Jump to content
House Price Crash Forum
Toast

It's a market. Free choices. No sympathy.

Recommended Posts

One of our respected forum members has crystallized a very clear and coherent position, that market participants, even in the housing market as it now stands, deserve no sympathy for their freely made choices. It's clearly put, I broadly agree, and it's one of the reassuring fixed points of visiting this site.

I would however like to explore this a bit more - in the first instance by trying to state my beliefs on the matter - because it raises important questions not only about personal agency, nor even just about the housing market, but also about the fabric of society and the nature of our relationships with one another.

All markets are distorted to a lesser or grater extent. In all situations, no matter how extreme, we always have some choices - although the amount of change those choice can produce, outside of our own minds, may be very limited. Those choices almost always carry a moral edge: my favourite Ghandi quote is that "we are all looking for a society so perfect that no one in it has to be good." Thus most choices lie on a spectrum from selfish, through somewhat neutral, to benefiting other people more than they benefit ourselves. Commerce generally functions in the space where both parties believe they are getting the better deal ... and I think that's as close to a free market as we can hope for. However, that doesn't exhaust the range of our choices: we can also push further, and do things which are positively harmful to ourselves, in order to do good to other people. I think that such acts are a harsh but necessary condition for the existence of society, and it is the main purpose of religion to help us to achieve them. In fact, I think one can define what is distinctive about all religions as "a belief in the unreasonable power of self-sacrifice". I don't mean that that is true just in a time of war (although war is a perfect example), but also in all the small acts of charity or self-abnegation that underlie the functioning of a community. If the amount of self-sacrifice needed is small, such a society is easy to live in; while to change society, which is a resilient beast, requires extraordinary sacrifice, which almost no-one is capable of. Such people have furnished history with its martyrs and saints (secular as well as religious, in the narrow sense).

My view is that there is a level of moral courage which we can (and must) expect of everyone, but as the choices become more extreme, it becomes harder to remain blameless. Not impossible - just that more and more people will find themselves unable to think of society at large, and instead fall back on the easier, selfish choice. Some people will face that moral question honestly, valiantly try to do what is right, but stumble in the struggle, and make a "second best" choice. It is for those people, if events turn on a sixpence, and they are "found out" in their greed, that I have genuine sympathy. I have very little courage, so perhaps I am just saying that I would have sympathy for myself when and if I am found wanting. However, there are situations in life (particularly at the ragged edges of wars) where almost everyone will be found wanting.

To make this more concrete and relevant to the forum: The housing market, as it now is, is set up to be morally testing - even scarifying. We compete with each other for the basic human needs of security and shelter. If this housing market implodes (and only at that point), I am saying that I will have sympathy for those people who suffer in the crash, who realised that buying at high prices had a cost for society at large, who tried to avoid those societal costs as long as possible, but whose moral force was not enough to make the sacrifices of continuing to rent. That's a list of "and"'s, not "or"'s. By sympathy, I mean the cheap sentiment, and I also mean that if I am in a position to reasonably help someone that I know in that situation, then I hope I will be able to make that sacrifice. I do not mean that I will campaign for, nor want there to be state aid - which would mean supporting spending other people's money at essentially no cost to myself.

I am not saying that renting is a sacrifice for everyone: many people like the freedom and lack of maintenance duties, and for some people that's enough to make it the better choice even outside a housing bubble. However, there are real costs for some: a lack of security, the humiliation of inspections, the difficulty of putting down roots, social opprobrium. The inability to stomach those consequences is what will arouse my compassion. You also notice I described those who "stumble", and make a "second best choice", which in this case would be buying a home to live in, even though it means pushing prices up further and endangering the stability of the system of money. "Second best" does not encompass those who hoard houses in a housing crisis, and thus actively take away other people's simple choices and self-determination.

What about those who went in with their eyes closed and just did what their friends and family did? I have not mentioned them so far, but I think this "housing crisis" is so apparent, and the situation so clear when one looks at the price and thinks how long it would take to save up that amount, that no-one can just follow their friends without being willfully blind.

My apologies that this has become a very long post ... but I've read a few long posts on the topic, so I don't think it's entirely out of place. In summary: Not everyone is a saint or a martyr, but we all have to make an honest attempt to understand our surroundings and push a little in that direction, rather than parasitize and tread society underfoot in our quest to die with the most toys. Those who make that honest attempt and find themselves wanting, I will have sympathy for.

Share this post


Link to post
Share on other sites

I'm a newbie (in fact this is my first ever post) and you've really hit the nail on the head for me here.  Renting IS a sacrifice for me and I feel utterly ridiculous that my life is "on hold" at the grand age of 48 because I do not have a "home" where I can do as I please.  But I simply cannot bring myself to spend somewhere in the region of 220K for a tiny house in Bedfordshire because it's just plain wrong.  Wrong for me to have to, wrong for everyone else following behind me if I am "part of the problem" rather than "part of the solution". 

Every single one of my friends and family think I am utterly bonkers and do patronising tilty-headed looks at me and make gentle jibes about me never quite getting over my 1980s anti-Thatcher Rik-Mayall student politics days.  Some days I think I am mad too and just want to give up the fight, give in, buy my shitty shoe-box and not worry about anyone else.  But with both my moral and financial compasses screaming "no" then I just don't seem to be able to bring myself to do it.

If house prices continue to go up then I know the tilty-headed sympathy will keep going through the roof and I'll also be sick as a parrot.  If they go down I will take no joy in anyone else's misfortune because the whole bloody mess should never, ever have happened.  It's bloody horrible.

 

Share this post


Link to post
Share on other sites

Just tried to edit my post to put ***** instead of some of my more "colourful" language as I don't want to offend anyone, but I can't see how to do it so I'm apologising now and will self-moderate going forward.  Don't want to make a bad first impression - got a bit carried away with the emotion of it all.

Share this post


Link to post
Share on other sites

Welcome, stop_the_craziness and don't mind the language. The forum software automatically saves our blushes for the really naughty words.

Share this post


Link to post
Share on other sites
44 minutes ago, stop_the_craziness said:

I'm a newbie (in fact this is my first ever post) and you've really hit the nail on the head for me here.

Thank you - and welcome to the forum!

It sounds like we are in very similar positions - even literally, as I'm also in bloomin' Bedfordshire, at least until I lose my somewhat precarious job.

Share this post


Link to post
Share on other sites

It breaks my heart that "being close to London" has such an effect on the local housing.  I don't like London, it might as well be on a different planet for all I care.  It wouldn't bother me if I never went there ever again in my whole life.  I like Bedfordshire because of what it is, not because of what it's near!  And that raises another moral issue that you touched on.  I've been considering a move to Yorkshire because I can get more for my money there.  But the utter irony of me taking my money "up north" and pricing out local buyers in Yorkshire because I got priced out of Bedfordshire by Londoners is not lost on me.  My friends think I'm a borderline communist loony but I just don't want this to be happening to any of us anywhere.

