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cailin maith
14th November 2012, 16:07
This is the top headline on Google news.

Ok then, what's the solution.... How do we get out of this shitty situation.

Armchair economists please step forward with your answers.

I'm bored of the recession now.

BrilloPad
14th November 2012, 16:10
The problem is high debt. Which causes meagre growth. We get out of it via inflation.

I now await sas to come along and call me a cretin......

BlasterBates
14th November 2012, 16:12
We need to tighten our belts, luxuries such as second class travel will become a thing of the past.

AtW
14th November 2012, 16:13
Low taxes for those who actually pay them.

Labour camps for those who don't*.

* except pensioners, disabled and children.

Paddy
14th November 2012, 16:17
The problem is high debt. Which causes meagre growth. We get out of it via inflation.

I now await sas to come along and call me a cretin......

Nop. The same amount of money is in the world economy as before the recession.

The problem at the moment is with:-

The banks

The monopoly of multinational companies controlling resources.

Multinational companies fiddling taxes

Jobs being off-shored.


The recession will go on at leaset another ten years if the government fails to take appropriate action.

Austerity measures never got any country out of recession.

AtW
14th November 2012, 16:23
Nop. The same amount of money is in the world economy as before the recession.

The total amount of money is growing slowly but prices on almost everything grow much quicker.

BrilloPad
14th November 2012, 16:30
Jobs being off-shored.


For most of the last 1000 years East and West have had similar living standards. Its only been the last 200 years they diverged.

At some point they will equalize. And its good to end world poverty?

AtW
14th November 2012, 16:30
At some point they will equalize. And its good to end world poverty?

It's a lot cheaper to make everybody poor...

Lockhouse
14th November 2012, 16:31
First thing we need to do is regain control of our borders which means leaving the EU amongst other things.

OwlHoot
14th November 2012, 16:35
Nop. The same amount of money is in the world economy as before the recession.

The problem at the moment is with:-

The banks
The monopoly of multinational companies controlling resources.
Multinational companies fiddling taxes

all utter bollocks, but do go on believing what you want to believe.


Jobs being off-shored.

Nearer the mark - You can sum up the problem (for us) in one word, with 1001 manifestations, globalization.


The recession will go on at leaset another ten years if the government fails to take appropriate action.

Austerity measures never got any country out of recession.

If you're on a canal boat in a lock and someone opens a giant sluice gate into a second lock, much larger and with a much lower water level, the "appropriate action" is to hold on tight and realise you can do f*** all else until the water levels equalize.

alreadypacked
14th November 2012, 16:43
It's a Zen thing, everybody can't be rich at the same time.
Currently it's not our turn, maybe not be our turn for sometime.
Tighten your belts.

HTH

VectraMan
14th November 2012, 16:47
Austerity measures never got any country out of recession.

Bankruptcy never got any country out of recession either. Just ask the Greeks how confident they feel about their economy.

Robinho
14th November 2012, 16:52
Cut spending by at least 1/3rd
Possibly lower tax if possible
Slash regulations all over the board (particularly employment regs)
Abolish the BoE (money base to stay the same and the market to set interest rates)

SimonMac
14th November 2012, 16:53
Bankruptcy never got any country out of recession either. Just ask the Greeks how confident they feel about their economy.

Iceland don't seem to be doing to bad

Robinho
14th November 2012, 16:54
Quite.

What we need is a bloody good war. :smokin

Well it worked the last time.:eyes

No it didn't. The US didn't leave the great depression until 1947. The war simply masked the GDP figures.

DimPrawn
14th November 2012, 17:02
This is the top headline on Google news.

Ok then, what's the solution.... How do we get out of this tulipty situation.

Armchair economists please step forward with your answers.

I'm bored of the recession now.

Put the kettle on love, there's a good girl.

KentPhilip
14th November 2012, 18:46
Austerity measures never got any country out of recession.

That isn't the purpose of austerity.
Austerity in the short term is required to control government debt (i.e. repair the previous government's economic damage)
The recovery from recession won't start until this repair is complete.

AtW
14th November 2012, 18:56
Austerity is required to cut Govt expenditure - otherwise it would grow until there is no private sector left.

Robinho
14th November 2012, 19:11
The UK is ****ed because the composition of its productive output is based around spending money that isn't there, a quick glace at the trade deficit confirms this very nicely.

This is why anything other than austerity is so utterly utterly moronic. People want to spend money propping up an unsustainable economy in the hope that it will suddenly because sustainable.

Mass austerity is the only thing that can reshape the UK into a productive country. Anything else is simply kicking the can further down the road. People just have to accept that our quality of life is going to decline quite a bit.

Thanks Labour.

http://www.tutor2u.net/blog/files/biggest_trade_gap.gif

AtW
14th November 2012, 19:13
It's ironic that it was Labour that really more or less finished off British industry - they had the chance to undo the damage made by Thatcher, but they opted to pocket easy money from the City instead.

Robinho
14th November 2012, 19:19
I don't think Thatcher necessarily did damage. If you don't distort the economy through easy credit the country should find the natural balance of industry and services. Britain was over industrialised prior to her arrival.

ZARDOZ
14th November 2012, 20:44
Abolish the BoE (money base to stay the same and the market to MANIPULATE interest rates)

FTFY to reflect the Libor scam

darmstadt
14th November 2012, 21:57
First thing we need to do is regain control of our borders which means leaving the EU amongst other things.

Wrong. The UK does have control of it's borders as its not a signatory to the Schengen Treaty which means that everyone has to show their passport unlike most of the rest of the EU. Maybe it should embrace the EU fully instead of constantly criticising it therefore giving the UK more control or alternatively just become the 51st state!

BlasterBates
15th November 2012, 06:45
Actually the EU allows countries to do more or less what they like with their borders. Germany didn't allow anyone from Eastern Europe into Germany in after they joined the EU. I beleive the UK was the only Western EU member to allow unrestricted access. Incidentally Germany and France were very reluctant to allow Eastern European countries in, that was due to the UK lobbying for it.

This is the thing the Newspapers make a big thing of the EU being responsible for Poles taking peoples jobs in the UK. It was the UK that basically got Poland in there driven forecfully by John Major, followed up by Tony Blair and it was the UK that invited them all to come over and work there.

The Germans felt it was way too early so they barred them all from coming in.

mudskipper
15th November 2012, 06:56
We need a big "buy British" campaign, along with the support for manufacturing to make the goods to buy at a competitive price.

Jobs making stuff.
People spend the money buying stuff.

BlasterBates
15th November 2012, 07:06
bring back the Austin Princess....


:banana:

SupremeSpod
15th November 2012, 07:45
We need a big "buy British" campaign, along with the support for manufacturing to make the goods to buy at a competitive price.

Jobs making stuff.
People spend the money buying stuff.

Who have we got left who's skilled enough to make anything.

We've been de-skilled.

Mich the Tester
15th November 2012, 07:48
I'm bored of the recession now.

I'm starting to make the best of it; luxury cars are cheaper than ever, restaurants are offering good deals for the set menu and now that the rich babyboomers are getting too old to climb the stairs in their mansions, there are some very nice houses on the market at almost affordable prices. As long as you can stay in work, this recession thingummy can be OK. It is very boring to keep reading about it though.

cailin maith
15th November 2012, 08:48
I'm starting to make the best of it; luxury cars are cheaper than ever, restaurants are offering good deals for the set menu and now that the rich babyboomers are getting too old to climb the stairs in their mansions, there are some very nice houses on the market at almost affordable prices. As long as you can stay in work, this recession thingummy can be OK. It is very boring to keep reading about it though.

True enough...

It's boring reading about it and depressing :(


Mind you - I can't say I'm any the wiser as to a solution after reading all those posts. You lot can't agree on how to fix it.

RasputinDude
15th November 2012, 08:59
We need a big "buy British" campaign, along with the support for manufacturing to make the goods to buy at a competitive price.

Jobs making stuff.
People spend the money buying stuff.

The great British public would certainly NOT pay for goods manufactured in Britain. If we produced consumer electronics over here, there is no way in hell that we could afford to compete on price - our labour, energy and business costs are way too high.

