We may have mentioned this on occasion...

HAMISH_MCTAVISH

"The position in the UK was nothing like that in the US, but because of the size of the housing market here, some of our banks were very exposed.

Home ownership in the UK is much wider than it is in Europe.

That means that what ever happens in the housing market not only affects the banking system but also the wider economy, including the business sector, since if house prices fall home owners spend less money."

~ Alastair Darling,
~ Back From The Brink, p116

geneer

Oh look. Nulabour flunkie insisting that it all started in america, nothing to do with us honest guv. zzzzzzzzzzzzzzzzz

lvader

Both housing markets probably dropped about the same if you take currency fluctuations into account.

£1 = $2 before the crysis vs £1 = $1.56 now.

crash123

Higher house prices make people think they have more money said the magician pulling the rabbit from his hat or is this the adviser saying "go on have that new car put it on the mortgage your house has gone up xxxx".
You still owe the money.

HAMISH_MCTAVISH

geneer wrote: »

Oh look. Nulabour

Oh look. Nothing has changed.

the_flying_pig

HAMISH_MCTAVISH wrote: »

...Home ownership in the UK is much wider than it is in Europe...

except for about five places at least http://en.wikipedia.org/wiki/List_of_countries_by_home_ownership_rate.

HAMISH_MCTAVISH wrote: »

...if house prices fall home owners spend less money....

we've been through this about a gazillion times...


alaistar darling probably knows less about economics than you do, H, which is saying something.

i think what he really meant was "if house prices fall millions of older people would be less likely to vote for us". and fall they did, of course. except in aberdeen obviously.

ILW

Isnt it about 97% in Greece?

heathcote123

HAMISH_MCTAVISH wrote: »

"The position in the UK was nothing like that in the US, but because of the size of the housing market here, some of our banks were very exposed.

Home ownership in the UK is much wider than it is in Europe.

That means that what ever happens in the housing market not only affects the banking system but also the wider economy, including the business sector, since if house prices fall home owners spend less money."

~ Alastair Darling,
~ Back From The Brink, p116

Makes sense - so for a more stable economy, more people should be encouraged to rent, therefore high house prices are great.

Thrugelmir

That means that what ever happens in the housing market not only affects the banking system but also the wider economy, including the business sector, since if house prices fall home owners spend less money.

Then surely this now a worry as recovery and growth stalls in the UK.

How do we break the debt cycle?

If everybody stopped using their credit cards and paid off the debt instead over the remaining term of this parliament. Its estimated that it will wipe 1% off GDP every quarter. A sobering thought. That the UK now needs to borrow just to stand still.

HAMISH_MCTAVISH

Thrugelmir wrote: »

If everybody stopped using their credit cards and paid off the debt instead over the remaining term of this parliament. Its estimated that it will wipe 1% off GDP every quarter.

Which does rather put Camoron's almost-uttered idiocy into perspective.

A sobering thought. That the UK now needs to borrow just to stand still.

It has ever been thus since debt was invented.

How do we break the debt cycle?

Simple answer.

We don't, and never will.;)

Without debt, savers can never make returns. They're two sides of the same coin.

ruggedtoast

It is interesting that apparently even the prime minister doesn't understand fractional reserve banking.