Disaster for Britain as housing becomes more affordable

harryhound

harrup wrote: »

LOL - well, he seemed a rather savvy poster rather than a brainwashed zombie.

Either way, Brown's "Tax & spend" is continuing

Bizarre.

Part of the problem and one of the reasons why the currency is down the pan, was the realisation that the tax bit of that equation was falling well behind the spend bit.
That was before the banks started crashing.
Don't expect to see much happening on the deficit front this side of the election, only then will the decision be made to sack the unproductive, extract more tax out of those lucky to still have jobs, or rob the owners of savings through inflation.

geoffky

adr0ck wrote: »

i don't think it would

it would just mean FTB's would have some advantage against BTL who are looking at the same properties

The bloody greedy would just put up their prices as they have done in Australia when the gov gave them money...

harryhound

stephen163 wrote: »

I think a lot of people, especially those who have not studied economics in any great detail, fall for the fixed pie fallacy. Wealth can be created, it is not a fixed pie. You can make the pie bigger. Call me a stupid optimist, but we have witnessed in the last 100 years in the developed world one of the most prolonged and sustained increase in wealth in world history. Nobody can deny this - if you do, prove to me that the average Briton today is less well of than one in 1900. This has happened because of trade, transactions, investment. Releasing equity from home ownership increases economic wealth overall, even if the new debt incurred by the homeowner is equal to the monetary value transferred to the rest of the economy. It is not a zero sum game, and money is very different to wealth. These are the crucial points you need to have due cognisance of.

Yes the banking system can multiply up the supply of MONEY, if this is invested in sensible new technology we all get richer.
If it is "invested" in a huge world wide gambling exercise in amounts that far exceed the quantities needed to finance world trade, then the whole scheme is a bubble waiting to burst.
If it is invested in a "granite topped kitchen" or a massive "let us drive to Cape Town through Africa" type of 4 x 4, how does that add to the wealth of the world?.

You might as well just pay soldiers to fight wars, they tend to increase the money supply and give the unemployed something to do.

stephen163

harryhound wrote: »

Yes the banking system can multiply up the supply of MONEY, if this is invested in sensible new technology we all get richer.
If it is "invested" in a huge world wide gambling exercise in amounts that far exceed the quantities needed to finance world trade, then the whole scheme is a bubble waiting to burst.
If it is invested in a "granite topped kitchen" or a massive "let us drive to Cape Town through Africa" type of 4 x 4, how does that add to the wealth of the world?.

You might as well just pay soldiers to fight wars, they tend to increase the money supply and give the unemployed something to do.

I agree that banks lent recklessly. They gave credit to people who had a high chance of defaulting. That isn't in question. The original point I was trying to make was, overall, increasing house prices tends to be a positive influence on the economy. Wealth is transferred from unproductive housing to a wider economy where the multiplier effect will multiply this wealth. You end up increasing wealth for everyone (though as I said, disproportionately). The reverse also happens, i.e., now, but examine closely how the wealth of developed nations has arisen so meteorically in the previous 2 centuries and it becomes obvious that the multiplier effects in the boom period can be manipulated such that it is far greater than the reverse multiplier in the bust periods. Increasing house prices, MEWing and greater confidence simply feed and contribute to the positive multiplier, which is why I said that house price increases are 'good' for the economy as a whole.

But in these debates, people sometimes forget that boom and bust are not inevitable and bust arises because of negligence in the boom period. In my opinion this is false. Though boom and bust is incovenient (i.e., recession tends to be bad), I still believe that the power of multiplier effects (made possible through lending) is responsible for the increases in wealth we have seen in recent times.

Mary_Hartnell

Really2 wrote: »

http://research.stlouisfed.org/publications/es/08/ES0819.pdf

I must be stupid, I am finding it very difficult to understand this thread?

1. I would think that a 1,000 sq foot in the centre of a mega financial centre in a city that makes London look like a village, is so atypical of Chinese accommodation that it is like putting a price on the penthouse at the Savoy. Don't Chinese feel rather proud if they get 300 sq ft and their own loo and kitchen in a 30 story block?

2. How does an urban saving rate of 25% and a rural savings rate of 25% add up to a national savings rate of 50%.
(I don't think rich suburbs working two jobs are a Chinese concept?).