We could match the quality, but not the price.

Paddy
15th November 2012, 09:10
I'm starting to make the best of it; luxury cars are cheaper than ever, restaurants are offering good deals for the set menu and now that the rich babyboomers are getting too old to climb the stairs in their mansions, there are some very nice houses on the market at almost affordable prices. As long as you can stay in work, this recession thingummy can be OK. It is very boring to keep reading about it though.

Short term you may benefit. Long term it is bad for everyone. In the last few months various friends have lost their business. One restaurant, one florist, one car showroom (established 30 years) one coffee shop.

OwlHoot
15th November 2012, 09:24
We need a big "buy British" campaign, along with the support for manufacturing to make the goods to buy at a competitive price.

Jobs making stuff.
People spend the money buying stuff.

It wouldn't work - Most people are cheapskates, and to be fair there are so many things that need buying, that almost everyone will always choose the cheapest tat they can find. Inevitably even tat would be more expensive if British made, given the tax rates and energy costs.

Scoobos
15th November 2012, 09:27
Cut spending by at least 1/3rd
Possibly lower tax if possible
Slash regulations all over the board (particularly employment regs)
Abolish the BoE (money base to stay the same and the market to set interest rates)

Or in other words, sell the population out to becoming little worker bees for no reason other than GDP, of which they see a very small fraction. Oh hold on, that's what we are doing by lifting restrictions on various EU workers from struggling countries, and bringing them in to work for a pittance.

Cheap labour, marginalising the local british workforce and compounding the recession in the name of quick bucks for the proportionate wealthy few.

Inequality of wealth is now growing worse than ever. It's not just the gap between the absolute bottom of the working class and the upper that is growing now, but its becoming a 2 class country - those at the very top and everyone else.

In my local paper (im in surrey at the moment) I'm reading about Middle class repossessions going through the roof.

Scoobos
15th November 2012, 09:28
It wouldn't work - Most people are cheapskates, and to be fair there are so many things that need buying, that almost everyone will always choose the cheapest tat they can find. Inevitably even tat would be more expensive if British made, given the tax rates and energy costs.

It works in Aus, but they have a special kind of "20 years ago in britain" attitude IMHO.

Mich the Tester
15th November 2012, 09:38
True enough...

It's boring reading about it and depressing :(


Mind you - I can't say I'm any the wiser as to a solution after reading all those posts. You lot can't agree on how to fix it.

Dunno either, but I think a lot of very large businesses need to become much less bureaucratic, quicker and more responsive to customers. Sounds pretty standard, but I think a lot of corporates have become as slow and stodgy as government organisations.

SupremeSpod
15th November 2012, 09:52
The great British public would certainly NOT pay for goods manufactured in Britain. If we produced consumer electronics over here, there is no way in hell that we could afford to compete on price - our labour, energy and business costs are way too high.

We could match the quality, but not the price.

The Raspberry Pi is now manufactured in South Wales at a plant owned by Sony. Production was moved from China and the price didn't increase... It can be done...

RasputinDude
15th November 2012, 09:52
I think that the best thing our politicians could do is stop being so hostile.

Our culture at the moment is hostile to business, it is hostile to entrepreneurship and it is hostile to self reliance. We are culturally hostile to 'the Rich' and to 'the Poor'.

Until we stop being so hostile to everything that isn't the way that we think it should be and start bigging up successful business, supporting entrepreneurs and lauding those who set out on their own to be independent risk takers; until we stop throwing rocks at 'the Rich' and degrading those who need financial support from the state for some reason or other, then I don't think we will get out the mire that we are in.

fckvwls
15th November 2012, 09:56
I think that the best thing our politicians could do is stop being so hostile.

Our culture at the moment is hostile to business, it is hostile to entrepreneurship and it is hostile to self reliance. We are culturally hostile to 'the Rich' and to 'the Poor'.

Until we stop being so hostile to everything that isn't the way that we think it should be and start bigging up successful business, supporting entrepreneurs and lauding those who set out on their own to be independent risk takers; until we stop throwing rocks at 'the Rich' and degrading those who need financial support from the state for some reason or other, then I don't think we will get out the mire that we are in.

Let's all hold hands, sing kumbaya, get high, shag a lot and love everyone. Sounds like the makings of an economic wonder plan. Do we have to include George Osborne though? :rolleyes:

DimPrawn
15th November 2012, 09:56
The actual answer is the previous growth and prosperity was an illusion based upon continuously borrowing from the future to pay for today, fractional reserve banking, ditching the gold standard so that money is not tied to value, etc.

There is no solution, this is the new paradigm.

So just enjoy what you have, party, have fun, smile, go out, travel, and stop worrying about it. You didn't cause the issue and you certainly won't solve it in your lifetime.

:happy

PS And whoever you vote for won't make the slightest bit of difference. They just want the credit bubble to pump up again.

RasputinDude
15th November 2012, 10:03
Let's all hold hands, sing kumbaya, get high, shag a lot and love everyone. Sounds like the makings of an economic wonder plan. Do we have to include George Osborne though? :rolleyes:

You can mock if you want, but what I mean is that there is very little confidence in the country at the moment. We've had four years of continuing bad news and people with no confidence don't start businesses, innovate, expand or try to improve themselves.

Mich the Tester
15th November 2012, 10:03
The actual answer is the previous growth and prosperity was an illusion based upon continuously borrowing from the future to pay for today, fractional reserve banking, ditching the gold standard so that money is not tied to value, etc.

There is no solution, this is the new paradigm.

So just enjoy what you have, party, have fun, smile, go out, travel, and stop worrying about it. You didn't cause the issue and you certainly won't solve it in your lifetime.

:happy

PS And whoever you vote for won't make the slightest bit of difference. They just want the credit bubble to pump up again.

WHS

lilelvis2000
15th November 2012, 10:25
Plenty of business opportunities in Spain running souvenir shops. I've already started looking for a place to rent.

My advice, get out! Soon (hopefully) the only thing left on the streets of the UK will be politicians on bicycles.

Robinho
15th November 2012, 10:39
Or in other words, sell the population out to becoming little worker bees for no reason other than GDP, of which they see a very small fraction. Oh hold on, that's what we are doing by lifting restrictions on various EU workers from struggling countries, and bringing them in to work for a pittance.

Cheap labour, marginalising the local british workforce and compounding the recession in the name of quick bucks for the proportionate wealthy few.

Inequality of wealth is now growing worse than ever. It's not just the gap between the absolute bottom of the working class and the upper that is growing now, but its becoming a 2 class country - those at the very top and everyone else.

In my local paper (im in surrey at the moment) I'm reading about Middle class repossessions going through the roof.

No, that's absolutely not what i said at all.

You seriously need to stop swallowing so many left-wing myths and cliches.

cailin maith
15th November 2012, 10:41
The actual answer is the previous growth and prosperity was an illusion based upon continuously borrowing from the future to pay for today, fractional reserve banking, ditching the gold standard so that money is not tied to value, etc.

There is no solution, this is the new paradigm.

So just enjoy what you have, party, have fun, smile, go out, travel, and stop worrying about it. You didn't cause the issue and you certainly won't solve it in your lifetime.

:happy

PS And whoever you vote for won't make the slightest bit of difference. They just want the credit bubble to pump up again.

Hmmmnn some sensible talk from the fishy one.

EternalOptimist
15th November 2012, 10:49
my dad used to warn me about borrowing and debt. I think he was right

there is a wise olde saying that he had, (or i may have just made up)

Borrow ye not, a pound nor a buck
less ye can hide your face, and run like fck




:rolleyes:

Robinho
15th November 2012, 10:51
People who don't' borrow in this day and age are the fools though unfortunately.

The government has made it stupid not to load yourself with debt.

EternalOptimist
15th November 2012, 10:53
People who don't' borrow in this day and age are the fools though unfortunately.

The government has made it stupid not to load yourself with debt.

we had this conversation last week.

I remain unconvinced



:rolleyes:

Mich the Tester
15th November 2012, 10:55
I remain unconvinced



:rolleyes:A lot of verbiage when 'BS' would do.

Robinho
15th November 2012, 10:56
A lot of verbiage when 'BS' would do.

