BOE: "Not our job to regulate house prices"

CLAPTON

shortchanged wrote: »

Of course wotsthat, it's the old adage money makes money.

Those who have got money inevitably make more as they are the ones who can afford to take risks as they can take a hit if it does go wrong.

But where does this leave the average joe, your shop workers, cleaners, lower paid workers? The economy needs them otherwise we cease to function, yet some people really don't give a stuff about them and the their simple answer is always, 'get a better job then.'

However it's not all that simple. Society is made up of people of differing abilities and not everyone is cut out to be an investment banker.

I would love all low paid workers one day to walk out of work for a few days and see the consequences. You'd soon see this country come to a grinding halt, yet these people are belittled and demeaned all the time.

why do you wish low paid workers to be even lower paid?

do you wish they were as rich and independent as subsistence farmers in Africa?

wotsthat

shortchanged wrote: »

I would love all low paid workers one day to walk out of work for a few days and see the consequences. You'd soon see this country come to a grinding halt, yet these people are belittled and demeaned all the time.

Of course, there's absolutely no link, in your mind, between pay and education and application. Low paid workers are sometimes low paid because of other people's choices but, in the main, their own choices are the main determiner of pay.

I used to be low paid. Rather than spending a life of drudgery dreaming of bringing the country to a halt by having a day off I improved my qualifications and got a better paid job. Many of my peers at the time decided this was 'simply' too difficult - I still see some of them around - turns out that avoiding those tough choices hasn't made their lives any easier now. Not that they recognise this - I've just been lucky.

HAMISH_MCTAVISH

theEnd wrote: »

It's got very little to do with real underlying supply and demand. Otherwise rents wouldn't be falling in real terms. Even relative to wages and even in London.

It's got everything to do with the supply of money. Initially the banks over leveraging and hugely inflating the broad money supply. Then the central banks printing (QE) to hugely inflate the narrow money supply. Now the government underwriting huge amounts of mortgage debt (both new and old) HTB2.

It will not end well. Might not even be a house price crash, but further currency collapse, hyper inflation or even state failure.

Pure, unadulterated, drivel....

shortchanged_2

wotsthat wrote: »

Of course, there's absolutely no link, in your mind, between pay and education and application. Low paid workers are sometimes low paid because of other people's choices but, in the main, their own choices are the main determiner of pay.

I used to be low paid. Rather than spending a life of drudgery dreaming of bringing the country to a halt by having a day off I improved my qualifications and got a better paid job. Many of my peers at the time decided this was 'simply' too difficult - I still see some of them around - turns out that avoiding those tough choices hasn't made their lives any easier now. Not that they recognise this - I've just been lucky.

So who would fill all the voids if all these lower paid workers all become doctors, dentists, investment bankers, managers etc?

Point is wotsthat is that somebody has to do these jobs, otherwise as a society we would fail to function.

Turnbull2000

theEnd wrote: »

It's strange that it was their job to regulate house prices (QE) when they started falling.

That's because falling house prices are generally detrimental to GPD, and supporting growth is a key consideration for the BoE. This intervention is needed when they fall.

Rising house prices boost GPD, boost household balance sheets and boost finance/banking balance sheets.

It's really quite obvious.

Generali

theEnd wrote: »

It's got very little to do with real underlying supply and demand. Otherwise rents wouldn't be falling in real terms. Even relative to wages and even in London.

It's got everything to do with the supply of money. Initially the banks over leveraging and hugely inflating the broad money supply. Then the central banks printing (QE) to hugely inflate the narrow money supply. Now the government underwriting huge amounts of mortgage debt (both new and old) HTB2.

It will not end well. Might not even be a house price crash, but further currency collapse, hyper inflation or even state failure.

The money supply (household M4) is up 0.1% over the year.

http://www.bankofengland.co.uk/statistics/Documents/bankstats/current/taba4.1.xls

Almost all of that rise can be accounted for by increased saving

http://www.bankofengland.co.uk/statistics/Documents/bankstats/current/taba2.2.1.xls

There is no massive increase in the money supply.

