Thursday, December 11, 2014

Are you starting to see the trend?

Norway’s

Of course, Norway, so dependent on oil taxes has been forced down this route because the commodities slowdown makes Norway's huge national debt unsustainable (you are witnessing the slow collapse of Socialism). Britain will be forced to follow suit in short order, and note, most current mortgages price in a 0.25% rise in rates. What will happen when the market prices in a 0.25% cut and subsequent cuts to follow that is an absolute bomb in the housing market. Note, despite the economy being larger than 2008 with at least 3 million more people (most in London), prices are not far off 2008 levels and transactions are well below. All points towards a major housing price boom with recent stamp duty changes creating a massive improvement to SENTIMENT.

Posted by libertas @ 12:58 PM (3353 views)
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26 thoughts on “Are you starting to see the trend?

  • Somehow the title of this did not show, despite it being typed in:

    “Norway’s Shock Rate Cut Drives Krone to Lowest Since 2009”

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  • Government’s not being able to pay their way, rather than deflation, is the cause of that.

    If there was ”proper” deflation, UK house prices would drop….and continue dropping….and continue dropping. A few central banks trying to control their interest payments is not necessarily deflation.

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  • mountain goat says:

    Trend at sample number 1?

    Russia raised its rates to 10.5% today, there you go another trend.

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  • ” makes Norway’s huge national debt unsustainable (you are witnessing the slow collapse of Socialism)”
    I’m not sure if you are aware that Norway’s gross national debt is 30% of GDP? One of the lowest in the OECD. And the NET debt is -165% as their sovereign wealth fund is so huge. They will have no problems for hundreds of years. The UK on the other hand pissed our oil wealth against the wall and have an off balance sheet liability of £2.2tn for the State Pension alone, never mind the massive burden that the NHS faces from the ageing population. Now the UK could easily simulate a sovereign wealth fund by simply collecting the rent on our greatest natural asset, land.

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  • Latterdaysinner says:

    On last reading, Norway’s net government debt (including its sovereign wealth fund) was -165% of GDP. That’s right, they have a huge positive net asset position.

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  • Russia raised its rates to 10.5% today, there you go another trend.

    Hmmm others *may* follow.

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  • Good post, Mombers.

    Difficult times ahead with a corrupt Ukraine and the Greek people who seem to have missed the plot.

    Meanwhile, motoring will get cheaper and we can more clearly see the impact of taxation and duties on fuel prices.

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  • So how would interest rates falling 0.5% affect buyers affordability under MMR?

    Answers on a postcard to Libby @ Enfield.

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  • $890bn – The size of Norway’s sovereign wealth fund

    $700bn – The size of Norway’s national debt.

    It’s no quite that simple but it’s an indication that Norway is very solvent.

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  • (Sorry, I posted that after seeing only the first 4 posts – was still on the page when I came back to the computer. mombers covered the point @5.)

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  • Meanwhile, motoring will get cheaper and we can more clearly see the impact of taxation and duties on fuel prices.

    It’s your pay rise – and don’t you forget it.

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  • “You are witnessing the slow collapse of Socialism”

    When “socialism” finally dies I guess there will be no choice but to vote Libertarian, since everything that is not Libertarian is obviously socialist, right Libby?

    Pity there’s only 5 of you in the UK as that will make overseeing what few government services you plan to keep running operational a bit of a challenge. Presumably, as a matter of principle, you will all be working unpaid.

    I can’t wait. It’ll be like living in some rabidly right-wing American’s idea of heaven.

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  • Mombers is spot on. Norway has so much money it hardly knows what to do with it. All that Libby’s post shows is just how completely uninformed he is about economics, and probably most other things as well.

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  • Norway taxes oil and has perhaps the great national wealth per head than any country on the planet, but high land prices where it matters & high employment taxes which puts huge dead weight losses onto the economy. If we taxed land (as well as natural resources) we could all enjoy the fruits of our labour with no tax and have great national wealth. Now that is not socialism that is Geogism.

    Libertas

    This is my favorite work on Georgism and its relationship to Neo Classical, Socialism and Libertarianism. I would love to have your considered opinion if you really do think it is socialism after you read it.: http://w.masongaffney.org/publications/K1Neo-classical_Stratagem.CV.pdf

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  • Reduced rates will affect the market despite MMR because 15% lending at 4.5% allowed for a DOUBLING of risky lending.

