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RichM

Building An Economy On Not Having Something

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The Medieval period, East Anglia:

Wow, we have lots of land suitable for grazing, let's have lots of sheep to sell luxuries like wool, and foodstuffs like mutton and lamb. We'll all be rich! Our economy will do really well with lots of extra produce. We can build wondrous buildings like churches and cathedrals that will glorify God and be there for countless generations to enjoy.

The Industrial Revolution, 1800s, Westrn Europe, mainly the UK:

Gosh, let's use coal to power steam engines and increase our ability to manufacture goods. We'll all be rich! Our economy will do really well with lots of extra produce. We'll be able to usher in a new age of prosperity and philanthropy, and healthcare and education will eventually flourish on the basis of cheaper essentials like food.

The internet revolution, the developed World, 2001+:

Gadzooks, let's use the internet to increase our markets, generally cut costs, and encourage free markets. We'll all be rich! Our economy will do really well with lots of extra produce. Boundaries between peoples and nations will fall, information and education will be universally accessible, a new era of learning and development will be beckoned in.

The housing economy, the UK, 2001-2007:

Hurrah! If we make it harder for people to buy homes and exponentially increase the amount of credit available to potential buyers, then the cost of homes already built will increase. We'll have more or less the same homes but they'll be "worth" three times as much. We can borrow never-ending amounts of money on the basis of this new found wealth and everyone can be grossly over-indebted.

We certainly won't all be rich, and our economy will not really be producing much more, but we can certainly found our economy on this exciting new development! There'll be not much to look forward to as fewer babies will be born and most people under the age of 35 are working to paying off their mortgage or rent.

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The housing economy, the UK, 2001-2007:

Hurrah! If we make it harder for people to buy homes and exponentially increase the amount of credit available to potential buyers, then the cost of homes already built will increase. We'll have more or less the same homes but they'll be "worth" three times as much. We can borrow never-ending amounts of money on the basis of this new found wealth and everyone can be grossly over-indebted.

We certainly won't all be rich, and our economy will not really be producing much more, but we can certainly found our economy on this exciting new development! There'll be not much to look forward to as fewer babies will be born and most people under the age of 35 are working to paying off their mortgage or rent.

The housing economy, Spain 2001-2006:

Hurrah! If we don’t have stupid planning laws that keep the rich landlords rich we can build 5 million new homes. the price will tank so hard that all those stupid brits will loose their holiday homes and our nations young will have dirt cheap housing

the boom in itself is not bad, the fact that we got nothing from the boom because of our planning system is what will really cripple us.

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The Housing Economy

Lots and lots of jobs for people building and renovating houses. From skip hire through to builder's tea multiple businesses sustained. Retail businesses supported selling decent stuff to homeowners and cheap crap to BTLers. All the old stuff gets recycled back through the Salvation Army to tight-fisted BTLers, the rest goes to landfill - where of course the govt taxes it, thereby generating enough revenue to pay for the NHS!

Inflation subdued because of that "substitution effect" - homeowners no longer need to press for higher wages, because they substitute MEW for their income. What a winner! Income-substitution keeps wages down, allowing the BoE to maintain low interest rates - enabling the BTL/housing "ladder" to keep going.

Meanwhile we import lots of EEs to paint/plumb/build/whatever our housing stock. So we have a permanently improving housing stock which in turn generates forward momentum for the economy. As Rudy Guiliani put it, shop for your nation. It's the patriotic thing to do.

And of course all these new immigrants need to be housed, so ever onward, you BTLers! Make the Great Leap Forward, do your bit by providing cheap, wholesome accommodation for these bastions of our economy. Suppress your moral qualms about "hot-bedding", they are obviously only here because it's so much better than back home. If it wasn't they'd go back, right? It's a free market after all.

And for anyone left behind in the renting class well, that's fine, it's obviously their fault. They deserve to be second-class citizens because they've wasted their money on iPods and mobile phones, not to mention the take-away coffees from Starbucks and excessive spending on frivolous magazines. If anyone is stupid enough to pursue one of those "worthwhile" careers in medicine or academia or whatever, let them warm themselves over the glowing embers of their self-righteousness. We need more property developers, more estate agents, more conveyancers, energy inspectors, mortgage brokers, innovative financial engineers. They are the future of the economy, the coal-face of wealth creation.

