most critical of central bankers' unwillingness to incorporate the link between credit growth and financial stability into their decision making.

"Conventional economic thinking completely ignores where money comes from," Keen says. "All this theory is effectively based on the idea that money is like nuts that chipmunks drop from trees and you can run out of it and if you don't have enough of it you are going to starve over winter, and it's a completely naive view of a monetary economy."

"The Reserve Bank were so backward in their thinking. Their argument was, 'oh well, the level of debt doesn't matter because the households that have the debt are wealthy and they can continue servicing it'. But the real problem is demand for the economy comes out of turnover of the existing money plus credit.

"Now, if you are relying on credit growth being equivalent to 15 per cent of GDP, which is where it was in Australia just over six months ago, you've got to continue borrowing that 15 per cent of GDP every year to maintain that trajectory.

"If you simply stabilise, then, bang!, 15 per cent of demand disappears. And that's what we face and what I think will happen [in 2017]."

Debt reset

So how do modern, monetary economies escape the spiral of ever higher debt? Keen believes there needs to be a reset of private debt levels via a "people's quantitative easing" – effectively, a government bailout of households – to something more in the order of 50-100 per cent of GDP, from around 120 per cent now.

Under the plan, the banks would be instructed to use the government cash injections to pay down the account holders' existing debt. If a person had no debt, then they would simply receive the cash.

He says the initial instalment should be larger than, say, the $1000 Rudd stimulus package, but not by much. "In anything like this, which hasn't been tried before, I would want to do it in small doses," Keen says.

What is then needed involves radical but simple regulatory reform of the banking sector.

"What I want to do is bring in a range of bank rules which would limit the amount of lending you can give against an asset to some multiple of the income-earning capacity of the asset."

Keen gives the example of a property with an estimated or actual annual rental income of $50,000, in which case the loan limit could be $500,000. Now the bidder for a house ready and nominally capable to take on the most debt wins.

Under Keen's prescription, both are limited to how much they can borrow, which means the bidder with the most savings is the one who wins.

"I want to cut off the asset bubble lending. When you look at the empirical data overwhelmingly it's leverage that determines asset prices. You have this positive feedback loop between lending and asset prices and that's how you get the bubbles we've got. These guys are making money by creating Ponzi schemes."

While Keen believes his radical policy prescriptions should happen, he has little illusions that they necessarily will. But the fault lines of years of conventional policymaking has brought the developed world to an impasse of high debt and low growth. Something may have to give.

 

[Greg Bowman]

7 hours ago, cashinmattress said:

 

What is the real idea of money anyway? We'll forgo the convenience of a 5p carrier bag and instead choose to juggle armfuls of messages back to the car park.

 

Eh no ! The convenience of a piece of plastic that is non bio degradeable and is responsible for tons of landfill each year 

I would rather juggle thanks 

in fact there is a line of thought that says we let the corps get away with no effort on the packaging front because the councils run recycling, sort of like tax credits for their employees 

Edited January 4, 2017 by Greg Bowman

[Guest]

1 hour ago, EnglishinWales said:

Surely with interest-only mortgages the clue is in the name. How can people still not get it.

They think it is a magic special deal where the mortgage pays for itself. I am not even joking.

[Venger]

So the thread began with a 'financially illiterate' would-be BTLer and HPI chaser - likely a homeowner herself.

And quickly has become a homeowner innocence thread / BTL innocence.

One or two examples of homeowners, enjoying everything that comes with ownership, who don't undertstand what IO means, or debt, and projecting that to wider homeowners.

Interest rates floored for years to help homeowning 'victims/innocents' caught in bubble in run up to 2007, make lower repayments.

Mad mad house prices (in many areas).   BTLer takeover.   HPI mad-gainz egos everywhere.  

Millions of renters.   *Constructing reality.*

Quote

Home Ownership much lower
Started by jiltedjen, December 27, 2016
http://www.housepricecrash.co.uk/forum/index.php?/topic/228377-home-ownership-much-lower/#comment-1103162923

Multiple-home ownership...Much higher.

The think tank, which lobbies for low-income families, calculated that 51% of families or individuals own a home.

It is calling for more attention to be paid to the millions of others who rent.

"Our new analysis shows that we should perhaps obsess a little less about homeowners, and think more about how the other half live," it said.

 

 

[Eddie_George]

9 hours ago, interestrateripoff said:

Her view may sadly be correct the financial would likely be bailed out and mortgages might be reduced.

Although thats a big gamble.

Owner-occupier maybe, BTLer, no chance. 

[Odin]

3 hours ago, sPinwheel said:

She is so wrong. The bank doesn't shrink the mortgage. Inflation does  ....

