Europe heading into recession
Discussion
Joey Deacon said:
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.
I hope you are proven to be correct about this, perhaps this is why Greece keeps taking the money rather than jumping shipPenelope Stopit said:
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
...
Ok so now you've switched from people having more cash to spend to some people having more cash and some people having less. How do you propose to keep house prices at the level they ''should have been kept to'' and when was the first place? ...
TriumphStag3.0V8 said:
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.
TX.
Terminator X said:
TriumphStag3.0V8 said:
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 anonymous-user 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.
TX.
One big issue is lack of mobility, whether that’s through choice or necessity. If more people were able/willing to move then the problem certainly lessens.
fblm said:
KrazyIvan said:
All good and well for the 1st time buyer...
Except it isn't good for them either because a) we'd be in recession and b) banks will tighten lending criteria.It's a useful policy tool when price are in the process of overheating, but it becomes a significant disincentive to sell or move in any other market environment.
garyhun said:
There are many areas of the U.K. with unaffordable housing for the normal local person. But, it’s normally quite localised to the extent that you can avoid it with a small (3-5 mile) move of location.
One big issue is lack of mobility, whether that’s through choice or necessity. If more people were able/willing to move then the problem certainly lessens.
That's the key - although I would suggest that there is no lack of mobility it is almost always the unwillingness to move/travel/live elsewhere. Comes back to the current climate of want it all now. So an affordable property 1/2/3/4 miles away from where they really want to be wont be considered. One big issue is lack of mobility, whether that’s through choice or necessity. If more people were able/willing to move then the problem certainly lessens.
As you said its the unwillingness to be mobile despite mobility being one of the most affordable things to do ie car ownership/bike/motorbike.
I would imagine like most others there are areas I cant afford to live in - so I find a house and area you can. You save and have 2nd hand furniture, don't have expensive hols, you have 2 wages to pay for it etc.
fblm said:
Penelope Stopit said:
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
...
Ok so now you've switched from people having more cash to spend to some people having more cash and some people having less. How do you propose to keep house prices at the level they ''should have been kept to'' and when was the first place? ...
In answer to your question regarding house prices - If it was up to me I would have had all houses valued many years ago and made it law that they held that value and could not be sold above that value, I would not allow houses to be built for profit, i would have had house building teams in each council throughout the land building high quality houses at affordable prices, profiting by buying and selling properties would be non-existent
There would be no property ladder
Please bear in mind that I would have also made sure that the supply of electric and gas to households was carried out on a break even basis in the same way as I would have organised the uk postal and phone service
Penelope Stopit said:
fblm said:
Penelope Stopit said:
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
...
Ok so now you've switched from people having more cash to spend to some people having more cash and some people having less. How do you propose to keep house prices at the level they ''should have been kept to'' and when was the first place? ...
In answer to your question regarding house prices - If it was up to me I would have had all houses valued many years ago and made it law that they held that value and could not be sold above that value, I would not allow houses to be built for profit, i would have had house building teams in each council throughout the land building high quality houses at affordable prices, profiting by buying and selling properties would be non-existent
There would be no property ladder
Please bear in mind that I would have also made sure that the supply of electric and gas to households was carried out on a break even basis in the same way as I would have organised the uk postal and phone service
ETA, Penelope for governor, let's have a referendum to decide.
Edited by PositronicRay on Monday 14th January 15:16
New objective for BoE:
Target the highest level of house price deflation that people will fail to notice in the context of targeting the levels of general and wage inflation that maximise money illusion. For the next 20 years. (Or until something delivers a significant step-change in productivity ... like benevolent robot overlords deciding to keep us as pets.)
Target the highest level of house price deflation that people will fail to notice in the context of targeting the levels of general and wage inflation that maximise money illusion. For the next 20 years. (Or until something delivers a significant step-change in productivity ... like benevolent robot overlords deciding to keep us as pets.)
superlightr said:
garyhun said:
There are many areas of the U.K. with unaffordable housing for the normal local person. But, it’s normally quite localised to the extent that you can avoid it with a small (3-5 mile) move of location.
One big issue is lack of mobility, whether that’s through choice or necessity. If more people were able/willing to move then the problem certainly lessens.
That's the key - although I would suggest that there is no lack of mobility it is almost always the unwillingness to move/travel/live elsewhere. Comes back to the current climate of want it all now. So an affordable property 1/2/3/4 miles away from where they really want to be wont be considered. One big issue is lack of mobility, whether that’s through choice or necessity. If more people were able/willing to move then the problem certainly lessens.
As you said its the unwillingness to be mobile despite mobility being one of the most affordable things to do ie car ownership/bike/motorbike.
I would imagine like most others there are areas I cant afford to live in - so I find a house and area you can. You save and have 2nd hand furniture, don't have expensive hols, you have 2 wages to pay for it etc.
