Deflation - Inflation - Hyper Inflation & Interest Rates Questions?

garmeg

talexuser said:

garmeg said:

So companies were forced by the government to take contribution holidays.

Well that may have been the case, but was not what we were told at the time, as described in my post. In any case it was a disaster for the long term significantly reducing surpluses for future bad times.. 

i agree but those were the rules, sadly.

zagfles

garmeg said:

talexuser said:

I seem to remember large companies having "pension holidays" in the 80s for many years in a row, while the employees carried on contributing. The reasoning was that the pension fund was worth more than the company and a tasty bait for takeover. Then years later all of a sudden the pension was un-affordable and had to be first limited and then closed to new employees, then sold off. I also remember talks with younger employees about "opting out" and don't know any that turned out better off than myself on my final salary pension (private company, inflation linked). A similar thing happened with repayment mortgages and investment mortgages that promised a large surplus at termination which often turned out to be a large deficit.

Then markets fell, we got Gordon Brown and the rest is history.

Gordon Brown is also responsible for the biggest problem faced by the young today - high house prices. The really steep rise in prices occurred between 1997 and 2007. He started with good intentions, in his first budget in 1997 he promised not to let house prices get out of control. But he broke that promise spectacularly, partly due to the stupid target he set the BoE, an inflation measure that specifically excluded house prices. So the BoE ran monetary policy not caring about runaway house prices.

Then even through strong growth he kept borrowing, because he thought boom and bust had been abolished. Leaving a massive budget deficit when the penny dropped and the credit fuelled boom ran out, causing the biggest bust for decades, and massive debts to be paid off probably mostly by the young.

Ironic how the young think Labour is on their side

Another_Saver

zagfles said:

garmeg said:

talexuser said:

I seem to remember large companies having "pension holidays" in the 80s for many years in a row, while the employees carried on contributing. The reasoning was that the pension fund was worth more than the company and a tasty bait for takeover. Then years later all of a sudden the pension was un-affordable and had to be first limited and then closed to new employees, then sold off. I also remember talks with younger employees about "opting out" and don't know any that turned out better off than myself on my final salary pension (private company, inflation linked). A similar thing happened with repayment mortgages and investment mortgages that promised a large surplus at termination which often turned out to be a large deficit.

Then markets fell, we got Gordon Brown and the rest is history.

Gordon Brown is also responsible for the biggest problem faced by the young today - high house prices. The really steep rise in prices occurred between 1997 and 2007. He started with good intentions, in his first budget in 1997 he promised not to let house prices get out of control. But he broke that promise spectacularly, partly due to the stupid target he set the BoE, an inflation measure that specifically excluded house prices. So the BoE ran monetary policy not caring about runaway house prices.

Then even through strong growth he kept borrowing, because he thought boom and bust had been abolished. Leaving a massive budget deficit when the penny dropped and the credit fuelled boom ran out, causing the biggest bust for decades, and massive debts to be paid off probably mostly by the young.

Ironic how the young think Labour is on their side

Ok chill, Jesus this turned from a debate into an argument fast

garmeg

Another_Saver said:

zagfles said:

garmeg said:

talexuser said:

I seem to remember large companies having "pension holidays" in the 80s for many years in a row, while the employees carried on contributing. The reasoning was that the pension fund was worth more than the company and a tasty bait for takeover. Then years later all of a sudden the pension was un-affordable and had to be first limited and then closed to new employees, then sold off. I also remember talks with younger employees about "opting out" and don't know any that turned out better off than myself on my final salary pension (private company, inflation linked). A similar thing happened with repayment mortgages and investment mortgages that promised a large surplus at termination which often turned out to be a large deficit.

Then markets fell, we got Gordon Brown and the rest is history.

