Stephanie Flanders on QEIII or whatever you want to call it

Graham_Devon

Decent blog from Stephanie Flanders.

Looks at how the latest tranch of money the BOE are putting up and how it might work. She suggests, like most others, the key problem is trying to persuade business and individuals to take on more debt. In today's climate, people are doing the opposite.

Business is sitting on cash, but holding back from spending it due to confidence and households are trying to batten down the hatches and pay off debt, not take new debt on.

She then looks at how the recovery took places in the 1930s. You need growth to resume confidence. The only way of providing growth in this climate is government spending, not household spending.

What's interesting is that there is something that led the UK recovery in the 1930's. Housing.

The private sector built just shy of 300,000 houses within 12 months. This in turn provided growth, jobs etc.

So, although we see the opposite, should we look at the 1930's, and instead of throwing money at the banks, get people in jobs, building much needed homes. We need them more now than we did then.

I know theres little hope of us looking and learning from history in this respect, so just putting it out there for discussion really. We have a real white paper on how to solve at least some of the growth issues....build houses.

http://www.bbc.co.uk/news/18463877

CLAPTON

the other thing about building houses is that people could then actually live in them, not just now but for the next 100 years (not many investments last that long)

HAMISH_MCTAVISH

Graham_Devon wrote: »

She then looks at how the recovery took places in the 1930s. You need growth to resume confidence. The only way of providing growth in this climate is government spending, not household spending.

Yes, many of us have mentioned that a few thousand times, and you've disagreed. But now Steph says it, you agree?

Do make your mind up Graham....

What's interesting is that there is something that led the UK recovery in the 1930's. Housing.

The private sector built just shy of 300,000 houses within 12 months. This in turn provided growth, jobs etc.

Once again, you've been told this repeatedly.

House building will stimulate the economy in a big way. And housing has historically led the UK out of recession.

But yet again you didn't agree with it when I mentioned you can't have a sustainable recovery in the wider economy without a sustainable recovery in the housing market.

So, although we see the opposite, should we look at the 1930's, and instead of throwing money at the banks, get people in jobs, building much needed homes. We need them more now than we did then.

I know theres little hope of us looking and learning from history in this respect, so just putting it out there for discussion really. We have a real white paper on how to solve at least some of the growth issues....build houses.

And who is going to buy the homes when nobody can get a mortgage?

Builders won't build what buyers can't buy.

Plenty of people out there who can afford the mortgage payments, and who want to buy. They can't do it until mortgage lending returns to sensible, historically normal, and prudent levels, where a 5% to 10% deposit and a decent work history is enough to get the vast majority of people a mortgage at non-punitive margins above bank funding costs.

That's the only thing that will work. It's the only thing that will get the housing sector moving again. And that sector is the only thing big enough to kick start the economy.

The politicians will eventually realise this, in fact it seems they are finally coming around, now that everything else they've tried has failed. :cool:

pqrdef

Didn't the Americans and the Spanish and the Irish build lots and lots of houses?

CLAPTON

pqrdef wrote: »

Didn't the Americans and the Spanish and the Irish build lots and lots of houses?

indeed so and it was very successful at increasing employment;

however like all good things when done properly they bring benefits and when done to excess they bring problems.

our current problems are not those of excessive activity.

Thrugelmir

Graham_Devon wrote: »

Business is sitting on cash,

That's a broad generalisation. As a rule most companies rely on borrowing to fund their working capital.

DannyRadclif

The central banks know the truth that creating more currency will do more harm long term but for now it kicks the can down the road. Make the problems worse for someone else to deal with in the future. But for now they just want the easy option.

Yes there will be more and more currency abuse all around the world. There will come a time when no matter how much currency they create it will not make much difference because people have lost confidence in it. But today people are so brainwashed and distracted from the truth about what money is, that day could be a long way off.

The analogy given by David Morgan another real money expert is like a flock of birds all flying in the same direction and suddenly all at the same time changing direction. That's how fast the world can lose confidence in currency and the rush begins.
At times like these gold and silver are not only the safest place to store your wealth but also the place with the most potential gains.

Wookster

Funny to hear Ed Balls talking about how austerity made the 1930s worse in Britain, when actually austerity combined with private sector investment brought the UK out of recession.

Interesting that construction was the main factor in rescuing the economy back then, that avenue now being closed due to high house prices, which are being kept high through a dysfunctional housing market and restrictive planning regulations.

For once Steph Flanders has written an article that contradicts the Labour spend song (though she'd never say it quite so explicitly).

MacMickster

Graham_Devon wrote: »

What's interesting is that there is something that led the UK recovery in the 1930's. Housing.

The private sector built just shy of 300,000 houses within 12 months. This in turn provided growth, jobs etc.

So, although we see the opposite, should we look at the 1930's, and instead of throwing money at the banks, get people in jobs, building much needed homes. We need them more now than we did then.

I know theres little hope of us looking and learning from history in this respect, so just putting it out there for discussion really. We have a real white paper on how to solve at least some of the growth issues....build houses.

http://www.bbc.co.uk/news/18463877

Exactly what I said yesterday on the other thread on this issue. Direct the money to the construction industry and get Britain building for the future.

Wookster

MacMickster wrote: »

Exactly what I said yesterday on the other thread on this issue. Direct the money to the construction industry and get Britain building for the future.

It is not enough to do this without a functioning house market. This means repossessing those in default and allowing prices to find their market driven equilibrium.

pqrdef

Wookster wrote: »

Funny to hear Ed Balls talking about how austerity made the 1930s worse in Britain, when actually austerity combined with private sector investment brought the UK out of recession.

Interesting that construction was the main factor in rescuing the economy back then

Well make your mind up, because the 1930s house-building boom was mainly council estates built for slum-clearance projects. Not austerity, not private sector investment, just good old-fashioned public spending.