European Union - Ramifications

[sealtt]

Just to add a little to that: This is a long term threat to the global perception of Britain as a vault to invest in, park cash, etc. In my opinion this has a very big impact on UK real estate (notably prime) which is a highly desirable asset due to the strong, steady and reliably conservative legal and political framework the UK has long been famous for. With this undermined by a shock referendum result changing fundamental political ideology in effect, it becomes far, far less attractive than the move to AA would suggest for this particular type of asset.

Govvies won't be that affected I doubt, after all there's a lot of sterling that has to be put somewhere !!

[DonkeyApple]

sealtt said:

Just to add a little to that: This is a long term threat to the global perception of Britain as a vault to invest in, park cash, etc. In my opinion this has a very big impact on UK real estate (notably prime) which is a highly desirable asset due to the strong, steady and reliably conservative legal and political framework the UK has long been famous for. With this undermined by a shock referendum result changing fundamental political ideology in effect, it becomes far, far less attractive than the move to AA would suggest for this particular type of asset.

Govvies won't be that affected I doubt, after all there's a lot of sterling that has to be put somewhere !!

I agree. But from an ethical perspective, should we continue to allow overseas wealth to commoditise the residential housing market and increase the cost of living for all Britons, force them into ever deeper levels of debt and have fewer and fewer young people becoming home owners?

Overseas money should have been locked out of the residential market a decade ago to save the common man from financing this unecassary means of storing wealth, hiding wealth and laundering wealth through the asset inflation of excess capital. Like many I have personally benefitted enormously from this insane effect but many more have been punished and pushed into stupid levels of debt and our retail banks are carrying huge exposure as seen by their sell offs this week.

It's a personal bugbear of mine but I see no positive upside to the artificial wealth and excessive household leverage the allowance of investment wealth into the resi market has caused. If London comes off the boil and highly leveraged properties start to be reallocated to the less geared then frankly I have no issue with this. It is the fact that controlling such a change to not be extremely damaging that is the issue.

[NRS]

sealtt said:

Just to add a little to that: This is a long term threat to the global perception of Britain as a vault to invest in, park cash, etc. In my opinion this has a very big impact on UK real estate (notably prime) which is a highly desirable asset due to the strong, steady and reliably conservative legal and political framework the UK has long been famous for. With this undermined by a shock referendum result changing fundamental political ideology in effect, it becomes far, far less attractive than the move to AA would suggest for this particular type of asset.

Govvies won't be that affected I doubt, after all there's a lot of sterling that has to be put somewhere !!

Is that not a good thing for actual British people though? All that money invested in houses here does is make them more expensive for people wanting to live and work here. It will cause a lot of pain and collateral damage when/if it goes, but in terms of the long term benefits for British people affording places to live then it will likely be better in the long run.

[sealtt]

DonkeyApple said:

I agree. But from an ethical perspective, should we continue to allow overseas wealth to commoditise the residential housing market and increase the cost of living for all Britons, force them into ever deeper levels of debt and have fewer and fewer young people becoming home owners?

Overseas money should have been locked out of the residential market a decade ago to save the common man from financing this unecassary means of storing wealth, hiding wealth and laundering wealth through the asset inflation of excess capital. Like many I have personally benefitted enormously from this insane effect but many more have been punished and pushed into stupid levels of debt and our retail banks are carrying huge exposure as seen by their sell offs this week.

It's a personal bugbear of mine but I see no positive upside to the artificial wealth and excessive household leverage the allowance of investment wealth into the resi market has caused. If London comes off the boil and highly leveraged properties start to be reallocated to the less geared then frankly I have no issue with this. It is the fact that controlling such a change to not be extremely damaging that is the issue.

I have a big issue with the way the UK has handled overseas money - especially the dirty, EM money - unethical, to the public detriment overall and not at all how a modern, progressive, EU (oh..) country should operate.

However, the correction is just SO painful for so many. More rational minds would have started renting rather than buying when prices got too high, but easy credit, relatively weak tenant protection and the ingrained 'must buy' British mentality prevented that happening.

I hope that this alone is not going to be enough to change things drastically, especially not with the balancing effect of the £ weakening, however if I was in prime London (or places popular with Londoners who have cashed out), I would not really want to be long & (highly) leveraged right now if I could help it. The risk is certainly real the way things are going, but it will be heavily dependent on what happens next.

Going for actually policy changes to change things? Unimaginable step, so painful - though the same thing I'd have said a week ago about leaving the EU...

