Thursday, December 6, 2012

Expecting trouble?

AS 2012: Govt extends support for mortgage interest scheme until 2015

The Support for Mortgage Interest scheme, due to expire next month, has been extended until March 2015.

Posted by dill @ 11:48 AM (3469 views)
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20 thoughts on “Expecting trouble?

  • mark wadsworth says:

    They own land, Dill, so what do we give them?

    Can’t have hard-working homeowners or the poor reckless bankers losing out, can we? That would never do.

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  • sibley's b'stard child says:

    FFS

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  • “The extension of the SMI scheme will cost an extra £10m in 2013/14, followed by £95m in 2014/15 and £90m in 2015/16.”

    Best get on the phone to Mervyn before he leaves.gonna need to print up another £0.2bn to spank on bankers interest.

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  • silly s0ds.

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  • How do i sign up, sounds like a bloody bargain, free money, do you have to give it back when your up on your feet again or does it get paid ad infinitum?

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  • mark wadsworth says:

    CML director general Paul Smee says: “We welcome the extension of the current arrangements for the support for mortgage Interest scheme until March 2015. These had been due to expire in January 2013 but today’s announcement provides a welcome extension of support for homeowners currently receiving income related benefits, as well as helping lenders to extend forbearance to those waiting to qualify.”

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  • Alternatively, cut taxes and let house prices fall to a sustainable level by avoiding Soviet style central economic planning.

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  • @libertas – Turkeys don’t vote for Xmas.

    The government will not reduce the size of it’s self unless forced by external circumstances. You can waffle on about reducing taxes and government size, but that will not happen by choice.
    It will take an event such as a currency crisis to trigger that off and then house prices will be the least of everyone’s worries.

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  • mark wadsworth says:

    Libby, I don’t really ever hope for a sensible or rational answer from you, but just for the heck of it, I will ask:

    “Cutting publicly collected taxes is, conceptually at least, very easy. But can you please explain how you are going to cut privately collected taxes, which are just as damaging for the economy as privately collected ones?”

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  • Mark, what on earth do you mean by privately collected taxes? That, by definition would be racketeering. Mafia behavior. Unless of course if you insanely believe that rent is a tax, through your Marxist perspective that private charges for private goods like land are exploitation.

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  • Khards. Just because government will not do the right thing, doesn’t mean I am mad for asking them to do the right thing. The reason they do the wrong thing is because a critical mass of people are sucked in by the propaganda. My aim is to lead more people to the side of truth.

    Tax cuts will occur when enough people demand them or refuse to pay.

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  • Libertas – those who privately collect ‘taxes’ or rents are the rentiers, who benefit from monopoly control over assets that the economy needs to function, and who grow disproportionately rich as the economy develops. Feudal landlords were the main beneficiaries when the term was first used and the concept analysed. Now it’s the finance sector, with its privileged position regarding credit creation.

    Most credit creation inflates asset prices and creates a flow of interest payments, which tend to rise as a proportion of personal and business income and thus outgrows the ability of debtors to pay.

    When people take on larger mortgages to buy houses property rents become a flow of mortgage interest that diverts the revenue of consumers and businesses away from consumption or new capital investment, hurting product markets, employment and wages.

    Likewise, debt-leveraged buyouts turn business cash flow into interest payments. Bank or bondholder financing of public debt (especially in the Eurozone, which lacks a central bank to monetize such debt) has turned a rising share of tax revenue into interest payments. As creditors recycle their receipts of interest and amortization (and capital gains) into new lending to buyers of real estate, stocks and bonds (which together account for nearly all credit), a rising share of employee income, real estate rent, business revenue and even government tax revenue is diverted to pay debt service.

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  • I do not care for Ricardo. Anybody who claims that rent for a commodity is exploitation is talking nonsense since, without a price mechanism how is that scarce resource allocated?

    What a Libertarian is against, is central planning of price mechanisms and for land, that primarily involves manipulation of the mortgage market through interest rate manipulation, Quantitative Easing being used to buy bad loans (failing to allow the market to liquidate bad investments and re-set), allowing fraudulent mortgaged backed derivatives and, using tax money to re-distribute wealth to certain classes of homeowners or renters.

    If Ricardo, applied, justifies government intervention in the housing and land market I say NO. The problem of the housing market is precisely that, too much government involvement and, their active attempts to counter justice by legalising fraud in derivatives, a practice which is contrary to Common Law, allowing financial institutions to treat derivatives as assets when they are infact liabilities.

