Friday, January 4, 2008

Honest article about the social benefits of any HPC

The coming decline in UK house prices: how large and how helpful?

"The social benefits from a significant decline in UK house prices are bound to be significantly larger than any short-term credit squeeze on consumers, writes Willem Buiter"

Posted by trough2010 @ 12:30 AM (908 views)
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6 thoughts on “Honest article about the social benefits of any HPC

  • That page is slightly mis-formatted; the most recent end of the graph (2006 and 2007) is chopped off. Full shocking graphic attached below:

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  • It’s great to see even the intellectuals have grasped it.

    He could have said all that in half a dozen sentences, it reads like it was written by Edmund Blackadder!

    My contrafibularities to the author.

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  • voiceofreason says:

    Last 4 paragraphs give a good summary:

    “Since housing prices in the UK have become ridiculous…”

    “The social benefits from a significant decline in UK house prices are bound to be significantly larger than the social costs associated with any short-term credit squeeze on consumers it may cause or aggravate.”

    Anyone care to point this out to David Smith, Yvette Cooper, Fionnululua etc ?

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  • ‘These detrimental effects from a decline in the price of residential property are, however, likely to be transient – cyclical at most. The social benefits from a significant decline in UK house prices are bound to be significantly larger than the social costs associated with any short-term credit squeeze on consumers it may cause or aggravate.’

    This is fantastic. The short term negatives will be turned on their heads with the stability that will come about when people are still spending, but within their means and will do so happily because they have been able to put a roof over their heads which they own. The government need to let the BoE do its real job of keeping inflation, real not CPI, in check and not worry about the next election. Crash Gordon and his Darling will always be remembered for shoddy economics and the real moral hazards they encouraged during their tenure, but Mervyn King has the opportunity to be remembered as a strong Governor, rather than a weak lap-dog. Do the right thing King – 17% increases in heating/ electricity – 14% increases on travel -Council tax increases – fuel increases – food increases. Inflation is not low because Curry’s have dropped the price of an outmoded LCD television.

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  • … incidentally (but Buiter knows it quite well) ratios do not trend linearly… it is prices and salaries that may trend linearly and their ratios revert “to the mean” not to the linear trend… so the right target is house price/ salary = 3.5x

    agreed the article is very long and it should be sent to david “my dog” smith, and fionnualla-alla-alla

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  • “Short-term credit squeeze”. He does sound like Fionnuala. None of these guys seems to have grasped the dire nature of the crisis in financial markets. Once more – unprecedented levels of credit/debt and unprecedented amounts of leverage by lenders and borrowers, all juddering to a halt and going into reverse. He’s examining the tail (the housing market) instead of the dog (the credit crunch).

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