Myth-Busting. Proving Bears Wrong, again.

Really2

StevieJ wrote: »

What is credit anyway? I rarely pay cash except for incidentals, then again my only oustanding credit is £300 on my mortgage and whatever I owe on my credit card before I pay it off in full each month ( also pays me a nice 1 or 2% cashback).

Exactly my point is any one debt a debtor? or some one who debts are more than there assets.

that is what i don't understand about the 7-1 figure.

IIs it there are 7 people who have no debts and some savings for every person who has a debt of some kind.

Or is it their are 7 people who have saving (and possibly debts) for every one person who as debt and no savings.

I would say it is most likely the later as most people use credit of some king.

Thrugelmir

Really2 wrote: »

Exactly my point is any one debt a debtor? or some one who asstes are worth more than there debt.

that is what i don't understand about the 7-1 figure.

Is it there are 7 people who have not debts and savings for every person who has a debt of some kind.

Or is it their are 7 people who have saving (and possibly debts) for every one person who as debt and no savings.

I would say it is most likely the later as most people use credit of some king.

If there 11 million mortgages outstanding in this country.

Over 10% are BTL. So assuming each BTL investor holds 2 properties as well as a mortgage on their own property (home).

Thats around 27% of mortgage total debt in the hands of 3 million people.
At least as prices have doubled since BTL became a fad in 1999.

Too much generalisation is dangerous an enormous amount of debt is in a few hands.

Really2

Thrugelmir wrote: »

If there 11 million mortgages outstanding in this country.

Over 10% are BTL. So assuming each BTL investor holds 2 properties as well as a mortgage on their own property (home).

Thats around 27% of mortgage total debt in the hands of 3 million people.
At least as prices have doubled since BTL became a fad in 1999.

Too much generalisation is dangerous an enormous amount of debt is in a few hands.

Thanks,

But that still does not answer the question of what is a debtor if "savers out number debtors 7-1"


Is it there are 7 people who have no debts and some savings for every person who has a debt of some kind.

Or is it their are 7 people who have saving (and possibly debts) for every one person who as debt and no savings.

Thrugelmir

Really2 wrote: »

Thanks,

But that still does not answer the question of what is a debtor if "savers out number debtors 7-1"

If you bought your house over 10 years ago . It would have cost you over 50% less. So if you'd bought a house for £75k with a 90% repayment mortgage you would only now owe £40k. ( with a 25% deposit only owe £33k).

A highly manageable amount that would either allow you to save, invest or pay down your mortgage faster.

Really2

Thanks.

But I will leave it there as it seems to be going no where.

StevieJ

Thrugelmir wrote: »

If there 11 million mortgages outstanding in this country.

Over 10% are BTL. So assuming each BTL investor holds 2 properties as well as a mortgage on their own property (home).

Thats around 27% of mortgage total debt in the hands of 3 million people.
At least as prices have doubled since BTL became a fad in 1999.

Too much generalisation is dangerous an enormous amount of debt is in a few hands.

Not sure about your arithmetic

Entertainer

Whilst I don't wish to feed the bulls any more than necessary, it is true that the "seven years" fall in house prices in the last slump is a complete misconception. In fact, most of the falls took place over just 1 1/4 years between Q3 1989 and the end of 1990. 1991 was virtually the same and 1992 would have been as well were it not for the couple of rogue months due to White Wednesday. It could be argued that this crash is following a similar path.

In addition, interest rates were ridiculously high last time due to the ERM. Today's surprising recovery just shows, yet again, the power of monetary policy.

dopester

Pete111 wrote: »

My thoughts...(such as they are)

Hamish is clearly a rabble rouser but I like to read his posts as I'm hoping for HPI in the next 4 years

Keep hoping. Really2's accountant's mind shines through here. The QE isn't really getting out and is a spit in the debt ocean anyway.

Also the Government doesn't have enough firepower to defeat the market, unless they deliberate choose economic destruction and total breakdown.

Inflationary depression would wipe out the financial economy and most likely lead to overthrow of the government. Because all of society's bad debts would be the bad debts of the government, there would be a growing temptation to repudiate the debts by repudiating the government. Law and order, commerce... all at risk of halting. Not some magic solution to the problems. You might have to hold on to your home and property by force, and see or experience things which may turn your hair white overnight, if it isn't already.

There comes a point when attempts at further inflation are self-defeating and it makes more sense to take the bad-tasting medicine required. We've had decades of inflation and have reached a peak-point in the cycle. The printing-press cure for deflation is worse than the disease.

Deflationary depression would write down that value of tangible assets that are the collateral for many loans in the banking system, but it would increase the value of sound financial assets, including the value of government debt. Deflationary depression would expose all the social conflicts that are currently kept indulged by welfare spending.

The major economic drama will be the struggle between the market and government over the liquidation of debt. Political authorities will prefer to wipe away debt surreptitiously through inflation. Yet to inflate away bad debts also means inflating away good credits. Market participants will seek to preserve the value of their assets denominated in money.

To the extent that they succeed, they will make it harder to repay excessive debt in cheap money, and thus make the system more vulnerable to overt default and deflation. As monetary policy is loosened in increasingly desperate efforts to reliquify the economy, the market may force a deflationary response.

The lesson of September 1992 is a re-affirmation of a central theme: markets are more powerful than governments. The European Exchange Rate Mechanism cracked apart because the Bank of England was no match for George Soros. Even with tens of billions of Deutch marks to spend defending an artificially high value of the pound, the British government was obliged by the market to beat a humiliating retreat. Given a similar circumstance, it would happen again.

sdooley

Inflationary depression would wipe out the financial economy and most likely lead to overthrow of the government.

Hyper-Inflationary depression would wipe out the financial economy and most likely lead to overthrow of the government.

Deflationary depression would wipe out the financial economy and most likely lead to overthrow of the government.

Moderate inflation (up to 8% p.a. or prices doubling every 8 years) would do nothing of the kind.

Really2

dopester wrote: »

Keep hoping. Really2's accountant's mind shines through here. .

Cheers dopester:beer:. It is not a good thing to be right about though

Long pay back from where I am looking.