Wage inflation does.  When did you last see that ?  When do you expect to see it again ?

Consumption inflation is what we are going to get.  Due to globalization and high immigration and much exported labour outsourcing it is going to be difficult for the workforce to exert wage demands with conditions of higher unemployment.  I'd say now is the ideal time for wage inflation to happen with lowest unemployment for 25 years, is it happening for you right now?

Google Public Data Unemployment Rate

 

 

[spyguy]

6 hours ago, Odin said:

Wage inflation does.  When did you last see that ?  When do you expect to see it again ?

Consumption inflation is what we are going to get.  Due to globalization and high immigration and much exported labour outsourcing it is going to be difficult for the workforce to exert wage demands with conditions of higher unemployment.  I'd say now is the ideal time for wage inflation to happen with lowest unemployment for 25 years, is it happening for you right now?

Google Public Data Unemployment Rate

 

 

 

[winkie]

The top few percentage of already well paid will no doubt be getting higher percentage pay rises, but they can not keep the economy going with their consumption spending, they have enough and can not consume any more, the satisfaction index of consumption reduces the more that people have..... the majority who are in the market to consume more are not getting inflation, or scraping along with inflation pay rises will be worse off due to higher fuel, fares, insurance and CT increases, not forgetting benefit payments reducing.......lower wages getting the same percentage rises get less cash money to spend than someone earning twice as much getting same increase, often those at the very top are getting generally more....No trickle down there then...Going back to monthly expenditure commitments including debt mean little money if any left, this is where looking in food trolleys in the supermarkets will see more plastic bread, beans and no frills purchases.....Charity shops will be doing a roaring trade.... Inequality growing is not good for business, people with less, have access to less, spend less....Wealthy or better off people do not spend more, they may export more, spend more investing and experiencing new opportunities in different places.......The rest stay in and make their own entertainment. 

 

 

Edited January 5, 2017 by winkie

[evetsm]

14 hours ago, zugzwang said:

Steve Keen explains why the bank should pay your mortgage.

http://www.smh.com.au/business/markets/steve-keen-rebel-economist-with-a-cause-20170104-gtluez.html

 

So, "Under the plan, the banks would be instructed to use the government cash injections to pay down the account holders' existing debt. If a person had no debt, then they would simply receive the cash"

 

No thanks. Give the prudent savers without debt devalued toilet paper payout, and let the mortgage scrounger keep his house. For nothing ?

No. Let the mortgage scrounger lose his house and maybe go to debtors jail and let the banks go bust.

Keen is smoking his socks.

[Venger]

10 minutes ago, evetsm said:

So, "Under the plan, the banks would be instructed to use the government cash injections to pay down the account holders' existing debt. If a person had no debt, then they would simply receive the cash"

 

No thanks. Give the prudent savers without debt devalued toilet paper payout, and let the mortgage scrounger keep his house. For nothing ?

No. Let the mortgage scrounger lose his house and maybe go to debtors jail and let the banks go bust.

Keen is smoking his socks.

Exactly.

On HPC this utter reaching to project as many homeowners as possible as 'innocent financial illiterates', enjoying all the advantages that come with homeownership.  

In a market where in many areas there has been raging HPI+++ on top of mad prices, from buyers (and BTLers) choosing to outbid other would-be owners.  

Older homeowners sat on massive fortunes of HPI mad-gainz, who play bomad to help their children pay mad-high prices, where worry about neighbours view of their cars.  Yet where they see house prices not really possible to fall. 

And on top of all that, 'new thinking' such as such a push to protect the very few 'innocent' homeowners at the margin.... to pay off their debts, and help prevent any need for owners to accept lower prices.  To lock in the mad-gainz.

To protect zany mad high house values at the margin, and trap renter-savers out of the market.  For go-go Bomad continuation and BTL winz domination of younger people.

In a market saturated by BTLers (another apparent financial innocent in the OP who would happily farm someone's income - 'stupid about debt'  - but surely intelligent enough to evict if ever comes up short on the rent) who have doubled down last few years out of their own free choice to capture 'Generation Rent' iphone 'money wasting' young people who should be grateful for opportunity to rent from their masters and HPI lubbing older owners sat on fortunes of mad-gainz that can't fall because of 'supply and demand' and 'population growth' anyway.

[thewig]

17 hours ago, One-percent said:

I used to think like that too.  When you are unplugged from the matrix and actually start thinking about what is actually happening, it is very disconcerting. I suspect a lot of people guess this and so decide to keep themselves plugged in, accepting what they are told in the face of massive evidence to the contrary staring them in the face.  Cognitive dissonance 

Hell yes. It can be very alienating once you "wake up". We are also all deeply programmed from birth to respond in a certain way to critical thinkers or those who question the accepted narrative to our reality. Its far easier to go along to get along, but I also suspect many people have a deep held feeling something isn't right but cannot put their finger on it and the only avenues of exploration are red flagged by our own defence mechanisms "I must be going mad to consider that" then back to x factor and junk food etc.

