Saturday, April 10, 2010

Too much easy “credit”

Priced out of property? The iPhone generation don't save enough

Should read, Priced out of property? Years of easy credit pushed prices to ridiculous levels. The reason her mother "never bought herself the things she wanted, and everything spare went towards making our childhoods as close to the privileged golden years all parents want for their children" was the non-availability of insane amounts of credit.

Posted by mken @ 04:09 PM (2565 views)
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26 thoughts on “Too much easy “credit”

  • mark wadsworth says:

    mken, I prefer your version. This is a rare lapse from the Graun who are usually the most honest about the property price bubble and its fall out.

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  • “In my supposed poverty, I have never really practised the necessary self-imposed deprivation to redress the situation. I shop at Waitrose, I eat out more often than my parents, and on the whole if I want something I buy it”

    That says it all, the “I want it and I want it now” generation who can’t hack it when things get tough.

    I shudder to think how these people would manage if they started work on £62.80 per week, the equivalent of the £4 per week gross, I earned in my first wage packet in 1963.

    Macmillan’s expression, “You’ve never had it so good comes to mind”

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  • I must be nearly 20 years older than the author of the article and I am pretty sure that I would never have been able to get that much credit during university, but then I did go to a free grammar school (much more common then) and got a very nearly free university education. For most of my adult life property prices (inflation adjusted) have been far below what they have been in recent years.

    Her generation have been betrayed by easy credit in a number of ways:
    1. University loan leads to the idea of debt as a natural state of affairs.
    2. Further easy credit educates a whole generation to borrow rather than save.
    3. Easy credit drives house prices into the stratosphere.

    I don’t understand why we don’t have a revoltion on our hands.

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  • revolution – it’s my lousy typing, honest.

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  • Oh this is typical baby boomer apologist rhetoric – “Blame on the young ‘uns because … well we don’t want to feel guilty about fleecing our children and their children”

    PS. The very fact that University loans are a fact of life for these ‘wasteful ipodders’ is because previous generations (like the baby boomers) GOT PAID to go to university.

    Yes you heard that right – they were paid grants by the government to study!

    It beggars belief that someone can write an article weakly attempting to turn blame back onto the biggest victims of the inter-generational smash-n-grab in history.

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  • The thing that strikes me when I read this is….inflation is coming. Its coming because the majority of people in this country want it, simple as that. Inflation is the revenge of the ipoders, with their debts, that will finally hit the fixed income retirees, with their savings.

    The debt ridden young want it, the house owners want it, industry wants it (because it races ahead of wages), the politicians want it (easier to print than tax), the homeowners want it….- whats not to love about inflation? The fact that it will destroy our country is neither here nor there. In the end, you get the government you deserve. We have new Labour and the cons because we thats all we deserve.

    Just don’t expect inflation to be declared openly in the CPI by the BOE…it will be more subtle than that.

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  • paul, you don’t like the old, you don’t like the young… who do you like (other than your fragrant self, of course)?

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  • i remember the 90`s says:

    The bottom line is young people want everything now and don`t know how to save ,it was not like that when i was young money was not easy like now you had to save .

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  • Hi – I’ve been away from this blog for nearly two years – some may remember me as I was very active back then. It actually feels rather odd typing away again on here. I’m sure that I’m not alone in wondering quite how the wheels haven’t come off the so called economy yet. Most predictions thus far have been inaccurate – time will ultimately tell. Clearly we have a generation that have been conditioned into spending rather than saving,obviously this can’t continue indefinitely.

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  • You old guys are very much behind the curve. The younger generation have smelt the coffee. Face it guys, your days of picking up a 20 year old with a nice car and a wad of twenties and a stash of chemicals including your viagra to keep your little pecker up, has part its sell-by date. Userf will be a revolution akin to the 60’s. I personally can’t wait to see “a run on the newly opened soup kitchen” by this bb generation, mumbling over soup and bread about the good ole days. You really do rear what you sow, imo after the change, things will become more civilized again, and in my lifetime too, which is a nice thought. I don’t have bb’s, i just feel sorry for them. As for my grandmothers generation, well they were tough and had values. Sadly she is in a home, as i her 5 children (baby boomers), were to busy arguing, sub-dividing her assets, she was really prudent, as a direct result of the last great depression. As for the young’ens, at least they have drugs, sex and what mortgage? Games up really. Like with communism in russia, doesn’t last forever.

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  • Saving is not a complicated concept, nor is debt. There is no excuse except stupidity or lack of self control.

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  • gone-to-colombia says:

    I remember one woman saying to me that she ‘never wanted to say no to her children’. My reply was that it was a parent’s job to nearly always say no.
    Delayed gratification is an important indicator of success, in many ways!

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  • @8 Welcome back handle_it. You have missed some good crazy times here at HPC.

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  • Thanks novice pete :O) I must admit I was completely obsessed with this site and the subject in general.I’ve now more or less stopped following the news,mainly because I found the outlook rather hopeless and depressing. I like many have lost a reasonably well paid job and work more hours for less pay than I was earning 10 yrs ago. My current job is basically a sweat shop – I’m the only person in the office who takes a lunch break – the rest have been intimidated into working straight thru a 10 hr shift. Everything is minimum – yet the staff are expected to work late and come in early for no extra pay. I’m sure this story is being repeated all over. I’m taking my last employer to a tribunal for constructive dismissal,this is still running after almost a year.

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  • tenyearstogetmymoneyback says:

    handle it said “I’m sure that I’m not alone in wondering quite how the wheels haven’t come off the so called economy yet.”