Care to expand mich? (as if you could :laugh )

RasputinDude
15th November 2012, 10:58
People who don't' borrow in this day and age are the fools though unfortunately.

The government has made it stupid not to load yourself with debt.

Rubbish. The problem is that people in this day and age have exchanged their wages for debt and now they are trapped.

Mich the Tester
15th November 2012, 10:58
Care to expand mich? (as if you could :laugh )

Yes. Loading yourself with debt means you'll have to repay one way or the other.

Mich the Tester
15th November 2012, 10:58
Rubbish. The problem is that people in this day and age have exchanged their wages for debt and now they are trapped.

WHS

Robinho
15th November 2012, 10:59
Yes. Loading yourself with debt means you'll have to repay one way or the other.

But we effectively have negative interest rates.

sasguru
15th November 2012, 11:00
... ditching the gold standard so that money is not tied to value, etc.


Europe had the gold standard for centuries. That period was known as the Dark Ages.
Gold has no intrinsic value, it's just a shiny, pretty useless metal.

You and that other cretin, Robby, always amuse me with your recycling of poorly understood ekconomik cliches.

Why don't you educate yourselves by doing some reading instead of spouting whatever bullcrap that springs unbidden and unwanted from your ignorant noggins?

:rollin::rollin:

HTH.

DimPrawn
15th November 2012, 11:02
Europe had the gold standard for centuries. That period was known as the Dark Ages.
Gold has no intrinsic value, it's just a shiny, pretty useless metal.

You and that other cretin, Robby, always amuse me with your recycling of poorly understood ekconomik cliches.

Why don't you educate yourselves by doing some reading instead of spouting whatever bullcrap that springs unbidden and unwanted from your ignorant noggins?

:rollin::rollin:

HTH.

No, I spend my time making money from "worthless" gold, spending it having a great time, and generally having a great life.

You?

:laugh

Robinho
15th November 2012, 11:03
Yes SAS, the industrial age was a dark age for economic progress. :laugh

Mich the Tester
15th November 2012, 11:03
But we effectively have negative interest rates.

Maybe, right now, but you don't know what those interest rates will be in a year's time. Having debt exposes you to risks of higher interest rates, having savings exposes you to risks of lower interest rates or higher inflation. But while the debt remains repayable your savings belong to you; you might lose your savings, but then you've lost what you could apparently miss. Even if inflation makes your debt smaller in relation to your income, you still have to repay it, so you can't claim to make a net gain.. You can only do that if you use the loan to buy something which increases in value or provides a reliable return, which is speculative; that's fine for some people, but not for me.

sasguru
15th November 2012, 11:06
No, I spend my time making money from "worthless" gold, spending it having a great time, and generally having a great life.

You?

:laugh

Are you "Money Dim" today?
I thought you were "Stud Sexy Dim". Changes so often I forget.
Feck me, next you'll be "Brainy Dim".
Or does even your imagination balk at that? :rollin::rollin:

sasguru
15th November 2012, 11:06
Yes SAS, the industrial age was a dark age for economic progress. :laugh

Point proven.

DimPrawn
15th November 2012, 11:09
Are you "Money Dim" today?
I thought you were "Stud Sexy Dim". Changes so often I forget.
Feck me, next you'll be "Brainy Dim".
Or does even your imagination balk at that? :rollin::rollin:

Today I am buff Dim, with a six pack and big guns.

http://www.smilies.4-user.de/include/Sport/smilie_sp_169.gif

Robinho
15th November 2012, 11:21
Maybe, right now, but you don't know what those interest rates will be in a year's time. Having debt exposes you to risks of higher interest rates, having savings exposes you to risks of lower interest rates or higher inflation. But while the debt remains repayable your savings belong to you; you might lose your savings, but then you've lost what you could apparently miss. Even if inflation makes your debt smaller in relation to your income, you still have to repay it, so you can't claim to make a net gain.. You can only do that if you use the loan to buy something which increases in value or provides a reliable return, which is speculative; that's fine for some people, but not for me.

I'm not saying make crazy loans and spend all the money on cocaine and strippers. The government made it stupid to save though.

EternalOptimist
15th November 2012, 11:27
I'm not saying make crazy loans and spend all the money on cocaine and strippers. The government made it stupid to save though.

you keep using words like fool and stupid, thats what I dont understand.

People who have a lot of savings and no debt may not be making a packet of interest, and they may be losing a bit to inflation right now, but does that make them fools ?
Someone who has a £200,000 secured loan and a credit card constantly maxed out is more sensible in your opinion ?

RasputinDude
15th November 2012, 11:27
The government made it stupid to save though.

I agree there. But it doesn't mean that we shouldn't. Someone with even a small (even if the value is falling) amount of savings and no debt is much better off than someone with lots of debt and no savings.

Old Hack
15th November 2012, 11:34
The only debt we have is mortgage debt, and we're paying them down as much as we (and our tenants) can. My opinion, is that savings are being eroded by inflation, but as the houses we own (apart from where we live) are in the south east, prices are rising, so the only way to make, what I consider to be, risk free money, is to pile it into the mortgages, as it's giving us a real world return, above interest.

Cashing in next year tho. I still think we've not hit rock bottom yet.

Old Hack
15th November 2012, 11:34
I agree there. But it doesn't mean that we shouldn't. Someone with even a small (even if the value is falling) amount of savings and no debt is much better off than someone with lots of debt and no savings.

Unless they plead poverty and get the interest stopped on their debts.

EternalOptimist
15th November 2012, 11:36
I agree there. But it doesn't mean that we shouldn't. Someone with even a small (even if the value is falling) amount of savings and no debt is much better off than someone with lots of debt and no savings.

whs

Robinho
15th November 2012, 11:39
I agree there. But it doesn't mean that we shouldn't. Someone with even a small (even if the value is falling) amount of savings and no debt is much better off than someone with lots of debt and no savings.

Not unless they have invested that debt into something, like a house for example.

DimPrawn
15th November 2012, 11:43
The way I look at it......:happy


http://www.youtube.com/watch?v=B1m_V3NmgwY


Cash it in and throw it all away, yeah
Never needed any of it anyway

So you crash, and you burn
Sometimes the road will twist and turn
Some of this, less of that
Forget all about the map California road

Cash it in and throw it all away
Never needed any of it anyway

Cash it in and throw it all away, yeah
Never needed any of it anyway

Cash it in and throw it all away
Never needed any of it anyway

Cash it in and throw it all away
Never needed any of it anyway

:music:

Mich the Tester
15th November 2012, 11:45
Not unless they have invested that debt into something, like a house for example.
Which is entirely speculative.

Robinho
15th November 2012, 11:46
Which is entirely speculative.

It's not, due to the government policies which i am talking about.

VectraMan
15th November 2012, 11:48
Not unless they have invested that debt into something, like a house for example.

WHS. I have no debt, but I've never bought a house either. Anyone with a £100K mortgage on a £200K house is better off than me.

We should look at it like corporation tax, i.e. assets vs debts. If your assets outweight your debts, you have no problem. It's borrowing money to go on holiday/buy clothes/buy petrol/pay interest on other loans that is the problem.

Mich the Tester
15th November 2012, 11:49
Not due to the government policies which i am talking about.

Oh, so you know for sure what's going to happen with house prices?

Anyway, the person who's bought an asset tat may rise or fall in value, and paid for it without a loan is still better off than the one with the loan. Using your example of a house, if it rises in value he's got the gains without the loan to repay, if it falls in value, he's got a house and can live in it without fear of how to repay the loan. Ergo, man with savings better off than man with loan.

Robinho
15th November 2012, 11:54
Oh, so you know for sure what's going to happen with house prices?

Anyway, the person who's bought an asset tat may rise or fall in value, and paid for it without a loan is still better off than the one with the loan. Using your example of a house, if it rises in value he's got the gains without the loan to repay, if it falls in value, he's got a house and can live in it without fear of how to repay the loan. Ergo, man with savings better off than man with loan.

For as long as the government is printing money at the rate it is then house prices will rise.