Edited by sealtt on Tuesday 28th June 00:08

[sealtt]

NRS said:

Is that not a good thing for actual British people though? All that money invested in houses here does is make them more expensive for people wanting to live and work here. It will cause a lot of pain and collateral damage when/if it goes, but in terms of the long term benefits for British people affording places to live then it will likely be better in the long run.

The problem is that the effect has spread so far & so fast - just think, UK guy buys a flat in London in 2000 for £200k, sells in 2015 for £800k. Retires and goes and spends it on a place in Dorset or the Cotswolds, seller then goes and spends that £800k in Kent to be closer to family, etc, etc. Suddenly prices are now huge compared to what they used to be, fine for the people holding all the equity, it's the people with the leverage trying to join in the game that end up exposed.

A cool down in the market will hurt a lot of people, liquidity is very expensive in the housing market, when demand dries up it can create real problems and big losses - unfortunately even for regular people just trying to live their lives who might not seem initially connected to London property.

[NRS]

sealtt said:

NRS said:

Is that not a good thing for actual British people though? All that money invested in houses here does is make them more expensive for people wanting to live and work here. It will cause a lot of pain and collateral damage when/if it goes, but in terms of the long term benefits for British people affording places to live then it will likely be better in the long run.

The problem is that the effect has spread so far & so fast - just think, UK guy buys a flat in London in 2000 for £200k, sells in 2015 for £800k. Retires and goes and spends it on a place in Dorset or the Cotswolds, seller then goes and spends that £800k in Kent to be closer to family, etc, etc. Suddenly prices are now huge compared to what they used to be, fine for the people holding all the equity, it's the people with the leverage trying to join in the game that end up exposed.

A cool down in the market will hurt a lot of people, liquidity is very expensive in the housing market, when demand dries up it can create real problems and big losses - unfortunately even for regular people just trying to live their lives who might not seem initially connected to London property.

I agree - it will be a lot of pain for a lot of people if/when a cool down happens and the ripple effects spread out. However I am more thinking in the longer term, which will help people benefit once the pain has been gone through. It will open up more chances for younger/poorer people, and give people more realistic targets to save up for. The irony is the younger people who complained they have been screwed by the oldies may benefit from house prices once it has worked it's way through and starts recovering.

[anonymous-user]

NRS said:

I agree - it will be a lot of pain for a lot of people if/when a cool down happens and the ripple effects spread out. However I am more thinking in the longer term, which will help people benefit once the pain has been gone through. It will open up more chances for younger/poorer people, and give people more realistic targets to save up for. The irony is the younger people who complained they have been screwed by the oldies may benefit from house prices once it has worked it's way through and starts recovering.

I agree. I don't enjoy the sort of wealth that some do but I'm far from poor and used to consider myself quite well off. However, I now find myself recognising the widening gap between rich and poor because it's become so extreme that it affects almost everyone under 50. Even in my own family I've seen close relatives buy one property after another to the point they have so much money they don't know what to do with it, so they buy more property. Meanwhile, your average, well educated person is forced to pay a high proportion of their income on rent and cannot afford to save for any sort of retirement. It's a disaster waiting to happen and should have been addressed a long time ago. Like popping a boil, it will hurt but our children will be better off as a result.

[walm]

DonkeyApple said:

A big question we were mulling over today is how keen hedge fund managers were on decimating their personal stores of wealth in the prime London property stakes. . Just how keen will they be to make their clients money when it's coming out of their own pockets?

Net worth is far more tilted to their funds, not RE.
I would estimate minimum 80:20. Their incentives are HUGELY aligned with their investors.

[DonkeyApple]

walm said:

DonkeyApple said:

A big question we were mulling over today is how keen hedge fund managers were on decimating their personal stores of wealth in the prime London property stakes. . Just how keen will they be to make their clients money when it's coming out of their own pockets?

Net worth is far more tilted to their funds, not RE.
I would estimate minimum 80:20. Their incentives are HUGELY aligned with their investors.

True. But we've not seen the usual volumes hitting the market on the sell offs which is what triggered our flippant conversation. An awful lot of significant people have an awful lot of wealth stored in London bricks and many have an awful lot of debt. The risk isn't going to be wholly ignored.

A more PH thought is whether the Brexit vote will transpire to be the shock that bursts the classic car market?

[Ozzie Osmond]

wormus said:

Like popping a boil, it will hurt but our children will be better off as a result.

Well, either that or,

• Recession
• Inflation, and
• Inability to leave UK and work freely in EU.

Time will tell.

[Ozzie Osmond]

DonkeyApple said:

A more PH thought is whether the Brexit vote will transpire to be the shock that bursts the classic car market?

