Help to Buy may have to be scrapped, Vince Cable warns

Thrugelmir

wotsthat wrote: »

Therefore investment is say, 10,000 people x £20k = £200m and the return is £5tn (UK housing wealth) x 5% = £250bn.

That's ponzi scheme finance. There's a major difference compared to the credit boom years though. As the banks are no longer putting their money at risk.

MrRee_2

Not read the whole thread ...... it was started by the misery-guts member of the BBS, so it must have a negative spin to it.

Surprisingly, I tend to agree that the Housing market is booming and may not need taxpayers money pouring into it in January 2014.

However, the booming house market equals a booming retail market equals more jobs created (25,000 more Estate Agency jobs have been created in the last 3 months, as an example!) - yes, I know we all hate them, but these are jobs and people paying their taxes!

So, I suspect - with a general election not far away - this stimulus will go ahead .................... certainly, every single person should be buying property right now - renting is for mugs (always has been, but now more than ever).

Rejoice! This is reaching boiling point and the run-off will be the booming retail market ......

Of course, with all the good news about, we may be able to kiss goodbye to Graham_Devons boring, boring, boring, negative, negative, negative, threads!!! A reason to Rejoice if ever there was one!!

CLAPTON

Thrugelmir wrote: »

That's ponzi scheme finance. There's a major difference compared to the credit boom years though. As the banks are no longer putting their money at risk.

why is an unrealised asset revaluation a ponzi scheme?

wotsthat

Thrugelmir wrote: »

That's ponzi scheme finance. There's a major difference compared to the credit boom years though. As the banks are no longer putting their money at risk.

That's not a Ponzi scheme. Every penny of the gain is available to the investor.

I actually didn't expect anyone to take the calculation seriously. It was intended to show the disproportionate return vs. investment i.e. it's a nonsense to suggest that a £250bn increase in housing wealth can be attributed to a £200m investment in HTB.

wotsthat

Graham_Devon wrote: »

Not saying they won't, but not sure why they would go to such lengths to shoot themselves in the foot like this.

In the face of critism of the scheme from:
- The IMF
- RICS
- Barclays
- The Institue of Directors
- Mervyn King
- The Housing Federation
- Shelter
- The Local Government Association
- The Parlimentary Committe
- Savills
- LSL
- The Treasury Select Committee

....and more.... the answer is always that they will press on. Seems to me time is running out for them to do a very embarrasing U-Turn now after stating so adamently it will go ahead regardless.

Many of those haven't criticised the scheme. Mervyn King is a good example - he made some good points but really pointed out the risks of the scheme. That's not the the same as criticism. We all know the risks. I also bet that a number if asked he direct question 'are you criticising HTB' would say not really.

This government isn't averse to a u-turn so the chance shouldn't be discounted. It's not likely but if it happens expect that they've 'listened' or done an even better job on the economy than even they thought.

Graham_Devon

Mervyn King...

‘Well I’m sure that there is no place in the long run for a scheme of this kind, this scheme is a little too close for comfort to a general scheme to guarantee mortgages. We had a very healthy mortgage market with competing lenders attracting borrowers before the crisis and we need to get back to that healthy mortgage market. We do not want what the United States have which is a government guaranteed mortgage market and they are desperately trying to find a way out of that position so we mustn’t let this scheme turn into a permanent scheme.’

Maybe we should call it "disquiet", as the FT put's it. Or critism as the telegraph, independant and sky put it.

Which others fall into the "many" that also haven't criticised it?

wotsthat

Graham_Devon wrote: »

Mervyn King...

Maybe we should call it "disquiet", as the FT put's it. Or critism as the telegraph, independant and sky put it.

Why not just call it what it is? A concern that the scheme shouldn't turn into a permanent subsidy for home buyers.

the_flying_pig

if HPI is *anywhere close* to breaching 5% p.a. then setting squillions of quids worth of taxpayer money off chasing after houses would be madness.

so i definitely think that there's a very strong argument that it should be withdrawn. at an absolute minimum it shouldn't be available to anyone looking to buy within London zones 1-5, since HPI is already so high & there's barely even the excuse that HPI might trigger a tiny bit more building.

though the unanswerable question, of course, is just how much of the demand that we're seeing currently is only there because people expect HTB to be implemented in full.

Thrugelmir

CLAPTON wrote: »

why is an unrealised asset revaluation a ponzi scheme?

How can the equity be realised?

Thrugelmir

wotsthat wrote: »

That's not a Ponzi scheme. Every penny of the gain is available to the investor.

Definition of a Ponzi scheme.

"Perpetuation of the high returns requires an ever-increasing flow of money from new investors to keep the scheme going."