If the government reverses policy then it will no longer be making it stupid not to take out debt. As of now it is though, and they don't show any sign of changing course, let alone even understanding the folly of their policies.

EternalOptimist
15th November 2012, 11:56
Not unless they have invested that debt into something, like a house for example.

buy a house with debt and you pay £300,000 for a £200,000 house
buy the house with cash and you pay £200,000 for a £200,000 house

DimPrawn
15th November 2012, 12:01
The sensible (but I admit risky) thing to do is to have the biggest mortgage you can get whilst still being able to borrow at the lowest rates.

Then the spare cash you have should go into tangible assets, so perhaps another UK property (BTL) and perhaps a foreign property (holiday let), buy gold on the dips, classic cars, some art, stamps, antiques etc. Also some dividend paying stocks like utilities as inflation will boost their price and profits.

The future involves increasing debt for the west, money printing and debasement of our currency. In these situations use the cheap debt to buy physical assets.

This is why the super rich are paying £300m for a house in London without even blinking.

BBC News - London's most expensive house yet, at £300m? (http://www.bbc.co.uk/news/business-19571104)

Mich the Tester
15th November 2012, 12:03
For as long as the government is printing money at the rate it is then house prices will rise.

If the government reverses policy then it will no longer be making it stupid not to take out debt. As of now it is though, and they don't show any sign of changing course, let alone even understanding the folly of their policies.

Euroland is doing something similar by propping up banks. Euroland house prices are falling. US is doing quantitative easing; US house prices are rising by about 1.5% , which is probably an accurate reflection of US GDP growth right now.

This is the point; you think you know what will happen to house prices, but you don't. The logic says that QE will lead to higher property prices, but the logic we all thought we could trust has been proven very fallible in the last few years. The reality is we don't know what house prices will do. There are good reasons to think they'll grow somewhat in London whether the economy does well or not; if the economy goes well, people in London might spend more on houses. If it goes badly, lots of people might move to London looking for work or business opportunities, so demand for houses in some price ranges might rise.

BUT; the baby boomers are retiring and they don't need their houses in London any more. Many might prefer to trade down to a smaller, more manageable house so they can enjoy blowing their easily earned pensions at Oddbins. Money spent on chardonnay is money not spent on houses.

In other words, to have any confidence in the prediction that house prices will rise, you have to know what people's spending patterns are going to be, and there are simply too many uncertainties for you to know that. I've only named a couple of uncertainties and there are many more.

Robinho
15th November 2012, 12:04
buy a house with debt and you pay £300,000 for a £200,000 house
buy the house with cash and you pay £200,000 for a £200,000 house

Or you could add that 200k to a 300k mortgate, buy a 400k house. Pay off that 300k which will get easier and easier when inflation hits 10%. And end up with a house worth a lot more than 400k.

Mich the Tester
15th November 2012, 12:05
Or you could add that 200k to a 300k mortgate, buy a 400k house. Pay off that 300k which will get easier and easier when inflation hits 10%. And end up with a house worth a lot more than 400k.

And a profit that's not worth much.

DimPrawn
15th November 2012, 12:07
Or you could add that 200k to a 300k mortgate, buy a 400k house. Pay off that 300k which will get easier and easier when inflation hits 10%. And end up with a house worth a lot more than 400k.

Yep, as long as you leverage the debt to be able to buy more physical assets you are a winner.

The idiots are the one that choose the big debt and then blow the money they have on crap, like rubbish Toyota cars and sheds that depreciate. They are known as Cretins.

sasguru
15th November 2012, 12:07
If the government reverses policy then it will no longer be making it stupid not to take out debt...

So logically, I take it, as you consider yourself not to be stupid, that you're up to your neck in debt?

:rollin::rollin::rollin:

You cretins make me split my sides laughing, you're just too stupid for words.
Like idiot savants, without the savant bit.

Robinho
15th November 2012, 12:08
So logically, I take it, as you consider yourself not to be stupid, that you're up to your neck in debt?

:rollin::rollin::rollin:

You cretins make me split my sides laughing, you're just too stupid for words.
Like idiot savants, without the savant bit.

SAS don't you have a lot of property?

Aren't you basically doing or have done exactly what i'm saying?

EternalOptimist
15th November 2012, 12:08
Or you could add that 200k to a 300k mortgate, buy a 400k house. Pay off that 300k which will get easier and easier when inflation hits 10%. And end up with a house worth a lot more than 400k.

why pay £500,000 for a £400,000 house ?

why not just pay £400,000

why am I stupid and foolish for always being £100,000 ahead of you ?

I have a hundred grand in my isa and savings that you dont have. and I am foolish ??



er... ok



:rolleyes:

Mich the Tester
15th November 2012, 12:09
Yep, as long as you leverage the debt to be able to buy more physical assets you are a winner.

The idiots are the one that choose the big debt and then blow the money they have on crap, like rubbish Toyota cars and sheds that depreciate. They are known as Cretins.

Toyotas are quite good actually, witnessed by the number of them that survive African roads where all other cars fail.

sasguru
15th November 2012, 12:09
Yep, as long as you leverage the debt to be able to buy more physical assets you are a winner.

The idiots are the one that choose the big debt and then blow the money they have on crap, like rubbish Toyota cars and sheds that depreciate. They are known as Cretins.

So you're in massive debt too?

Give me strength.
:laugh:laugh:laugh

DimPrawn
15th November 2012, 12:10
Toyotas are quite good actually, witnessed by the number of them that survive African roads where all other cars fail.

Do you live on an African road? No, so you don't need one.

sasguru
15th November 2012, 12:10
SAS don't you have a lot of property?

Aren't you basically doing or have done exactly what i'm saying?

I don't have any mortgage on any of it. Well a very small one on the Portuguese house.
HTH

So can you answer my question? Are you in massive debt? Or are you just posting complete bollux on here?

Mich the Tester
15th November 2012, 12:11
why pay £500,000 for a £400,000 house ?

why not just pay £400,000

why am I stupid and foolish for always being £100,000 ahead of you ?

I have a hundred grand in my isa and savings that you dont have. and I am foolish ??



er... ok



:rolleyes:

Because you do not understand. But personally I think you're probably better off not understanding in this case.

Robinho
15th November 2012, 12:12
why pay £500,000 for a £400,000 house ?

why not just pay £400,000

why am I stupid and foolish for always being £100,000 ahead of you ?

I have a hundred grand in my isa and savings that you dont have. and I am foolish ??



er... ok



:rolleyes:

Maths tip: you can't pay 400k for a 400k house if you only have 200k.

DimPrawn
15th November 2012, 12:12
So you're in massive debt too?

Give me strength.
:laugh:laugh:laugh

No I'm not, but it is clearly the way to be "a winner", since it leaves your pot of money so be spent on other assets.

The debt is almost free and guarenteed to be cheap for a very long time.

What's more likely, interest rates in the west rise, or more money is magically printed to allow cheap servicing of debt?

Mich the Tester
15th November 2012, 12:12
Do you live on an African road? No, so you don't need one.

Well I think the road into the village might have been built by M'Bongo's Building Contractors Ltd, yes.

Mich the Tester
15th November 2012, 12:13
Maths tip: you can't pay 400k for a 400k house if you only have 200k.

So buy a 200k house and get out and enjoy life.

sasguru
15th November 2012, 12:15
No I'm not, but it is clearly the way to be "a winner?

So don't you want to be a "winner", then? Go out and get loads of luverly debt. Then you can really be "Rich Dim the Winner".

:rollin::rollin::rollin:

It's lucky I'm alone at home and the nanny is out - she'd think I've gone mad tittering and spluttering at you gormless cretins.:laugh:laugh

DimPrawn
15th November 2012, 12:15
So buy a 200k house and get out and enjoy life.

If £200K could actually buy a house, that would be a great plan.

:laugh

Better to put £200K down, borrow £299,800,000 and buy that gaff in London.

EternalOptimist
15th November 2012, 12:16
Maths tip: you can't pay 400k for a 400k house if you only have 200k.

common sense tip: who said i only had 200,000?

Robinho
15th November 2012, 12:18
So buy a 200k house and get out and enjoy life.

