Total Liquidity Much More Important Than Immigration

[Jimmy James]

Imagine a country - let's call it Great Bittern.

This country has 59 people living in it.

One immigrant from Ethnonistan decides to move to Great Bittern - making the population 60.

The basic demand for houses has thus increased from 59 to 60.

However houses are bought with something called money, and this money has to be borrowed from the local bank called Yabbey National. Yabby National will lend these people 3.5 worth of the Great Bittern unit of money.

Effective demand is thus 60 x 3.5 - i.e. 210.

The immigrant contributes 3.5 to this effective demand, the rest of the population contributes 3.5 x 59 - that is 206.5. The original population has a much more powerful impact on effective demand than our one new immigrant.

Now Yabbey National makes an announcement that it is loosening its lending criteria and will now lend people 5 units of Great Bittern's money.

Effective demand is thus 60 x 5 - i.e 300 - an increase of effective demand by nearly a third.

The increase in effective demand caused by the immigrant is only 1.5 unit. But the impact of increased liquidity from the native population is 88.5!

Thus we can see that the availability of money to buy Great Bittern's housing stock is much more powerfully impacted by lending criteria rather than immigration.

This would be even more the case if you took into account the fact that the immigrant is likely to have a lower wage than the native population thus reducing the level of his effective demand.

[Jason]

Yep, I started a thread on this yesterday: http://www.housepricecrash.co.uk/forum/ind...c=37440&hl=

People are taking on mortgage that are 12% higher than 12 months ago, no wonder house prices are rising. This immigration issue is a red herring for the country as a whole, I think it's more applicable to places like London.

[brainclamp]

Your argument that the banks are at fault for lax lending is based on the expectation of BOE interest rates which are ultimately based on mass immigration prevent workers from having bargaining power over wages, as the BOE governer Mervin King has stated.

[Jimmy James]

Your argument that the banks are at fault for lax lending is based on the expectation of BOE interest rates which are ultimately based on mass immigration prevent workers from having bargaining power over wages, as the BOE governer Mervin King has stated.

Come again?

[?...!]

Your argument that the banks are at fault for lax lending is based on the expectation of BOE interest rates which are ultimately based on mass immigration prevent workers from having bargaining power over wages, as the BOE governer Mervin King has stated.

OK, who benefits other than nationalist propaganda types such as yourself?

[laurejon]

How about, Immigrants require a roof over their heads.

FTB'er on a salary of 30k can borrow 150k, however property is 200k.

Business Man, with 20 BTL Properties rings bank and asks for loan of 200k on the security of 4Millions Pounds of property assets

Business Man then lets said property to 10 Immigrants who sleep in all the rooms, including downstairs cloaks, the Coal Cupboard, and the Garden Shed. Paying the Rent between 10 people is easy, however rents invariably go up as the Landlord can ask more and more, and the numbers living in each house get larger to compensate.

Meanwhile, British Young Families put their lives on hold waiting for a recession, how negative is that ?.

[Realistbear]

Look at California for a little foretaste of what is coming here. Huge multiples, IO etc. offered to the sheeple in the last days of HPI. Vast numbers of repossessions are occuring and many are headed for auction at cut rate prices. The higher HPI the bigger the debt load and the more houses headed for the auctioneer.

You can't beat the market.

[laurejon]

Looking at this from another angle.

The Government have used immigration to bolster up a failed economy.

By importing cheap second class labour, the Government have removed the standards in the workplace built up over generations, in addtion they have pushed wages down, and also put pressure on the security of employment for British Workers.

If we had not had mass high density immigration the Governments hand would have been forced several years ago and interest rates would have been raised, higher rates would have put the stop on house price inflation and made property affordable for hard working British Families.

[Jimmy James]

How about, Immigrants require a roof over their heads.

FTB'er on a salary of 30k can borrow 150k, however property is 200k.

Business Man, with 20 BTL Properties rings bank and asks for loan of 200k on the security of 4Millions Pounds of property assets

Business Man then lets said property to 10 Immigrants who sleep in all the rooms, including downstairs cloaks, the Coal Cupboard, and the Garden Shed. Paying the Rent between 10 people is easy, however rents invariably go up as the Landlord can ask more and more, and the numbers living in each house get larger to compensate.

Meanwhile, British Young Families put their lives on hold waiting for a recession, how negative is that ?.

Yes the rental sector is a contributing to demand. But think about it in a little more detail.

Effective demand in the rental sector is based on the amount people can borrow - tempered by the yield they must earn from rent.