3. Educate me - what does this mean ?
gap,ppp,superguard,10%flat

Really2

Mary_Hartnell wrote: »

I must be stupid, I am finding it very difficult to understand this thread?

1. I would think that a 1,000 sq foot in the centre of a mega financial centre in a city that makes London look like a village, is so atypical of Chinese accommodation that it is like putting a price on the penthouse at the Savoy. Don't Chinese feel rather proud if they get 300 sq ft and their own loo and kitchen in a 30 story block?

2. How does an urban saving rate of 25% and a rural savings rate of 25% add up to a national savings rate of 50%.
(I don't think rich suburbs working two jobs are a Chinese concept?).

3. Educate me - what does this mean ?
gap,ppp,superguard,10%flat

1) It is a median price of a apartment in a financial center. It is still 20X the average wage for that city so people have to save more for longer to get a property.(the jist is chinas property prices compared to earnings is massivly inflated)

2) Because when you add the total rural savings and urban savings and averaged that out it would make the average chinese person saving 50% of their salary.
You could take from that there is a lot of people earning a lot lower than the average wage so that distorts the amount they have saved as an average ( A majority would not save 25% but the higher paid skew the average)

3) ? I don't know what you are on about on that one sorry.

MrFonzerelli

beingjdc wrote: »

If you were looking to build a factory, and you had a choice of two countries which were otherwise identical, where would you build it?

The country where your workers needed £200,000 to buy a family home
The country where your workers needed £50,000 to buy a family home

Deflation is bad primarily if you're in debt. But the hangover analogy is apt. The problem isn't the hangover, it's the embarrasing state you got in the night before.

The one where the workers needed £200k to buy a home. If they're stupid enough to buy a 200k property rather than move to the other country then they're stupid enough to buy the lousy products coming from the factory I'm about to build.;)

MrFonzerelli

Really2 wrote: »

1) It is a median price of a apartment in a financial center. It is still 20X the average wage for that city so people have to save more for longer to get a property.(the jist is chinas property prices compared to earnings is massivly inflated)

I'm guessing the Chinese expect to see debt inflated away and the economy (or GDP) to continue to motor on (albeit at a slightly slower pace).
If the futures bright, people are far more willing to invest/buy.

Really2

MrFonzerelli wrote: »

I'm guessing the Chinese expect to see debt inflated away and the economy (or GDP) to continue to motor on (albeit at a slightly slower pace).
If the futures bright, people are far more willing to invest/buy.

I presume it is more to do with overcrowding and how the rich can afford and make things less affordable for the poor.

Sapphire

Wookster wrote: »

And StevieJ's kids will pay for it.

Don't you mean "Dear Leader" Graham?

'Our Glorious Leader'.

In passing – odd how the tone of these boards has changed in the few weeks since this new board was created. Some odd propagandists for Labour seem to be determined to keep this scumbag, discredited party going at all costs.

To me, anyone who can support this 'government' after everything that has happened (and is still happening) is either totally thick, or slimester Mandelson pretending to be thick.

All this 'government' seems to be able to do (apart from throwing around taxpayers' money) is to utter 'We will do everything in our power [fill in the blank]' – and then do nothing.

It's doing nothing about the obscenity that is bonuses. It's beyond me why anyone should receive any bonuses at this time, let alone the millions that the disgusting, immoral scum at the tops of outfits are still paying themselves at the taxpayer's expense (and squirreling away in tax havens to boot). (NB I've never received a bonus of more than £1,000 or so – even this amount is unusual in my profession – but work because have pride in what I'm doing in a profession that is not particularly well paid, not because I expect a massive heap of cash each year.)

Of course, the 'government' won't do anything to bring an end to the bonus culture because its members also have their snouts deep in the trough, and could themselves be compromised should they try to act against the afore-mentioned scum.

For the same reason, it will do nothing about bringing in a law (with immediate effect) designed to take away the honours of the dishonoured Lords and 'sirs' who blight the system and make a mockery of it.

All they will do is to commission 'enquiries' lasting months or years and costing the taxpayer millions.

Words cannot express how I despise this 'government'.