I've got £50 that says ALL car sales in UK, new used and classic, will slow dramatically with immediate effect. Will be delighted if at 31 December I've lost the bet!

New TVR project? Hmmm. Could be interesting getting finance for that one.

In the immediate term I fear that both Brits and foreigners may pull down the shutters and stop spending/investing money in UK, with inevitable knock-on effects which slow the economy. The timeframe for exit negotiations is going to cause years of very damaging uncertainty IMO. Again, I shall be absolutely delighted if proved wrong!

[Simpo Two]

KimJongHealthy said:

So far we've got:

- £ record low
- promissed £350m for the NHS confirmed as not happening
- government in ruin
- announcement of raising taxes and cutting spending
- racist tts think they got green light to abuse people

Well done leavers. Well f**g done.

What's caused much of the damage is Cameron jumping ship rather than doing his job, Osbourne turning the kinfe to prove he was right, and a deafening silence from Boris & Co when leadership is most needed. I do wonder whether the Remainders at high level are delberately making things worse just to say 'I told you so' rather than getting on with patching up the ship.

[DonkeyApple]

KimJongHealthy said:

So far we've got:

- £ record low
- promissed £350m for the NHS confirmed as not happening
- government in ruin
- announcement of raising taxes and cutting spending
- racist tts think they got green light to abuse people



Well done leavers. Well f**g done.

Hmm.

- Nope. http://www.xe.com/currencycharts/?from=GBP&to=...
- Was never going to happen and anyone with a functioning IQ level knew that.
- Nope. Nowhere near ruin. Flux is the correct word.
- An announcement by a man who lied all the way up to the 23rd. Lied previously about PFI to get elected. Part of a Govt that lied about almost ever facet of their election manifesto. Why is he suddenly telling the truth for the first time in his career?
- Racist tw4ts are racist tw4ts and yes they do think they've been given a green light. How long will that last?

What we do have is a whole load of hysteria from people who simply still aren't thinking straight or are panicking because they've taken on too much debt to be shock resistant?

We've only just rolled the dice and while they are still rolling there is no real upside to running about lobbing abuse, distributing non truths and enhancing division.

What we know for sure is that there will be a pull back on GDP in the short term regardless of whether we actually end up leaving or not. The focus is on the long term and how to ensure growth after the uncertainty.

[walm]

DonkeyApple said:

What we know for sure is that there will be a pull back on GDP in the short term regardless of whether we actually end up leaving or not. The focus is on the long term and how to ensure growth after the uncertainty.

Absolutely.
Or, you know... we could have avoided all that by voting Remain.

I have done a lot of reading (perhaps not much understanding) and I am still utterly baffled as to what the intangible "upside" of the cost benefit analysis for a Brexiteer shows.

I get that it is at least in theory a vote for democracy and sovereignty but while that might give you some warm and fuzzy feeling is it really enough to offset years of uncertainty?
Was there something else?
Reducing immigration from 0.3% of the population per annum to 0.2% or 0.1%?? I mean... seriously?

OK perhaps it was just an anti-establishment vote. An "FU" to government... fair enough. Hardly rational but perhaps I understand that.

Yet I still have plenty of Brexit friends who think they have some logical explanation for what they did and I just don't see it.

Certainly not one that has much place in the Finance forum!

[Jockman]

walm said:

DonkeyApple said:

What we know for sure is that there will be a pull back on GDP in the short term regardless of whether we actually end up leaving or not. The focus is on the long term and how to ensure growth after the uncertainty.

Absolutely.
Or, you know... we could have avoided all that by voting Remain.

I have done a lot of reading (perhaps not much understanding) and I am still utterly baffled as to what the intangible "upside" of the cost benefit analysis for a Brexiteer shows.

I get that it is at least in theory a vote for democracy and sovereignty but while that might give you some warm and fuzzy feeling is it really enough to offset years of uncertainty?
Was there something else?
Reducing immigration from 0.3% of the population per annum to 0.2% or 0.1%?? I mean... seriously?

OK perhaps it was just an anti-establishment vote. An "FU" to government... fair enough. Hardly rational but perhaps I understand that.

Yet I still have plenty of Brexit friends who think they have some logical explanation for what they did and I just don't see it.

Certainly not one that has much place in the Finance forum!

Walm, you are a numbers guy. On a list of priorities, sovereignty and democracy are not high up. It's all about the numbers.

Many disagree with that.

[walm]

Jockman said:

Walm, you are a numbers guy. On a list of priorities, sovereignty and democracy are not high up. It's all about the numbers.

Many disagree with that.

Fair enough. That does seem to be the honest answer. And I can't argue with that.
I guess I just saw some trying to give a rational answer based on numbers too, which never made sense.