Gordon Brown is also responsible for the biggest problem faced by the young today - high house prices. The really steep rise in prices occurred between 1997 and 2007. He started with good intentions, in his first budget in 1997 he promised not to let house prices get out of control. But he broke that promise spectacularly, partly due to the stupid target he set the BoE, an inflation measure that specifically excluded house prices. So the BoE ran monetary policy not caring about runaway house prices.

Then even through strong growth he kept borrowing, because he thought boom and bust had been abolished. Leaving a massive budget deficit when the penny dropped and the credit fuelled boom ran out, causing the biggest bust for decades, and massive debts to be paid off probably mostly by the young.

Ironic how the young think Labour is on their side

Ok chill, Jesus this turned from a debate into an argument fast

Not much arguing here that i can see.

zagfles

garmeg said:

Another_Saver said:

zagfles said:

garmeg said:

talexuser said:

I seem to remember large companies having "pension holidays" in the 80s for many years in a row, while the employees carried on contributing. The reasoning was that the pension fund was worth more than the company and a tasty bait for takeover. Then years later all of a sudden the pension was un-affordable and had to be first limited and then closed to new employees, then sold off. I also remember talks with younger employees about "opting out" and don't know any that turned out better off than myself on my final salary pension (private company, inflation linked). A similar thing happened with repayment mortgages and investment mortgages that promised a large surplus at termination which often turned out to be a large deficit.

Then markets fell, we got Gordon Brown and the rest is history.

Gordon Brown is also responsible for the biggest problem faced by the young today - high house prices. The really steep rise in prices occurred between 1997 and 2007. He started with good intentions, in his first budget in 1997 he promised not to let house prices get out of control. But he broke that promise spectacularly, partly due to the stupid target he set the BoE, an inflation measure that specifically excluded house prices. So the BoE ran monetary policy not caring about runaway house prices.

Then even through strong growth he kept borrowing, because he thought boom and bust had been abolished. Leaving a massive budget deficit when the penny dropped and the credit fuelled boom ran out, causing the biggest bust for decades, and massive debts to be paid off probably mostly by the young.

Ironic how the young think Labour is on their side

Ok chill, Jesus this turned from a debate into an argument fast

Not much arguing here that i can see.

Indeed - just a good debate! But almost bedtime, us old people need our sleep.

itwasntme001

zagfles said:

garmeg said:

talexuser said:

I seem to remember large companies having "pension holidays" in the 80s for many years in a row, while the employees carried on contributing. The reasoning was that the pension fund was worth more than the company and a tasty bait for takeover. Then years later all of a sudden the pension was un-affordable and had to be first limited and then closed to new employees, then sold off. I also remember talks with younger employees about "opting out" and don't know any that turned out better off than myself on my final salary pension (private company, inflation linked). A similar thing happened with repayment mortgages and investment mortgages that promised a large surplus at termination which often turned out to be a large deficit.

Then markets fell, we got Gordon Brown and the rest is history.

Gordon Brown is also responsible for the biggest problem faced by the young today - high house prices. The really steep rise in prices occurred between 1997 and 2007. He started with good intentions, in his first budget in 1997 he promised not to let house prices get out of control. But he broke that promise spectacularly, partly due to the stupid target he set the BoE, an inflation measure that specifically excluded house prices. So the BoE ran monetary policy not caring about runaway house prices.

Then even through strong growth he kept borrowing, because he thought boom and bust had been abolished. Leaving a massive budget deficit when the penny dropped and the credit fuelled boom ran out, causing the biggest bust for decades, and massive debts to be paid off probably mostly by the young.

Ironic how the young think Labour is on their side

It wasn't just interest rates, it was immigration too.  Again Labour's fault with Blair's immigration policy.

Arguably immigration had a bigger impact.  When you have low skilled immigration like we have had, you have massive fiscal support being provided to the immigrants in the form of schooling, healthcare, benefits etc and that helps provides demand for rentals (because immigrants have more money to spend on rents) which in turn drives demand from BTL landlords to buy up these properties.  This results in a boom in property prices generally, particularly in areas like London that saw massive inward immigration.