Penelope Stopit said:
No I haven't switched, I have inwardly digested a posters comments regarding those that would be paying for a property that was no longer worth what they had had a money lender buy it at
In answer to your question regarding house prices - If it was up to me I would have had all houses valued many years ago and made it law that they held that value and could not be sold above that value, I would not allow houses to be built for profit, i would have had house building teams in each council throughout the land building high quality houses at affordable prices, profiting by buying and selling properties would be non-existent
There would be no property ladder
Please bear in mind that I would have also made sure that the supply of electric and gas to households was carried out on a break even basis in the same way as I would have organised the uk postal and phone service
Are you sure you have thought this through?In answer to your question regarding house prices - If it was up to me I would have had all houses valued many years ago and made it law that they held that value and could not be sold above that value, I would not allow houses to be built for profit, i would have had house building teams in each council throughout the land building high quality houses at affordable prices, profiting by buying and selling properties would be non-existent
There would be no property ladder
Please bear in mind that I would have also made sure that the supply of electric and gas to households was carried out on a break even basis in the same way as I would have organised the uk postal and phone service
What you appear to be describing is a state mandated dormitory system?
Say in 1991 my house was valued between £88-120K (Band E). in the meantime they've added hundreds of new homes in the village, built a factory and there is a flight path overhead. Does my house stay the same price relative to all other houses in band E?
I mean my house actually is relatively speaking worth 'less' than the same house valued similarly in 1991 but located 15 miles down the road, in that it is now a less pleasant environ. But I would be able under your system to sell it for the same value? Why would someone buy my house if they can get the one down the road for the same value?
What about all the new houses? They've been built to your high quality affordable price mandate, as, well there is no incentive for private house builders to build anything bigger because 'profit' has been eliminated. They apparently have potentially more perceived 'value' as they are all high spec, as opposed to my slightly ailing 1960s build. I might do a bit of self improvement on it, but it would only be for the quality of living element I get out of living there, as I can't actually benefit from an increase in value and the resultant resale value.
In short order there would be no moves. The only supplier of housing would likely be the government. The only standards would be the 'high quality' affordable housing which I presume would become the gold standard. Ironically those awarded social housing would now be massively better off in relation to the rest of the lumpen populace as they would have literally profited a total freeze up in the commercial market and be living in 'gold standard' accommodation.
Long live the revolution!
Edited by Ridgemont on Monday 14th January 15:54
Terminator X said:
So basically all the countries remain fooked 10 years later but all / most of the Banks are doing fine!
TX.
But this isnt true at all. European banks have some of the worst capital buffers than their global peers. The EU proposes moving to lower capital standards way below those agreed by the BCBS and G20 via Basel accords. They need to keep the debt being churned out to keep economies tunning. When italy shats its pants, the banks are through their loss absorption buffers and potentially have their wholesale funding pulled and go to the wall ala Lehman.TX.
The problem the EU has is an over reliance on monetary policy (to stimulate consumer activity given poor wage inflation). This was uncontrolled and much of the cheap money ended up NOT in the EU economies but funding US banks. If Eurozone bank balance sheet is 300%+ of EU GDP, monetary policy faed on an epic scale.
Due to lower capital standards, leverage is about 40bps cheaper to create in a Eurozone bank than its US competitors. This price discrepency created a huge market arbitrage and EU banks rented their balance sheet outside the EU.
Fuethermore, the construct of Basel accords requires the banks to hold EU soverign debt, so you get private sector support of public sector debt binge. With very poor budget constriants, a Govt debt crisis could kill all Eurozone banks pretty quick. TARGET2, speeds this up.
The EU today is trying to take more control over member state budgets and tax levels, but this fiscal intervention is way too late (and France and Italy HAVE to tell them to do one). The EU zone come down from Monetary policy (the ECB will pay you 40bps to borrow money), will be like coming off crack. It will hurt, a lot.
Edited by stongle on Monday 14th January 15:56
Borghetto said:
Penelope, are you a member of momentum? Your time may be coming and we can all enjoy the spectacle of Corbyn and his gang really f#cking the economy.
Fortunately, they couldn't find their own arses with both hands, so the chance of them ever actually getting that far are (thankfully) slim.
PositronicRay said:
Penelope Stopit said:
fblm said:
Penelope Stopit said:
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
...
Ok so now you've switched from people having more cash to spend to some people having more cash and some people having less. How do you propose to keep house prices at the level they ''should have been kept to'' and when was the first place? ...
In answer to your question regarding house prices - If it was up to me I would have had all houses valued many years ago and made it law that they held that value and could not be sold above that value, I would not allow houses to be built for profit, i would have had house building teams in each council throughout the land building high quality houses at affordable prices, profiting by buying and selling properties would be non-existent
There would be no property ladder
Please bear in mind that I would have also made sure that the supply of electric and gas to households was carried out on a break even basis in the same way as I would have organised the uk postal and phone service
ETA, Penelope for governor, let's have a referendum to decide.
I know that communism doesnt seem to work
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