    Pete, Socialism involves re-distribution of wealth via force. Yes, there are different schools of thought applied to that and various different methods, but it all comes down to the same principle. Libertarianism is very different because it is based upon the concept of voluntary transactions rather than forced transactions.

    The difference is forceful vs voluntary human action.

    Of course, in reality, it is a spectrum. Maybe your approach is less Socialist than what we have now, but it has aspects of Socialism nonetheless.

    From a cursory glance, it appears that Georgism is based upon class warfare that harks back to pre-industrial revolution economics where wealth was land. Tax land and you would “level” the economy. Only problem is that wealth now is based upon ideas, technology and networking. Even commodities are no longer a guarantee of wealth. The idea of homing in on one asset class and taxing it to solve all ills is fundamentally imbalanced and clearly based upon a very specific perspective. Maybe the random tapestry of taxation is better given that most parts of the economy are equally hindered as opposed to hindering just one aspect of the economy, and note, taxation does hinder because it absorbs force, and in economics, the laws of thermodynamics still apply.

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  • If wealth now is based on ideas and networking, how come so many of the richest British-born people in the country are still landowners (Duke of Westminster), the foreigners are mostly oligarchs and even the tech industries have spawned tons of monopolies eg Google, Facebook, Amazon, eBay etc. The richest man in the world control’s Mexico’s mobile phone market. There are much bigger and richer countries, but he is lucky enough to have a monopoly. I could go on.

    Even things like Uber which harness the power of the internet to liberalise protected markets like minicab driving have wound up making eyewatering amounts of profit for their owners. In the free market, there’s not supposed to be any profit above what it would take to induce competitors to enter the market.

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  • A fatal flaw in Libertarianism for me is that for it to be fairly implemented, all property would need to be nationalised and split up equally. If the state is to be reduced to a level of the protection of life, private property and enforcement of contracts, all ill gotten gains under the inevitable corruption of big government need to be wiped out and everyone can start with a clean and equal slate. Only then can merit alone determine one’s success.

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  • FTSE undergoing another drop this week.

    Wiping the value off gains from the last year… wonder if there are any other high value assets that could correct.

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  • What the hell is all this libertarian this, georgist that and neo frog spawn the other? Adults don’t talk like that or think like that. Its blog twaddle. Read the Shelter/KPMG report I posted. Do you see a single reference to this type of gibberish on any one of the 108 pages? Of course you don’t. That’s because its written by adults for adults trying to get something done in the real world. In 25 years of conversations and dealings with proper people and doers, I’ve never heard anyone even mention any of these things.

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  • Flashman, my point was, that Georgism is in reality a fancy name for class warfare and socialism. I made the contrast of that with Libertarianism and then went further to say that neither really exist because its a spectrum between the action of individuals vs government (the collective).

    I was effectively trying to say the same as you, that this constant reference to a certain 19th Century “economist” / politician is banal nonsense.

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  • Your libertarianism, or whatever, references are no better.

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  • Georgism at least involves some relation to incentives, which are the backbone of economic reasoning.

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  • Not sure about that. To me an incentive is something that makes me willing to do something and happy about the outcome. The so called economic ‘incentive’ offered by Georgism is more of a threat to confiscate via taxation. So called Libertarian/ Georgian philosophies are at the extreme ends of the spectrum which is why they’ll never find a place in a heroically moderate Britain that has yawned at the communist and fascist revolutions that once swept through Europe. I’m sorry but I’ll never understand why people waste time talking about concepts that would be abhorrent to the democratic majority. If anyone got serious airtime and fully explained/campaigned for either of these things, they’d be laughed at or maybe even pelted. Ask anyone (it’s in the tens) who’s made a concerted effort to push either of these things and they’ll agree that the public has no truck with them. So why here?

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  • Flashman the flaw in your augment is the democratic majority are only aping the values they accept as normal. Most people would probably agree with georgism if it was explained and they had time to mull over the issues, and not an inbuilt fear of any change (which I share). In many ways I support libertarianism, though not to an extreme like our good friend here. I also support landownership, just not the bit that extracts the wealth of human progress due to its monopoly. Georgism is really just paying for what you get. Mostly in the form of monopoly (and externality) compensation to everyone else – you have yet to argue against in any real way – just sophistry and slipperiness, with no real logic. Still waiting on you refutation which has been singularly missing for some time now.

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  • I’m not interested Pete. Its really just a you and libertas thing.

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