So a higher capital gains tax targetted at landlords (because they can not sell a fraction of a property) seems only fair and is essentially just give back on the massive fiscal support through immigration policy that underpinned much of their profits.

garmeg

zagfles said:

garmeg said:

Another_Saver said:

zagfles said:

garmeg said:

talexuser said:

I seem to remember large companies having "pension holidays" in the 80s for many years in a row, while the employees carried on contributing. The reasoning was that the pension fund was worth more than the company and a tasty bait for takeover. Then years later all of a sudden the pension was un-affordable and had to be first limited and then closed to new employees, then sold off. I also remember talks with younger employees about "opting out" and don't know any that turned out better off than myself on my final salary pension (private company, inflation linked). A similar thing happened with repayment mortgages and investment mortgages that promised a large surplus at termination which often turned out to be a large deficit.

Then markets fell, we got Gordon Brown and the rest is history.

Gordon Brown is also responsible for the biggest problem faced by the young today - high house prices. The really steep rise in prices occurred between 1997 and 2007. He started with good intentions, in his first budget in 1997 he promised not to let house prices get out of control. But he broke that promise spectacularly, partly due to the stupid target he set the BoE, an inflation measure that specifically excluded house prices. So the BoE ran monetary policy not caring about runaway house prices.

Then even through strong growth he kept borrowing, because he thought boom and bust had been abolished. Leaving a massive budget deficit when the penny dropped and the credit fuelled boom ran out, causing the biggest bust for decades, and massive debts to be paid off probably mostly by the young.

Ironic how the young think Labour is on their side

Ok chill, Jesus this turned from a debate into an argument fast

Not much arguing here that i can see.

Indeed - just a good debate! But almost bedtime, us old people need our sleep.

I'm sure you aren't old.

Now, where did I leave my dentures ...

zagfles

itwasntme001 said:

zagfles said:

garmeg said:

talexuser said:

I seem to remember large companies having "pension holidays" in the 80s for many years in a row, while the employees carried on contributing. The reasoning was that the pension fund was worth more than the company and a tasty bait for takeover. Then years later all of a sudden the pension was un-affordable and had to be first limited and then closed to new employees, then sold off. I also remember talks with younger employees about "opting out" and don't know any that turned out better off than myself on my final salary pension (private company, inflation linked). A similar thing happened with repayment mortgages and investment mortgages that promised a large surplus at termination which often turned out to be a large deficit.

Then markets fell, we got Gordon Brown and the rest is history.

Gordon Brown is also responsible for the biggest problem faced by the young today - high house prices. The really steep rise in prices occurred between 1997 and 2007. He started with good intentions, in his first budget in 1997 he promised not to let house prices get out of control. But he broke that promise spectacularly, partly due to the stupid target he set the BoE, an inflation measure that specifically excluded house prices. So the BoE ran monetary policy not caring about runaway house prices.

Then even through strong growth he kept borrowing, because he thought boom and bust had been abolished. Leaving a massive budget deficit when the penny dropped and the credit fuelled boom ran out, causing the biggest bust for decades, and massive debts to be paid off probably mostly by the young.

Ironic how the young think Labour is on their side

It wasn't just interest rates, it was immigration too.  Again Labour's fault with Blair's immigration policy.

Arguably immigration had a bigger impact.  When you have low skilled immigration like we have had, you have massive fiscal support being provided to the immigrants in the form of schooling, healthcare, benefits etc and that helps provides demand for rentals (because immigrants have more money to spend on rents) which in turn drives demand from BTL landlords to buy up these properties.  This results in a boom in property prices generally, particularly in areas like London that saw massive inward immigration.

So a higher capital gains tax targetted at landlords (because they can not sell a fraction of a property) seems only fair and is essentially just give back on the massive fiscal support through immigration policy that underpinned much of their profits.