The point is you would be better off with that 400k house. Most people don't have 200k lying around and the people that do would have been better off getting a mortgage out earlier instead of saving up that much.

Mich the Tester
15th November 2012, 12:18
If £200K could actually buy a house, that would be a great plan.


Mine cost less than that and it is perfectly satisfactory for what I want to do with it.

Robinho
15th November 2012, 12:19
common sense tip: who said i only had 200,000?

You in your earlier example.

Mich the Tester
15th November 2012, 12:19
The point is you would be better off with that 400k house. Most people don't have 200k lying around and the people that do would have been better off getting a mortgage out earlier instead of saving up that much.

Ah, that's hindsight. That's different to making predictions. Easier too.

DimPrawn
15th November 2012, 12:20
common sense tip: who said i only had 200,000?

What we are saying is, whatever you have, only put in as much as is needed to secure the property as the lowest mortgage rate.

What's left over, buy other physical assets.

Roll forward 10 or 20 years, and your mortgage is paid off and you have lots of very valuable assets to sell.

Those who kept the cash in the bank will be using it to buy a loaf of bread.

Negative real interest rates rob those that have to pay those that don't.

Robinho
15th November 2012, 12:20
Ah, that's hindsight. That's different to making predictions. Easier too.

I have made predictions based on the government policies i am complaining about. Feels as if we're going around in circles here.

sasguru
15th November 2012, 12:24
Feels as if we're going around in circles here.

That usually happens when you post your bollux.
So are you in massive debt or not?
Because either you're right and you should act logically OR you're posting complete bullshite.
Which is it, shit for brains?

EternalOptimist
15th November 2012, 12:26
What we are saying is, whatever you have, only put in as much as is needed to secure the property as the lowest mortgage rate.

What's left over, buy other physical assets.

Roll forward 10 or 20 years, and your mortgage is paid off and you have lots of very valuable assets to sell.

Those who kept the cash in the bank will be using it to buy a loaf of bread.

Negative real interest rates rob those that have to pay those that don't.

I understand all that , and I did it differently, without debt or risk.

Robinho
15th November 2012, 12:27
I have a lot of money in precious metals.

Looking to get a mortgage in a year's time.

Mich the Tester
15th November 2012, 12:27
I have made predictions based on the government policies i am complaining about. Feels as if we're going around in circles here.

No, no. You have made predictions based on thinking you know what the effects of government policies will be. I'm saying you don't know what the effects will be. Neither do the government; they're just following the same basic logic as you, but acting differently to how you would choose to act.

I certainly don't know what's going to happen but my logic is; we don't know what's going to happen to inflation, house prices, interest rates etc and I'd rather have a little bit in the bank than owing money to somebody. If I'm wrong I miss out on the chance to buy a huge mansion and pay very little for it and maybe my savings aren't worth much. If I'm right I prevent myself (not 100%, but that's another matter) becoming poor and indebted. Not much of a sacrifice to make for peace of mind. I agree that the current policies with very low interest rates and lots of QE are making saving less attractive, and I think they're undermining people's desire and ability to save for old age; that's not a good thing. But I'm not sure that falsely expanding the money supply will lead to higher house prices.

By the way, I don't want a huge house. I grew up in a big old house, visited many others and concluded that big old houses are actually a bit tulip.

sasguru
15th November 2012, 12:29
I have a lot of money in precious metals.

Looking to get a mortgage in a year's time.

You must extremely thick then, because according to you it's stupid not to have a huge debt.
So you admit you're stupid then? :laugh:laugh

DimPrawn
15th November 2012, 12:30
No, no. You have made predictions based on thinking you know what the effects of government policies will be. I'm saying you don't know what the effects will be. Neither do the government; they're just following the same basic logic as you, but acting differently to how you would choose to act.

I certainly don't know what's going to happen but my logic is; we don't know what's going to happen to inflation, house prices, interest rates etc and I'd rather have a little bit in the bank than owing money to somebody. If I'm wrong I miss out on the chance to buy a huge mansion and pay very little for it and maybe my savings aren't worth much. If I'm right I prevent myself (not 100%, but that's another matter) becoming poor and indebted. Not much of a sacrifice to make for peace of mind. I agree that the current policies with very low interest rates and lots of QE are making saving less attractive, and I think they're undermining people's desire and ability to save for old age; that's not a good thing. But I'm not sure that falsely expanding the money supply will lead to higher house prices.

My dad was like that. A zero risk person, always money in the bank, would never take on a mortgage due to "risk" so rented all his life.

Never made any wealth or owned anything of value.

I take the opposite view, get rich or die tryin'

Mich the Tester
15th November 2012, 12:30
I have a lot of money in precious metals.

Looking to get a mortgage in a year's time.

What makes those metals 'precious'?

EternalOptimist
15th November 2012, 12:32
What makes those metals 'precious'?

we could speculate on that all day

DimPrawn
15th November 2012, 12:33
What makes those metals 'precious'?

They cannot be conjured from thin air, and for 5000 years they have always had value.

We need another $300trn to pay some debts. Oh look, my central bank computer now has an extra $300trn. How weird?

Same as a classic Ferrari never turns a wheel, but doubles in "value" every few years.

Robinho
15th November 2012, 12:35
But I'm not sure that falsely expanding the money supply will lead to higher house prices.

Then you're thick.

EternalOptimist
15th November 2012, 12:36
Then you're thick.

how much are your metals worth right now, robhino ?



:rolleyes:

Mich the Tester
15th November 2012, 12:38
They cannot be conjured from thin air, and for 5000 years they have always had value.


They have value so long as there's demand for them. Demand changes. Robby cannot predict demand. Neither can I, but I don't pretend I can.

By the way, Cowry shells had value for hundreds, possibly thousands of years. They haven't now.

Mich the Tester
15th November 2012, 12:39
how much are your metals worth right now, robhino ?



:rolleyes:
As much as some other eckonomick jeenius will pay for them.

Robinho
15th November 2012, 12:40
They have value so long as there's demand for them. Demand changes. Robby cannot predict demand. Neither can I, but I don't pretend I can.

By the way, Cowry shells had value for hundreds, possibly thousands of years. They haven't now.

So you think houses are going to go out of fashion and people are going to start living in fields? :laugh

EternalOptimist
15th November 2012, 12:41
So you think houses are going to go out of fashion and people are going to start living in fields? :laugh

I am begining to suspect that you are trying to wreck CM's fine thread



:rolleyes:

sasguru
15th November 2012, 12:43
Then you're thick.

No you are, since you're not in debt.

feck me, I couldn't make up a cretin like you.

Mich the Tester
15th November 2012, 12:43
So you think houses are going to go out of fashion and people are going to start living in fields? :laugh

No. But bigger and bigger houses might not be wanted. People might choose to spend more on other things while living in a small house. In other words, maybe people will let go of the idea of a 'property ladder' and see houses as what they really are; big boxes that are comfortable to live in.

EternalOptimist
15th November 2012, 12:47
No. But bigger and bigger houses might not be wanted. People might choose to spend more on other things while living in a small house. In other words, maybe people will let go of the idea of a 'property ladder' and see houses as what they really are; big boxes that are comfortable to live in.

I am torn
part of me, the charitable part, hopes it all turns out well for him
the other 99.999% of me hopes he learns a very hard lesson indeed


:rolleyes:

Robinho
15th November 2012, 12:53
No. But bigger and bigger houses might not be wanted. People might choose to spend more on other things while living in a small house. In other words, maybe people will let go of the idea of a 'property ladder' and see houses as what they really are; big boxes that are comfortable to live in.

The likelihood of that happening is however, far lower than the likelihood that your money in the bank will be greatly diminished by the current level of QE.

Thus returning to the original point. You might think you are being prudent and sensible by saving and having money in the bank, but the reality is you have purchased shares in a company whose stock price is vastly diminishing, that company is pound sterling.

DimPrawn
15th November 2012, 13:03
Japan's likely next PM says BOJ may need rates below zero | Reuters (http://uk.reuters.com/article/2012/11/15/uk-japan-economy-abe-idUKBRE8AE08N20121115)


The leader of Japan's main opposition, seen as likely to become premier after a general election next month, called on the central bank to push interest rates to zero or below zero to spur lending, prompting the yen to slide to a six-month low.



