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Debate House Prices
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Gaps between selling and asking prices
Comments
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The inflation I imagine will happen over 27 to 33 months and be stopped off in its tracks by a sharp rise in interest rates.
The problem here, as I see it, is that Government has to borrow yet more again, to fund the public works and more. I get what you mean about infrastructure projects though. Just like the US had men work on building highways and stuff during the last depression to get industry ticking over.
Yet an advanced economy with a bond market - a country which borrows in it's own currency - has limits on how much it can follow an inflationary policy.
Inflation wipes away bad debt, but also wipes out good credits.
Would anyone, especially foreigners, really buy more in to sterling gilts in the knowledge that the UK intended to pursue a stealthy inflationary policy?
It would destroy their capital, unless somehow the rates and return on the gilts matched the inflation.
And if it didn't offer sufficient return, then they wouldn't be bought - and existing Gilt and bond holders would sell them rather than see good money inflated away, forcing up internet rates and putting the UK in an even worse position.
I don't think you can stop the UK house price crash, or save the jobs in industry and services which were formed or grew to worship the forever HPI bubble. The adjustment is here and Government nor Treasury has the power to stop it.0 -
The problem here, as I see it, is that Government has to borrow yet more again, to fund the public works and more. I get what you mean about infrastructure projects though. Just like the US had men work on building highways and stuff during the last depression to get industry ticking over.
Yet an advanced economy with a bond market - a country which borrows in it's own currency - has limits on how much it can follow an inflationary policy.
Inflation wipes away bad debt, but also wipes out good credits.
Would anyone, especially foreigners, really buy more in to sterling gilts in the knowledge that the UK intended to pursue a stealthy inflationary policy?
It would destroy their capital, unless somehow the rates and return on the gilts matched the inflation.
And if it didn't offer sufficient return, then they wouldn't be bought - and existing Gilt and bond holders would sell them rather than see good money inflated away, forcing up internet rates and putting the UK in an even worse position.
I don't think you can stop the UK house price crash, or save the jobs in industry and services which were formed or grew to worship the forever HPI bubble. The adjustment is here and Government nor Treasury has the power to stop it.After the uprising of the 17th June The Secretary of the Writers Union
Had leaflets distributed in the Stalinallee Stating that the people
Had forfeited the confidence of the government And could win it back only
By redoubled efforts. Would it not be easier In that case for the government
To dissolve the people
And elect another?0 -
Just like the US had men work on building highways and stuff during the last depression to get industry ticking over.
That's how Hitler built the Autobahn network as well, I think....much enquiry having been made concerning a gentleman, who had quitted a company where Johnson was, and no information being obtained; at last Johnson observed, that 'he did not care to speak ill of any man behind his back, but he believed the gentleman was an attorney'.0 -
Later tonight I'll try and pull up the figures, but recalling them from hazy memory, a surprisingly high percentage of people own their property outright, or are well towards being mortgage free - unless that report was massaged.
I can't see them being that hurt from the house price crash, however severe, unless they were relying on their homes to be their pensions. Their incomes and reliance on Government benefits, and their expectations of continued high standard of living, are another matter.
We have no automatic right to consume away on near enough anything that takes our fancy, when other peoples in other countries make do with a lot less or live in dire poverty. Nothing too much wrong with a change to living within your means although it will be painful.
Those who've bought in the last few years, and the speculators, feel the pain most, but will or can so much be risked to save bail them out with a futile attempt to prop up house prices for them?0 -
neverdespairgirl wrote: »That's how Hitler built the Autobahn network as well, I think.After the uprising of the 17th June The Secretary of the Writers Union
Had leaflets distributed in the Stalinallee Stating that the people
Had forfeited the confidence of the government And could win it back only
By redoubled efforts. Would it not be easier In that case for the government
To dissolve the people
And elect another?0 -
neverdespairgirl wrote: »That's how Hitler built the Autobahn network as well, I think.
