Friday, April 27, 2007

Excellent common sense article

Up to our eyes in debt we can't see

Yet the experts still say, don't worry. Much of this debt is backed by property. House prices are going up; they always do. You know it makes sense. Really? Am I alone in not understanding hocus-pocus economics? How can houses, some of which are being acquired on mortgages of six times the buyer's salary, keep increasing in price at a rate of more than twice income growth? The numbers add up only if you want them to - and plenty do.

Posted by papabear @ 02:16 PM (595 views)
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4 thoughts on “Excellent common sense article

  • A very good article!!
    Read the comments too. some are amazing stories about Spanish property.

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  • As a country, we are definitely up to our eyes in something that has 4 letters and ends with t, besides debt.

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  • sold 2 rent 1 says:

    One of the best comments at the bottom:

    “Apart from UK housing, which is a planning led supply shortage speculative bubble which needs to be very slowly deflated in real terms over a very long period, the world is awash with oversupply, with China and India investing massively in productive capacity which they cannot hope to fill without Western consumers borrowing their massive export earnings to spend on their exports, because they do not have enough wealthy and credit worthy consumers of their own.

    Meanwhile unemployment in Europe is hideously high. The risk remains deflation, not inflation. And if the monetary authorities stick to rigid inflation targets, let alone rigid monetarist targets, in response to supply price shocks like energy prices, then a huge deflationary crisis is just waiting to hit.

    Such a process could justifiably be described as a form of usury and the bankers ramp and would be morally bankrupt as well as economically suicidal and politically crass. The world now bears no resemblance to the inflationary situation of the seventies. Wage inflation in the UK net of City bonuses is low and falling.”

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  • I like the last paragragh of S2R’s quote, which reads to me that Inflation is OK as long as Wage Rises are Low or FALLING as long as the CITY does OK.

    Tears what is left of hair out and has another coffee, puts Kaiser chiefs CD on and listen to the lyrics ‘Everything is Average Nowadays’ and ‘I want to Retire and get the Man off My Back’.

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