What the BoE will do after they bored with QE.

The more you owe, the more you make.

Mich the Tester
15th November 2012, 13:06
The likelihood of that happening is however, far lower than the likelihood that your money in the bank will be greatly diminished by the current level of QE.

There are enormous uncertainties in this reasoning. You think you can predict consumer spending patterns. For the last 30 years or so, lots of people spent lots of money on houses. But that's a short period of human history that doesn't reflect spending patterns over a longer period of time. Before that people spent more on food, but then food got much cheaper. Food may well be about to get much more expensive. Here in NL we have relatively low unemployment, the economy is sort of bumping along, one quarter is bad, the other is good and banks are lending to people who want to buy houses. Trouble is, people don't want to commit to big mortgages and there isn't any demand for houses; there are demographic shifts that can explain some of that, but also attitudes.

In a small and very unscientific survey, just look at the people I work with. They're all between 25 and 45, earning twice average income or more, and what do they talk about doing with their money? Travelling, eating out, going to concerts or the theatre and buying gadgets. Around the dinner table, nobody says he wants a big house, in fact most say they don't care as long as they have a decent place to live. Now OK, this is a bunch of nerds, but they're well paid nerds, and in the past people in this income group and age group sat around discussing house prices. My parents spent their money on big smart houses, possibly because they'd grown up in small, cramped, cold and crappy houses. People who make money spend it on buying what they missed in their youth. Having grown up fairly comfortably, I and the people around me don't really have any dreams of 'moving up the property ladder'. I've got a house, it's fine and I'm not missing put on anything in that aspect of life, so i don't need or even want a bigger or more expensive house. I'd rather spend my money on experiences; I'd like to visit friends in Ethiopia and travel around there. I'd like to go to the Concertgebouw more often than I do. I'd like to go to Japan. My only material desire is a new track bike. All those things cost money, and that's money I won't be spending on a house. Believe it or not, there may be many more people with the same attitude; maybe I'm not wierd. That's a frightening thought.

Robinho
15th November 2012, 13:14
It is not an enormous uncertainty. Even if the demand for houses does fall, it is not going to counter the ridiculous amount of money that is being printed.

Mich the Tester
15th November 2012, 13:17
It is not an enormous uncertainty. Even if the demand for houses does fall, it is not going to counter the ridiculous amount of money that is being printed.

Well, I see your logic that printing money leads to inflation, and possibly that will happen. BUT, what articles will become more expensive is another matter. If food and fuel prices rise fast, then their share of household expenditure rises, leaving less for spending on a mortgage or rent. I think significant rises in the cost of food and fuel are also a realistic scenario, certainly as realistic as money supply driven inflation.

Robinho
15th November 2012, 13:22
Relative prices might change but are very unlikely to change dramatically.

Mich the Tester
15th November 2012, 13:28
Relative prices might changes but are very unlikely to change dramatically.

That's a big prediction.

War in the middle east could cause a huge spike in oil prices. A couple of poor harvests in the US or Europe could cause a huge spike in food prices, as could continued desertification in Africa, increases in domestic demand for meat in developing countries which lead to less land being used for veg, increased use of land for bio-fuels, reduction in farming activity in some places due to urbanisation, a big volcano causing cold winters for a few years and reduced harvests; there are more uncertainties than you would like to imagine. Some of them are caused by long term trends, others by short term events; all can affect household spending patterns quite dramatically in a very short time.

EternalOptimist
15th November 2012, 13:30
my own, personal price inflation has remained very low, mostly due to luck. For that reason, I am not too fussed about QE

Ketchup
15th November 2012, 13:32
This recession is actually needed in order to make Britain great again.

IMHO (i am by no means an economist), a lot of Britains problems are caused by the lazy lower classes. The welfare bill of this once-fine country is over 6% of GDP, the lazy lower classes are happier to sponge off the state than work for an honest living.

There are a large amounts of immigrants in this country who will work cheaply to do the jobs that were previously done by the working-class British public. A stat that i find highlights this is - a cash-in-hand cleaning job in london pays more than that of a judge in India. The supply of immigrants willing to do these jobs has driven the offered wages down, making claiming benefits a much more attractive option. A lot of these migrant workers then save their money and then send it home, this money leaving the economy is severely damaging as people spending their wages is what keeps the economy growing and is cylcical, money spent in the economy stays in the economy, buying a meal in the restaurant pays the wages of the restaurant staff, cleaners, delivery drivers, food suppliers, who in turn go and spend their money in another restaurant and the money keeps flowing. Now take out the cleaners and waiting staff who are immigrants, they dont spend their money in the country and take it home with them, the ytake the maximum they can back to India with them (believe it is 9k), this is more than they can hope to earn in 10 years in India, their neighbors see how much they have earned and decide to come over. I think we can all see where this ends up.

In order to fix the economy, we need to send the immigrants back home and force the benefit scroungers back to work, and if they wont work, make them work for their benefits.

Mich the Tester
15th November 2012, 13:33
my own, personal price inflation has remained very low, mostly due to luck. For that reason, I am not too fussed about QE

Do you mean to say you're a happy person that doesn't really worry about the 'value' of your house?

Mich the Tester
15th November 2012, 13:42
THE OPIATES OF THE MIDDLE CLASSES
Nassim Nicholas Taleb [9.25.05]

As a practitioner of science, I am opposed to teaching religious ideas in schools. But, it seems to me somewhat misplaced energy — more of a fight for principles than for any bottom line. As an empirical skeptic, I would like to introduce a dimension to the debates: relevance, consequence, and our ability to correct a situation — in other words the impact on our daily lives.

My portrait of the perfect fool of randomness is as follows: he does not believe in religion, providing entirely rational reasons for such disbelief. He opposes scientific method to superstition and blind faith. But alas, human skepticism appears to be quite domain-specific and relegated to the classroom. Somehow the skepticism of my fool undergoes a severe atrophy outside of these intellectual debates

1) He believes in the stock market because he is told to do so. — automatically allocating a portion of his retirement money. And he does not realize that the manager of his mutual fund does not fare better than chance — actually a bit worse, after the (generous) fees. Nor does he realize that markets are far more random and far riskier that he is being made to believe by the high priests of the brokerage industry.

He disbelieves the bishops (on grounds of scientific method), but replaces him with the security analyst. He listens to the projections by security analysts and "experts"— not checking their past accuracy and track record. Had he checked them he would have discovered that these are no better than random — often worse.

2) He believes in the government's ability to "forecast" economic variables, oil prices, GNP growth, or inflation. Economics provide very complicated equations — but our historical track record in predicting is pitiful. It does not take long to verify these claims; simple empiricism would suffice. Yet we have confident forecasts of social security deficits by both sides (democrats and republicans) twenty and thirty years ahead! This Scandal of Prediction (which I capitalize) is far more severe than religion, simply because it determines policy making. Last time I checked no religious figure was consulted for long-term business and economic projections.

3) He believes in the "skills" of the chairmen of large corporations and pays them huge bonuses for their "performance". He forgets that theirs are the least observable contributions. This skills attribution is flimsy at best — there is no account of the possible role of luck in his success.

4) His scientific integrity makes him reject religion but he believes the economist because "economic science" has the word "science" in it.

5) He believes in the news media providing an accurate representation of the risks in the world. They don't. By what I call the narrative fallacy, the media distorts our mental map of the world by feeding us what can be made into a story that can be squeezed into our minds. For instance (preventable) cancer, not terrorism remains the greatest danger. The number of persons killed by hurricanes, while consequential, is dwarfed by that of the thousands of isolated daily victims dying in hospital beds. These are not story-worthy, implying; the absence of attention on the part of the press maps into disproportionately reduced resources allocated to their welfare. The difference between actual, actuarially defined risks and the perception of dangers is enormous — and, sadly, growing with the globalization and the media, and our increased vulnerability to visual stimuli.