Share this post


Link to post
Share on other sites

For me the immorality is at the systemic rather than individual level- at least in the case of those who only buy one house in order to live in it. But even for some of the demonised 'Buy to Let' brigade you can point to the decimation of savings rates and their fears of old age poverty as offering a degree of insight into- if not approval of- their actions.

But the moral failure here cannot really be located in the individuals buying the houses but in the system itself and the underlaying assumptions upon which that system is built.

Oddly enough if I were pressed to identify a single group of people who are most to blame for the current sorry state of affairs I would point at Economists and their shallow self serving propagation of deeply flawed notions such as 'trickledown', the infallibiltiy of the free market and the deregulation of finance. The truth is that in their haste to distance their profession from the other social sciences and present themselves  as a 'hard' science instead the Economics profession tried to pretend that  mathematical formulae and abstract theory could substitute for genuine empirical research and often plain common sense.

Anyone who takes the time to examine such fantasies as the theory of  Ricardian equivalence will quickly understand that at some point in the past the Economics profession parted company with reality and entered a realm of self serving delusion.

Keynes famously said  that practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. - and this is true today- the entire panolply of economic ideology upon which our current world is built has been shaped by the half baked and entirely non empirical ideas of people like Freidman and Greenspan who, wittingly or otherwise, provided the intellectual fig leaf for the orgy of greed and excess that culminated in the crash of 2008 that broke the world economy and left it in ruins to this day.

The ability of the Bankers and their political enablers to corrupt the financial system and create the massive bubble in house prices on the back of a mountain of fictitious capital conjured up by the banks from thin air was only made possible because they had the backing of economic theories that legitiimised their actions.

The slogan 'Greed is good' may have issued from the mouth of a fictional wall street trader, but the intellectual ecosystem from which this amoral philosophy was spawned was not created on wall street but in the halls of academe, in the economics departments of the great universities where the great and the good of economics pontificated and postured as 'real scientists' while ignoring the most basic tenant of science itself - which is the primacy of empirical observation and evidence as the true test of any theory, no matter how beautiful that theory may happen be.

So if we are going to (metaphorically) string up anyone from lamposts I nominate the Economists- because without their hubris and delusions of the infallibility of 'the market' to be the solution to anything and everything the world might not be in the economic mess it is today.

"J'accuse ...!"

 

Share this post


Link to post
Share on other sites
21 minutes ago, stop_the_craziness said:

My friends think I'm a borderline communist loony

If you want prices to become affordable that makes you a "numbskull anarchist" rather than a communist!

Share this post


Link to post
Share on other sites
13 minutes ago, stop_the_craziness said:

And that raises another moral issue that you touched on.  I've been considering a move to Yorkshire because I can get more for my money there.  But the utter irony of me taking my money "up north" and pricing out local buyers in Yorkshire because I got priced out of Bedfordshire by Londoners is not lost on me.  My friends think I'm a borderline communist loony but I just don't want this to be happening to any of us anywhere.

You would be going there to live, pay tax / council tax and spend your money on the local economy. It's not like you're a money changer (banker) that doesn't actually produce anything with a second holiday home that remains empty for most of the year and you're not paying council tax (until fairly recent changes).

Share this post


Link to post
Share on other sites
Just now, wonderpup said:

if we are going to (metaphorically) string up anyone from lamposts I nominate the Economists- because without their hubris and delusions of the infallibility of 'the market' to be the solution to anything and everything the world might not be in the economic mess it is today.

"J'accuse ...!"

The prevailing view amongst economists is that market failure is pervasive and hence many interventions are required. Despite deregulations we do still have numerous regulations and interventions. It can be argued that we have too little or too much regulation, or that we have the wrong regulations, but we cannot assume the impact of the government interventions are negligible. People who want to argue that our mixed economy is effectively a market economy and that we can attribute everything to the market implicitly do this. Can you say explicitly why this is so?

Share this post


Link to post
Share on other sites
3 hours ago, Toast said:

...Some people will face that moral question honestly, valiantly try to do what is right, but stumble in the struggle, and make a "second best" choice. It is for those people, if events turn on a sixpence, and they are "found out" in their greed, that I have genuine sympathy. I have very little courage, so perhaps I am just saying that I would have sympathy for myself when and if I am found wanting. However, there are situations in life (particularly at the ragged edges of wars) where almost everyone will be found wanting.

To make this more concrete and relevant to the forum: The housing market, as it now is, is set up to be morally testing - even scarifying. We compete with each other for the basic human needs of security and shelter. If this housing market implodes (and only at that point), I am saying that I will have sympathy for those people who suffer in the crash, who realised that buying at high prices had a cost for society at large, who tried to avoid those societal costs as long as possible, but whose moral force was not enough to make the sacrifices of continuing to rent. That's a list of "and"'s, not "or"'s. By sympathy, I mean the cheap sentiment, and I also mean that if I am in a position to reasonably help someone that I know in that situation, then I hope I will be able to make that sacrifice. I do not mean that I will campaign for, nor want there to be state aid - which would mean supporting spending other people's money at essentially no cost to myself.

I am not saying that renting is a sacrifice for everyone: many people like the freedom and lack of maintenance duties, and for some people that's enough to make it the better choice even outside a housing bubble. However, there are real costs for some: a lack of security, the humiliation of inspections, the difficulty of putting down roots, social opprobrium. The inability to stomach those consequences is what will arouse my compassion. You also notice I described those who "stumble", and make a "second best choice", which in this case would be buying a home to live in, even though it means pushing prices up further and endangering the stability of the system of money. "Second best" does not encompass those who hoard houses in a housing crisis, and thus actively take away other people's simple choices and self-determination.

What about those who went in with their eyes closed and just did what their friends and family did? I have not mentioned them so far, but I think this "housing crisis" is so apparent, and the situation so clear when one looks at the price and thinks how long it would take to save up that amount, that no-one can just follow their friends without being willfully blind.

My apologies that this has become a very long post ... but I've read a few long posts on the topic, so I don't think it's entirely out of place. In summary: Not everyone is a saint or a martyr, but we all have to make an honest attempt to understand our surroundings and push a little in that direction, rather than parasitize and tread society underfoot in our quest to die with the most toys. Those who make that honest attempt and find themselves wanting, I will have sympathy for.

 

Quite a lot of balance in your main post (good), but there are some points I need to push back against.  (sorry)

TBH I am into my 9th year of reading about some of those sympathy/victim points, and into my 9th year of kicking up the rent, vs house prices at new peaks, 35% above 2007 prices (25% above 2008-10 prices.. in a quick as a flash supposed 'hpc' that past most owners by in this area.)

No one stumbles into one of the most important decisions of their life imo (buying a house), in areas where the prices have become ever more extreme vs incomes.... and showing up that decision as ever more extreme.  

