Why prices must not fall, but have to fall

tyllwyd

Graham_Devon wrote: »

If we cannot aim to pass on a better standard of living for our younger generations, then were more selfish than I first thought. ...

You reminded me of a book I worked on a couple of years ago, which discussed exactly these types of questions. Not exactly an easy read but in case you want to consider the topic in more depth ...

http://www.oxfordhandbooks.com/oso/public/content/philosophy/9780199282951/toc.html

Graham_Devon

Kohoutek wrote: »

I can't think of any aspect of our economic or political system that is organised to achieve that goal. If it was, we wouldn't be living a society where our economy is dependent on the remains of fossilised plants and animals and we wouldn't have governments that make policy on absurdly short term (less than five years) agendas.

Even society rallied around that goal, the world we live in is too global for "we" (I assume you mean the current generation) to be be able to pass on a better standard of living to younger generations.

I'm talking about building houses. We CAN do that.

I'm talking about looking at the debt we increase every single month, partly in order to prop up todays generation. We CAN look at that.

I'm talking about legislation in THIS country in order to keep a tighter lid on asset prices. We CAN do that. Lets face it, BTL is probably one of the least regulated, popular investments out there.

I'm talking about investing in our own economy, investing in proper rail links, and rail infrastructure that people will actually use as it's cheaper than other transport. We CAN do that. Indeed, I would rather see government money, if we have to rack up debt, providing jobs in this respect, rather than paying towards individuals mortgages so that repo's don't affect house prices, and prolonged delays in changing the benefit and absurd housing benefits system which provides mass taxpayer wealth to private housing investors.

Theres plenty we can do, and lots we can't. However, like I said, what we can do, and what we are willing to do, are 2 different things. If it effects us today, it's unlikely we will do anything for tommorow.

globalds

Graham_Devon wrote: »

I'm talking about .

Long term Planning.

When every decision is made based almost entirely on it's economic results then we will as a Nation keep selling off our most important things to the highest bidder for the forseable future.

Elderly care run by fund managers.
Hospitals built on private equity and seen by all parties even the patients at times as a free lunch.
Public housing considered as a national liability.
And now University education seen as a cash cow.

We have given ourselves an almost impossible task for no real reward -in fact just to stand still.

At least we are making it easier for soulless multinational corporations to run there tax dodging schemes within our borders

Kohoutek

Graham_Devon wrote: »

I'm talking about building houses. We CAN do that.

Which political party can I vote for that is committed to a massive housebuilding/planning liberalisation programme? I think you'll find we can't do that.

Graham_Devon wrote: »

I'm talking about looking at the debt we increase every single month, partly in order to prop up todays generation. We CAN look at that.

What debt are you talking about? The monetary system is based on debt - read the "how is wealth created" thread.

Graham_Devon wrote: »

I'm talking about legislation in THIS country in order to keep a tighter lid on asset prices. We CAN do that. Lets face it, BTL is probably one of the least regulated, popular investments out there.

I'm talking about investing in our own economy, investing in proper rail links, and rail infrastructure that people will actually use as it's cheaper than other transport. We CAN do that. Indeed, I would rather see government money, if we have to rack up debt, providing jobs in this respect, rather than paying towards individuals mortgages so that repo's don't affect house prices, and prolonged delays in changing the benefit and absurd housing benefits system which provides mass taxpayer wealth to private housing investors.

Theres plenty we can do, and lots we can't. However, like I said, what we can do, and what we are willing to do, are 2 different things. If it effects us today, it's unlikely we will do anything for tommorow.

My whole point is that what we should do is limited by our economic and political system to what we can do. Making long term infrastructure investments is certainly what we should do and can (theoretically) do. But our political system does not seem to allow cutting back expenditure to pay for today to invest in tomorrow.

Graham_Devon

We are only limited by our political system because WE, the nation, wouldn't vote in any policies which hurt us today.

Can only blame the politicians for part of it.

As for the political party. Probably the green party comes closest. Look how far they get. (not a green supporter)

• Building a new generation of quality council homes
• Supporting the development of housing co-ops
• Bringing back into use Britain's 300,000 long-term empty private sector homes
• Renovating Britain's 37,000 empty council homes to help cut waiting lists

May become a green supporter looking at their policies however. Bar the pensions, they suggest they will do exactly what I said for housing, and exactly what I said for trains!

Kohoutek

I don't disagree. But the idea that in the past the older generation passed on a better standard of living to the young just isn't true.

There's never been any intention for the present to pass on a better world to the future, it just happened as a consequence of a very long period of unprecedented robust economic expansion. But by definition expansion cannot go on forever.

Graham_Devon

Kohoutek wrote: »

I don't disagree. But the idea that in the past the older generation passed on a better standard of living to the young just isn't true.

There's never been any intention for the present to pass on a better world to the future, it just happened as a consequence of a very long period of unprecedented robust economic expansion. But by definition expansion cannot go on forever.

It may not be true. My intention was to suggest things cannot continue as they are, on the same trajectory, because of the impact on the generation being born today.

I'm just a lone voice. I never expect my voice to gain the majority. Ever. But I do feel it is far to easy to suggest we can't do something, because it's not the way it has worked before, and to suggest the path we are on now, and rising costs of living is best for us all.

I don't believe it is. I believe it's best for the wealthy, the greedy, and those who see no further than their personal asset wealth. Unfortunately, on average, it's the aforementioned who hold the reigns and create the rules, either through activly doing so, or flexing their muscle.

Poshbird

macaque wrote: »

The stalemate between bulls and bears has continued for a couple of years now and neither side has won the case convincingly (despite the daily declarations of victory by some contributors on this formum).

House prices are now far beyond affordability levels of normal people. Prices will fall when sellers either elect to accept less or are forced to accept less. Since there is no chance of voluntarily price reductions, the question is when will the forced selling start in earnest?

In the UK, every possible lever to protect house prices has been set to maximum. We have low interest rates, a high tolerance to bad debt, immigration, weak £ etc. I also imagine that other measures are being employed that we don't know about. In the mean time, banks are working flat out to de-risk their lending portfolio by restricting good deals to borrowers with high deposits.



If house prices fall by 10%, the banks will be forced to foreclose on many of these 300,000 people and the market will be flooded with distressed sellers. The banks' lending portfolios will become even more pear shaped and this will stimulate fresh forced selling. Like the US, we will be faced with an unstoppable bear market. This is why the government and lenders are fighting so hard to prevent even the smallest price falls. As a result of this policy however, turnover has collapsed and this is creating new economic and social problems.

The only alternative to a property bear market is strong economic growth but where does this come when so much of UK economic activity is tied to the property market? At some point the UK will have to bite the bullet and accept lower prices.

Very good post, the props have to prop up these high prices to kick the can down the road. But unless wages and the economy can catch up with high house prices then the props can not be supported any more.

As you said when the props start to come out the instability of it all will cause a huge crash, could even be as bad as the USA and that is saying something.

Thrugelmir

macaque wrote: »

Agreed but in a bear market, the banks who dispose of their poor risks quickest will be the ones who survive

So how does the Government run down NRAM?

Full of borrowers who are unable to remortgage elsewhere. Due to high LTV, negative equity or poor credit rating.

macaque_2

Thrugelmir wrote: »

So how does the Government run down NRAM?

Full of borrowers who are unable to remortgage elsewhere. Due to high LTV, negative equity or poor credit rating.

If you own a brand new car and a rusty old banger, you don't take parts off the new car to keep the rusty old banger on the road.