On the economy

molgrips – Member

I'm not sure the housing market has 'crashed' properly in historical terms. Still very very expensive compared to wages

Exactly. Still astronomical.

It started making its adjustment to sensibility back in 2008. But then Gordon decided he had to do 'The Right Thing' for 'Hardworking Families' and throw everything (up to and including a few hundred billion of freshly printed money) at the 'problem' of one of life's basic necessities becoming more affordable for normal people.

G.Brown April 2008 : "We've seen house prices rise by about 180% over the last 10 years and they have risen by about 18% over the last three years, so a 2.5% fall is something that is containable."

ARSEHOLE.

It started making its adjustment to sensibility back in 2008.

So the global financial crisis of 2007 onwards was just simply the market making "sensible adjustments" was it ?

It was nothing to do with people not being able to borrow/get mortgages that drove down house prices then ?

And you didn't like Gordon Brown trying to contain a 2.5% fall in house prices ? So obviously negative equity is a really great thing ? Specially for 'Hardworking Families' with 100% mortgages ?

Who you calling an "ARSEHOLE" btw ?

Yes, the crisis was caused by the market trying to discover value. On the global financial level this was financial derivatives, mortgage backed securities etc. which were thought to be AAA investment grade being discovered to be giant turds and their prices adjusting accordingly.

And yes, house prices adjusting downwards was caused by people not being able to borrow so much. That's how the housing market works – prices are driven by people's ability to borrow. Not being funny here but I'm not sure what you're getting at? Could you elaborate a bit?

I do understand the next bit though. You're evoking the dreaded bogeyman of -dun dun duuuun- Negative Equity. Oh noes! Can't have that, we must only let prices ratchet up, never back down lest someone's house be worth less than they paid for it!

Much better to have an entire generation priced out and living at the whim of Buy To Let landlords on 6 month ASTs instead (an invention of bastard Tories).

I was calling Gordon an arsehole. Who else?

Thanks BP – that answers everything. Globally, no should have interfered with market as it "adjusted prices accordingly" (although no one listened to your solution) People not being able to get mortgages, with all the effect of houses not being built despite the desperate shortage (the market says there's no shortage) is just absolutely fine. Sitting on negative equity is also absolutely fine. And finally we established who is an arsehole. Thank you 8)

😯

That's a very nice little tirade ernie, now would you like to take a deep breath and 'debate' the points I've made rather than spitting your dummy out?

Thankyou 8)

Bp – you're new around here I take it ? 😆

Sitting on negative equity is also absolutely fine.

Actually for most people, yes it is. Given current mortgage rates it's not as if it should be that hard to pay some of the mortgage off to get out of it.

😆 @ allthepies!

Don't blame as 1/3 of the country didn't vote

Don't blame as 1/3 of the country didn't vote

That 2/3 of the country DID vote is pretty remarkable IMO in this day and age!

Blair stayed in power for his second term when little more than 1/3 of the population turned out to vote iirc!

That's a very nice little tirade ernie, now would you like to take a deep breath and 'debate' the points I've made

I looked up the word "tirade" as it's a word I don't use very often – and after your comment I wasn't sure if I fully understood what it meant. Apparently your post ending "arsehole" in capital letters, fits the description much better than my post. Funny that.

And as allthepies asks – are you new around here ? Because that'll be a probable, "no" from me………I don't believe I really fancy debating anything with you. An intelligent guess should give you a clue where I stand. And I'm fine with leaving it at that. If you need any more help, I'll throw in the words "brutal market forces" and "the human needs of people". HTH

I'm sorry if I've robbed you of an opportunity to have a pointless "debate".

But although I won't promise anything, I'm happy for you to expand on your "points". Firstly you could explain why your views are so much at odds with the undisputed world champions of non-government intervention and laissez-faire economics – the Republican Party of the United States.

Because given the situation which you described, these dyed-in-the-wool disciples of the "the market always knows best", chose massive, mind boggling, government intervention as a solution. In fact they totally supported Gordon Brown's own solution.

Now of course had George Bush just been a punter in a mountain bike forum, and not US president, then I'm sure that he would have posted stuff very simular to you. Such is the special privilege of MTB forum economists………the right to say anything which takes their fancy, without worrying about the consequences.

Then you could perhaps explain why you are also at odds with the general consensus that deflation is even worst than inflation. When deflation occurs people stop buying, preferring instead to let prices fall. The more they fall, the more reluctant people are to buy. And left to the market, the prices can eventually crash uncontrollably – as confidence completely vanishes. No one, not even the Tories, described what was happening as a mere "bleep".

Maybe you could also explain why you appear to consider housing to be just simply another commodity. Despite the fact that not only can it represent someone's home, but also their investment. Why is it acceptable to leave ordinary people sitting on worthless investment (for which they owe money) facing repossession/homelessness, and unable to move ?

If you decide to take a deep breath and 'debate' the points, as apparently you would like to, I wouldn't hold your breath too long waiting for a response from me …..but then you never know 8)

Why is it acceptable to leave ordinary people sitting on worthless investment (for which they owe money) facing repossession/homelessness, and unable to move ?