Count offers up buyers of £1m apartments as innocents/victims because he believes they have been conned when developer will pay the stamp duty.  :shakeshead:    

Obviously such buyers (and there have been such buyers for years) didn't want to suffer indignity or renting/wanted to put down roots/  stigma or renting / no put up with landlord/letting agent inspections / insecurity of tenure.   Or.. they went into it with their eyes closed (£1m+ apartment) the other rallying call for a HPC that has not happened, in a market where millions rent.

The same renting hardships exist for millions of others who rent/choose not to buy or can't afford to buy.  They get no special pass because they couldn't put up with renting, vs buying, in my view - although so many argue that they/others should get a special pass... yourself a bit, many others and see below.   Many of us want to put down roots, and not go through insecure tenancies.... but these prices mean we choose not to buy / or can't afford to buy... but those who outbid and buy as the victims of blanket sympathy?   

 

Neverwhere, on 26 May 2016 - 10:20 AM, said:snapback.png

 

That is totally wrongheaded in my view.

 

It's more like saying you feel sorry for someone who has taken risky financial decisions and bid up the price of housing and is currently enjoying that position and might - but will not necessarily - suffer for it in the future, whilst totally failing to mention all of the people who their actions have helped to price out and who are actually suffering as a result now.

 

The two are intrinsically interlinked.

 

That is a pass that covers every buyer.... 'those who went in with their eyes closed" - if the market turns against them (if it ever ever does), and they claim they are hard-done by.  Including those happily buying and HPI spreadsheeting it now.... or taking BOMAD.   

I too am ready to assist some people I know on the owning side (a bit) IF the market turns down and if they were to find themselves in a testing situation (including one hpcer I know who bought... but bought a far lower level house than I believed their employment position merited... in the need for him to play it as safe as possible with debt to income against extreme house prices). 

However I am not willing to offer blanket sympathy.   Why would I bail out any of the HPI chasers/smuggers?  

Against all the raging HPI, there is one thread (Freetrader) about newbuilds in some areas, where houses have actually gone on to sell at much lower prices.  No one here knows they so they don't really lose sleep about what went on to happen to those owners.   I am not going to have sympathy for a fancyguy (presumably homeowner) who I saw slap around a young waiter a few months ago, seemingly because he went into a rage after his wife smiled at the waiter, if his house falls in value.  People are different.  They have to show their positions (if HPC ever happens).   I don't really have sympathy for the DM woman (frowny face) from a few years ago who claimed she gave her kids last years toys as new Christmas presents (because of her costs/mortgage that wasn't like many others at a very low 'zirpy'/QE rate).  I checked out her house recently and no sign she has sold it.   Not renting.  Paying down £150K mortgage (2006).... not had to rent/move/suffer insecure tenancies/ root rubbish, and now 10+ years of rent paid to a BTLer.

On 2/9/2016 at 10:14 AM, insertcoinstocontinue said:

existing mortgages will still have to repaid. So the poor buggars who bought during the last 18nonths or so are still going to have to repay their huge debts.

I've been off/on HPC since 2007 and I've always had an issue with the lack of empathy to people who bought out of necessity, me being one of them.

Of course I want a crash, but spare a thought for the innocent people who's lives will be ruined by huge negative equity! Some of the things I read on here are really quite vile.

 

On 2/9/2016 at 10:47 AM, Tresbon said:

Necessity? You simply had no other options available whatsoever other than purchase an overpriced property? Really? Nothing at all?

 

On 2/9/2016 at 10:55 AM, insertcoinstocontinue said:

So now a house is not a necessity? Renting is not an option children at school are unable to rent as they could be evicted at any time.

Like I said the tone of this forum has turned very nasty.

And regarding BTL landlords selling up??? For every landlord selling a reduced property there will be 5 wanting to buy a reduced property, thus the game simply starts again....

 

On 2/9/2016 at 11:26 AM, Quicken said:

That will happen regardless of a crash, so what are you complaining about?

 

On 2/9/2016 at 11:38 AM, Tresbon said:

This is exactly the attitude which gets you zero sympathy. I know a number of people whom have to do exactly this. Rent with kids. My younger brother and the majority of his friends. You did have a choice and you chose to buy at the price you did, rather than rent.  At least be man enough to accept the negative consequences of this decision, should they come about.

 

On 2/9/2016 at 11:45 AM, Kiwi_Muncher said:

When you move into a house, you have to consider whether you'll be there for a year, or five, or twenty five. Negative equity is only a problem for people who want to move ... they should have considered that when they disregarded the option of renting.

 

On 2/9/2016 at 11:49 AM, insertcoinstocontinue said:

I'm not complaining I am saying you should spare a thought for people who will still have to repay the over inflated prices paid.

HPC is not going to be a utopia. Fact is the majority of the population HAVE bought and although I accept they have added to the problem, HPC is going to be pretty awful for the average family.

I think there are too many butter renters on this forum who 8 years on from when I first started reading this have grown even more self centred!

I started reading this forum back in 07 before I bought my second house and I'm still waiting for a crash.

I would be interested to know if there is some sort of date in mind when if HPC hasn't occurred we give up?

Personally I see no end to the BTL game, it just means wealthy people will buy more cheaper houses and as for ir raises, forget it.

I think if we ain't seen HPC by summer 17 you can forget it.

 

On 2/9/2016 at 0:09 PM, Amiinsane said:

When houses are earning more per year than the people who own them, then something is severely wrong. It's basic common sense.

You have people living in houses now that they couldn't possibly afford to buy. And people locked out of the market forever because they were a few years too late coming the the party. This isn't sustainable.

So what's going to happen? Are houses going to continue to spiral upwards at 5-10% minimum per year? Wages will never catch up. The UK isn't the land of full employment and massively high paid jobs. It's zero hour contracts, instability and cheap labour for most. People farming is seen as one of the only ways to make money.

When I look at property in the UK and listen to the way people talk about it I feel like I've been taking crazy pills.

 

On 2/9/2016 at 0:13 PM, Automotive Engineer said:

Aggressive tone....text is not aggressive.

Tone policing?

Reminds me on a video I saw on YouTube when searching for housepricecrash.co.uk. Apparently (I didn't know this as I'm relatively new) Kristy Allsop once went on a rant about this site, saying how we bring "misery to millions of people", as if we were the third Reich or the Islamic state.

 

On 3/5/2016 at 5:20 PM, anonguest said:

Firstly, I believe yes we have made quite a few preparations (financially speaking) to shelter us from a quite a flood - as have a great many. The fact is that, as history shows those who can see the madness for what it is, and take precautions, tend to survive more than those who do not. Whereas the financial zombies get completely eradicated.