[Jockman]

walm said:

Jockman said:

Walm, you are a numbers guy. On a list of priorities, sovereignty and democracy are not high up. It's all about the numbers.

Many disagree with that.

Fair enough. That does seem to be the honest answer. And I can't argue with that.
I guess I just saw some trying to give a rational answer based on numbers too, which never made sense.

Indeed. Your financial analysis makes sense even though our old mate sidicks gives you a good grilling.

It was never about the money for me. Nor was it about immigration (being a Jock living in a part of England founded on immigration).

FTSE is up today, though

[NRS]

It is hard to sort out the actual sums, but it would be along the lines of:

• We (maybe) don't have to give as much money to the EU to be a member of the club
• We would benefit if it did come to tariffs, since we import more from the EU than they do from us. So the cost of tariffs is in our benefit.
• We can get our fishing grounds back, instead of giving the majority of the fishing quota to other countries. They don't give us their farmland, so why should we give our fishing grounds away? This has destroyed a lot of the coastal communities.
• We don't have to bail out poor economies when generally the UK is much stronger than a lot of the other EU countries.
• We can act more quality and do what is best for the UK, rather than leaving stuff up to a big body which isn't oriented around what is best for the UK, and as a bigger body is slow to act. Look at Iceland recovery for example.
• Less migrants = higher salary for people in the UK due to less competiton for jobs (potential for poorer people in particular to benefit)
• Less money coming in from other countries to push UK house prices up (both investment and migrants). Lower house prices will mean more British people can own homes and have less debt/ it's a more affordable debt to salary ratio.

Obviously there are some disadvantages, but who knows how they balance out in practice (a lot will also depend on the agreements negotiated when leaving).

The people voting of numbers are more likely thinking of the possibilities within 5-10+ years, not the short term 5 years or less.

Edited by NRS on Tuesday 28th June 11:54

[DonkeyApple]

walm said:

DonkeyApple said:

What we know for sure is that there will be a pull back on GDP in the short term regardless of whether we actually end up leaving or not. The focus is on the long term and how to ensure growth after the uncertainty.

Absolutely.
Or, you know... we could have avoided all that by voting Remain.

I have done a lot of reading (perhaps not much understanding) and I am still utterly baffled as to what the intangible "upside" of the cost benefit analysis for a Brexiteer shows.

I get that it is at least in theory a vote for democracy and sovereignty but while that might give you some warm and fuzzy feeling is it really enough to offset years of uncertainty?
Was there something else?
Reducing immigration from 0.3% of the population per annum to 0.2% or 0.1%?? I mean... seriously?

OK perhaps it was just an anti-establishment vote. An "FU" to government... fair enough. Hardly rational but perhaps I understand that.

Yet I still have plenty of Brexit friends who think they have some logical explanation for what they did and I just don't see it.

Certainly not one that has much place in the Finance forum!

Except 'avoid' isn't the correct term. Remain was about kicking the problem down the road to a time when the EU was stronger and in more of a position to force through terms that we know would have been unsavoury to the UK.

And I tend to agree that this was an anti-establishment vote but one that our establishment firmly has brought on themselves.

But a vote for remaining was to sentence the majority of the UK population to zero natural wage inflation in their lifetime and the hideous social ramifications of which we are only seeing a small amount of currently. That alone made voting remain impossible, even though it will almost certainly mean less money for me in the long run. I would rather have a little less money and live in a fairer society than remain as we are, with more money, but an ever sinking under class and deepening wealth and social divide.

[sealtt]

walm said:

Absolutely.
Or, you know... we could have avoided all that by voting Remain.

I have done a lot of reading (perhaps not much understanding) and I am still utterly baffled as to what the intangible "upside" of the cost benefit analysis for a Brexiteer shows.

I get that it is at least in theory a vote for democracy and sovereignty but while that might give you some warm and fuzzy feeling is it really enough to offset years of uncertainty?
Was there something else?
Reducing immigration from 0.3% of the population per annum to 0.2% or 0.1%?? I mean... seriously?

OK perhaps it was just an anti-establishment vote. An "FU" to government... fair enough. Hardly rational but perhaps I understand that.

Yet I still have plenty of Brexit friends who think they have some logical explanation for what they did and I just don't see it.

Certainly not one that has much place in the Finance forum!

It was a vote against something, but not really a vote for anything. The people weren't voting to say "I don't like the EU and I'd prefer XYZ", they were just voting to say I don't like the EU. But as we know, without a preferential, realistic and implementable alternative, then not liking the EU is pretty irrelevant.