 

[cashinmattress]

17 hours ago, Greg Bowman said:

Eh no ! The convenience of a piece of plastic that is non bio degradeable and is responsible for tons of landfill each year 

I would rather juggle thanks 

in fact there is a line of thought that says we let the corps get away with no effort on the packaging front because the councils run recycling, sort of like tax credits for their employees 

Plastic bags are not so much as a problem as are the processes and feed-stocks used to synthesise our modern world, as well as byproducts of their use as fuels.

Nor are they anywhere near as much of a problem as the continual expansion of humanity around the globe.

Fact is that crude oil and its derivatives are integral in 99.99999% of the things in your life.

Besides, most 'biodegradable' bags aren't and the products that claim are... like Hessian and other natural fibers... required a lot energy and petro-chemical derivatives (pesticides, fungicides, insecticides, dyes, stabilisers, solvents, bleaches, fertilisers, etc...) and water to create. Plus you have to deal with them throughout the lifecycle; washing, recycling, reductions to fuel, whatever.

I'm not going to sweat a few carrier bags in the UK... it looks nasty, but what I really see is a future fuel source.

Shame when they ruin the landscape, but ultimately not as bad as above.

[Venger]

Wake-up?

Hmm the £300,000 - £400,000+ asking prices of bang-average South Manchester semi-detached houses might be a clue....

£Trillions in housing wealth in possession of older owners, BTLers, and no one dragging anyone in to buying.

Millions of renters.

OP all about another would-be BTL people-farmer and her 'innocence'.

Houses, cars and so much more - want to forgive people's choices if they don't match same world-views, and if there is an opportunity to bash the banks.

I am out of the zany forgiveness quest on HPC.    At least it's going to happen; so much good HPC concerns actually in HPI land.

 

[Greg Bowman]

1 hour ago, cashinmattress said:

Plastic bags are not so much as a problem as are the processes and feed-stocks used to synthesise our modern world, as well as byproducts of their use as fuels.

Nor are they anywhere near as much of a problem as the continual expansion of humanity around the globe.

Fact is that crude oil and its derivatives are integral in 99.99999% of the things in your life.

Besides, most 'biodegradable' bags aren't and the products that claim are... like Hessian and other natural fibers... required a lot energy and petro-chemical derivatives (pesticides, fungicides, insecticides, dyes, stabilisers, solvents, bleaches, fertilisers, etc...) and water to create. Plus you have to deal with them throughout the lifecycle; washing, recycling, reductions to fuel, whatever.

I'm not going to sweat a few carrier bags in the UK... it looks nasty, but what I really see is a future fuel source.

Shame when they ruin the landscape, but ultimately not as bad as above.

I don't like nasty and especially galling when its avoidable.

Take your point re the bigger picture but where are you starting....

 

[Greg Bowman]

2 hours ago, cashinmattress said:

 

I'm not going to sweat a few carrier bags in the UK... it looks nasty, but what I really see is a future fuel source.

 

 

You are totally entitled to call me a hypocritical  B**** after seeing my post on the current car thread...

[thewig]

20 hours ago, Venger said:

So the thread began with a 'financially illiterate' would-be BTLer and HPI chaser - likely a homeowner herself.

And quickly has become a homeowner innocence thread / BTL innocence.

One or two examples of homeowners, enjoying everything that comes with ownership, who don't undertstand what IO means, or debt, and projecting that to wider homeowners.

Interest rates floored for years to help homeowning 'victims/innocents' caught in bubble in run up to 2007, make lower repayments.

Mad mad house prices (in many areas).   BTLer takeover.   HPI mad-gainz egos everywhere.  

Millions of renters.   *Constructing reality.*

 

the programming runs deep for sure, you've broken yours but the rest haven't, the question is what to do about it?

 

edit: metaphorical "you" and notional "the rest" rather than aimed at Venger and the rest of HPC

Edited January 5, 2017 by thewig
DEBT

[dryrot]

On 04/01/2017 at 0:43 PM, Kiwi_Muncher said:

No idea. She has never bought a house, or done any financial research, on anything. She has no savings or pension. After a £50k inheritance recently I suggested investing the bulk of it in a SIPP which I could manage for her. But no, she wants to do BTL. 

Were you using a cigarette holder and stroking a white cat at the time?

[Si1]

10 minutes ago, dryrot said:

Were you using a cigarette holder and stroking a white cat at the time?

My thoughts too