Sorry, I only do finance here. You can access any desired amount of me arguing for anarchocapitalism over in the archives of uk.politics or ed.general. I haven't bothered much with it for at least two or three years though.
Me neither lately. Pearls before swine...
FoFP
This is uk.politics.british.
But you're right about AnarchoCapitalism, it died with the Paleo Conservatives...
Don't know about "all governments", but this one needs abolishing. After bailing out out NR with billions of our money they allowed them to carry on offering
125% mortgages for several months!!
No, it's uk.finance.
Maybe that's why nobody saw the credit crunch coming then, apart from Mike....
certainly socialists don't have a clue...about anything...
but i am highly sceptical that even sane people can stop bubbles or even identify them with much founded confidence...
it is the tax system and the constant inflation that drives people to look for shelters from the clown's mismanagement...a perfectly rational objective....
regards
And Vince Cable...
The odd thing is that he *did* recognise the dangers of a house price bubble when he first became chancellor in 1997. In his first budget he promised not to let house prices get out of control, as he'd seen the economic damage caused by the bubble of the late 80's.
But then what did he do? He gave the BoE interest rate setting responsibility, but *he* set them their inflation target, first RPIX, then CPI. The former excludes mortgages, and the latter excludes virtually all housing costs. So house price inflation didn't affect the BoE's rate setting decisions, result was interest rates were lower than they should have been had the BoE been using a proper measure of *all* inflation, and the housing bubble then kept growing.
Then having seen a much bigger rise in prices for much longer than the boom in the 80's, he failed to recognise that it was in fact a bubble even though he himself had warned of the dangers of a housing bubble. He seems to have entered a fantasy world where he thought prices rising at 2 or 3 times rises in earnings was actually sustainable. He claimed to have abolished boom and bust, even though housing was obviously in it's biggest ever boom in living memory.
They even boasted about it at the last election - remember the posters with flowery 60's themes boasting of the "lowest mortgage rates for 40 years"?
He can hardly avoid that now...
He needs some divine help now...
Indeed - I meant to write "the likes of Mike". In fact several people on uk.finance predicted the credit crunch long before it happened.
The trouble is that "solution" is now being devised by the incompetants who not only didn't see it coming, but who even arrogantly thought they had "abolished boom and bust".
Maybe we should start listening to those who predicted the credit crunch instead.
'abelard' wrote this:
It might depend on the type of bubble. The dot.com bubble may have been difficult to prevent, since it was investment based, and who's to say what an investment in an IT company is worth? A regulator? I don't think so.
OTOH this current mess was created by a credit bubble, and as M Holmes says, probably has its origins in the Big Bang. However, that was not the problem in itself. It became a problem when loose credit became available in excessive amounts and caused the price of assets (houses) to be bid up to absurd levels and personal debt levels rose to unprecedented heights. For their part, the banks packaged up their dodgy loans into mortgage backed securities and sold them on. The rest is history.
The crucial point is that much of this was being watched from the sidelines and many warnings were given by wiser people.
IMV therefore, this bubble was foreseen and could have been prevented by more aggressive oversight and higher interest rates, both of which Brown was strongly against.
The article you posted today by Jeff Randall quoted several speeches by Brown in which he glorified in lax regulation.
Another thing Randall has been banging on about, rightly IMV, is that the FSA has failed to include in its proposed reforms to seperate clearing banks from investment banks. The former are so fundamental to the economy that this seperation should happen and they can become a safe investment for grannies and orphans.
wodda-yer-reckon?