But, as you say, it is indeed well possible that the 'flood' would exceed our expectations and not leave us completely untouched in some form or another (e.g. rising crime rates, etc). But then again are we not already 'touched', harmed and hard done by this ongoing financial madness? I would argue we, and our like, have already (unfairly!) suffered. So IF suffering should come to those who genuinely deserve it? GOOD! It cannot come too soon.

Using the fear tactic that you espouse (i.e. you too will get swept up in the flood) doesn't hold sway with me anymore.

What are you? Man or Mouse?

It has been said, in many different ways, in respect of personal liberty and freedom that it isn't 'free' - it has to, from time to time, be paid for in toil and blood. The same such applies to ensuring restoration of financial sanity to the world. IF I have to suffer some (more than already) to ensure a better world for my children and their children than I gladly do so. What are you prepared to do?!

These personal stories of people, in this day and age, having to resort to living in vans utterly disgusts me with the 'system' and TPTB. Anyone who is not similarly disgusted simply does not grasp the significance.

If it doesn't you then I put it to you that you have started to lose some crucial essence of your decency and humanity.

 

On 4/15/2016 at 10:40 AM, Hullabaloo82 said:

[upsizer]... As a tool for highlighting the inter-generational injustice between wealthy baby boomers who benefitted from 60s house building programs and their offspring who can barely scrape up enough to pay rent let alone save for a deposit, it misses the mark.

I say this as someone facing the scenario detailed above. I own a small 2 bed house and need to trade up to a family home. The prospect of a 25% reduction in value before I can sell my current place doesn't have me jumping for joy; the idea of riding out the storm on a fixed rate mortgage in a bigger place for 5 years until the market gets back to square one (which, let's face it, we all know it will in the event of a crash) is much more appealing than being stuck in a smaller place unable to add to the family.

That's the trouble; this isn't as clear cut as some of you like to think. The victims in an HPC won't just be wealthy baby boomers and usurious banks.

 

On 4/15/2016 at 3:08 PM, Hullabaloo82 said:

....As for 'people like me' expecting protection from suffering, believe it or not it's not beyond my wit to stress test my decisions. In my particular circumstances, given that I won't be trying to go for something that costs double but instead aiming for a more realistic 50% to a three bed place with scope to expand, I won't be wiped out, but my choices will be severely limited by the maximum 90% LTV on offer which limits where I can buy regardless of how affordable it is in income terms. This doesn't mean we won't be able to get somewhere bigger but it does mean we'll be priced out of the area we know and love, have a longer commute, access to poorer performing schools and be further away from our support network of family and friends. Not saying there's a moral aspect to this or I think it's wrong that this would happen but, by the same token, don't expect me to go marching down the road playing "When the Saints" on a little trumpet New Orleans style at the prospect.

My interest in this site, and the wider topic of house prices and the economy in general, is not driven by fear that I'm about to be found out for the "feckless, debt junky" you no doubt think I am.   I'm a big boy now, I can stand on my own two feet. I just want to try and understand what might happen in the future so I can respond appropriately.

Also, would be interested to know your definition of 'suffer' here. My wife and I's major motivating factor in buying our place was our desire to start a family. I was 31 by the time we bought our first place, my wife 29. Exactly how much longer should we have left it before looking to do something about it?

Most rental houses in our area were either too expensive or not of a sufficient standard to bring up a child, not to mention the insecurity of being a tenant in 21st century Britain. We couldn't get near a housing association or Council place so our only option was essentially to save up and buy somewhere. Neither of us are trust fund kids, so we had to work incredibly hard and make a lot of sacrifices to scrape up even the paltry 10% deposit we did manage, but manage it we did.

Personally, what I view as morally repugnant is that we, as a nation, are failing to provide adequate housing to all our citizens. That's not the same as thinking everyone should have the right to own their very own financial asset. How did we ever end up, as a country, believing it is?

 

On 4/15/2016 at 5:01 PM, Neverwhere said:

If you want to be seen as 'a big boy' you should probably hold off from implying that you should be thought of as some kind of 'victim'.

And everyone else dealing with that reality right now, who have no hope for a home of their own without a HPC, despite also working hard and making sacrifices?

Everyone should have a right to a home of their own. Shelter and security are basic human needs. Land is a natural resource, not a made thing that can rightly be monopolised by the select few who created it.

The fact that you choose to describe that primarily as owning a "financial asset" is exactly what's wrong with this country.

There seems to be a certain subset of existing homeowners who are intent on trying to convince younger generations that they're horribly entitled if they think they should have the same opportunities at homeownership as their elders did. This is incredibly distasteful to say the least.

 

Quote

You chose to buy a house during a massive credit boom. That's your responsibility. It doesn't make you a victim. If you can't weather the consequences of your own free will choices then that is your own fault, nobody else's.

Younger people who have had no chance to buy at all - who haven't even had the option of making that decision one way or another - should not be expected to continue to suffer in order to make sure that people like you don't.

To suggest otherwise would be morally repugnant.

And if there is ever HPC that does actually affect a few more recent owners/upsizers.... (and I doubt that many at all really... not any number vs the £Trillions in house price wealth on the owner side.. and BOMAD buyers of recent years....+ some big pay buyers.... not everyone scratching a living but on big money).

Quote

Loose talk about the demise of a class of homeowners is fun and games provided we are honest about what happened. These people purchased houses paying prices that they could not afford. There is a tremendous moral hazard associated with allowing the situation to persist. Their death will not be a literal death; at the very worst they may have to acknowledge their insolvency and lose their present homes and rent somewhere else.

The terrible fate they wish to be spared is from renting. Only the most unfortunate will be insolvent. Some, finally forced to sell by the pressure of rising SVRs captured by the graph, will find that though even though they do not end up selling from a position of significant negative equity, much or all of their former notional equity and actual deposit may be lost. Again, this is not such a terrible fate; it is just life. They paid too much for something and thus when they came to sell it on, they made a capital loss, (and of course the unspeakable shame and hardship of renting also awaits*).

If we ever get any HPC.... into my 9th year on HPC reading about future victims of HPC.   Everyone I know on the owning side is quite happy with their homeowning position.  One couple we know have their 2014 purchased house on market for £120,000 more than she paid for it, and houses are selling (no doubt to victims sigh)- in a low inventory market - at this higher level.  I thought she had paid top whack in 2014.... but with this no-victim hardness / constantly wrong... what do I know.  I certainly know very few award me any sympathy whatsoever for forever renting against raging HPI... including way back before i even joined HPC.   No one is going to step up with big refund (partial rebate) of all the rent I have paid out.  Even a big HPC is never going to set me back up into any position vs if I had bought... pre 2007... or even 2013 given value surge around here, and another 4 years rent paid out.... for this 'oh so certain' HPC.   It hasn't happened (in my area) so I refuse to give the winners the sympathy.  And if it does happen (HPC) then my sympathy will no be blanket sympathy but for individuals who can show they were one of the few hard-working bad-timing hard-luck cases.

