Monday, July 5, 2010

Perpetual Property Boom

Private speculation rather than public profligacy is real villain of Labour years

Bank lending to fuel the property boom plunged UK into spending crisis - ... Budget projections show that Cable and Osborne expect the property boom to be back within a couple of years

Posted by mken @ 04:19 AM (1915 views)
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18 thoughts on “Perpetual Property Boom

  • “It is in the consumption and asset price numbers that politicians should look for the roots of the crisis.”

    Pie in the sky. We know now that MPs of all parties gamed their expense claim system to acquire property. Politicians are part of the problem.

    “A glance at the budget projections shows that Cable and Osborne expect the property boom to be back within a couple of years and providing even more tax receipts than before. In 2015/16 stamp duty taxes will fill the exchequer with £17.7bn, with the majority from duty on property sales. A £10bn net boost to the exchequer will mark a return to a consumption-led boom and a return to all the same old problems.”

    Aside from whether or not the prediction of another property boom is correct, will another £10bn of stamp duty tax really make all that much difference to UK plc?

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  • As I’ve said before, this whole sorry episode that brought about the 2007 financial crisis will go down in history as being the making of corrupt politicians, duplicitous monetary policy committee members, greedy baby boomers and a pliant media.

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  • This piece takes a very roundabout route to argue that the OBR’s projections for economic growth are optimistic.

    Yes, I agree. The core engine of economic growth has been grinding to a halt for the last decade, and for a number of reasons is likely to remain static for some time. The official predictions on the other hand, use past growth patterns to project forward, and do not appear to have factored in the underlying slowdown.

    If this govt really can roll back the state, then that will create some natural growth; but only for a limited period. Perhaps as important is to remove the need for the ‘non-jobs’ in the private sector – we have far too many people employed as lawyers, compliance officers, accountants etc – posts that are essentially non-productive and ultimately expendable – provided the nanny state and its compensation culture are put firmly out to grass..

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  • mark wadsworth says:

    I’d say it’s the twin evils of a bloated quangocracy (including its private sector counterparts, as Uncle Tom outlines, and I am one of them, tee hee) and Home-Owner-Ism. Either of these is enough to choke off a properly functioning free market economy, but both together and Japan here we come.

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  • letthemfall says:

    A rare insightful article on the subject (thanks for posting mken).
    So, it’s back to the banks again – their culpability pretty much ignored now, especially by our new govt, in which the LibDems have been assimilated by the giant amoeba of the Tory party. So rather than restore the distribution of wealth caused by a step back towards feudalism, the Govt is aiming to exacerbate the inequalities.

    It’s all very well to complain about welfare and quangos, but the quangos are small beer against the profound costs to the economy of the financial sector’s greed; and how do you deal with all the welfare problems? Telling them to get on their bikes? Same old Tories, same old narrow-mindedness.

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  • Both are responsible. Each exacerbated the other. What a waste of newsprint.

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  • orcusmaximus says:

    The Guardian seeks to absolve Labour of the countries problems, by blaming it on the housing boom. Now if they were to acknowledge that the housing boom was architected by Gordon Brown, then I’d give the article the thumbs up.

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  • powerofnow says:

    @orcusmaximus : the housing boom was architected by Gordon Brown

    Stand back and take a look at wider view…. ‘Thatchers Right to buy/limit to security of tenure’ should take the larger share of the responsibility?

    Stand back further and the Enclosure Acts of the 1700s as pointed out in the Guardian article are closer to the root of the ongoing injustice.

    [scaling rights]

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  • @powerofnow “Stand back and take a look at wider view…. ‘Thatchers Right to buy/limit to security of tenure’ should take the larger share of the responsibility?”

    Love her or loath her, it’s time to stop living in the past and stop blaming Thatcher, it’s virtually 20 years since she was PM.

    Jockstrap carries as much blame as anyone for the housing boom.

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  • powerofnow says:

    @mr g: it’s time to stop living in the past and stop blaming Thatcher, it’s virtually 20 years since she was PM.

    I’m not defending or blaming anyone, we are all complicit in the mess;
    (either by our action or inaction, which is why I used the word responsibility rather than blame)

    But if we don’t understand history we will repeat it… or some such platitude like that.

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  • the number cruncher says:

    Mt g @ 10

    I take your point entirely as Gordon Brown was to blame – but economics is a big ship and often changes take decades for their effects to be seen – Thatcher is very much the culprit too, and the huge failing of her government are not time limited. We see all around us her failings as we will see Blair and Brown’s failings for many decades to come.

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  • letthemfall says:

    I think MT has a lot to do with the conditions we have now. It was her who turned around the progress towards a fairer society back to the one we have got today. Not entirely all her doing, and of course Labour just allowed business, especially the City, to carry on the bad work, aided by globalisation. But her philosophy had a profound effect.

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  • clockslinger says:

    Wow, a good and relevant article. Re. above “was it the Tories or Labour” bickering, the fact of the matter is that Thatcher or, more precisely, the Thatcherite model of an economy predicated on the service sector, the decimation of manufacturing, the emasculation of organised labour, privatisation of all public goods and deregulation of markets (like errr, financial markets too) are exactly the cause of what we are living through…including a massive democratic deficit.
    The fact that Nu Lab felt the need to ditch clause four and largely carry on with the same economic model, albeit with greater public spending to mitigate the consequences, does not mean it was not a market driven deregulated Thatcherite model at heart. What we are about to see is the forcing through of the purest form of that Thatcherite ideolology, cutting public spending on the pretext of a crisis… although the lesson from Japan is that, in so doing (in ’97) the stagnation of the economy was, on some estimates, extended by another ten years. This Tory agenda has never gone away since it was introduced by Keith Joseph.
    The lesson is ignore (or in the case of your average Tory poster on here, reinvent) the lessons of the past and one is doomed to repeat the errors in the future. Never mind my opinion Tory voters…you are about to live the consequences of your muddled thinking starting this autumn!
    By the way who do you Tory voters blame for the 80’s housing bubble….? Forces outside your control? A “booming economy”?

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  • @ “We see all around us her failings as we will see Blair and Brown’s failings for many decades to come.”

    @LTF “Not entirely all her doing, and of course Labour just allowed business, especially the City, to carry on the bad work, aided by globalisation. But her philosophy had a profound effect.”

    I have to agree that many of today’s ills stem from the Thatcher years.

    I trust that I don’t sound patronising when I say that I also applaud both of you for your honesty regarding the Blair & Brown years.

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  • @ clockslinger “By the way who do you Tory voters blame for the 80’s housing bubble….? Forces outside your control? A “booming economy”?”

    1. The 80’s boom was nowhere near the magnitude of that which Brown presided over.

    2. There was still a sensible relationship between earnings and mortgages.

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  • clockslinger says:

    Mr.G …correct, 1.magnitude of 80’s bubble wasn’t as great because 2. there wasn’t the leverage… 3. and why not? 4.Still some regulation in the banking/shadow banking world, thats why. Now, tell me, who was the architect of that doctrine of financial deregulation?

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  • clockslinger says:

    Oh, and the question, which you did not to address, was “Who do you Tory voters blame for the 80`s housing bubble?”

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  • shipbuilder says:

    Blair was a Thatcherite through and through and even admitted as much on the odd occasion.
    New Labour and Thatcher/Reagan/Bush Neoconservatism were all cut from exactly the same cloth.
    This is what makes the left/right nonsense spouted on here so frustrating, as if there was any difference.

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