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HovelinHove

Inflation Will Kill Hpc

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I am a bear, and I think our economy is completely screwed for the same reason as everyone else on this board, but I'm starting to think that an HPC is not going to happen as the government and powers that be would much rather allow hyperinflation than a housing a crash. Inflation they can blame on global factors such as oil, but an HPC is politically disastrous. If they raise interest rates and cause an HPC they will be crucified by the press and the people in debt for causing the crash, so they will continue to manipulate the stats and keep IRs low, and HPI high. This is effectively what happened in the 70s and what I believe will happen now.

The only solution I have is to immigrate so you can forget all about this pathetic country and the growing problems that our government are creating for our future.

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I think our economy is completely screwed for the same reason as everyone else on this board, but I'm starting to think that an HPC is not going to happen as the government and powers that be would much rather allow hyperinflation than a housing a crash.

Which will make house prices even more difficult to sustain, when the price of essential items rapidly outpaces wages.

Or are you really claiming that we can have high wage inflation when most of the jobs that aren't being outsourced are being given to cheap immigrants? The government's entire immigration policy is designed to keep wage inflation down.

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Which will make house prices even more difficult to sustain, when the price of essential items rapidly outpaces wages.

Or are you really claiming that we can have high wage inflation when most of the jobs that aren't being outsourced are being given to cheap immigrants? The government's entire immigration policy is designed to keep wage inflation down.

I posted this as a devil's advocate type thing as I see it as the only block to an HPC. I kind of agree with you, except during the seventies we had massive immigration and that didn't stop inflation going out of control. We did have the unions then however, and now we don't, so there is nothing to keep wages froma ctually going down if redundancies increase.

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I asked myself the same question, and the answer i came up with was wages are held down with immigration, redundancies and more companies outsourcing work to cheaper countries.....

Add to the fact that things really are priced on and beyond the limit for any type of house now the only way is house prices to become more affordable for those who have no debt (ie.DOWN)...... Those who do have mega mortgages and credit card loans will continue to suffer in a low wage environment for a long time to come........

Edited by keepwatching

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I posted this as a devil's advocate type thing as I see it as the only block to an HPC. I kind of agree with you, except during the seventies we had massive immigration and that didn't stop inflation going out of control. We did have the unions then however, and now we don't, so there is nothing to keep wages froma ctually going down if redundancies increase.

That's the thing, many peoples' wages are actually falling across a number of activities.

High inflation without wage inflation will cause a massive recession. China and India will just say thnkyou very much for the jobs and muddle on through as best they can with severely reduced external demand but they will still be the long term jobs gainers as each sector gets progressively wiped out in the countries that decide to go for the inflationary route.

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Inflation is not enough, that alone simply impoverishes people (just as housing does today), we need commensurate wage inflation too, unfortuately that's the only type of inflation the Bank of England really cares about. There simply isn't the bargaining power to bring about 1970's style wage demands, the unions are dead, we have limitless migration and out sourcing, even if we did manage to get a bout of wage inflation that would only result in driving more jobs and industries abroad. Also, it would make the public finances appear really ugly.

We have inflation of course, just the wrong sort.

Edited by BuyingBear

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I wonder why the government let a HPC happen last time. I know i know, they wont let it happen this time.

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I am a bear, and I think our economy is completely screwed for the same reason as everyone else on this board, but I'm starting to think that an HPC is not going to happen as the government and powers that be would much rather allow hyperinflation than a housing a crash. Inflation they can blame on global factors such as oil, but an HPC is politically disastrous. If they raise interest rates and cause an HPC they will be crucified by the press and the people in debt for causing the crash, so they will continue to manipulate the stats and keep IRs low, and HPI high. This is effectively what happened in the 70s and what I believe will happen now.

The only solution I have is to immigrate so you can forget all about this pathetic country and the growing problems that our government are creating for our future.

Wages would not keep up at all... also gordon brown and Mervin King have said that they will fight inflation completly. With IR's...

they have said this every time is has come up..

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I wonder why the government let a HPC happen last time. I know i know, they wont let it happen this time.

It was NOT the same government.. Maybe they made a mistake.. Dont know..

"I wonder why they let Saddam go the first time?"

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Guest Charlie The Tramp

If they raise interest rates and cause an HPC they will be crucified by the press and the people in debt for causing the crash, so they will continue to manipulate the stats and keep IRs low, and HPI high. This is effectively what happened in the 70s and what I believe will happen now.

We had hyperinflation and high interest rates in the 70s

Interest Rates

UK Inflation

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It was NOT the same government.. Maybe they made a mistake.. Dont know..

"I wonder why they let Saddam go the first time?"

better the devil you know, plus they knew that ejecting him without a replacement in the pipeline would cause more problems.

Its weird they they are letting the housing market crash in some american states.

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Hovelinhove

You put a lot of faith in this government if you think they can prevent a house price crash, they cannot do anything right these days.

Interest rates will in reality be set by the international currency traders, the government / bank of england can only hold out for a few hours against those guys as has been proven in the past.

