apom Posted February 8, 2006 Share Posted February 8, 2006 So, you are the chancellor.. You have a choice.. You can see that the market is pushing towards regained affordability of house prices and there are two ways this can happen and you are lucky both have been tried before. 1: House prices on their way down to meet wages. This happened in the period 1989-1995 and although painful for many it was not so much blaimed on the government as on investors getting carried away.. 2: Wage push inflation. This has happened three times in the last 60 years. In each case the country has entered into a recession. This is blaimed against the government and poor fiscal policy and is still remembered today.. To be honest poor fiscal policy has been an issue each time.. recession effect = everyone HPC effect = Those in massive debt luckily this time a lot of this will be explained by fraud in most cases. I.e 1: IO mortgage and no provision of a repayment vehicle 2: Playing fast and loose with the real facts about your salary on that mortgage application the kind man is not going to check up on. One way as a chancellor you are covered to a good part. The other way you are still covered, only in brown and sticky stuff. Hell its not as if the head of the MPC has not been shouting that prices are not sustainable and warning of the market for years. Is it your fault if people don't listen and break the law..? Quote Link to comment Share on other sites More sharing options...
JBFTB Posted February 8, 2006 Share Posted February 8, 2006 Am I reading this right in that the implication is that an HPC will only affect people up their eyeballs in debt? To be honest I think a recession is on the cards whichever choice you go for. People will start panicking whichever way it goes, hence drop in spending etc. hence recession, surely? Quote Link to comment Share on other sites More sharing options...
apom Posted February 8, 2006 Author Share Posted February 8, 2006 Am I reading this right in that the implication is that an HPC will only affect people up their eyeballs in debt? To be honest I think a recession is on the cards whichever choice you go for. People will start panicking whichever way it goes, hence drop in spending etc. hence recession, surely? Spending will increase as people begin to buy in at lower amounts. They then have money to buy goods and need to buy furniture etc.. Also, lower debt.. More holidays.. It worked in 1989-95 There was a recession.. But if you let house prices force up wages.. The whole country hurts.. Most will survive a HPC.. Struggle with higher debts for a while. They will be fine... Quote Link to comment Share on other sites More sharing options...
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