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Realistbear

Korean Article Warns One Small I R Hike And P O P

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THIS ARTICLE IS, IN MHO, THE BEST YET. IT SUMS UP EVERYTHING WE HAVE ALL BEEN SAYING.

The conclusion is worthy of being inscribed in stone and sent to the Miracle man himself.

Read whole article--best parts cut and pasted below:

http://english.ohmynews.com/articleview/ar...283498&rel_no=1

THE MIRACLE:

Pop! Britain's Bubble Economy Confounds Experts

One significant interest rate rise spells disaster for millions

It's the first proper spring weekend of the year, and Britain is a picture of economic beauty. Growth is high. Inflation is low. Interest rates are low. The nation's typical "shopping basket," as drawn up by the Office for National Statistics, now contains MP3 players and flat-panel televisions. Mass affluence has arrived. This is solid, sustainable economic expansion -- with not even a hint of a collapse, since in the immortal words of our Chancellor, there will be "no return to boom and bust."

Take inflation. Officially, during the last decade, inflation has generally hovered between 1 percent and 3.5 percent. In 1997 it peaked at 3.7 percent, in January 2004 it was 1.4 percent, and currently it stands at 2.0 percent. But in most key areas of the economy, inflation has been off the scale. A March 2005 report published by Oxford Economic Forecasting and Cluttons Real Estate noted that house prices had risen nationally by an average of 11.4 percent per year every year for the past ten years. While property prices are controversially not included in the official U.K. inflation figure, similar if not larger rises have been recorded in transportation -- a one-day travel pass in London now costs £6.30 -- utilities, with 2006 seeing a one-year hike of 20 percent for many gas customers, and oil, the price of which skyrocketed following recent instability in the Middle East.

And herein is the crux of the matter: the U.K. economy is built on consumer spending, which accounts for two-thirds of the nation's GDP. But consumer spending is in turn contingent on credit. The average salary in the U.K. is estimated to be around £22,000 before tax, which in most parts of the country is not enough to comfortably subsist on: for the majority of people, to save anything substantial from that figure would require frugality. Luxuries such as brand-new home cinema systems and cars should in theory be exactly that -- luxuries.

What conclusions can one draw? Firstly, the official inflation figures simply cannot be correct. Two percent inflation in an economy with rapidly increasing living costs and more credit than real money in circulation does not even begin to make sense.

However, the most sobering conclusion of all is that many of the country's economic fundamentals -- and the foundations for future growth -- are rather shaky. In fact, we could be heading for the biggest bust since that of Lolo Ferrari. And economic historians may in the future liken the "Brown Boom" to the fate of the late French actress. Under the malign influence of her husband, Ferrari, a chronic depressive and body dysmorphic disorder sufferer, underwent 25 cosmetic surgery operations to alter her face and enlarge her breasts with silicone in the belief that it would catapult her to stardom. Like Ms Ferrari, we have flooded our system with plastic in the quest for growth. The result is likely to be similarly artificial.

PROOF:

http://www.in2perspective.com/nr/2006/04/-...use-prices-.jsp

'Home equity withdrawal rising with house prices'

By Laurie Osborne, Editor

Published 5th Apr 2006, (a Wednesday) at 08:00AM

See also... mortgage, equity-withdrawal, bnp-paribas, economy, uk

With house prices picking up in the last three months of 2005, Britons extracted the most amount of equity from their homes in more than a year.

Mortgage equity withdrawal rose to £11.806billion, or 5.6% of post-tax income, over the quarter, the Bank of England said on Tuesday.

That was the highest since the third quarter of 2004 and followed a revised £8.858billion or 4.2% of post-tax income in July to September 2005.

In recent years, sharply rising house prices have encouraged a trend of Britons refinancing mortgages to extract cash, with mortgage equity withdrawal hitting a peak of 8.9% of post-tax income at the end of 2003.

The latest figures suggest that Britons may be borrowing again in order to keep spending, said analysts.

"The rise in equity withdrawal is consistent with the rebound in house price inflation," Alan Clarke, economist at BNP Paribas,was quoted as saying.

"It shows spending growth is increasingly dependent on equity extraction on top of take home pay."

:o:o:o

Edited by Realistbear

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Guest Charlie The Tramp
However, the most sobering conclusion of all is that many of the country's economic fundamentals -- and the foundations for future growth -- are rather shaky. In fact, we could be heading for the biggest bust since that of Lolo Ferrari. And economic historians may in the future liken the "Brown Boom" to the fate of the late French actress. ]However, the most sobering conclusion of all is that many of the country's economic fundamentals -- and the foundations for future growth -- are rather shaky. In fact, we could be heading for the biggest bust since that of Lolo Ferrari. And economic historians may in the future liken the "Brown Boom" to the fate of the late French actress.

I always say you see things clearer when looking from the outside. Nice to read a non VI perspective on serious matters. ;)

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Guest Guy_Montag

I think he may have made a few errors in his report.

Avg. London Terrace over £1m?

£1t houshold debt excluding mortgages?

But generally, interesting read, I imagine Gordon will be kicking himself for putting up the price of bankruptcy when he comes to declare the country that way.

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I think he may have made a few errors in his report.

Avg. London Terrace over £1m?

£1t houshold debt excluding mortgages?

But generally, interesting read, I imagine Gordon will be kicking himself for putting up the price of bankruptcy when he comes to declare the country that way.

An average London terrace IS £1m

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  • 337 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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