Are the eternal optimists on here still feeling optimistic?

HAMISH_MCTAVISH

shortchanged wrote: »

So America the ultimate capitalist society with it's very unequal society still runs a deficit.

UK versus USA national debt as a % of GDP.

kabayiri

Thrugelmir wrote: »

The UK is equally unequal with an increasing divide.

The super rich in the UK probably have more in common with their counterparts in the U.S, in India, in Russia etc, than they do with their fellow countrymen.

michaels

HAMISH_MCTAVISH wrote: »

The recent large increase in deficit spending is entirely a result of the global financial crisis and would have happened regardless of who was in power.....



As it happens, the UK went into the crisis with a relatively low deficit and from a total debt position that was lower than it's been in all but a few years out of the last 300 years plus....

You can blame Labour/Brown for a lot of things, but significantly increasing the national debt prior to the global financial crisis isn't one of them.

I wouldn't argue that the Tories would have been any better prior to the crisis (although perhaps the state would have been smaller and taxes lower which might have helped reduce the deficit increase when the downturn happened?)

However I would suggest as Thrug says that a one off increase in financial sector profits and taxation brought about by bringing a stream of profits forward into a single period was taken to be a permanent shift and spending set accordingly but as it turned out wrongly...

HAMISH_MCTAVISH

michaels wrote: »

I wouldn't argue that the Tories would have been any better prior to the crisis (although perhaps the state would have been smaller and taxes lower which might have helped reduce the deficit increase when the downturn happened.

The Tories promised to spend the same as Labour.

03 Sep 2007

In an echo of New Labour’s own 1997 manifesto promise to match the Tory Government’s projected spending levels, George Osborne vowed last night to stick to Gordon Brown’s plan of increasing public spending by 2 per cent in real terms over the next three years.

“Today, I can confirm for the first time that a Conservative government will adopt these spending totals,” the Shadow Chancellor said.

“Total government spending will rise by 2 per cent a year in real terms, from £616 billion next year to £674 billion in the year 2010/11.

“Like Labour, we will review the final year’s total in a spending review in 2009,” Mr Osborne wrote in a newspaper article.

He added that the effect of the commitment “is that under a Conservative government, there will be real increases in spending on public services, year after year”.

“The charge from our opponents that we will cut services becomes transparently false,” he said

http://www.telegraph.co.uk/news/uknews/1562023/Tories-vow-to-match-Labour-spending.html

wotsthat

shortchanged wrote: »

This government have pinned their hopes on propping up the housing market to give the illusion of an improving economy which of course does give some people the feel good factor as is evident on here. I suppose if house prices did start to fall even the people who pin their hopes on rising prices would also be bricking it.
This unfortunately is the UK's problem, it's economy is far too dependent on the housing market.

I do wonder if the government is really propping up the housing market in the way you suggest. Maybe because this is a house prices board all things end up being about the UK housing market. The media is housing market mad too - easy 'journalism'.

The UK has a number of problems and the housing market is a small one. Our biggest customer having money problems is a much greater concern.

shortchanged_2

wotsthat wrote: »

The UK has a number of problems and the housing market is a small one. Our biggest customer having money problems is a much greater concern.

Yes I agree with you but I do also believe that the government is pinning a great deal of economic hope on the housing market by trying to create a feel good factor by encouraging hpi.
There is a great deal of talk coming from the government about building x number of houses etc but in reality the will isn't actually there. It's just what it always is with the housing market, just talk and the house building programme will continue it's drip feed as per usual.

HAMISH_MCTAVISH

wotsthat wrote: »

I do wonder if the government is really propping up the housing market in the way you suggest. .

I really don't understand why so many posters have a hard time grasping what is a pretty simple concept.

The "housing market" (ie the sale, construction, furnishing, financing, repair, and letting of houses) is a significant part of the economy, perhaps 10% or 15% just as it is in all developed nations, and it would be bizarre to suggest that it shouldn't be.