Latest FTB numbers are apparently showing a surge because, according to one source, BOMAD money is now going less and less to being on the deeds, and directly gifted to the offspring adult buyers (to avoid SDLT surcharge).   BOMAD exists big time, in the no-HPC reality view of so many market participants (who may yet be right for years to come... give global money and UK companies sat on £1 Trillion with Hammond is trying to urge to get the money flowing).   

And as crashmontior (and myself) point out... owner side are sat on £Trillions in equity.  Millions of outright owners, and high equity.   No symphathy required for them in any HPC.   THIS MARKET DOES NOT JUST CONSIST OF BUYERS WHO BOUGHT HOUSES IN 2015-2017, although seemingly it's the view that it does, from many people.  Including outright owners, who point to latest buyers, as in need of sympathy/protection... AND WHY WE CAN'T EVER ALLOW A HPC.  (Together with everything else they shield with, including the view banks would collapse with little HPC... and then of course many still rubbing hands for ever more HPI+++).  Market.  

When I buy (if there is ever any HPC), I will probably be taking on the same level of mortgage debt as a HTBer... so I will be in the same economy as they are with the same level of debt (if ever HPC) in servicing that debt.  I just hope HPC allows me to buy in the area I want to buy... or a nicer home than they have settled for with their own choice decision to have bought in recent times.

Quote

People do have minds of their own.  No one is so stupid that they can't practice caution at these prices (or even of 2004 - 2010). It's own choice to buy.

There's no HPC yet (and may not be), but sympathy for owner side is where so many minds have been at, for years now.

No fully functioning human adult is so stupid that they can't learn to practice caution.

 

 

Edited by Venger

Share this post


Link to post
Share on other sites
1 hour ago, wonderpup said:

"J'accuse ...!"

I concur with your diagnosis. I support your accusation.

The question I am trying to wrestle with here, is what should we do? I am suggesting that small, circumscribed acts of moral courage (and facing ridicule for not buying a house in a housing bubble, is one such act), is a way to oppose the framework of control that has been built around us. It would be a statement of irrational faith to say that such small choices are an effective way to change the system, but that, if you like, is my faith.

When you say that thre are understandable reasons for even buy-to-letters to buy, I agree with you: the whole point of moral choices is that they are difficult, and require sacrifice. What I am saying is that I do not consider buy-to-let to be an acceptable moral compromise, while buying a home to live in would be. There was a very insightful post a few days ago on the subject of buy-to-let as a pension: that it is a model which breaks the essential contract between generations. By receiving a pension, you are extracting rent from the working generation, and although rent-seeking is intrinsically bad, a pension is justified not only out of compassion for and gratitude to the elderly (although those would be sufficient reasons), but because they also contributed to the pensioners of their day, and we hope to benefit from the workers in our future: it is a fair contract with society at large. Buy-to-let as a pension extracts money from the young and takes away their chance to own a home: it's a broken contract.

Share this post


Link to post
Share on other sites
31 minutes ago, Venger said:

but there are some points I need to push back against.

Apologies for not figuring out multi-quote, so I'll do what I can (and also thank you for not going ballistic on a sensitive topic!):

Venger: "No one stumbles into one of the most important decisions of their life imo (buying a house)"

I agree: I was referring to a moral stumbling, a failure of courage. A decision to buy a house is always a deliberate decision.

Venger: "but those who outbid and buy as the victims of blanket sympathy?"

No, not blanket sympathy. Sympathy for those who have wrestled with the moral question, suffered under the indignities that they wish to avoid, and have not been able to stomach any more of it. Not for those who went in happily calculating their gains at the expense of those who have chosen to stay out of the market. And, as an important point you rightly raise again and again: no sympathy for anyone at the moment, because there has not been a crash.

Venger: "That is a pass that covers every buyer.... 'those who went in with their eyes closed" - if the market turns against them (if it ever ever does), and they claim they are hard-done by.  Including those happily buying and HPI spreadsheeting it now.... or taking BOMAD."

No: my last point was that no one goes in now with their eyes closed, unless they purposefully choose to do so. The situation is too clear for anyone to claim innocence on that account.

You also quote a couple of posts with people asking for sympathy in the hypothetical situation that prices fell and they still had to repay the high price they had bought for. I don't think I ever suggested that this was a situation worthy of sympathy?

Share this post


Link to post
Share on other sites

London has its place.....But as a born and bred Londoner and both parents and born and lived in London for many many years know London very well, lived and embraced London.....there is a time and a place for everything.....a wide and wonderful exciting world with brilliant unforseen opportunities out there, timing is everything...;)

 

Share this post


Link to post
Share on other sites
15 minutes ago, Toast said:

Apologies for not figuring out multi-quote, so I'll do what I can (and also thank you for not going ballistic on a sensitive topic!):

:lol:

Well the thread title you chose, and your overall main theme, kept me in remain-sensible check.

Although even after your response, I still have issues against the points you are making (insecurity of renting/'wrestled with choice or renting/buying... for those who have actually bought /owned /owned for many years now since that position was first raised on HPC)...... that could account for every single buyer/owner.    

If there is any HPC we are sure to see many an owner on the HPI happy spreadsheet side of things come out and claim they are the innocents who had no choice but to buy.. and that they wrestled with renting-vs-buying.  

I can not be responsible for those adults who have outbidding others in market for a house/property, whatever their beliefs for buying in an open market - and despite it all, it is still a market.  

It's bad enough having to suffer so much mad-gainz win side smugness, even from recent buyers!   

And there is no certainty of HPC.   Many a person believes in foreverHPI.   If there was any HPC concern, there would be far more sellers in the market, instead of multi-decade scraping lows of housing inventory on the sales market.

Even if there is ever any HPC, I will probably still be wrestling about whether to pay so much / buy that particular house / the specific street / the mortgage.

 

 

Share this post


Link to post
Share on other sites

Our money supply, our essential medium of exchange, is lent to us at interest by the commercial banking system which thereby controls both the quantity of money in circulation and the initial recipients of that money.

Why is it that about two thirds of our money supply is lent to us to compete with each other to buy the homes we live in? This seems a very silly way for a cohesive society to allocate capital, diverting it from valuable productive and nurturing activity. We are goaded by the banks, by their political lackeys, by the MSM, to compete hard for housing and so to maximise our indebtedness to the commercial banking system. To the general population the system is pernicious and normalises lifetime debt servitude.

It seems glaringly obvious to me and many others that a supposedly self-determining, trading and investing population such as the citizenry of the UK can and should provide itself with an adequate, persistently circulating money supply, issued publicly and debt-free as a common utility.

Why not? Why should we rent our money supply from profit motivated issuers when we could easily provide it for ourselves at virtually no cost?

The principal UK organisation promoting and developing this thesis is positivemoney and I would encourage anyone who is perplexed, adversely affected by and/or fed up with the UK housing market to study their website and publications.

