Europe heading into recession
Discussion
TriumphStag3.0V8 said:
Penelope Stopit said:
Thank you for confirming that I am still of good mind
So, what do you and your good mind plan to do for the millions of families with mortgages whilst you are busy reducing house prices? Do you expect those mortgages to magically dissapear?We need a prolonged slow down, not a crash.
Penelope Stopit said:
stuckmojo said:
Penelope Stopit said:
Surely if a person isn't paying as much for a property that person will have more cash. Am I missing something?
Actually, you're spot on. It's just a very very hard thing to get through to most people that bubble level real estate prices make everyone poorer except for those with plenty of equity and about to exit the market forever. Of which there's very few. As said we do not need a massive crash/reset of house prices, it needs to slow or stop and pressure put on wages to catch up.
We also need to make credit for crap (tvs/phones/holidays ect) almost impossible to get.
Terminator X said:
So basically all the countries remain fooked 10 years later but all / most of the Banks are doing fine!
TX.
Banks were bailed out with public money. The new Italian government swore they would never do this - saddle the country with debt incurred by broken banks - but then, only last week, has done the very same.TX.
smifffymoto said:
Is it coincidence that QE was stopped a month or 2 ago,now there is talk of a recession.
It has happened very quickly if so.
The recession we should have had in 2008 was delayed because of lowering interest rates to 0.5% and QE printing of hundreds of billions of pounds. This caused an asset bubble with houses and classic cars as people with money wanted to invest in assets as they were getting little interest for their money. It has happened very quickly if so.
This also got more people addicted to cheap credit as the interest rates were so low and more and more people think of things as a monthly cost, rather than a total lifetime cost. Just like a junkie, it is going to be very difficult for the government to turn off, or even reduce the supply.
This whole "got to have it now" consumerism is a relatively new thing, 20 years ago nobody I knew would even think about buying a brand new car. These days it seems to be the norm to lease/PCP a brand new car and just change it for a new one every 2/3 years.
I think the answer is pretty simple, keep interest rates low and keep printing the cash and worry about it another day. The national debt is meaningless now, it is purely a pointless number in a spreadsheet.
PositronicRay said:
TriumphStag3.0V8 said:
Penelope Stopit said:
Thank you for confirming that I am still of good mind
So, what do you and your good mind plan to do for the millions of families with mortgages whilst you are busy reducing house prices? Do you expect those mortgages to magically dissapear?We need a prolonged slow down, not a crash.
CzechItOut said:
Given that the Bank of England now own around a quarter of Government bonds, does the taxpayer still have to pay interest on those bonds and if so where does that money go?
https://www.bankofengland.co.uk/markets/the-sterling-bond-portfolioAt least we have a definite market for at least 70% of our bonds. No idea who's bold enough to step into the breach for Italy with the ECB out of the running.
https://www.reuters.com/article/us-italy-markets-b...
Thankyou4calling said:
I really don’t think demand for housing exceeds supply at all.
I know demand for houses at cheaper prices than advertised exceeeds supply but that’s different.
Look on rightmove and you’ll see the supply, it’s massive! And there aren’t many buying.
Working in property (investment and development) tells me otherwise.I know demand for houses at cheaper prices than advertised exceeeds supply but that’s different.
Look on rightmove and you’ll see the supply, it’s massive! And there aren’t many buying.
Rovinghawk said:
If supply can't be addressed then surely methods to reduce demand should be considered.
I agree, but that's a very difficult one to pull off, especially in metropolitan areas where employment, amenity and so in is concentrated. Decentralisation can help but that creates as many problems as it solves and generally moves from one high demand/high cost centre to a slightly lower demand/lower cost centre and can then distort that market.As long as we as a nation are disproportionately wedded to the "home ownership as an investment" ethos then I don't see an easy fix. We are a small crowded island with a relatively small number of urban concentrations there is no easy answer. We also have a large amount of land that is effectively useless for anything other than sheep and walking.
tannhauser said:
PositronicRay said:
TriumphStag3.0V8 said:
Penelope Stopit said:
Thank you for confirming that I am still of good mind
So, what do you and your good mind plan to do for the millions of families with mortgages whilst you are busy reducing house prices? Do you expect those mortgages to magically dissapear?We need a prolonged slow down, not a crash.
Joey Deacon said:
smifffymoto said:
Is it coincidence that QE was stopped a month or 2 ago,now there is talk of a recession.
It has happened very quickly if so.
The recession we should have had in 2008 was delayed because of lowering interest rates to 0.5% and QE printing of hundreds of billions of pounds. This caused an asset bubble with houses and classic cars as people with money wanted to invest in assets as they were getting little interest for their money. It has happened very quickly if so.
This also got more people addicted to cheap credit as the interest rates were so low and more and more people think of things as a monthly cost, rather than a total lifetime cost. Just like a junkie, it is going to be very difficult for the government to turn off, or even reduce the supply.
This whole "got to have it now" consumerism is a relatively new thing, 20 years ago nobody I knew would even think about buying a brand new car. These days it seems to be the norm to lease/PCP a brand new car and just change it for a new one every 2/3 years.
I think the answer is pretty simple, keep interest rates low and keep printing the cash and worry about it another day. The national debt is meaningless now, it is purely a pointless number in a spreadsheet.
garyhun said:
The house buyer, yes. However Vanden was referring to the existing house owners and people working in the industry that builds and services houses.
And also consider that most of the housing stock is owned by *someone* and most of those people will have mortgages. Edited by garyhun on Monday 14th January 10:41
Suddenly reducing the value of people's existing homes reduces their wealth, doesn't do anything to reduce their debt or outgoings, therefore makes them feel poorer which in turn makes them tighten their belts, meaning that they will spend less.
Bringing into the market a slew of cheap houses will reduce the "value" of those in existence having the effect described above. So, sadly you cannot just reduce house prices and have that magically fix the problem by people having more money to spend, because they won't!
I do agree that house prices are too high and I despair for youngsters trying to get on the ladder today, but just halving (for example) house prices is not some magic solution and will cause more issues than it solves.
Penelope Stopit said:
Surely if a person isn't paying as much for a property that person will have more cash. Am I missing something?
Yes. You're missing how we are supposed to get there and the effect that will have on the cash said person has to spend. House price drop = recession = less cash. House prices aren't here by magic. They're here because enough people are prepared to pay these prices and have ''less cash''. That being the case even if you engineer a recession and get them lower they will recover as we see every time.garyhun said:
Penelope Stopit said:
Vanden Saab said:
I didn't suggest that house prices were at a sensible level only that reducing them would not leave people with more cash to spend...
Surely if a person isn't paying as much for a property that person will have more cash. Am I missing something?Some people will have to lose a little money for others to gain a little money until prices level out to what they should have been kept to in the first place
PositronicRay mentions that drastic action will cause problems and I agree with this yet do feel that it is tough luck on those that have suffered from greed and created the situation
People wanting to own a roof over their heads should not have been put into the situation of having to take out massive mortgages, the housing market in the UK and land prices are inhumane, for many years governments have failed the people, yet it is the people that pay their wages
Terminator X said:
So basically all the countries remain fooked 10 years later but all / most of the Banks are doing fine!
TX.
The banks are only doing fine because people haven't decided to take their investment/money out of them.TX.
I would think there aren't many banks that actually have a massive stash of notes sitting in a vault,their wealth is all digital data on chips.it doesn't really exist.
As for house prices crashing it's only a problem if you are selling.
If someone is in negative equity but intends to stay there until carried out in a box what's the issue?
What we need is local authorities to build more,most builders at the moment are private cos. and they aren't going to build if prices drop as they want max profit.
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