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...could it really be that the government is determined to enslave us with high house prices in perpetuity and that creating the money to stimulate the market is seen as a political as well as financial decision?

...the US government being determined that two salaries are necessary to afford a home and that by bailing out Fannie and Freddie they have practically enshrined permanently high house prices into government policy.

That's about the best summary of the sensible side of the argument I've heard.

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The doom and gloom theme continues today as C4 news featured an article on how gloomy it's looking for the credit market. The tail end of the report mentioned the possibility of "unprecedented" government cash help to try and stave off further falls in asset prices. That said, could it really be that the government is determined to enslave us with high house prices in perpetuity and that creating the money to stimulate the market is seen as a political as well as financial decision?

The article on the front page of HPC talks about the US government being determined that two salaries are necessary to afford a home and that by bailing out Fannie and Freddie they have practically enshrined permanently high house prices into government policy. All this government intervention really means a new paradigm for the mortgage market. I can't help thinking that this will change things - just as the US government banned shorting on Fannie and Freddie, then watched their share prices recover - the British government may be about to play a similar trick by injecting billions into the market by providing bonds in exchange for new mortgage loans.

Where is it all leading?

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I fail to see the point of all this. OK it is very important to ensure that banks don't fail as it will be the savers who suffer. However, higher and higher house prices can't go on indefinately unless people have the wages to support this. Therefore, the government would do better to keep industry alive to make sure that people actually have jobs.

Furthermore, let us hope that people not yet on the housing ladder insist on purchasing homes at prices that are affordable and will not enslave them with never ending debt.

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Add in the fact that the US have a PRE-FUNDED bailout deposit insurance scheme and the UK have a "WE WILL ALL CHIP IN IF IT DOES GO T!TS-UP" deposit insurance (IF they can afford to).

Then I'd expect a few more UK banks to be farmed out offshore etc.

Edited by Yoss

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It's depressing to imagine that this might actually do what it says on the label. But is any government - no matter how much money they borrow from the taxpayer - capable of pulling off such an ambitious stunt, and what effect would it have on the rest of the economy in the face of rising prices elsewhere?

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Apart from the tragedy of the party of the poor - Nu-Labour is so middle class these days - even contemplating this the reality is that anything they do will not buck the global markerts. The markets will will out in the end. All that Brown and Co will do is waste a great deal of our money and make matters worse.

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I fail to see the point of all this. OK it is very important to ensure that banks don't fail as it will be the savers who suffer. However, higher and higher house prices can't go on indefinately unless people have the wages to support this. Therefore, the government would do better to keep industry alive to make sure that people actually have jobs.

And there dear reader is the root cause of all the financial woes of the western world. Wage rates are not high enough to support the existing debt burden weighing down on the economy. Just creating more credit will not change that fact. Instead, it will just ensure that the problem gets bigger and badder down the road. All those wage arbitrages played by corporations offshoring jobs and exploiting cheap immigrant labour may have looked no brainers to the bean counters of individual companies but collectively they have screwed the pooch.

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The paradox of the apparent desire of the government/industry for increased mobility among the workforce alongside the desire to anchor people to one place through huge debts is something I have never been able to figure out.

On the one hand, the powers that be would like us all to be willing to drop everything at a moments notice and move from one end of the country to another, or even abroad, yet on the other, their policies seem focussed on lining the pockets of lending institutions so that the bubble can be kept inflated - thereby chaining people to one place for 25+ years.

One thing that seems certain is that there is no certainty in anything anymore. The power elite would have us play a guessing game as to what their next move might be - with the sense that the rug could be pulled from under our feet at any minute. This is somewhat like walking across quicksands. All possible avenues for escape, relief or refuge are slowly but surely being closed off.

:unsure:

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As it's been noted before we are in uncharted territory what happens now is anyone's guess. It's unlikely that this money will do anything apart from make a few people very rich at the taxpayers expense.

Intervention on this level will never work mainly because no one has any idea what the losses will be.

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Where is it all leading?

War, probably.

The general public are sooo ******ing stoooopid!

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They can't do anything. Half of all the mortgage lending we have witnessed in recent times has been securitized. The market for securitized mortgage debt is now nonexistent.

What are the government gonna do? Become the net purchaser of consumer debt, and draw gilts to fund it? Don't make me laugh.

They want the mortgage market to return to how it was. It can't! They didn't understand it then and they don't understand it now.

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I'm gonna keep a very beady eye on how this pans out.

If it results in another HPI period, I'm off to Canada. I'm 21 and have absolutely no plans to spend a full 15-20 years of my life working to pay for a pile of sodding bricks. 4-5 years, fine.. 15-20, though? No chance in hell.

The UK government needs to tread very lightly, or their current generation of university graduates will sod off and take their taxes with them.

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The doom and gloom theme continues today as C4 news featured an article on how gloomy it's looking for the credit market. The tail end of the report mentioned the possibility of "unprecedented" government cash help to try and stave off further falls in asset prices. That said, could it really be that the government is determined to enslave us with high house prices in perpetuity and that creating the money to stimulate the market is seen as a political as well as financial decision?

The article on the front page of HPC talks about the US government being determined that two salaries are necessary to afford a home and that by bailing out Fannie and Freddie they have practically enshrined permanently high house prices into government policy. All this government intervention really means a new paradigm for the mortgage market. I can't help thinking that this will change things - just as the US government banned shorting on Fannie and Freddie, then watched their share prices recover - the British government may be about to play a similar trick by injecting billions into the market by providing bonds in exchange for new mortgage loans.

Where is it all leading?

Why did I think "Lord of the Flies" when I read your summary?

It seems to be where we're heading. :huh:

Edited by Pacific State

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Guest anorthosite
If anything like this happens I will leave the country.

I'm already packing.

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I'm gonna keep a very beady eye on how this pans out.

If it results in another HPI period, I'm off to Canada. I'm 21 and have absolutely no plans to spend a full 15-20 years of my life working to pay for a pile of sodding bricks. 4-5 years, fine.. 15-20, though? No chance in hell.

The UK government needs to tread very lightly, or their current generation of university graduates will sod off and take their taxes with them.

another to say i'll be off too.

obviously that is far easier said than done though, jobs will hardly be rife anywhere in the world right now.

tbh though i'd look at a complete career change, helping people out in poor countries, work for charities, any wage would do to get away from here should this madness continue.

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Inflation, massive inflation, will be the inevitable consequence of these moves.

They are actually terrified of deflation. Mortgage lending accounts for 70% of the money supply. The growth in money supply only needs to slow to create a deflationary bust. The general inflation we a witnessing now is the secondary wave, tghe primary wave being asset inflation.

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I think the problem with this is that most of the remaining first time buyer have worked out that they are the suckers that prop up the market.

I just think too many people have seen through the smoke an mirrors for this to work.

Lets face it the 'system' is broken. There is only so long the madness can continue, even with support from Broon.

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Add in the fact that the US have a PRE-FUNDED bailout deposit insurance scheme and the UK have a "WE WILL ALL CHIP IN IF IT DOES GO T!TS-UP" deposit insurance (IF they can afford to).

Then I'd expect a few more UK banks to be farmed out offshore etc.

Thank you Yoss, I thought I was the only one on here making that point about the useless FSCS scheme...

Optobear

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I'm am passionately against the government propping up a ridiculously inflated housing market, it makes no economic sense, and just makes people poorer in the long run, paying huge mortgages every month.

Labour are desperate though, and I think they'll do anything to get some feelgood factor back into the housing market. Brown is selling his soul to the devil if he goes through with this.

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  • 399 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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