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  • I do not care for Ricardo. Anybody who claims that rent for a commodity is exploitation is talking nonsense since, without a price mechanism how is that scarce resource allocated?

    What a Libertarian is against, is central planning of price mechanisms and for land, that primarily involves manipulation of the mortgage market through interest rate manipulation, Quantitative Easing being used to buy bad loans (failing to allow the market to liquidate bad investments and re-set), allowing fraudulent mortgaged backed derivatives and, using tax money to re-distribute wealth to certain classes of homeowners or renters.

    If Ricardo, applied, justifies government intervention in the housing and land market I say NO. The problem of the housing market is precisely that, too much government involvement and, their active attempts to counter justice by legalising fraud in derivatives, a practice which is contrary to Common Law, allowing financial institutions to treat derivatives as assets when they are infact liabilities.

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  • You may pooh pooh my claims of Mark and yourself being Marxists, but a key tenant of Marx is that those participating in the market are principally exploiting consumers. He completely disregards the idea that the market is a rational method of allocating scarce resources and, that the market provides goods and services which would not otherwise exist.

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  • @Libertas

    “If Ricardo, applied, justifies government intervention in the housing and land market I say NO.”

    Ricardo’s Law of Rent is not something you apply to the world; rather it is simply a description of the way the world works.

    You don’t have to believe in LVT or Georgism to understand and appreciate Ricardo’s Law of Rent. Most people in this country tend to see rising land/property prices as a good thing because the majority of households in this country are owners or mortgaged. Mark Wadsworth happens to take the rather opposite view that our tax system encourages land speculation that damages our economy and standard of living and prescribes a different tax structure that is intended to encourage work and discourage rent collecting.

    “He completely disregards the idea that the market is a rational method of allocating scarce resources and, that the market provides goods and services which would not otherwise exist.”

    When did the Georgists ever dispute the role of markets in pricing goods and services? Why you insist on labelling Mark as a ‘Marxist’ is puzzling. At least call him a Georgist if you like the current tax structure (do not confuse tax structure with taxation levels.)

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  • Thecountofnowhere says:

    Government extends back door support for the banksters more like.

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  • mark wadsworth says:

    Libby aka Peter Risdon spouts his usual nonsense:

    “Anybody who claims that rent for a commodity is exploitation is talking nonsense since, without a price mechanism how is that scarce resource allocated?”

    One of the many arguments FOR LVT is that it encourages the efficient or optimum use of land and buildings. There is a clear market place – whoever bids the highest amount of rent/tax (there is no real difference between the two) to occupy a site can occupy the site, and the counter-party (the “landlord”) is “everybody else” who gets their small share of all the rent either as public services or an LVT rebate or a cash payment.

    And if we are agreed that price rationing is the best form of rationing, then LVT clearly ADDS to the number of market participants bidding for each site because everybody has to pay the same to occupy it. There are no special privileges for whoever happens to be down as freeholder at HM Land Registry. So the price discovery mechanism works far more efficiently because there are no insiders or monopoly privileges.

    To argue that LVT is not a market system is like saying that a large plc does not operate in a free market, even if the vast majority of its customers happen to also own shares in the company. Just because you are a shareholder (freeholder) does not mean that you can demand that plc’s goods or services for free (some plc’s do special offers for shareholders, but that is in itself a distortion).

    Libby aka Peter Risdon then digs himself ever deeper:

    “If Ricardo, applied, justifies government intervention in the housing and land market”

    That is completely and utterly ar5e-about-face and a complete lie. The Support For Mortgage Interest scheme (the actual subject of this thread) is exactly the sort of government intervention which Ricardo’s Law says is stupid and pointless and makes things worse. Restricting planning and subsidising land ownership are exactly the sort of government interventions which the Home-Owner-Ists love and which free market liberals (such as me or Icarus or Pete Green or Ricardo or Adam Smith) abhor.

    Here endeth.

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  • Libertas @13 – so what’s wrong with this formulation? – The finance sector, which harms the economy for reasons I gave @ 11, is aided in that behaviour by the state, which acts in that sector’s interests by doing the things you identified in your 2nd para @ 13.

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  • Are private sector tenants fast becoming the only people that actually pay mortgages in this country?

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