Why should they be any more likely to be facing repossession/homelessness than if their house was worth a bit more?

Why is it acceptable for people not to be able to afford to buy a house?

I'm assuming here that you will still debate with me – not really that bothered if you're not interested.

not really that bothered if you're not interested

Now that hurt aracer……….you know how much I enjoy our little debates.

"Why should they be any more likely to be facing repossession/homelessness than if their house was worth a bit more? "

I refer you to the Tory created recession of the early 1990s.

That doesn't really answer the question, ernie. Negative equity, tick. Repossessions, tick. Definitely a correlation. But on the same basis global warming is caused by the decline in pirates.

The correlation between the decline in pirates and global warming has already been discounted – due to recent evidence of increased pirate activity. Try adding depressed housing market due to deflation to your things to tick. Also calling in bad, and getting worst, bad debt. What lender wants to be left with a worthless pile of bricks ?

The correlation between the decline in pirates and global warming has already been discounted – due to recent evidence of increased pirate activity.

Well that's why we just had such a cold winter.

I'll accept that calling in bad debt getting worse may have an effect, but are you really suggesting it would really be a significant cause of a significant amount of repossessions? Particularly when banks would appear to be calling in bad debt anyway.

Or indeed why it should be a problem for most people sitting on negative equity – the sense of doom which normally accompanies the idea that people might not have increased their theoretical worth this year you'd think negative equity was a disaster for everybody who was in it.

ernie_lynch
And as allthepies asks – are you new around here ? Because that'll be a probable, "no" from me………I don't believe I really fancy debating anything with you.

There’s a connection implied in that statement. You don’t fancy debating anything with me because I’ve been on this forum less time than you?

Right, you were here first, therefore you wouldn't deign to engage with me because your opinion automatically overrides mine. OK, I understand.

If you’ll allow me on your forum though, I will address your points, however worthless my opinions may be in the face of your 5 month longer forum membership.

ernie_lynch
An intelligent guess should give you a clue where I stand. And I'm fine with leaving it at that. If you need any more help, I'll throw in the words "brutal market forces" and "the human needs of people". HTH

Then you could perhaps explain why you are also at odds with the general consensus that deflation is even worst than inflation. When deflation occurs people stop buying, preferring instead to let prices fall. The more they fall, the more reluctant people are to buy. And left to the market, the prices can eventually crash uncontrollably – as confidence completely vanishes. No one, not even the Tories, described what was happening as a mere "bleep".

Yes, this works the same on the way up too. Rising prices plus greed fuel the anticipation of further price rises and it’s a self reinforcing loop. ‘Irrational exuberance’ Greenspan famously called it. Prices shoot up – a bubble. You seem quite content for "brutal market forces" to do their work, tripling the cost of "the human needs of the people" over 10 years on the upside of the bubble, but then we should do everything possible to stop it working the other way round at all and "the human needs of the people" returning to prices which they can actually afford. Quite odd. And also completely bonkers.

So you think the price of housing should incrementally ratchet up above the rate of general inflation and wage inflation and never, ever drop back. Extrapolating this to its logical conclusion, eventually the only way anyone will be able to have a house is if they were born early enough to already have one (bought way back when they were affordable) to leverage against, or they inherit or they are just extremely rich. Everyone else born too late can just rent forever from the property owning class, on an AST with 6 months maximum security of tenure. Yep, sounds positively socialist, like those Victorians, they had the right social structure eh?

I'm going to take a wild stab in the dark here and guess you personally already have a house, yes?

But no children?

ernie_lynch

Maybe you could also explain why you appear to consider housing to be just simply another commodity. Despite the fact that not only can it represent someone's home, but also their investment. Why is it acceptable to leave ordinary people sitting on worthless investment (for which they owe money) facing repossession/homelessness, and unable to move ?

Maybe you can explain why you think it’s good that shelter, one of life’s basic essentials should be used as a speculative gambling chip. I suppose it’s easy to see why people would want to, after Gordon Brown raided pensions, destroying people’s confidence in them as a way to provide for their old age. Why is it acceptable for young people to be mired in ever greater and greater debt just to put a roof over their heads, or be completely locked out of ever having their own secure home? Why do you think it is beneficial for the wider economy long term, for ever larger and larger proportions of people’s income to be swallowed up just on servicing debt?

Presumably you’re happy enough when fuel prices spike up because of speculation in oil futures? Furthermore, once it has shot up, it should never be allowed to drop back, in case oil speculators lose money on their investments?

How about food? Is it OK to use food as an investment, driving up and tripling the cost of food? Sure, eventually some people won’t be able to afford food at all and will starve, but that’s preferable to the price being allowed to drop back and having food speculators lose money on their investments, eh!

Let them eat cake

ernie_lynch

If you decide to take a deep breath and 'debate' the points, as apparently you would like to, I wouldn't hold your breath too long waiting for a response from me …..but then you never know

Come off it. We both know you’ll respond, and we both know why 😉