Now I am not arguing that one should ignore the side effects of religion — given the accounts of past intolerance. But it was in these columns that Richard Dawkins, echoing the great Peter Medawar, recommended bright students to find something worthwhile "to be smart about". Likewise, I suggest exerting our skepticism "where it matters". Why? Because, alas, cognitively, our resource to doubt is rather limited.

We humans are naturally gullible — disbelieving requires an extraordinary expenditure of energy. It is a limited resource. I suggest ranking the skepticism by its consequences on our lives. True, the dangers of organized religion used to be there — but they have been gradually replaced with considerably ruthless and unintrospective social-science ideology.

Religion gives many people solace. On a personal note I have to admit that I feel more elevated in cathedrals than in stock markets — be it only on aesthetic grounds. If I were going to be gullible about a subject, I would rather pick one that is the least harmful to my future — and one that is rewarding to my thirst for aesthetics.

It is high time to worry about the opiates of the middle class.

cailin maith
15th November 2012, 13:45
I am begining to suspect that you are trying to wreck CM's fine thread



:rolleyes:

CM lost interest ages ago when someone mentioned Jack Bauer ..... oh, that was me was't it :laugh

Seriously though I have been reading it, although not really understanding everything.

I'd much rather live in a comfy home and have lots of nice holidays and trips than a fecking big mansion and no cash to do anything.

EternalOptimist
15th November 2012, 13:49
Do you mean to say you're a happy person that doesn't really worry about the 'value' of your house?

if a tin of beans cost £5000 and I wanted one, I would have a problem
but if they would take a tin of tomatoes, why would I worry ?

the only two times I would concern myself over the 'value', are the first time I had to lay out for one
and the last time I sold one


:rolleyes:

Mich the Tester
15th November 2012, 13:50
if a tin of beans cost £5000 and I wanted one, I would have a problem
but if they would take a tin of tomatoes, why would I worry ?

the only two times I would concern myself over the 'value', are the first time I had to lay out for one
and the last time I sold one


:rolleyes:Yep, that's pretty much my attitude.

Robinho
15th November 2012, 13:50
That's a big prediction.

No it isn't.

But it doesn't matter anyway, i never said buy a house necessarily, that is just a good example of an asset that will be very likely to rise in value. My point was that (effectively) negative interest rates have made taking on a certain level of debt the most sensible course of action.

Mich the Tester
15th November 2012, 13:51
I'd much rather live in a comfy home and have lots of nice holidays and trips than a fecking big mansion and no cash to do anything.

I've experienced both and I think you're right.

Mich the Tester
15th November 2012, 13:52
No it isn't.

But it doesn't matter anyway, i never said buy a house necessarily, that is just a good example of an asset that will be very likely to rise in value. My point was that (effectively) negative interest rates have made taking on a certain level of debt the most sensible course of action.

No they haven't. They've made saving a less attractive option; that doesn't mean that borrowing has become the best option.

EternalOptimist
15th November 2012, 13:53
CM lost interest ages ago when someone mentioned Jack Bauer ..... oh, that was me was't it :laugh

Seriously though I have been reading it, although not really understanding everything.

I'd much rather live in a comfy home and have lots of nice holidays and trips than a fecking big mansion and no cash to do anything.

:hug:

damn fine words.

DimPrawn
15th November 2012, 13:56
I think a lot of you are missing the point, but never mind.

As long as you are enjoying yourselves that's all that matters.

If you have no money and no debt you've got nothing to lose. Those with money and those with debt have got the most to lose.

However, there has never been a better time to be in debt, at the expense of those that aren't. And if you are going to take advantage of that situation, best to load up on a mixture of assets and let those who are working and saving pay for it.


The prudent are making the feckless rich.

:happy

EternalOptimist
15th November 2012, 13:56
As saving has become less attractive, I have taken to buying a new car every two years and going on massive holidays and helping the kids pay off their mortgages

but I paid all that from savings, not through debt


:rolleyes:

Mich the Tester
15th November 2012, 13:57
:hug:

damn fine words.
There are whole sectors of 'the economy' whose business model is based on people like us borrowing shitloads of money to buy a 'fecking big mansion'. Trouble is, I know more and more people like us who aren't doing that.

Robinho
15th November 2012, 13:58
No they haven't. They've made saving a less attractive option; that doesn't mean that borrowing has become the best option.

On average, yes it has.

Mich the Tester
15th November 2012, 14:05
Here in NL the government is trying all sorts of things to get the housing market going again. Although they're talking about limiting mortgage interest tax relief a little bit in the very long term, in the short to medium term they're extending it to cover losses from selling a house at a loss; that's to try and get people trading up while they have negative equity. House prices keep falling and fiscal stimulus isn't working because our government, the banks, the estate agents and the building industry have failed to grasp a couple of simple facts; we've got enough houses and we've got more than enough offices. We don't need any more buildings. Throw as much cheap money at us as you like, but it won't get spent on stuff we already have. The building industry is in for hard times, for a long time to come.

At the same time, health insurance costs have gone through the roof, food and fuel costs have risen significantly and disposable incomes have fallen a bit. Stimulate the housing market as much as you like, but if people don't want to buy houses they won't buy them and the prices will continue to fall.

BlasterBates
15th November 2012, 14:24
I'm rather surprised to find I have no material desires at all any more.

:ind

Does this mean I have all the toys I've ever wanted?

Scary.

me too, most important thing is an adequate supply of comfortable leather shoes.

sasguru
15th November 2012, 14:30
Seriously though I have been reading it, although not really understanding everything.
.

Nothing to understand - just some mediocre IT jobbers waffling on and on about topics they haven't got a clue about. :laugh

Mich the Tester
15th November 2012, 14:32
mediocre IT jobbers waffling on and on
Try saying that quickly. Ten times.

Sysman
15th November 2012, 14:45
In a small and very unscientific survey, just look at the people I work with. They're all between 25 and 45, earning twice average income or more, and what do they talk about doing with their money? Travelling, eating out, going to concerts or the theatre and buying gadgets. Around the dinner table, nobody says he wants a big house, in fact most say they don't care as long as they have a decent place to live.

I found that was true of many friends and colleagues in Europe back in the 80s. While everyone my own age in the UK was busy crippling themselves with mortgages, in Europe we were wining and dining, seeing concerts and doing 3 holidays abroad every year.

OK I lost out on the UK property market in that period, but I had a much better time than having to constantly juggle bills.

And saw a bit of the world too.

Sysman
15th November 2012, 14:48
Relative prices might change but are very unlikely to change dramatically.

Do you remember the coffee and sugar shortages in the seventies?

The prices of both products doubled within just a few months, and never came back down again.

AtW
15th November 2012, 14:49
Britannia will be just fine.

HTH

AtW
15th November 2012, 14:50
Do you remember the coffee and sugar shortages in the seventies?

There was NO coffee in Soviet Union :laugh

Sometimes no sugar either and it would take lack of vodka to cause civil unrest :eyes

Robinho
15th November 2012, 14:52
Do you remember the coffee and sugar shortages in the seventies?

The prices of both products doubled within just a few months, and never came back down again.

No because i wasn't alive. However, did the price of houses plummet because coffee was more expensive?

Mich the Tester
15th November 2012, 14:55
No because i wasn't alive. However, did the price of houses plummet because coffee was more expensive?

The price of houses went up and down because in the 1970s most people didn't have this strange idea of houses as a means to generate income or as an 'investment'; they saw them as boxes to live in.

Robinho
15th November 2012, 14:57
It's nothing to do with the ideas. Humans will always attempt to seek profit from situations.

RasputinDude
15th November 2012, 15:05
The price of houses went up and down because in the 1970s most people didn't have this strange idea of houses as a means to generate income or as an 'investment'; they saw them as boxes to live in.

What MtT said.

I am just buying a new house - upgrading as it were. I am *not* buying an investment or my future retirement fund, I am buying a home; somewhere for my family to live and grow up in. I don't care how much I will get when I eventually sell it - the money paid out every month is just part of the rolled up cost of living.

The idea of a house as an investment seems absurd to me.

Sysman
15th November 2012, 15:08
The price of houses went up and down because in the 1970s most people didn't have this strange idea of houses as a means to generate income or as an 'investment'; they saw them as boxes to live in.

