The next boom.....

Graham_Devon

Joeskeppi wrote: »

Looks to me like you're trying to find reason not to debate it to me. The point of the graph and subject of debate is the line and what it shows, not Hamish's interpetation of what happened previously which is irrelevant in this context anyway.

Oh, OK, my bad.

So all of Hamish's descriptors of the line and what they mean are, erm, irrelevant?

!!!!!!. Come on.

You've asked for debate. I started. As soon as the debate started it's dragged back to this nonsense.

As I stated, no point to the forum anymore, it's just this constantly.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Sorry, but, the graph points out the "artificial crash".

What was artificial about it? It seems to me to be, based on the descriptive before it, that the "artificial" aspect was that the boom simply didn't continue.

A crash based on fundamentals would happen for reasons like....

1) A building boom caused supply of houses to exceed demand for houses - didn't happen in the UK, quite the reverse

2) Prices rose to levels unsupportable by affordability- also didn't happen in the UK in 2007, percentage of income required to service mortgages was a third lower in 2007 than it was in 1990

An artificial crash would be caused by pulling 70% of mortgage finance form the market almost overnight, due to things like....

1) A global credit crunch causes banks to stop lending, despite UK mortgage lending being responsible, prudent and profitable.

2) UK banks misadventures overseas cause a banking crisis, and they're forced to ration funds for years afterwards

So if people seriously want to debate it, I'm up for it. But we would need to start there, as until it's described that was artificial about the crash (thereby, making all crashes in history artificial by nature too) we cannot debate any further. To do so, we would have to assume that forced booms through money creation are simply natural.

The house price boom leading up to 2007 was not "forced" by credit or money creation, it was caused by a good old fashioned housing shortage leading to demand exceeding supply.

As the often quoted BBC article by Stephanie Flanders pointed out, median house prices rose in advance of lending throughout the boom, suggesting it was rising prices that caused the increase in lending, not the other way around.

I mean, seriously, how can you debate about something that labels the crash as artifical, but the stimulus to "repair" it as "the governments job".

We are debating absolute extreme mindsets here.

Where you have a UK residential mortgage lending market that is profitable and whose downfall had nothing to do with UK lending or UK defaults, but rather external events, and furthermore where the proper functioning of that market is vital to the recovering economy of the UK, it is absolutely the role of govt and the BOE to repair the damage caused by those external events and return that market to functionality.

Graham_Devon wrote: »

Though "mortgage rationing" was a response to the crash. It didn't cause the crash.

Therein lies another problem with the OP's thoughts.

What the.....

Eh?

Are you seriously trying to claim, against all recorded history, that the fall in UK house prices was not primarily caused by the credit crunch and global financial crisis?

Seriously?

You really think that prices spontaneously crashed all by themselves and only after that did banks stop lending?

Is there oxygen on the planet you come from?

As I said, I'm all for debating it and still am....but can't debate if you guys won't let it happen after asking for the debate.

Crack on then Graham.

I'm here all day.

wotsthat

Graham_Devon wrote: »

Though "mortgage rationing" was a response to the crash. It didn't cause the crash.

Therein lies another problem with the OP's thoughts.

As I said, I'm all for debating it and still am....but can't debate if you guys won't let it happen after asking for the debate.

We might be mixing financial and house price crashes but it doesn't matter - I assume you're not disputing that the graph to date is correct. It's the future we're looking at.

Mortgage rationing seems to be easing. Wages are improving (the last PMI service sector survey showed an improvement without a corresponding reduction in unemployment) so increased productivity. Supply is getting better but arguably still significantly lagging demand. The economy is showing signs of improvement. Your 'props' are all still in place. You have concerns that Help To Buy might cause a price bubble and will be very difficult to withdraw.

BUT an extrapolation of above inflation rises for a couple of decades is inconceivable?

It seems to me that you and Hamish are on the same page. If anything Hamish's predictions aren't as bullish as yours.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Crack on then Graham.

I'm here all day.

There really is no point if you are not willing to accept why the crash did happen, and keep reverting to your own version.

I do have better things to be doing. If you are not willing to accept why the crash happened, then there is no point to this discussion.

I'm not sure any amount of debate will have you move away from pretending the crash was artificial, but all stimulus, schemes etc are normal.

You seem to have reversed the tables on the meaning of normal and artificial and are somewhat now entrenched in this viewpoint.

wotsthat

Graham_Devon wrote: »

There really is no point if you are not willing to accept why the crash did happen, and keep reverting to your own version.

Why does Hamish's view of the past affect your view of the future?

HAMISH_MCTAVISH

Graham_Devon wrote: »

There really is no point if you are not willing to accept why the crash did happen, and keep reverting to your own version.

This is not my version.

It is absolutely recognised fact that UK house prices crashed because of the global credit crunch causing the sudden withdrawal of 70% of lending from the market.

Not because of UK residential mortgage defaults.

Not because of UK house prices.

But because a global financial crisis paralysed the banking system.

Graham_Devon

HAMISH_MCTAVISH wrote: »

But because a global financial crisis paralysed the banking system.

Right, so why claim it was all artificial?

You can't suggest the banking system was paralysed, and then turn around and suggest "but it was artificial".

It's like saying someone is "artificially bankrupt" as they went bankrupt due to credit problems before they became bankrupt.

It's a complete and utter nonsense.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Right, so why claim it was all artificial?

Because UK residential mortgage lending, UK house prices, and UK default rates had the square root of naff-all to do with why there was a housing crash in the UK.

This was an external event, caused by factors completely outwith our control, that resulted in a dysfunctional lending market here, which then caused a wholly artificial crash not based on any of the housing market fundamentals..

It is the job of govt and the BOE to repair dysfunctional markets.

Which is exactly what they're doing.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Because UK residential mortgage lending, UK house prices, and UK default rates had the square root of naff-all to do with why there was a housing crash in the UK.

And this is the rub Hamish. It doesn't matter.

They were effected by it. That's NOT artificial. It's being part of the economic system. This is why other countries weren't effected by it...they weren't involved in that system. We were. Therefore they are NOT external events.

Again, it's like suggesting someone who is bankrupt is artificially bankrupt because he lost his job.....not because he couldn't afford to pay the loans back.

Absolute, complete and utter blinkered nonsense.

What happened happened, and we were part of the game. Being part of the game means we also had to accept the risk. You can't be part of the game and then claim when it falls over that it was all someone elses fault.

You are so utterly focused on what caused it that you are failing catastrophically to see why we, in the UK, felt the effects of it.

Blimey Hamish, if you ran a race and didn't come first, you'd blame the "external events" of someone else winning and it can't possibly have anything to do with you not running as fast.........

wotsthat

Graham_Devon wrote: »

And this is the rub Hamish. It doesn't matter.

They were effected by it. That's NOT artificial. It's being part of the economic system. This is why other countries weren't effected by it...they weren't involved in that system. We were. Therefore they are NOT external events.

Again, it's like suggesting someone who is bankrupt is artificially bankrupt because he lost his job.....not because he couldn't afford to pay the loans back.

Absolute, complete and utter blinkered nonsense.

What happened happened, and we were part of the game. Being part of the game means we also had to accept the risk. You can't be part of the game and then claim when it falls over that it was all someone elses fault.

You are so utterly focused on what caused it that you are failing catastrophically to see why we, in the UK, felt the effects of it.

If it doesn't matter why can't you move on?

The start point of the graph isn't in dispute. You only dispute WHY we're here.

Ignore Hamish's world view and use your own to predict the next few years. I genuinely think you agree that above inflation rises are more likely than not.

If you don't agree then why all the fuss about Help To Buy and the inflating bubble?