Housing is responsible for a really significant number of jobs and drives a lot of economic activity.

Every government will always try to ensure the housing market functions in such a way those jobs and that economic activity are not put at risk.

What happened in 2007, where a global financial crisis caused lending to fall off a cliff, which caused UK houses to stop selling and stop being built as virtually nobody could get a mortgage, was bad not just for the housing market but also for the wider economy.

The credit crunch and associated crash in the housing market caused mass layoffs and was responsible for a significant part of the fall in economic activity.

Here we are 7 years later and lending has still nowhere near recovered, construction of houses is nowhere near back to pre-crisis levels, housing related retail activity remains depressed, unemployment remains high as a consequence, etc.

Somewhere around 85% of the UK economy has nothing to do with housing..... But as we saw in 2008 having 15% of your economy malfunctioning is enough to take the rest of it down too.

No wonder governments are motivated to ensure the housing market remains as healthy as possible.

shortchanged_2

HAMISH_MCTAVISH wrote: »

I really don't understand why so many posters have a hard time grasping what is a pretty simple concept.

The "housing market" (ie the sale, construction, furnishing, financing, repair, and letting of houses) is a significant part of the economy, perhaps 10% or 15% just as it is in all developed nations, and it would be bizarre to suggest that it shouldn't be.

Housing is responsible for a really significant number of jobs and drives a lot of economic activity.

Every government will always try to ensure the housing market functions in such a way those jobs and that economic activity are not put at risk.

What happened in 2007, where a global financial crisis caused lending to fall off a cliff, which caused UK houses to stop selling and stop being built as virtually nobody could get a mortgage, was bad not just for the housing market but also for the wider economy.

The credit crunch and associated crash in the housing market caused mass layoffs and was responsible for a significant part of the fall in economic activity.

Here we are 7 years later and lending has still nowhere near recovered, construction of houses is nowhere near back to pre-crisis levels, housing related retail activity remains depressed, unemployment remains high as a consequence, etc.

Somewhere around 85% of the UK economy has nothing to do with housing..... But as we saw in 2008 having 15% of your economy malfunctioning is enough to take the rest of it down too.

No wonder governments are motivated to ensure the housing market remains as healthy as possible.

But why does a healthy housing market have to mean hpi?

I would say a healthy housing market is the number of transactions and I don't see why there can't be a significant increase in the supply of housing unless they are fearful of house price falls, or what you're always concerned about Hamish in that they won't build what they can't sell which then obviously means they are overpriced.

HAMISH_MCTAVISH

shortchanged wrote: »

But why does a healthy housing market have to mean hpi?

A healthy housing market is one where there are no major blockages to building and buying/selling houses.

At the moment there are two major blockages in the UK.

1) Planning permission and S106 bribes

2) A lack of funds for mortgage lending and development finance

Both of these factors conspire to reduce transactions and construction and thus worsen the shortage that causes HPI, over the long term it's been mostly (1) but at the moment it's mostly (2).

Prices are high primarily because there's a shortage of housing.

You can't cure a housing shortage by rationing lending, you only make it worse, as we've seen.

shortchanged_2

HAMISH_MCTAVISH wrote: »

A healthy housing market is one where there are no major blockages to building and buying/selling houses.

At the moment there are two major blockages in the UK.

1) Planning permission and S106 bribes

2) A lack of funds for mortgage lending and development finance

Both of these factors conspire to reduce transactions and construction and thus worsen the shortage that causes HPI, over the long term it's been mostly (1) but at the moment it's mostly (2).

Prices are high primarily because there's a shortage of housing.

You can't cure a housing shortage by rationing lending, you only make it worse, as we've seen.

But there will always be some excuse for the lack of building Hamish.

As you are well aware there wasn't enough building going on even when the banks would have given a £100k mortgage to someone on unemployment benefit.

There is definitely a genuine lack of will in the UK to address the housing shortage from the highest level.