Share this post


Link to post
Share on other sites

How do you awaken the population to this way? We're such a fringe of society here; I can't understand where the madness comes from. It's so mind numbingly, glaringly obvious we're being indebted with such ease from our masters; but it's just us, this small enclave that sees it.

 

Share this post


Link to post
Share on other sites
24 minutes ago, The Spaniard said:

Our money supply, our essential medium of exchange, is lent to us at interest by the commercial banking system which thereby controls both the quantity of money in circulation and the initial recipients of that money.

Why is it that about two thirds of our money supply is lent to us to compete with each other to buy the homes we live in? This seems a very silly way for a cohesive society to allocate capital, diverting it from valuable productive and nurturing activity. We are goaded by the banks, by their political lackeys, by the MSM, to compete hard for housing and so to maximise our indebtedness to the commercial banking system. To the general population the system is pernicious and normalises lifetime debt servitude.

It seems glaringly obvious to me and many others that a supposedly self-determining, trading and investing population such as the citizenry of the UK can and should provide itself with an adequate, persistently circulating money supply, issued publicly and debt-free as a common utility.

Citizenry of the UK as victims of lifetime debt servitude from bankers / 'the system' and/or some big-bad politicians alone?

That's not how I see the actual housing market.

Buy or rent... sit on fortunes of HPI mad-gainz and expect more... be a BTLer, a multi-property BTLer.... all own choices.

 We're in a market.  I respect the market decisions of other people in the market, because they make the reality.  Their own choices.

C3-VTgUWAAAysMN.jpg

 

Quote

Daily Mail

Average UK house price to hit £780,000 by 2040, says leading think tank

Kilo Charlie, My World, 9 hours ago
We purchased a property in 1983 for £72,000.........today it's worth £650,000 plus. It's certainly possible and quite likely.

Sam, Bucks, 3 hours ago
Bought house in ,74 for 16k added extention about £8k now valued at £480k you do the maths?

I think it was crashmonitor (recently sold... millionaire now?) who claimed his own housing costs so very very low.

£Trillions in equity.

 owners (equity), and millions of BTLers - with homeownership levels for younger people having fallen steeply.  

On 12/30/2016 at 4:34 PM, Grumpysod said:

Maybe I should, there is only so many years you can waste your life hoping while there is so many other good things in life to get on with or try. Not sure how healthy it is waiting and hoping for a HPC along with all the innocents caught up in that, wishing bad on others cannot be a good thing for ones soul.

:fume:

On 2/28/2016 at 9:52 PM, Neverwhere said:

Weak as hell.

More people are already suffering, because of the current dislocation between house prices and wages, than will possibly suffer in a HPC.

People who own their homes outright won't suffer.

People who have borrowed sensibly in relation to their household incomes and savings buffers won't suffer.

The only people who might possibly suffer are those who have acted speculatively, whether by holding multiple properties or by borrowing unsustainably for their main residences in order to maximise their stake in the housing market.

This relatively small cohort who might possibly suffer are also the ones who are most likely to have been driving the bubble and causing the suffering of those who are, as a result, priced out and unable to own homes of their own without borrowing in a similarly reckless manner.

In so doing this relatively small cohort who might possibly suffer have ultimately caused this possibility themselves. Not only in choosing their own personal exposure to the housing market, but also in the aggregate effect of their actions on house prices. It is the build up over the course of the boom that causes the bust. The boom is the bad times. The bust is just the bad times coming to an end.

This relatively small cohort who might possibly suffer are also, currently, not suffering. In fact they are enjoying the fruits of their speculation as we speak, and many of them have been doing so for quite some time now, and may well continue to do so even in the event of a HPC, if they play their cards right.

-- To a big HPC doubter....

 

On 1/1/2017 at 4:31 PM, Bland Unsight said:

Isn't this a contradiction in terms?

If your view is "what the hell is going on" then you have no view, and if you have no view then surely you have no view to articulate?

However, much as Venger finds, I do see the outline of a view in your posting, and that view is that there won't be a house price crash. Now you're totally entitled to hold that view, but if you hold it, own it. If that's your view and you're willing to stand behind it then the forum would benefit from you expressing that view, though of course you might be expected to be able to explain why you hold it.

If your actual position is house prices will rise forever, but don't ask me to justify that because I don't know what the hell is going on then your predicament, regarding drawing a little bit of sniper fire from time to time (metaphorically speaking, natch) surely requires no explanation, but I'll explain it anyway.

There is no forum position on whether or not HPC is desirable and no forum consensus on the when or the if of a crash. There is no forum consensus on the mechanics by which rampant real HPI could be sustained or a HPC become inevitable.

However, there are many posters (and many vocal posters) who would favour a HPC and think that as events reveal themselves the extent to which those events make a HPC more or less likely can be considered.

Hence, if you keep up what I read as your position (house prices will rise forever, but don't ask me to justify that because I don't know what the hell is going on) you are going to get people tipping into you. It's just a numbers game; there are many active posters who'd take issue with the position that you appear to be taking, hence from time to time one of them will take issue. If your default response is to suppose that they need to get over themselves then maybe more than a dash of "physician heal thyself" ought to inform your thinking?

 

There is no big-bad.  The HPI Lovers are everywhere.  With our minds we make the world, and many want the HPI mad-gainz at expense of everything else.

Market.

On 4/12/2015 at 3:45 PM, Neverwhere said:

Of course the BBC are rampers. Large sections of the populace are rampers. IRL even the people I know that think house prices are overvalued are generally accidental rampers as, more often than not, they remain either utterly unconvinced that a deviation from current trends is possible; or are just dreaming of an opportunity to re-run the boom from start to finish with themselves as beneficiaries (except it will be different that time, of course). Many of the others are, needless to say, worse.

Playing fast and loose with actual facts is, it seems to me, disturbingly socially acceptable at present and part of a wider cultural trend that obscures or denies the qualitative difference between observed reality and personal interpretation. I would hesitate to characterise the manifestation of this at the BBC as an organisation-specific problem when my experience is that it is fundamentally a society-wide problem.

Much as bankers are just other people, so production staff and journalists are just other people also. This is not an exoneration of either the specific individuals involved or the institution itself, but rather a partial condemnation of people in general. If you have a more uplifting alternative view then I would welcome it as I think I'm in danger of becoming somewhat of a misanthrope!

As to your specific complaints you are clearly quite correct on all counts, whether anyone whom your grievances encounter on their travels through broadcasting house is actually capable of telling the difference between this and just the expression of one possible view among many equally valid perspectives is another matter...

Market.