    They have pulled off the oldest trick in the book – Currency devaluation – without many people noticing.

    If you price U.K. house prices in dollars, euros or gallons of petrol prices have dropped significantly.

    However, to quote a previous Labour Prime Minister “It does not mean that the pound here in Britain, in your pocket or purse or in your bank, has been devalued”. The amusing thing about the article this came from http://news.bbc.co.uk/onthisday/hi/dates/stories/november/19/newsid_3208000/3208396.stm
    are the figures. Back in 1967 they were fretting about a £800 million deficit.

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  • [email protected], I am pretty sure (but I can’t proove it) that my generation would have behaved just the same had credit been so easy to us and if we had been conditioned by a huge loan to go to university (rather than being paid to go to university as Paul so rightly puts it).

    The point is that the saving habit comes easier when you have to do it in order to survive.

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  • tenant super says:

    I like the UKIP policy on higher education… only the very brightest should go to university. The quasi-egalitarianism that leads to the idea that everyone can get a degree is deeply flawed and has compromised standards and meant those who really are academic find themselves drowned out in the labour market. The government took perfectly good polytechnics and turned them into third rate universities which leave their alumni drowning in debt and with a near-useless degree which doesn’t garner them any more wage. I have often sifted CVs for jobs and internships and always put them in three piles: Russell group, other red-brick and thirdly polytechnic degrees. The third pile I discard. The second pile have to work harder to impress me than the first group. Almost invariably, the job or internship goes to a Russell group graduate.

    Bring back the polytechnics and then less academic students can gain a vocational qualification at their nearest, while living at home with their parents and thus avoiding debt. Only 10% will go to the red brick universities and then giving them some kind of grant becomes realistic.

    The idea that the iphone gnereration don’t save enough; on a good graduate wage of £25k, after paying rent, student loan, travel-card, food and domestic bills, they can probably save about £250 per month. Even if they live like a monk and never go out or go on holiday, they would never save more than £400 per month. When HPI is more than £1000 per month, the price of a propery increases per month by more than two times what you have saved. And most graduates don’t even earn that, many more start out on less than £20k.

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  • mark wadsworth says:

    TS, “Even if they live like a monk and never go out or go on holiday, they would never save more than £400 per month. When HPI is more than £1000 per month, the price of a propery increases per month by more than two times what you have saved.”

    Exactly. It’s all well and good the Home-Owner-Ists deriding younger people as spendthrift and so on, the point is that there is no point in saving any more. Either you own a home and live in a dream world where the house does the ‘saving’ your for you (or at least that what’s they think), or you don’t and you can either enjoy your life now; life like a monk and get nowhere, or even worse, live like a monk and then take on a colossal amount of debt in a few years time to vindicate the Home-Owner-Ist who has just over-charged you by £100,000.

    (Hooray for UKIP by the way, separate topic)

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  • Bit shocked at the Guardian printing this twittery conformist stuff.They have stood against the HomeOwnerist tide pretty resolutely till now.
    The big problem as MW indicates is that students don’t have to enter the jobs market with just student debt: they have to take on 100k quid+ debt for land to live on,as well as contributing to the paying off the charges for land of the proprietors of bars,restaurants and shopowners every time they go out.In effect freeborn British citizens have to pay upfront for the right to reside in their own country.
    God knows why we want to live like this.A majority does though.

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  • mark wadsworth says:

    DBC: “freeborn British citizens have to pay upfront for the right to reside in their own country.”

    Exactly.

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  • @Nubber, you’re saying your generation is stupid, or lacks self control? (With respect. ;))
    “The point is that the saving habit comes easier when you have to do it in order to survive.”
    — Can’t disagree that credit is the cause of much woe (Neither a borrower, nor a lender be), simply flexibly lowering the base, never a no. I prescribe rock climbing for all – nothing like the leniency shown by a slab of rock. But what happened to common sense? It’s not complicated…. Once upon a time, there was a little grasshopper and an ant…. It’s the stupid, stupid.

    @TS, agreed – not everyone is equal. Especially the aforementioned bunch who can’t grasp “this exists, this doesn’t”.

    Not saving just because one currently can’t afford a house seems childishly sulky and short-sighted. Those who follow that path will remain priced out eternally, everywhere.

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  • Those who follow that path will remain priced out eternally, everywhere.

    Yeess. The problem with that idea is that if you have been saving over the last seven or eight years or so, you have remained priced out. So if the past seven years’ experience is anything to go by it’s nothing to do with being short sighted, but being pragmatic in a reckless world (or subject to a reckless economic policy).

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  • Pragmatic would be to look for alternative stores of wealth, not saying stuff it I’ll just blow it all. That guarantees 0% chance, the other has no guarantees but possibilities. Different strategies I guess, “little grasshopper” 🙂

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  • Pragmatic would be to look for alternative stores of wealth

    Such as …

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  • tenant super says:

    rumble @ 19,

    I agree it would be silly not to save at all. I recommended saving to my younger brother so when the crash comes…
    Like me he holds a small but significant amount in various currencies and will be able to take advantage of the crash if it comes or look at emigrating.

    However, if the crash doesn’t come, and house price inflation continues at the current rate, every month he saves, the average property is £600 further away (usually when you save, you have the encouragement of seeing the thing being saved for getting nearer every month). If this is the case, pretty much every young person “will remain priced out eternally, everywhere” whether or not they saved.

    And if the government encourages high inflation (I think Blanchflower recommended 5%) and we have very low interest rates, the money you save is eroded anyway.

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  • such as gold, which over the last 7 years has increased more than houses

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