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You put a lot of faith in this government if you think they can prevent a house price crash, they cannot do anything right these days.

That's the most reassuring thing I've heard on this topic!! If our government is focused on maintaining HPI, then we are guarenteed a crash, they are biggest bunch of incompetent arseholes this country has ever had in power.

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That's the most reassuring thing I've heard on this topic!! If our government is focused on maintaining HPI, then we are guarenteed a crash, they are biggest bunch of incompetent arseholes this country has ever had in power.

Me too. We are crazy to worry that the government will not allow a crash. We should be more worried if they will just let it happen in its own time.

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I am a bear, and I think our economy is completely screwed for the same reason as everyone else on this board, but I'm starting to think that an HPC is not going to happen as the government and powers that be would much rather allow hyperinflation than a housing a crash.

Inflation they can blame on global factors such as oil, but an HPC is politically disastrous. If they raise interest rates and cause an HPC they will be crucified by the press and the people in debt for causing the crash, so they will continue to manipulate the stats and keep IRs low, and HPI high. This is effectively what happened in the 70s and what I believe will happen now.

The government 'dont control interest rates.' The MPC are in charge.

I would suggest that a housing crash caused by higher interest rates would be quite easily side-stepped by the government - after all they made a huge deal of giving the BoE independence.

Further, the powers that be - big business - would rather the inevitable costs of this readjustment be placed on the shoulders of Joe Public than on their shoulders. - Additionally a HPC would reduce inflation by reducing spending.

Two stoned birds, a hand in one bush...and all that.

The only solution I have is to immigrate so you can forget all about this pathetic country and the growing problems that our government are creating for our future.

Hmmm...ultimately the citizens of this country are responsible for its fate.

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Not sure if inflation would kill the HPC, but one thing is for sure.

Inflation would kill Gordon Brown's chances of ever becoming the prime minister.

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The reality is the BOE MPC arn't going to be facing the voters in 3 years time.

This time arround (2006) the Uk property market and the sentiment which underpins it is hypersensetive to IR movments.

Last time arround (1988 to 1994) rates were moved up and down in .5% and 1% graduations with little warning. Now the BOE MPC know that having allowed a credit bubble and rampant HPI to develope in the UK, the cost of warding off general inflation (via IR rises) is going to be painfull for many. But it has to be done and .25% graduations up or down now have a big affect.

IR in the UK will be 5% by end 06 and probably 6 to 6.5% by end of 07.

There is a whole generation of highly indebted First and second time buyers, not to mention thousands of amature, inexperiance BTL's that are going to learn about the reality of debt and economics the hard way. The MPC have alowed the UK consumers to dig themselves a huge hole. Now the little Englander game is over and in World Cup year Global forces are afoot. Boy will the feckless, naive and stupid have some stories to tell come the peak of the next cycle in 2018/19.

Nothing changes, you have been warned. Govern yourselves acordingly!

Pablo Silver or Lead?

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That's the most reassuring thing I've heard on this topic!! If our government is focused on maintaining HPI, then we are guarenteed a crash, they are biggest bunch of incompetent arseholes this country has ever had in power.

YEAHHH!! - He's seen the light :)

TB

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Guest

High inflation without wage inflation will cause a massive recession.

High inflation without wage inflation HAS ALREADY HAPPENED.

The relaxation of the money supply and cheap lending HAS NOT found its way into wages in the last five years, so I have no reason to believe that it will find its way into wages over the next five years.

This is why the "Bernanke's Inflationary Depression" idea will fail.

Comments invited because I am struggling with this. ( I care about this more than a property crash ).

I wonder why the government let a HPC happen last time. I know i know, they wont let it happen this time.

I was 14 as the time, but IMO, the Tories were indifferent to the housing market on the way UP and on the way DOWN. This is because they have non-interference policies in free markets. (Some old labour supporters don't actually understand this and think the evil ******* tories delibrately crashed the property market, in reality the British people crashed their own market because some of them did silly borrowing). I do not recall a level of ramping that has gone on this time.

better the devil you know, plus they knew that ejecting him without a replacement in the pipeline would cause more problems.

Its weird they they are letting the housing market crash in some american states.

Chuz. The yanks dont give a shit about their house market or about ours. They give a shit about losing the US dollar as the world reserve currency. Nothing else matters. This is a huge part of what makes America a superpower.

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The government 'dont control interest rates.' The MPC are in charge.

This is true but the government does control the ONS, which publishes inflation data. Now most of us agree that inflation seems to be above 2%, with the rising of rising bills & energy prices. If the government are publishing inflation data which has been altered to be artificially low using their various "statistical methods", this surely shows their intention to keep IRs low for as long as possible despite the long term consequences.

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We had hyperinflation and high interest rates in the 70s

Interest Rates

UK Inflation

quality links Charlie - thanks

I think that demonstrates that we a long overdue a dose of deflation, in fact. Indeed, that might be the only thing that could get us back into some kind of competitive parity with the 50p/hour orient (not Leyton).

not that the medicine would be anything other than profoundly painful, of course. :unsure:

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  • 333 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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