Immigration isn't to blame, the increased housing demand over the last few decades wasn't fuelled by increased population, the housing stock has risen much faster than population. Population in 1970 was about 55.6 million, in 2010 about 62.8 million. A 13% increase. Housing stock in 1970 was about 18 million, in 2010 about 26 million. A 44% increase.

It was fuelled by a big decrease in the amount of people per property, and that was more amongst the existing population, not immigrants who generally live more densely. There was/is an issue in London with mega rich foreigners buying London property as a sort of safe haven for their wealth, driving prices up.

There was this attitude that you should buy property as soon as you can, and you should buy the biggest/most expensive property you can afford, because it's a "good investment". There was a stigma about still living with your Mum in your 20's.

So this fed not only into people buying as soon as they could afford, and buying bigger houses than they needed, but also buying second properties, buying BTLs etc. Demand was not been fed by need, but by investment potential.

Yes high CGT on housing profits should have been implemented ages ago, also on owner occupied gains with a roll forwards allowance - so if you make a gain on your first house, sell it and buy a more expensive second house, you can roll forwards to the gain to the new house, so you never pay CGT until you actually realise your gain by eg moving downmarket, abroad etc. 

(At least the Tories have done something about all this, like having higher stamp duty for second homes, higher CGT for property, and restricting tax relief on BTL mortgages. Too little too late, but more than Labour ever did while they were watching prices skyrocket on their watch...ironic that lots of people still seem to be believe tired old stereotypes that the Tories are on the side of the owning classes...)

Another_Saver

I think higher skilled immigration has had more of an effect. On aggregate immigration is just a cheaper means of population growth which is a component of economic growth - you don't need the mat leave, midwife, education, vaccinations and expense of one adult FTE taken out of the workforce to raise them. Immigrants naturally tend to be ambitious, from a higher than average socioeconomic background, more highly educated, a mobile and flexible workforce, than the average British resident - otherwise they wouldn't be able to, be able to afford to, or want to migrate to the UK. They're also younger, mostly in the "young workers" age bracket of 20-40 where, so help balance Boomer demographics, and more fertile, boosting that same effect.
The benefits of the low-skilled migrant population are a lower cost of living for consumers.
This is great for the aggregate economy but I worry that relatively fast concentration in higher end human capital has had a push down effect on career opportunities and wages below those top end professions, and that because change has happened faster than through natural population and human capital growth (education/training) the wider economy is still figuring out how to adjust to it behaviourially.
But the idea that immigration is the cause of any of the country's present problems isn't something I buy into. If governments had invested the marginal tax revenues in the extra infrastructure needed to accommodate a growing population, immigration would not have been created into a political issue.

Uxb1

The Tories can afford to tax the owning classes as because they know that those taxed have nowhere else to go to vote - these people are not likely to be voting labour!
Meanwhile as others have said they have reduced the tax on income so those in the lower income earning bracket (ie typically labour voters) will benefit...so the Tories hope to benefit from this.
It's a sort of reverse psychology, each party needs the votes of those other than their core supporters and to do this they need to appeal to those not really likely to vote for them. Tony Blair likewise did this by becoming Tory-lite to get the right wing/capitalist vote to vote for a labour administration.
A roll forward CGT regime on owner occupied property comes a cropper when as is often the final property is sold to pay for the occupants end of life care. By the time the CGT is paid on all the roll up's HMG is going to end up paying the bill for the care as the amount left for the resident is not a lot.
 There is a proposal from the office of tax "simplification"  to remove the rebasing of CGT upon death so the new owner/inheritor of the asset, share/house/car, art work whatever pays CGT not from the value at which they were given it in the will but at the value from when the deceased bought it.  Quite how this is classed as "simplification" escapes me as the new owner would need to know the price paid and quite how legitimate deductible expenses at purchase incurred back then by the now deceased would even be known much less how they would be accounted for.
Anyway this is an interesting thread to read and learn