Chronically sick nation determined to learn nothing

CLAPTON

mvengemvenge wrote: »

I think the fundamental Thatcher reform he refers to is the courage to take on the unions in the late 70's/early 80's. This is separate in my view from the 'big bang' reform in 1986 which I for one believe led us in part to this big mess.

You may well be correct.
I just found his whole article rather a journalist incoherent rant, linking rather unrelated threads together but nevertheless it seems odd to appear to praise Thatchers refoming zeal in the context of doom and gloom about the financial meltdown.
But who says journalists have to make any sense.

CLAPTON

Thrugelmir wrote: »

Though the people owning the business need to stake their own capital and not just the banks. The returns for taking risks can be very high and rewarding. Though now more people want the returns without taking a risk.

This country was built on great entreprenurs are there any new ones on the horizon?

To me and I know I'm in a very small minority, life in the late 20th and early 21st century is fantastic for Western European people at least.
I don't hold with the view the the best is in the past and everything today is rubbish.

I've no idea why you say that 'Though now more people want the returns without taking the risk'... maybe you're right but I see no evidence either way.
It seems to me there are lots of entreprenurs today (Branson, Sugar, Mobile Phone companies, Internet innovators,cheap flights operators... I can't compare them to the past because I don't know but the pace of change and innovation is amazing ...

Thrugelmir

CLAPTON wrote: »

To me and I know I'm in a very small minority, life in the late 20th and early 21st century is fantastic for Western European people at least.
I don't hold with the view the the best is in the past and everything today is rubbish.

I've no idea why you say that 'Though now more people want the returns without taking the risk'... maybe you're right but I see no evidence either way.
It seems to me there are lots of entreprenurs today (Branson, Sugar, Mobile Phone companies, Internet innovators,cheap flights operators... I can't compare them to the past because I don't know but the pace of change and innovation is amazing ...

Its a change in culture over the past 30 years. Instant profits. Principably by leveraging up. Rather than reinvesting profit back into business to grow organically.

My reference to risk is that a lot of small business owners want the banks to lend, but are unhappy that the banks want a charge over their houses as security. Without security whose taking the risk?

CLAPTON

Thrugelmir wrote: »

Its a change in culture over the past 30 years. Instant profits. Principably by leveraging up. Rather than reinvesting profit back into business to grow organically.

My reference to risk is that a lot of small business owners want the banks to lend, but are unhappy that the banks want a charge over their houses as security. Without security whose taking the risk?

Possibly you're right but I see / know of no particular evidence one way or the other.
I would have thought that people always wanted 'instant' profit if it were possible.
I know lots of small businesspeople and most have agreed a charge over their house to secure a bank loan. (I doubt if they were exactly happy about it..)

Clearly the last few years have seen the banks offering silly loans based on silly valuations and the financial sysytem is in disarray because of it.

Harry_Powell

Surely a lot of the debt is mortgage related, where the debt is often more than covered by the value of the asset (i.e. the house). There are not very many people who can afford to buy a house outright, so they have to either rent forever or get a mortgage. It's hardly reckless spending, especially if they have saved up a decent deposit or have a large amount of equity in their houses, and especially if their monthly mortgage payments are well within their means.

We've never had such a large proportion of owner occupiers in this country, so no wonder the amount of debt has gone up proportionally. I'd be more interested in data on unsecured loans, and whether these are increasing/decreasing in the current climate. This would be a far better indicator on people's spending/overspending habbits than to include necessary and unavoidable debt such as mortgages.

Thrugelmir

Harry_Powell wrote: »

Surely a lot of the debt is mortgage related, where the debt is often more than covered by the value of the asset (i.e. the house). There are not very many people who can afford to buy a house outright, so they have to either rent forever or get a mortgage. It's hardly reckless spending, especially if they have saved up a decent deposit or have a large amount of equity in their houses, and especially if their monthly mortgage payments are well within their means.

We've never had such a large proportion of owner occupiers in this country, so no wonder the amount of debt has gone up proportionally. I'd be more interested in data on unsecured loans, and whether these are increasing/decreasing in the current climate. This would be a far better indicator on people's spending/overspending habbits than to include necessary and unavoidable debt such as mortgages.

More recently subprime lending was a factor in increase in ownership of property. Coupled with the explosion in BTL. This all contributed to the market becoming distorted and values overstated. Many not even putting down a deposit.

I agree with your fundamental point about house ownership. This would be fine in "normal" market conditions. Until we know the impact of the overlending over the past 10 years and asset prices settle at a "true" market value. Its best to sit and watch.

econo_2

Harry_Powell wrote: »

Surely a lot of the debt is mortgage related, where the debt is often more than covered by the value of the asset (i.e. the house). There are not very many people who can afford to buy a house outright, so they have to either rent forever or get a mortgage. It's hardly reckless spending, especially if they have saved up a decent deposit or have a large amount of equity in their houses, and especially if their monthly mortgage payments are well within their means.

We've never had such a large proportion of owner occupiers in this country, so no wonder the amount of debt has gone up proportionally. I'd be more interested in data on unsecured loans, and whether these are increasing/decreasing in the current climate. This would be a far better indicator on people's spending/overspending habbits than to include necessary and unavoidable debt such as mortgages.

Harry,

Unsecured debt is apparently off the chart and savings are up well less than 1 % by what I've read. It appears that until there is an actual monumental shift in attitude and we get a savings rate up at 6% or more rather than the 2ish % it is now, this recession will drag on and on and things on the manufacturing side will not improve much.

Really2

econo wrote: »

It appears that until there is an actual monumental shift in attitude and we get a savings rate up at 6% or more rather than the 2ish % it is now, this recession will drag on and on and things on the manufacturing side will not improve much.

That would mak the recession worse and the rest of the world would sell the £ as it would show we were clearly bonkers.

Because of low IR debt is being paid back of record rates. It may not be saving for you but it is for anyone with debt.
http://www.guardian.co.uk/business/2009/apr/01/mortgage-lending-figures-mortgages

BOE Base is a reflection on inflation and the economy, not to punish/reward savers.

Thrugelmir

econo wrote: »

Harry,

Unsecured debt is apparently off the chart and savings are up well less than 1 % by what I've read. It appears that until there is an actual monumental shift in attitude and we get a savings rate up at 6% or more rather than the 2ish % it is now, this recession will drag on and on and things on the manufacturing side will not improve much.

Though its difficult to repay debt and save at the same time.

Net indebtedness , total borrowing less total savings is a better measure currently. As consumer debt is around 1.5 times that of total savings. So will take a long time to rebalance.

Thrugelmir

Really2 wrote: »

Because of low IR debt is being paid back of record rates. It may not be saving for you but it is for anyone with debt.
http://www.guardian.co.uk/business/2009/apr/01/mortgage-lending-figures-mortgages

But net borrowing is still increasing.......

Figures released today by the British Bankers Association reveal that net mortgage lending was up by £2.6bn in June, giving an annual increase of 5.1%, which follows on from a £2.4bn increase in May.

We haven't turned the corner yet.

In fact the banks must be laughing. As they relend money at higher rates of interest.