Yes, but putting people to work in public spending projects is nothing new in recessions and depressions of the past. It wasn't just limited to Hitler. The US survived it and others have without succumbing to extremes.
Maybe the pyramids were also built in some sort of similar public infrastructure project.
Although I'm not claiming any such public spending measures would be successful anyway - far from it.Stimulation Will Not Stimulate
Efforts to stimulate gڐrowth are likely to prove more counter-productive than in the 1930s. They borrow from the future in a futile effort to sustain the past. Consider the reasons why:
1. The same kind of public works spending that was very productive in the last depression would be a waste today. Lots of new highways, for example, would not pay off as they did in the past. Improvement of highways had a dramatic effect beginning in the 1930s in increasing the number of autos in use and amplifying other activity that depended on autos, like building of suburbs and shopping centres.
There will be much more modest effects today. The number of autos in use is not likely to go up no matter how many roads are built. Congestion can be much more efficiently handled by peak-load pricing than by pouring concrete.
2. Even during the last depression, when industrialism was still advancing towards its mature phase, political efforts to "stimulate" the economy usually involved subsidising the faltering sectors of industry and impeding the emerging sectors.
The tendency to retard is bound to be more pronounced because of the much more frightening impact of information technology in reducing economies to scale, reducing the demand for unskilled labor, breaking down the barriers between occupations, and shifting the distribution of income toward the better educated.
3. Investments in the "industrial base" in an attempt to preserve high wage jobs for voters with low skills are destined to show meagre returns. They are force-feeding more capital into a declining sector.
For example, plans to create "manufacturing extension centres" modelled on the agricultural extension centres of the last century are no more likely to halt the decline of manufacturing than agriculture extension services were to the reverse of the decline of farming.
The reason that manufacturing is in decline is not that private business is unaware how to manufacture, but because information technology is supplanting industrial technology as the main area of value-added activity. At best, political manipulations can slow the general decline in the standard of living, while creating larger pockets of dependency.
4. Most "stimulation" involves either overt or thinly disguised income redistribution, which tends to delay the necessary adjustment in skills among poorly educated segments of the population who are prepared to work on the assembly line but not to contribute to the development of intellectual property.
5. Redistribution also diminishes incentives to save, while reducing the capital of those who do most of the saving.
6. The tendency to regulate higher costs onto operating businesses to facilitate income redistribution is a common feature of political systems under stress, and is remarkably evident today in both Europe and North America. But these higher burdens make the local economy less competitive, and thus impeded recovery.
7. A common feature of all stimulative initiatives, especially those that involve little but income redistribution, without a substantial investment component, is that they expand government debt.
This runs downs the national balance sheet, increasing the debt burden without increasing the earning capacity. In logic, this means a deeper depression in the end.
- William Rees Mogg & James Dale Davidson
The Great Reckoning.0 -
Those who've bought in the last few years, and the speculators, feel the pain most, but will or can so much be risked to save bail them out with a futile attempt to prop up house prices for them?
In a strange way could inflation not save them (providing they could hold on). EG inflation pushing up wages, so making houses more affordable but their debt staying static?0 -
In a strange way could inflation not save them (providing they could hold on). EG inflation pushing up wages, so making houses more affordable but their debt staying static?
Yes. The debtors can be saved via inflation, but it comes at the expense of ruining the creditors.
Not just banks and their capital, but savers too. We could have continued high house prices but the capital markets and commerce wrecked and destroyed.0 -
Yes. The debtors can be saved via inflation, but it comes at the expense of ruining the creditors.
Not just banks and their capital, but savers too. We could have continued high house prices but the capital markets and commerce wrecked and destroyed.
It is hard to know who is safest the home owner or the saver It looks like we will all suffer just as much in the end.0 -
It is hard to know who is safest the home owner or the saver It looks like we will all suffer just as much in the end.
You are reading my mind. There is and will be a conflict between the two different interests in the path ahead. I don't imagine either side will escape without suffering.0
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