I found a nice little cottage for 5K but got persuaded by my parents to go for a new house at more than twice that. Well I suppose my parents came from the generation who had grown up in old properties and wanted new and shiny. They were also suckered in their own way into buying new; someone had to buy all those houses thrown up in post war Britain.

I would have been much happier in that cottage - it had nice views and was in a leafy area, for a start.

Guess which house was worth more by 1985 once MIRAS had kicked in and building societies became more willing to lend on old properties?

Scoobos
15th November 2012, 15:11
It's nothing to do with the ideas. Humans will always attempt to seek profit from situations.

lol, "humans"... not at all generalistic.

Sysman
15th November 2012, 15:12
No because i wasn't alive. However, did the price of houses plummet because coffee was more expensive?

What have the prices of houses to do with it?

Mich the Tester
15th November 2012, 15:13
What have the prices of houses to do with it?

Everything to do with his theory that under current conditions, wise people borrow money and spend it on houses, while stupid people put their money in savings.

Scoobos
15th November 2012, 15:15
However absurd it may be to us , it seems to be the majority view now.

I thought we'd already done the "Loadsamoney" generation and seen the results.

Robinho
15th November 2012, 15:17
Everything to do with his theory that under current conditions, wise people borrow money and spend it on houses, while stupid people put their money in savings.

Well, it's true.

EternalOptimist
15th November 2012, 15:23
However absurd it may be to us , it seems to be the majority view now.

I thought we'd already done the "Loadsamoney" generation and seen the results.

we have progressed from 'Thatchers Babes' now we appear to have a generation that thinks having a few gold sovereigns under the pillow, loads of debt but no house is the height of fiscal wisdom, whilst having everything bought and paid for is foolish and stupid

i sort of understand what the victorians were getting at when they said that children should be seen and not heard

:rolleyes:

Sysman
15th November 2012, 15:34
Everything to do with his theory that under current conditions, wise people borrow money and spend it on houses, while stupid people put their money in savings.

Oh. I see.

I don't really understand Robinhomics.

Robinho
15th November 2012, 15:55
The value of GBP is swiftly declining. Thus a loan denominated in GBP will be in part being paid for by everyone else who has GBP. Thus an investment in something that will merely retain value will see you better off.

Very simple.

doomage
15th November 2012, 16:19
The value of GBP is swiftly declining. Thus a loan denominated in GBP will be in part being paid for by everyone else who has GBP. Thus an investment in something that will merely retain value will see you better off.

Very simple.

Except when you buy property, in effect you buy the money that allows you to live in the property (i.e. the mortgage - unless you are buying with cash of course.) So the property might 'retain' value as you say, but the cost of the mortgage may increase (via interest rate rises), so no matter the denomination you might lose out. As merv once said, house prices are illusory but debts are real.

Not so simple.

sasguru
15th November 2012, 16:44
Very simple.

Yes you are. Economics isn't.

HTH

Robinho
15th November 2012, 16:55
Except when you buy property, in effect you buy the money that allows you to live in the property (i.e. the mortgage - unless you are buying with cash of course.) So the property might 'retain' value as you say, but the cost of the mortgage may increase (via interest rate rises), so no matter the denomination you might lose out. As merv once said, house prices are illusory but debts are real.

Not so simple.

The underlying principle is very simple. You can cloud the issue with other variables like mitch has attempted but that does not make it complex. At the end of the day constant devaluation of money and artificially low interest rates have resulted in a situation where it is better to have sensibly sized debt and assets than either nothing or or the equivalent savings.

EternalOptimist
15th November 2012, 16:59
The underlying principle is very simple. You can cloud the issue with other variables like mitch has attempted but that does not make it complex. At the end of the day constant devaluation of money and artificially low interest rates have resulted in a situation where it is better to have sensibly sized debt and assets than either nothing or or the equivalent savings.

well, keep us informed on how it all goes, Goldfinger




:rolleyes:

sasguru
15th November 2012, 16:59
You can cloud the issue with other variables like mitch has attempted but that does not make it complex. .

So your argument is that you must never use a multiple regression model in economics?
My god, you're beyond a cretin, you're a kind of meta-moron. :laugh:laugh

sasguru
15th November 2012, 17:01
well, keep us informed on how it all goes, Goldfinger




:rolleyes:

:laugh:laugh:laugh
Fook me , I'm spluttering again - and the nanny os home to hear me,

Robinho
15th November 2012, 17:03
These variables are irrelevant and thus can be ignored.

EternalOptimist
15th November 2012, 17:04
:rolleyes:

Robinho
15th November 2012, 17:05
Got a bit excited there eternal?

sasguru
15th November 2012, 17:07
These variables are irrelevant and thus can be ignored.

You've done the data mining/statistical analysis, have you?:laugh
Here's one prediction I can make with complete certainty: you won't become rich anytime soon.

Robinho
15th November 2012, 17:09
I already am rich sas.

EternalOptimist
15th November 2012, 17:10
Got a bit excited there eternal?

dont bandy legs with me sunshine, do you have a bobble-eye and imagine you have ended boom and bust by any chance ?



:rolleyes:

sasguru
15th November 2012, 17:10
I already am rich sas.

Sure you are :laugh
Thanks for the laugh this afternoon. You are comedy gold if nothing else.

Robinho
15th November 2012, 17:13
Sas the proof is in the pudding, and the fact is with your mortgage you mentioned earlier you are doing the very same thing i am suggesting is sensible.

sasguru
15th November 2012, 17:18
Sas the proof is in the pudding, and the fact is with your mortgage you mentioned earlier you are doing the very same thing i am suggesting is sensible.

What mortgage?
Go for it, load yourself up with debt, if your rock-solid analysis has told you that's what going to make you rich :laugh:laugh:laugh

Please stop now, you've got me spluttering with mirth again.

Robinho
15th November 2012, 17:20
The one you mentioned earlier in this thread.

I presume you are pretending it doesn't exist now. How pathetic. :laugh

sasguru
15th November 2012, 17:24
The one you mentioned earlier in this thread.

I presume you are pretending it doesn't exist now. How pathetic. :laugh

You mean the few K I have left on the Douro property? Its a smallish amount that I've ignored, will pay it off next year. what's your point, exactly?

SupremeSpod
15th November 2012, 17:27
You mean the few K I have left on the Douro property? Its a smallish amount that I've ignored, will pay it off next year. what's your point, exactly?

I think he's deduced that you're a bullsh!tting w4nker. If he'd asked me I'd have clued him up without the need for all this unpleasantness.

Robinho
15th November 2012, 17:27
You mean the few K I have left on the Douro property? Its a smallish amount that I've ignored, will pay it off next year. what's your point, exactly?

The point is that you are doing the very same thing i am suggesting is a good idea. :)

sasguru
15th November 2012, 17:29
The point is that you are doing the very same thing i am suggesting is a good idea. :)

What buy a property mainly for cash leaving a small outstanding mortgage that's only there because of delay in expected cash from another source?

sasguru
15th November 2012, 17:30
I think he's deduced that you're a bullsh!tting w4nker. If he'd asked me I'd have clued him up without the need for all this unpleasantness.

You'd like to think so wouldn't you? Well if it makes you feel better...

SupremeSpod
15th November 2012, 17:32
You'd like to think so wouldn't you? Well if it makes you feel better...

Carry on Walter.

Robinho
15th November 2012, 17:33
What [.....] a small outstanding mortgage

Exactly

BrilloPad
17th November 2012, 22:15
We’re heading for economic dictatorship - Telegraph (http://www.telegraph.co.uk/news/politics/9684778/Were-heading-for-economic-dictatorship.html)

suityou01
17th November 2012, 22:30
We’re heading for economic dictatorship - Telegraph (http://www.telegraph.co.uk/news/politics/9684778/Were-heading-for-economic-dictatorship.html)

Did you read the comments before posting a link to this?

BrilloPad
17th November 2012, 22:32
Did you read the comments before posting a link to this?

Nope. Its usually total drivel in the Telegraph. Was there any worthwhile ones?

GreenLabel
18th November 2012, 04:58
I already am rich sas.


Sure you are :laugh


You could always ask him for a picture of his car.