Are the eternal optimists on here still feeling optimistic?

cepheus

shortchanged wrote: »

http://www.bbc.co.uk/news/business-29566009

With the global recovery looking ever more shaky are the regular band of optimists on here still positive about the economic outlook for the UK?

What positives can we take from this new (sorry, predictable) looming financial crisis?

after it happens, perhaps, we will be forced to tame the power of the financial industry once and for all, and we can return to a more equitable stable world where money flows into ventures which do useful stuff?

as the IMF rightly pointed out, the money has not gone into economic risk-taking but into financial risk-taking. Animal spirits of entrepreneurs have remained weak but asset prices have been strong. Tighter controls on banks have been accompanied by the emergence of a powerful and largely unchecked shadow banking system. Investors have been piling into all sorts of dodgy-looking schemes, just as they did pre-2007. Recovery, such as it is, is once again reliant on rising debt levels. Central bankers know this but also know that jacking up interest rates to would push their economies back into recession. They cross their fingers and hope for the best.

Meanwhile, the legacy of the slump has been high levels of unemployment and growing inequality. In those economies where jobs have been created, such as the UK, they have tended to be of the low pay, low skill and low productivity variety. Profits have recovered; real incomes have not...........

Similarly, the IMF is alert to the threat of another financial crisis. It knows that much of the cash created by central banks has found its way, via the shadow banking system, into emerging markets and developing countries. It knows that investors are complacent about the risks. It knows that in a rush for the exit, many of these investors would be badly burned.

There is, though, no mechanism for regulating these financial flows, just as there is no mechanism for dealing with countries when they go bus

http://www.theguardian.com/business/2014/oct/12/world-leaders-war-games-financial-crisis

N1AK

HAMISH_MCTAVISH wrote: »

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

Which in itself emphasises that house prices aren't the issue. Ultimately I'd define a 'healthy housing market' as one in which property is available to those who need it at a reasonable price. Encouraging more and more lending leads to excessive prices and does nothing to address the major limiting factors that are restricting house building.

CLAPTON

shortchanged wrote: »

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.

virtually every country in the world (even those with evil banking systems like ours) manage to build more houses per capita per year than we do.

They all benefit from not having a mad planning system;
until it's changed then yes, there will always be an 'excuse' for lack of building

Minrich

The UK is an island and overcrowding of it is a huge concern . Those that build more than us are nowhere near as overcrowded . Continued building of houses is not required (social housing , yes) , a control of our population is more important .

HAMISH_MCTAVISH

N1AK wrote: »

Encouraging more and more lending leads to excessive prices and does nothing to address the major limiting factors that are restricting house building.

Not enough lending is one of the major limiting factors that are restricting house building, in fact since 2008 it's been a bigger factor than planning.

The issue with planning and S106 is a longer term problem, but it's not been the major issue since 2008.

HAMISH_MCTAVISH

shortchanged wrote: »

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

There was nearly twice as much building before the credit crunch as there was in it's aftermath.

Credit restrictions post-2008 caused building to fall to 100 year lows.

You cannot cure a housing shortage with mortgage rationing.

mayonnaise

HAMISH_MCTAVISH wrote: »

There was nearly twice as much building before the credit crunch as there was in it's aftermath.

Oh no, Hamish has attended the Devonian School of Grammar! :eek:

As to the OP; yes, I feel very optimistic. Always have, always will.

mobfant

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.

'scuse my ignorance, but what's the issue with S106?

Thrugelmir

cepheus wrote: »

Meanwhile, the legacy of the slump has been high levels of unemployment

Then the writer of the article has never experienced a recession. Mind you if they are under 40 then all they've known is years of boom and a little minor inconvenience.

HAMISH_MCTAVISH

mobfant wrote: »

'scuse my ignorance, but what's the issue with S106?

In theory, where used to genuinely create infrastructure for large developments, not much.

But it has acted as a significant disincentive for small and self builders, as it can add fees running often into tens of thousands of pounds that are entirely disproportionate to the project.