And if we can't grow our own money we'll import somebody else's by selling to all those wealthy foreigners. We have a fantastic product - the ever-improving UK housing stock - so let's be rightfully proud of what we've got to sell and tout it all round the world. Anyone stupid enough not to buy RIGHT NOW deserves to fall behind, they've only got themselves to blame.

So there.

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Guest Skint Academic
The housing economy, the UK, 2001-2007:

Hurrah! If we make it harder for people to buy homes and exponentially increase the amount of credit available to potential buyers, then the cost of homes already built will increase. We'll have more or less the same homes but they'll be "worth" three times as much. We can borrow never-ending amounts of money on the basis of this new found wealth and everyone can be grossly over-indebted.

We certainly won't all be rich, and our economy will not really be producing much more, but we can certainly found our economy on this exciting new development! There'll be not much to look forward to as fewer babies will be born and most people under the age of 35 are working to paying off their mortgage or rent.

... and the younger generation who have spent years in university will leave the country where the quality of life is better, to pay off debts, buy a house and then save for their old age, taking all their talent with them and in doing so exacerbate the aging demographic of Britain.

The alternative is staying in this country, not having any disposable income because of high utility bills and a falsified inflation figure that keeps wages down, being unable to afford to raise a family, buying a dump of a house that at sky high prices that takes longer to pay off and not being able to save for your old age.

Last time Labour were in power the rich left the country as they were taxed so heavily, taking all the wealth with them. The rich of course are quite able to be mobile because of their wealth. This time it's all the young hard working talent that's leaving the country. The young of course being mobile because they have fewer ties, haven't already embarked on a lifetime of hopeless slavery and are less resistant to change.

Which reminds me, I had better get the language course installed on this computer again ...

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... and the younger generation who have spent years in university will leave the country where the quality of life is better, to pay off debts, buy a house and then save for their old age, taking all their talent with them and in doing so exacerbate the aging demographic of Britain.

Aye, and I'll be certain the door doesn't catch me on the **** on the way out ;)

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The housing economy, Spain 2001-2006:

Hurrah! If we don’t have stupid planning laws that keep the rich landlords rich we can build 5 million new homes. the price will tank so hard that all those stupid brits will loose their holiday homes and our nations young will have dirt cheap housing

the boom in itself is not bad, the fact that we got nothing from the boom because of our planning system is what will really cripple us.

As colonel mannering would say "stupid boy"

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The housing economy, Spain 2001-2006:

Hurrah! If we don’t have stupid planning laws that keep the rich landlords rich we can build 5 million new homes. the price will tank so hard that all those stupid brits will loose their holiday homes and our nations young will have dirt cheap housing

the boom in itself is not bad, the fact that we got nothing from the boom because of our planning system is what will really cripple us.

I think this is right. Spain will hit the rails, but their young people will reap the harvest of cheap property available over the next decade. I think it will crash a lot, but I see no problem in trying to make property absurdly cheap, for the long-term.

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I see no problem in trying to make property absurdly cheap, for the long-term.

Is there any reason why we can't do that? Surely if planning permission was eliminated and houses were mass-produced and just assembled on site in a few days, we could dramatically cut costs? Why shouldn't housing have benefited from mass production the way everything else has?

Admittedly we'd have to stop using bricks and mortar, but the cost reduction could well be worth any increased maintenance costs in the long term; just replace the whole house when it gets too old.

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We certainly won't all be rich, and our economy will not really be producing much more, but we can certainly found our economy on this exciting new development! There'll be not much to look forward to as fewer babies will be born and most people under the age of 35 are working to paying off their mortgage or rent.

Dunno about your parents, but my dad, a typical boomer, worked long hours, weekends, few holidays, lived with few mod cons etc. My grand parents had a war to fight. My gf's grand parents were bought up in a typical terrace street, worked their hands to the bones, even less mod cons, no heating, an outside loo, etc. This was and has been reality.

Ive said this before and I say it again, exactly how do people think we should be living? Sitting around all day listening to our ipods, drinking champagne, watching the big plasma screen. Perhaps turn up to work a few times a year and then on holiday for the rest.

Maybe some of you were lucky enough to be brought up by parents who could afford holidays, nice big houses, a room for each sibling and had parents who could afford time to spend with you. But sorry, this isnt reality for the majority of people in history. Have you ever looked in a history book before?

Most of my peers live lives of relative luxury and I just cant understand why some find it understand that such a lifestyle costs more money. Ive also said this bofore, by shunning all this stuff and living a frugal life I was easily able to buy a house last year in London and im far from rich (sadly).