I don't know if ordinary individuals apply that rationale. There was a large growth in BTL mortgages and in personal debt ...some of the latter may have been caused by rising taxes and people borrowing to maintain their living standards. The rise in energy prices may also have contributed to people borrowing.
ok...this looks like getting complicated!
i'm not sure about that....such a claim depends on many factors.... people have money...they tend to want to do something with that money....what they do depends largely on their perceptions of risk and reward....
meanwhile the clown is pumping ever more paper into the markets...what will they choose to do with it?
i regard the present gold price as a probable bubble...but others are more trusting...one reason i believe the gold bugs are involved in a bubble is because the gold market is under false control....
but housing(in the uk)...is especially where it is desired is in fairly short supply...the household formation level is outstripping supply and god knows how many illegals are also chasing it....
meanwhile the (uk) government is constantly keeping the interest rates falsely low....
now, those buying houses quite rarely look at the total price/ (costs?)...they look at what they have to pay per month...and look at whether they expect to be able to lay their hands on sufficient disposable income... further, there is a basic need for housing (unlike gold)
there is also the magic gamble that you may well come away with a damned good golden windfall....
now let me present the item i linked earlier...
here the author misses a vital number... the real inflation since the clown started on his socialist idiocy is according to my assessment certainly now approaching 100%....
100% + 18% and you're getting within shouting distance of that 155%....and you still haven't considered the pressing desire for a house you control, the disposable income estimates... and the windfall...further the clown is now letting rip by accelerating the printing presses still further....the boe figures suggest real inflation is *already* closing on 20%....
i've no idea why he believes that...doubtless he has his reasons...
but i'm yet to be convinced those levels are/were 'absurd'... added to my above reasons, note that many prices were falling as globalisation extended....that means more disposable income where will all that paper go??
(**i'm am strongly limiting this argument to the uk....imv the mess in the uk is far different from that in the usa despite the innumerate whining of the clown ....)
indeed they did...but one of the poisonous consequences of inflation is that it *pays* to borrow....it is saving that means you lose...
another, possibly even more serious, is that it engender distrust in the society because no-one can be sure that over reasonable contract time frames you cannot trust you'll not be cheated.... let alone the continual theft by socialist government....
if you can't trust government...who can you trust?
i see no problem with that...as long as purchasers exercise due diligence
you can always find some babble to say anything and its reverse...
there is a great deal of difference between the horse race tipster and the boaster when his horse won.... to claim you knew...*after the event* is not even similar to your position before the race.....
meanwhile the markets do tend to go in cycles anyway....if you keep repeating the markets will rise from this present situation. eventually you will be correct... just the same as before the recession...you would be bound to be correct eventually....
while i fully agree that greater 'oversight' to block crooks or even complete idiots...and i certainly believe interest rates should have been higher(as you may recall i have long being saying uk interest rates were *far too low*... my reason was because of the irresponsible money debauchery... not because i had much concern for bubbles....
i repeat here again......imv the american situation involves some very different considerations!!!
let's establish a simple assumption... the clown is a thorough-going fool and fraud...he should never have been let anywhere near high office...i wouldn't readily employ him as a tea boy....
to criticise the clown is not much different from pointing out that and old tooth brush is not a suitable house sweeping device...
anybody who could even fantasise that the clown could do any job well is ludicrous....
the separation is obvious and vital....
so is the too big to fail problem.... so is regulation that fails to keep crooks and spivs out of the kitchen... the incompetence of 'new' labour is not much different from employing stupid policemen....in both cases you'll get more conmen and those conmen will run rings around the clown or pc prat....
they don't have to do it consciously or thoughtfully... they will follow the leaders and respond to the signals...
eg sue down the road just made a fortune on her flat and has gone of to the canaries to lie on the beach forever... and the constant wish to live in that neat flat sue just left....
society is mostly made up of sheep and the mediocre.... such people don't invent relativity or even credit swaps
i leave you to read the above :-)
regards
In the past decade there has been a succession of TV and radio programmes about the instability of 'financial instruments' and how nobody in the banking world really understood them and how they could bring the whole edifice crashing down at any moment.
In a world where Terry Wogan was more highly qualified as a banker than the heads of all the banks in the UK something dreadful was bound to happen...
It will once we are finished with it.
Factor in the fact that the lowest paid people don't generally buy houses, and that people will add a deposit to the mortgage borrowings, and the long term average house price of 3.5x to 4x earnings should be in reach of most people.