Quote

Frances Coppola on Jun 14th 2014

[..] House prices have risen pretty consistently for over fifty years: yes, in that time there have been three crashes, but the losses in the first two have all been more than recovered, and the losses from the most recent one will soon be recovered too. Property is risky in the short-term, but as a long-term investment it is high-yielding and virtually risk free. And that makes it a better investment for ordinary people than virtually anything else. No wonder people prefer to buy property than save in bank accounts or stocks & shares.

So the fact that property is expensive, and becoming ever more expensive, is actually one of the principal reasons why people want to buy.


http://www.pieria.co.uk/articles/the_british_obsession_with_property

Frances Coppola on Jun 10th 2014

Admittedly, London house prices do look inflated: but the London boom is mainly driven by rich people putting their money into cash purchases of prime real estate (and overseas buyers borrowing from overseas banks to buy prime London real estate), not by cash-strapped households over-mortgaging themselves to pay off credit card debts.

[..]We do not have a consumer consumption boom any more. We aren't going to have a consumer consumption driven housing crash, either. This isn't nuts (yet), and if there is going to be a crash, it's a long time off.

http://www.pieria.co.uk/articles/consumption_booms_and_housing_busts

 

On 5/7/2016 at 10:32 PM, canbuywontbuy said:

If you give people a choice of cheap housing or cheap goods, 99% of people will take cheap housing because you can at least plan your life if you can buy a house. 

... of course... :rolleyes:

On 5/8/2016 at 5:33 AM, StainlessSteelCat said:

Plainly not true. People have had the ability to make that choice by not participating in an overheated market (which would have brought down prices) over the last couple of decades. But almost everyone was "happy" to pay inflated prices - often on the expectation that the prices would continue to further increase. Also there have been almost no protests about it either (unlike say the price of petrol)..

 

On 5/8/2016 at 9:04 AM, StainlessSteelCat said:

I think my point is that if you want cheap house prices the rational choice at the moment is for everyone not to buy - a buyers strike - regardless of whether the bank will lend you the money. As Venger regularly reminds us - no-one is forced into taking the bank's shilling.

If no-one's buying, prices will fall. In the absence of sensible government policy and bank lending - collection action by striking and protest is the only rational choice - and one which could have been exercised at any point in the last decade and a half. But people don't take that route so ergo they actually want high prices. It's a cliche that almost every house buyer wants prices to be low, until they have one. That's because individual's need to treat a house as an investment vehicle and a source of prestige seems to take priority over the collective need for cheap shelter.

Its batshit insane in my view - and is essentially eating our young. But successive governments are giving voters what they apparently want - which is high house prices. If 99% of us wanted cheap housing, we would have it

Quote

I've been following this site since 2007 and you deserve absolute credit as one of the few who has railed against the HPC sympathisers to those on the other side of our equation whose complete disregard to carrying out any kind of due dilligence with regards the biggest financial decision they would ever make has played a massive part in leading us to where we are now and playing into the banksters hands. 

We've had to suck up the shitty end of things for well over a decade. Like you say, any HPC'er who wants sympathise with those who will now learn the hard way how stupid they have been, whilst believing us to be the stupid ones all this time can indeed donate as much as they wish to their 'plight' if they so want to, I just wish they would quit bleating on about it on here. You either want a HPC or you don't.

 

Re BTLers... (also cast as innocents by many who 'simply need to make good returns on their money/savings against low rates')

 

bland unsight, on 01 Feb 2015 - 11:38 PM, said:snapback.png

I couldn't care less how you made out. Through your actions you were complicit in financial captureYou've picked sides alreadyand you favoured a horrid notion of yourself in splendid isolation over your ability to live equitably with your neighbour(sorrytenant)and damn the consequences. That speaks plainly to what you are.

snapback.png

BuyToLeech, on 19 Sept 2015 - 07:47 AM, said:

 

A lot of bankers did benefit, it's just that plenty of other people also benefited and benefited more in many cases.

There are plenty of people who have made more through the housing bubble than they have ever earned in their lives. For landlords and London homeowners or anyone with an inheritance the amounts are similar to lottery wins - hundreds of thousands or millions - largely untaxed.

Those people wanted the banks to inflate the bubble, and they wanted the bailout. They may even be the reason there was a bailout, but none ever holds them responsible.

People love to blame banks for what happened, but millions of people were complicit. Most obviously the banks didn't get any criticism when the damage was actually happening. They only get blamed for stopping it.

Even now the British middle aged middle classes are clamouring to go back to the days when the crisis was still looming, so they can play at being property developers.

 

There is a strange intense need on HPC to cast the big winners as the losers / those who have bought during every year I have been a member as set to experience misery/bad because they didn't know what they were doing, by people who project superior-ness imo.... who believe they know so much more than everyone else.

 

If you buy a house you're making your own freewill personal decision, in a market where millions of people would like to become homeowners.. and where yours is the accepted best offer.  Same to not sell a house (including outright owners).   Renters too make their choices (and proven hard for many on that side... ohhhh but some weighed it up and decided to buy... maybe a bit uncertain about doing so, but did it anyway..... so now IF any HPC ahead.... think of them, rather than what HPC could mean for renters advancing their own situation, and getting something for their productivity... also escaping the BTLers they've suffered for years (against worse option of overly expensive houses - as some of us see it - and big debt risk... that others were prepared to take on to keep house prices supported and/or becoming even more expensive).

 

It's ridiculous.  And on HPC it even extends to those who choose to buy themselves nice new cars, as 'victims' / 'didn't know what they were doing' crazy projection from superiors !!!   They don't bother about plight of those who are taking the bus, let alone running older cars.... the victims are the ones who spend the most... even when they have zero knowledge of their financial circumstances.  Someone with a nice £30K new car.  "A victim."  sheesh.   And that attiude but coarser for so many owners... pointing to those who have been paying ever higher prices (even when that buyer may have had jumbo bomad, or have a different view of the future... including one of my pals who has seen his own house rise £300,000 since he bought it in 2011, and his income x5 via promotion to the top... which I certainly didn't expect for either... but is the reality of the situation.   Millions of different viewpoints.. different people... make the market.)

 

Quote

The liberal left have a deeply patronising attitude to the victim groups they seek to protect.

They see them as totally helpless children without agency or the ability to make decisions of their own.

 

On 1/7/2017 at 0:38 AM, Pablosammy said:

PCP isn't inherently evil, although evil people often use it to pull the wool over the uninitiated's eyes.

As long as you do the sums, work out the total cost of ownership, and compare it against other available finance options, it's a perfectly valid way of owning a car. It's just a finance product, ultimately, and a relatively simple one at that.

Yes, of course a £3k used Fiesta is cheaper to own than a C Class Merc on PCP, but some people don't mind paying more for a bit of luxury and a warranty. They're not idiots, they're not uninformed, they just made a different choice. The self-righteousness on here can be suffocating at times.

 

Share this post


Link to post
Share on other sites
4 hours ago, Toast said:

Thank you - and welcome to the forum!