You dont actually have to be rich to have kids. I wore my older siblings clothes, we survived with 1 small car, we ate cheap healthy groceries, we shared rooms. This is and always has been reality for many of us. I appreciate this is hard for some middle class well off people to understand but at some point it would be helpful if they realised they dont have the wealth they think they have. Or think they deserve.

Our economy has actually grown in a number of respects, although if you have your HPC blinkers on I can appreciate why you cannot and will not see this.

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Dunno about your parents, but my dad, a typical boomer, worked long hours, weekends, few holidays, lived with few mod cons etc.

So did mine. But he bought a house on one factory worker's salary while raising several kids; the same house would require two professional salaries to be even remotely affordable by a couple today.

And, more than that, his salary rose rapidly in the next few years, so the mortgage became much easier to pay off. Today that professional couple who both have to work to pay the mortgage would be looking at minimal wage inflation and they'd have to keep working until it was paid off.

Ive said this before and I say it again, exactly how do people think we should be living?

Better than our parents, as was true of most generations since the beginning of time.

Ive also said this bofore, by shunning all this stuff and living a frugal life I was easily able to buy a house last year in London and im far from rich (sadly).

But you were telling us a few days ago that you work in the City. Or did you forget that one?

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Guest Bart of Darkness
But you were telling us a few days ago that you work in the City. Or did you forget that one?

That big bag of McCains he has on each shoulder caused him to be fired (not the right image you see).

Maybe some of you were lucky enough to be brought up by parents who could afford holidays, nice big houses, a room for each sibling

Cue the violins.

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Orbital, I don't want a "lifestyle", I want to be able to afford a wooden/brick box with a suitable roof in which to have more than one child! My dad did this in the 80s on a very modest income. That house is now worth a quarter of a million, in a fairly rough district of Romford! :lol::lol::lol:

I don't expect life to be easy or fun but some degree of progress is not too much to ask, and a credit/planning system that doesn't screw over people is a very fair expectation. Housing is not something that we couldn't make widely and cheaply universally available. the government has engineered it such that this is impossible.

But you've allowed yourself to get sucked into the bubble so can't see otherwise. Good luck when the poop hits the fan.

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Orbital, I don't want a "lifestyle", I want to be able to afford a wooden/brick box with a suitable roof in which to have more than one child! My dad did this in the 80s on a very modest income. That house is now worth a quarter of a million, in a fairly rough district of Romford! :lol::lol::lol:

Didn't have you down as an Essex boy, RichM!

fiat_punto_flip_03.jpg

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Didn't have you down as an Essex boy, RichM!

And proud of it too. it's a well known fact that the Essexians (?) are the most intelligent people in the UK, by some margin.

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So did mine. But he bought a house on one factory worker's salary while raising several kids; the same house would require two professional salaries to be even remotely affordable by a couple today.

Too ******ing right.

Apparently, as a graduate in a decent job, I'm being selfish because I aspire to the same quality of life as a 1970s factory worker :angry:

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Dunno about your parents, but my dad, a typical boomer, worked long hours, weekends, few holidays, lived with few mod cons etc. My grand parents had a war to fight. My gf's grand parents were bought up in a typical terrace street, worked their hands to the bones, even less mod cons, no heating, an outside loo, etc. This was and has been reality.

Ive said this before and I say it again, exactly how do people think we should be living? Sitting around all day listening to our ipods, drinking champagne, watching the big plasma screen. Perhaps turn up to work a few times a year and then on holiday for the rest.

Maybe some of you were lucky enough to be brought up by parents who could afford holidays, nice big houses, a room for each sibling and had parents who could afford time to spend with you. But sorry, this isnt reality for the majority of people in history. Have you ever looked in a history book before?

Most of my peers live lives of relative luxury and I just cant understand why some find it understand that such a lifestyle costs more money. Ive also said this bofore, by shunning all this stuff and living a frugal life I was easily able to buy a house last year in London and im far from rich (sadly).

You dont actually have to be rich to have kids. I wore my older siblings clothes, we survived with 1 small car, we ate cheap healthy groceries, we shared rooms. This is and always has been reality for many of us. I appreciate this is hard for some middle class well off people to understand but at some point it would be helpful if they realised they dont have the wealth they think they have. Or think they deserve.

Our economy has actually grown in a number of respects, although if you have your HPC blinkers on I can appreciate why you cannot and will not see this.

As one of those middle class people you talk about, I thank you sincerely for this useful and poignant post.

*snigger*

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