In your example the main contributor to effective demand to be able to buy the house is the business man (who borrows the money, pays the mortgage whilst earning rent), whilst the immigrant (because of their low wages and their inability to borrow) only contributes 10% of this effective demand through rent.

The business man benefits from access to better (although riskier) access to credit, through interest only loans and rental income, which means they can out compete our hard working young British couple.

Of course the immigrant contributes to rental demand (albeit at 10 immigrants per house this is very low) but the key driver of effective demand is the business man in alliance with the bank.

Can you see a picture emerging: business man + bank = problem.

Socialism made easy.

Edited November 2, 2006 by Jimmy James

[Wuluf]

removed the standards in the workplace built up over generations,

Laurel and Hardy John...

lol

[Jimmy James]

By importing cheap second class labour, the Government have removed the standards in the workplace built up over generations, in addtion they have pushed wages down, and also put pressure on the security of employment for British Workers.

If we had not had mass high density immigration the Governments hand would have been forced several years ago and interest rates would have been raised, higher rates would have put the stop on house price inflation and made property affordable for hard working British Families.

The first paragraph could be said to be a fair argument - although it doesn't have much to do with house prices, more a 'immigrants are a tool to help supress wages for the working man' thesis.

The second paragraph is fairly tendentious though. The links you are trying to make are weak at best. House prices are much better seen in the context of monetory policy and the surrounding framework of government policy on investment, btls, tax incentives etc.. Immigration isn't the main issue. And what is 'high density immigration' - coming here 50 to a mini metro?

[laurejon]

London now get most immigrants, as a result the density of the built environment has increased beyond sustainable levels.

Standards are now substantially reduced, immigrants have very low standards, they expect little in terms of pay and they put a huge strain on housing and services put in place for the taxpayers.

London is now seeing the British as an ethnic minority as many leave, unable to live in cramped and unsatisfactory sorroundings, now that is dense immigration.

As London expands on itself, pressure is put on housing, as a result houses are getting smaller and smaller, we will soon be at a point whereby it is acceptable to live in a flat measuring 10ft by 10ft.

Immigration is serving only business, and Government, hard working British Families are having to go without in order that the scarce resources designed and payed for by hard working British Familes are shared out amongst an ever increasing artificial population.

[iamnumerate]

So demand and supply do not affect prices ???

Good I will tell my friend who lives in Norfolk than Londoners who retire there do not affect prices because the number of people who want to live in an area has no effect on the house price.

[Jimmy James]

So demand and supply do not affect prices ???

Good I will tell my friend who lives in Norfolk than Londoners who retire there do not affect prices because the number of people who want to live in an area has no effect on the house price.

Have you bothered to read this thread?

It is about clarifying what 'demand' is - and why a simple head count is not a very good way of understanding current levels of 'demand'.

The primary reason why Londoners retiring to Norfolk effects prices is because they have a great deal of money - i.e. their contribution to 'effective demand' is very high.

You make a good point in highlighting that in a case where one group with more money moves into an area with a group that has less money this of course makes the impact on demand much greater.

Of course this isn't the case with the movement of most immigrants into the UK.

[laurejon]

The primary reason why Londoners retiring to Norfolk effects prices is because they have a great deal of money

Why are they not happy to stay in London?.

Why are Families moving out of London?.

[Jimmy James]

Laurejon: but immigrants causing pressure on housing services is not the same as immigrants causing high house prices.

Why are they not happy to stay in London?.

Why are Families moving out of London?.

Well, much to my surprise, I partly agree with you here LJ - the quality of life is deteriorating in London, and part of that is to do with levels of immigration. However I think it's best to come at it from a more rounded way - immigration is clearly a problem, but distributional and social justice issues are also equally important, if not more so. It's a faulty intellect who tries to hang it all on the immigrant hook.

And treat the 'immigrants cause house prices to increase' with the very large piece of salt it deserves.

[Wuluf]

...

Current State of Play..

http://news.bbc.co.uk/1/hi/talking_point/1767762.stm

A few random extracts

"Having experienced hospital treatment in England and in Scandinavia, I cannot emphasise enough how ridiculously poor the NHS is. (That is "poor" in every sense of the word!) Anyone offered treatment abroad should consider themselves very lucky indeed."