It sounds like we are in very similar positions - even literally, as I'm also in bloomin' Bedfordshire, at least until I lose my somewhat precarious job.

Another in bedfordshire ..last few years prices have gone insane as the commuter belt has been pushed further out.

Share this post


Link to post
Share on other sites

Did someone mention sympathy for renters both young and older, savers and people who would like to step up the ladder etc etc but who are all being effectively robbed of money and perhaps much more importantly time by the government's obsession with risky high house prices at crazy levels and protecting their own investments and those making unwise purchases often with extreme levels of debt.  Prop after prop after prop often through robbing the taxpayer and thieving from the saver.

Debt as if nobody had ever heard of the risks of debt.  Risks meaning a risk of losing as well as gaining.  Debt is a gamble and always has been a gamble despite them trying to say otherwise and manipulate it all.  Without debt there's always the risk of loss of capital with any purchase.

The government has sold the sympathy through their relentless props, QE and zirp etc.  Also to remember that King the governor of the BoE during the start of the crisis said that he recognised that the likes of savers were being damaged and he hadn't forgotten them.  Empty words as he took the base rate down to record lows along with the addition of lots of QE.  Now 10 years later and Britain has Carney with his rotten words setting new lows in base rates and more QE - they all sold the sympathy down the river a long time ago and many times over.

Edited by billybong

Share this post


Link to post
Share on other sites
5 hours ago, stop_the_craziness said:

It breaks my heart that "being close to London" has such an effect on the local housing.  I don't like London, it might as well be on a different planet for all I care.  It wouldn't bother me if I never went there ever again in my whole life.  I like Bedfordshire because of what it is, not because of what it's near!

That's a good part of why I find the desire for ever-faster travel disturbing, it makes places nearer and then yes, Bedfordshire may as well be part of London. It's not knowing when to stop, just because a long time ago things improved when people figured out faster ways of travelling than walking.

Share this post


Link to post
Share on other sites

 

Quote

It's a market. Free choices. No sympathy.

The key part for me is that I can have sympathy in varying degrees towards people who have made decisions to the best of their ability or knowledge but it hasn't worked out well (ie they lose their house). But that doesn't translate into me wanting to bail them out. You make your choices, you live with the consequences. Obviously if people are living on the streets or starving that's were I support the welfare state. It doesn't mean we should court moral hazard to the extent that has been going on this last decade.

 

 

Share this post


Link to post
Share on other sites
Quote

The prevailing view amongst economists is that market failure is pervasive and hence many interventions are required. Despite deregulations we do still have numerous regulations and interventions. It can be argued that we have too little or too much regulation, or that we have the wrong regulations, but we cannot assume the impact of the government interventions are negligible. People who want to argue that our mixed economy is effectively a market economy and that we can attribute everything to the market implicitly do this. Can you say explicitly why this is so?

What lent a spurious legitmacy to the deregulation of the financial sector that ultimately gave us the insane house prices we have today was the prevailing mythology amongst the dominant strain in modern economics that the economy- the 'free market'- is an inherently self correcting machine that is either already in a state of equilibrium or about to return to this happy state. This is the reason that virtually the entire economic establishment failed to see the crisis of 2008 coming- because the models they were using made such a crisis impossible.

The problems with economics are not rooted in it's failure to correctly interpret reality, they are rooted in it's failure to engage with reality at all. Economic theories that ignore Banks, Debt and Money as being a mere veil over a Barter based economy that itself has never existed in any known historical context are not to be evaluated on their empirical effectiveness because reality is not the domain in which economists operate- economics is not in the reality business, it's in the mythology business.

And we can confirm this by conducting the following thought experiment;

Suppose in 2008 all over the country bridges and buildings began to collapse in large numbers due to a massive conceptual failure in the field of Architecture that created fatal structural weaknesses in those structures.

Can you imagine the absolute uproar and scandal such a failure of professional standards and theories would have caused? The mass sackings of the people involved and the demands for change in the way that Architecture was taught in the universites? Not to mention the questions in parliament and the hysteria of an outraged public.

Compare and contrast this to the complete failure of Economics theory and practice exposed by the 2008 financial crisis. Was anybody sacked? No- Has there been any real attempt to change the way that economics is taught in the Univerisites?- not really. With a few notable exceptions like Steve Keen at Kingston the same people are teaching the same theories as if nothing has happened. How is this possible?- how can it be that an entire branch of 21st century intellectual endevour collapsed like a deck of cards and yet have so little consequnce in the real world?

The answer, I suggest, is that the true role of economists is not practical but ceremonial- their function in society is more akin to a priest than a scientist. It is the role of the priest to offer certainty in an uncertain world, to provide a narrative framework that makes sense of otherwise incomprehensible events.

But when things happen that seem to contradict that narrative nobody demands that the Pope be sacked or the churches be closed down, because everyone understands that in the domain of religion we are dealing not in hard facts but in metaphors and myth.

So it is with economics- when it failed in 2008 there was no strong demand for the sacking of the nobel prize winners whose theories had proved to be utterly false- they go on teaching those same theories to new generations of students to this very day.

The truly bizzare fact is that even those who employ economists and are guided by their advice also seem to view that advice as more narrative than fact- which is why we did not see a mass culling of economists following the 2008 debacle- no one was sacked because no one was really expected to be competant in the first place.

Viewed through the lens of Sociology Economics is a curious beast- it's ideas are hugely influential based on their claimed scientific rigor- yet when those ideas are proven false they continue to be influential because their true value seems to be due to their narrative power  rather than any empirical reality. This is the reason that Neo Liberal economics seems impossible to kill-despite it's utter failure to produce a single model to explain the 2008 crash- the narrative it offers is so compelling and so useful to so many powerful people that it's kept alive, shuffling across the economic landscape like a demented zombie leaving havoc in it's wake.

Edited by wonderpup

Share this post


Link to post
Share on other sites
6 hours ago, Muddlehead said:

The prevailing view amongst economists is that market failure is pervasive and hence many interventions are required. Despite deregulations we do still have numerous regulations and interventions. It can be argued that we have too little or too much regulation, or that we have the wrong regulations, but we cannot assume the impact of the government interventions are negligible. People who want to argue that our mixed economy is effectively a market economy and that we can attribute everything to the market implicitly do this. Can you say explicitly why this is so?

The exponential growth in demand for high yielding mortgage securities worldwide was driven a cohort of international tax avoidance jurisdictions and made practicable by the existence of a shadow banking system - a matrix of nonbank credit intermediaries and money market funds offering cross-border banking services - that lay almost entirely beyond the reach of any central bank or statutory regulator prior to 2008.

No market has ever been freer or more liquid.

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

  • Recently Browsing   0 members

    No registered users viewing this page.

  • Next General Election   90 members have voted

    1. 1. When do you predict the next general election will be held?


      • 2019
      • 2020
      • 2021
      • 2022

    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.