As to 'further currency collapse'. What currency collapse? There hasn't been one.

wotsthat

shortchanged wrote: »

So who would fill all the voids if all these lower paid workers all become doctors, dentists, investment bankers, managers etc?

Point is wotsthat is that somebody has to do these jobs, otherwise as a society we would fail to function.

That's not a point so don't worry about it.

All of these lower paid workers won't become doctors, dentists etc. anytime soon. That's the point - whilst most people can improve their circumstances most choose not to. Hence when it ends in tears it'll be the usual suspects doing the crying, bemoaning their own bad luck and other people's good fortune.

Loughton_Monkey

shortchanged wrote: »

Of course wotsthat, it's the old adage money makes money.

Those who have got money inevitably make more as they are the ones who can afford to take risks as they can take a hit if it does go wrong.

This rather insular view ignores that many key examples where the reverse is true. Tesco was started by Jack Cohen with his de-mob money. Alan Sugar built his empire from nothing. Marks & Spencer started as barrow boys........

When there's little or nothing to lose, taking risks is quite common and often laudable. Many 'comfortable' people with plenty of money are risk averse.

It is true that people who invest money make money.

shortchanged wrote: »

But where does this leave the average joe, your shop workers, cleaners, lower paid workers? The economy needs them otherwise we cease to function, yet some people really don't give a stuff about them and the their simple answer is always, 'get a better job then.'

If I take the spark plugs out of my car, it will cease to function. Does that make them worth any more than the £2 they cost? Even on a £50K car? Does it mean that I don't care about them? Or tell the garage "Service the car, but plugs are so cheap don't even bother to look at them..."

Do you really believe that the majority of cleaners, and lower-paid workers were born with a gene that programs them inevitably to be a cleaner? They became a cleaner because (for a variety of reasons) did not develop either the education or application to do something far more lucrative. Many of those reasons are 'self-inflicted' like preferring to do X rather than Y - which could be listening at school, doing homework, doing a creative hobby...

shortchanged wrote: »

However it's not all that simple. Society is made up of people of differing abilities and not everyone is cut out to be an investment banker.

.. and we would be in a sorry state if everyone was.

shortchanged wrote: »

I would love all low paid workers one day to walk out of work for a few days and see the consequences. You'd soon see this country come to a grinding halt, yet these people are belittled and demeaned all the time.

Don't you remember the 70's? Blackouts. Rubbish on the streets. Shortages.... This really did demean and belittle the strikers, none of whom came out of it better off in the long run.

The more a low paid job holder costs, or becomes unreliable (by going on strike for instance) the easier and more pressing it is to eliminate that dependency. This can be done by a variety of means.... automation, getting it done overseas, outsourcing etc. Mid-paid clerical staff have been extremely hit by this - possibly more than the far bottom end.

shortchanged_2

Loughton_Monkey wrote: »

.

The more a low paid job holder costs, or becomes unreliable (by going on strike for instance) the easier and more pressing it is to eliminate that dependency. This can be done by a variety of means.... automation, getting it done overseas, outsourcing etc. Mid-paid clerical staff have been extremely hit by this - possibly more than the far bottom end.

Which is all fine and of course we need lower paid workers. The problem arises when the cost of living continually outstrips their wages.

A boom in housing costs does nothing whatsoever to help this group of society, which is why it is this group that are squeezed more and more by the shortage of housing in this country.

It is another way for the wealthy to squeeze the pips out of the working classes.

theEnd

Turnbull2000 wrote: »

That's because falling house prices are generally detrimental to GPD, and supporting growth is a key consideration for the BoE. This intervention is needed when they fall.

Rising house prices boost GPD, boost household balance sheets and boost finance/banking balance sheets.

It's really quite obvious.

Agree. GPD growth and debt growth are interlinked. GDP was extremely high due to the huge debt taken on up to 07/08. This was then replaced with government debt and now they're trying to get more private debt into the system again.

They might succeed, but debt still needs to be paid back. It's already caused a banking collapse. Without real wage growth it will happen again.