"in Germany. The system was fast and efficient, to the extent that, meeting with the consultant two days after being referred, I thought that my German was bad until I realised that the doctor was actually saying "when would it be convenient for you to come in for the operation"!! The treatment was excellent. "

"My Mum fell ill while in France. Within six hours she had been to the doctor twice, had the blood test completed within two hours, and her medicine given to her - not to mention all the other high tech scans etc that were given. My parent still to this day cannot believe how good their healthcare system was. It really does make you wonder what the rest of the world think of our NHS,"

"The question should not be would you go abroad but can you afford to stay in the UK and get sicker and sicker until you die? The NHS is not just a joke in the UK, it is also a constant source of amusement for Europeans"

"My brother in law's brother lives in Norway. He recently had an accident resulting in multiple fractures to his arm. In hours of surgery the doctors painstakingly pieced his arm back together again and now it is as good as new. Discussing the operation with his former doctor in England, he asked the doctor how they would have gone about treating him here: "Oh, we'd probably have amputated your arm", was the reply."

I will dig up some stuff about the 70s later...

Poor standards in the UK is not a recent phenomenon

[TheJudge]

Now Yabbey National makes an announcement that it is loosening its lending criteria and will now lend people 5 units of Great Bittern's money.

Effective demand is thus 60 x 5 - i.e 300 - an increase of effective demand by nearly a third.

The increase in effective demand caused by the immigrant is only 1.5 unit. But the impact of increased liquidity from the native population is 88.5!

Thus we can see that the availability of money to buy Great Bittern's housing stock is much more powerfully impacted by lending criteria rather than immigration.

Yes liquidity is key.

I have noticed the change from late nineties when we had to practically beg to borrow 2.75 times joint, to 2005 when I had a 'financial advisor' pressurising us to borrow 5 times joint so we could bid more. Of course this is going to have a massive effect on house prices, it ain't rocket science.

And no it doesn't all boil down to immigration, that's a separate debate. The really big thing here is liquidity.

[brainclamp]

There are lots of things which affect the borrowing rate. The main one is inflation.

INTEREST RATE = INFLATION.

The main cause of inflation is the UK wage level (COST) MINUS Productivity (GAIN) = DEMAND/SUPPLY PRICE OF PRODUCE. (GDP) The wage level and supply of produce affect inflation far more than any other factors like raw materials which you mention.

A policy of controlled immigration for rare skills - a team formed from experts from different countries around the world to cure cancer for example - might raise productivity as projects are sucessful, drugfirm patents and innovation rises and our competitve edge rises, so that per person GDP rises without affecting the structure of society. (GAINS)

A policy of MASS immigration is recognised to lower wages and have limited effects on productivity, deeply affecting the structures of society and bargaining powers of individuals (LOWER COSTS) which raises GDP but lowers per person GDP.

So we have rising GDP - (the gains are mostly from rising houseprices and rents) from lowering UK WAGES even as RENTS and PROFITS rise. Under the 1980s and 1990s we have the opposite - rising GDP per person from productivity gains.

70% of INFLATION = UK WAGE LEVEL.

What Mervin King - the BOE - has stated (not me), is that the key to interest rates/inflation is the ability of the workforce to bargain for higher wages in the face of MASS immigration.

MASS immigration affecting every worker, and lowering what wages otherwise should be, is therefore the keystone underpinning this 'economic boom', low interest rates, and inflation - according to the BOE!

If the policy is set to continue, which looks likely, then the banks can lower lending standards and lending mutiples without too many worries, to reflect certain FACTS -

the fact that workers will never have bargaining power to cause INFLATION / WAGES to rise, and to reflect the fact that housing is in short supply, in relation to the millions and millions of people imported to make this policy work.

Edited November 2, 2006 by brainclamp

[iamnumerate]

Have you bothered to read this thread?

It is about clarifying what 'demand' is - and why a simple head count is not a very good way of understanding current levels of 'demand'.

The primary reason why Londoners retiring to Norfolk effects prices is because they have a great deal of money - i.e. their contribution to 'effective demand' is very high.

You make a good point in highlighting that in a case where one group with more money moves into an area with a group that has less money this of course makes the impact on demand much greater.

Of course this isn't the case with the movement of most immigrants into the UK.

Actually a lot of immigrants -not all - get help paying rent which helps encourages BTL and puts up prices. I know a benefit seeker [benefit seeker = a fraudalent asylum seeker who comes here for benefits] who lived in a house I wanted to buy with the rent paid for with my taxes - therefore she made housing more expensive

Also I personally moved up the housing ladder with help from rent paid by immigrants (from their own work) so they do cause prices to be sustained.

However much liquidity there is if people do not want a house then prices will fall. If 10 million people emmigrated tomorrow however cheap borrowing money would be, then houses would fall because no one would buy them.

True liquidity is a factor but supply and demand are also true. Which is why prices are going up most in places that either a) have a lot of immigration or white flight.