Average earnings as far as I can see are about £24,000.
'abelard' wrote this:
True, but this boom appears not to have been created by people
*with* money, but by people who *borrowed* money: mortgages. Also, a lot of re-mortgaging and credit card borrowing went on. Personal debt >>> £1.5 trillion.Armed with cheap money, they set about the speculation process; in the UK, that usually means property. BTL and sub-primers played a part in it. Some lenders specialised in BTL loans, presumably creaming off some extra profit.
Increased money supply? Much of it gets spent. I assume this filters down in the form of more jobs, higher wages and then higher consumer inflation.
Your views on gold have caused me to be wary of the stuff!
Contributory to the regular boom in house prices. Prices should find a natural level without lenders making reckless loans. The downside is that some people will never be able to buy their own home. Dunno what the solution is to that. A family suite in Butlins maybe? ;-)
Which will increase lending/borrowing, although ATM people are holding back ...and watching.
This may help to explain why home maintenance is quite low.
Absolutely. That is what drives this market. Many people see property as their main pension fund. I worked that out a very long time ago myself...
Yeahbut, true inflation is not reflected in wages and incomes. So people see property speculation as the best way to get ahead of the inflation curve and make some *real* money, which they can't do in their jobs. A good strategy 'til the market collapses.
This boom also dragged in the BTL spivs which created serious extra pressure on rising prices, especially at the low end.
Makes me wonder what's gonna happen next in the markets to protect against Brown's inflation. Tulips? Property? .....again.
The Big Bang removed a lot of restrictions on banks. Allowed them to lend mortgage money and play the casino.
Prices were bid up to levels way above what people could afford. This has always happened in our frequent house booms.
Left alone, the market adjusts on its own, but this time we had a banking crises arise, causing a collapse in lending. So, the adjustment has been much more sudden and severe than usual.
Some prices were falling (mobile phones, iPods, electronics), but real consumer inflation (energy, housing, food, taxes) was rising. I doubt if many saw much real rise in discretionary spending, hence the high personal borrowing levels.
Indeed. And much of that borrowing went into property. Fine for those who went in but got out in 2007...
Not the banks apparently!
But they didn't. Casino mentality. We are now paying the price.
I foresaw a property price crash back in 2005-6, but I didn't know about the looming banking crises. Nevertheless Brown was warned.
Depending on how this downturn develops, it could take a lot longer for recovery than in previous downturns.
ISTM there's a lot of parallels. The US usually suffers stock market booms/busts. This one has been property and BTLers were active over there too. Also, banks indulging in casino activities.
agreed.
That the FSA has not recommended this seperation here is worrying.
I'm also concerned that new regulation Brown introduces will be wrong headed and won't prevent further mess ups in the future. eg: the failure to seperate banking activities.
Oooh thanks!
I assume that's a joke.
'William Black' wrote this:
Nope.
You followed Abelard's advice about something to do with money!
I have a bridge for sale...
'William Black' wrote this:
I have held views about gold myself. His views are equal to my own but arrived at independently.
I'm not in the market, thanks anyway.
Yup, although the banks didn't do it alone.
There were the idiot politicians who thought they had abolished boom and bust, and those who thought legislation which effectively forced banks to make subprime loans, to increase home ownership among the poor and minority groups, was a good idea.
Then there were the regulators, some of whom were the worst of the ex-bankers, who thought that mortgage backed securities were AAA rated because of the rock solid asset backing them, after all house prices never go down do they?
It turns out you were both wrong.
Especially as profits on gold bullion in the UK are neither declarable nor taxable.
Mind you, now's the time to sell...
It's just another investment, it's just that it's a supremely good one in the UK because you don't have to pay income tax on the profits.
'William Black' wrote this:
Given that I didn't state whether my views on gold were related to its past performance or its future performance, I guess you must do mindreading.
Fascinating.
Argh! so you open the possibility that gold prices can go down as well as up.
When I'm looking at where to invest my £billions, I'll bear this in mind ;-)
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