Fiscal Cliff

HAMISH_MCTAVISH

Graham_Devon wrote: »

First it's supply and demand with you.

Next you state they were allowed to correct "unnecessarily" which suggests it's not supply and demand.

The demand for housing from people desperate to buy, and able to pay the mortgage payments with a sensible 5% to 10% deposit at current, or even higher than current, house prices is absolutely vast.

A million or more people that would prefer to buy, but have been forced into paying rents higher than a mortgage would be, in just the last few years alone.

Which has caused house building to fall off a cliff, worsening the critical housing shortage, and driving rents to new record highs.

The cause of all this is of course the artificial and wholly needless mortgage famine. The govt/BOE were presented with a plan to prevent the mortgage famine, and subsequent housing crisis, and failed to adopt it.

I can't keep up.

You're just being deliberately obtuse.

Forcing house prices down artificially, through preventing millions of people from buying house thanks to mortgage rationing, is absolutely bonkers but that's what we've done.

And it's prevented more people from buying than higher house prices ever did.

Graham_Devon

HAMISH_MCTAVISH wrote: »

You're just being deliberately obtuse.

And I think you have lost the plot with the post above.

The_White_Horse

MacMickster wrote: »

Maybe TWH, as an advocate of falling off cliffs, would like to make it his new year resolution to give it a go.

Having said that, it can't be the real TWH advocating tax rises (even if in the USA) can it?

Whilst undoubtedly, both here and in the USA, spending needs to be cut drastically while taxes need to be increased, this needs to be done in a controlled way. Rather than a cliff, I prefer to think that we are facing a high speed car crash. I would rather that we weren't, but if it can't be avoided then I would prefer it to happen in the most controlled way possible - in a car with high NCAP rating, seatbelt and airbags. The fiscal cliff approach is more akin to riding a motorbike without helmet or leathers at 100mph straight towards a concrete wall.

i am all for tax rises, as long as it is a rise on everyone - not a spiteful jealous raid on the perceived wealthy.

Generali

After all, how bad were things last time despite all the shouts from the newspapers?

HAMISH_MCTAVISH wrote: »

Well, the political games cost them their AAA rating (which had no impact on borrowing costs), but other than that dent in their pride, not too bad.

So things weren't too bad last time around and the US economy is in a far better state than this time last year. Perhaps a reasonable guess is that the end result won't be too bad this time too...?

I know the newspapers love to shout about how bad things are going to be but that doesn't mean things will be bad. Perhaps it's just a way to sell more newspapers.

Generali

HAMISH_MCTAVISH wrote: »

And what a nobel prize winning economist has to say about it....

A debt inherited from the past is, in effect, simply a rule requiring that one group of people — the people who didn’t inherit bonds from their parents — make a transfer to another group, the people who did. It has distributional effects, but it does not in any direct sense make the country poorer.

Really, this isn’t complicated — and the fact that everyone in public life gets it wrong doesn’t change the logic.
http://krugman.blogs.nytimes.com/2012/10/12/on-the-non-burden-of-debt/

That would be true if all Treasuries were bought by US investors however Treasuries bought by overseas investors require a transfer of funds out of the economy each time a coupon payment is made.

michaels

Generali wrote: »

That would be true if all Treasuries were bought by US investors however Treasuries bought by overseas investors require a transfer of funds out of the economy each time a coupon payment is made.

Yes it is called the chinese/german export miracle whereby chinese/german workers work for increasingly worthless pieces of paper rather than benefiting from their industriousness - I know which side of the trade I would rather be on

sabretoothtigger

I'll side with the people who know how to make stuff. They should charge more, they probably will

Plenty of people exist outside of UK or USA, we really are quite small overall?
Surely if UK relies on being a customer that is not a fortuitousness future


Krugman could be right if he were to acknowledge USA demand and supply is like Greece Demand on Germany. They cant just keep saying we control our own central bank so its ok, they are just lucky right now to have buyers for new debt or currency. Otherwise they are not better off

CLAPTON

spacey2012 wrote: »

The question nobody can answer is :
all the countries in the world owe billions in debt ?
To whom do they owe it ?
Is there some guy sat somewhere with a huge pile of worldwide IOU ? and if so who underwrites him.

for every debt there is corresponding savings; so total debt equals total savings

Generali

michaels wrote: »

Yes it is called the chinese/german export miracle whereby chinese/german workers work for increasingly worthless pieces of paper rather than benefiting from their industriousness - I know which side of the trade I would rather be on

Well in theory the pieces of paper are claims on future production. In reality they are just pieces of paper.

PaulF81

Or little electronic squiggles most likely. Far cheaper than anti counterfeiting technology on paper money.