When wil this austerity madness end!

[chapeau]

That's just daft. Cut your nose off to spite your face.

 

[Gasman28]

I've no sympathy on people with huge mortgages in negative equity getting shafted by banksters.
Their own greed put them where they are today.
Some people had no choice - they bought there property expecting it to gain value. You don't see the chinese or indians buying and selling mud huts to each other for extortionate prices.
Then go there and make a killing
I know one mug who had an ole run down council house on a mortgage for £70k and the estage agent offered him £170k for it just before the crash. He turned his nose up at the offer.
Well house prices were set in concrete, were they not?
Anyways he's stuck with it now. I wouldn't give £40k for it let alone £70k.

There has always been a risk in house buying, it's a chance that you take if you want to buy then sell at a profit. You sound like a typical ' look at me, I've done good Tory'

 

[EddieM]

when interest rates rise to something that reflects reality... then be scared.. it will not end well.

 

[Gasman28]

when interest rates rise to something that reflects reality... then be scared.. it will not end well.

Good shout and of course when house prices go to a realistic value, all will be OK. Then again, how we, the home owners feel about that?

 

[EddieM]

when interest rates rise to something that reflects reality... then be scared.. it will not end well.

Good shout and of course when house prices go to a realistic value, all will be OK. Then again, how we, the home owners feel about that?

well precisely... it won't end well.

 

[chapeau]

Yeah what good are houses? You can't export them.
I've no sympathy on people with huge mortgages in negative equity getting shafted by banksters.
Their own greed put them where they are today.
You don't see the chinese or indians buying and selling mud huts to each other for extortionate prices.
I'm quite happy for my home to drop to quarter its value.

Well houses are useful as we all have to live somewhere.
The Chinese and Indians have a housing bubble too, house prices in places like Bombay are ridiculous.
I'd agree that greed is responsible for the housing crisis in the UK. In fact, greed is responsible for the whole financial crisis, from top man in the bank to the bums on welfare who voted in governments who paid them to do nothing.

The people with huge mortgages in negative equity aren't actually being shafted by the banksters anymore. If anything it's the other way round. In a normal market these people who couldn't afford their mortgage would be turfed out of their homes. Right now the banks are unable to do that as it would hit their balance sheets, the banks have to support loans which really should be called in. At the end of the day the taxpayers guarantee these banks so the taxpayer is being shafted.

No surprise there.

If your house drops to a quarter of it's value then you will be impacted even if you own it outright. If it gets to that stage the whole system will be in ruins, even those with nice safe public sector jobs will be poor. If anything property might be the only thing worth having, though only in desirable areas of course.

 

[EddieM]

we sit on an uncomfortable knife edge, in order to stimulate growth, interest rates will have to rise, if that happens the carnage in the housing market will be biblical. Banks will not be able to afford the mass reposessions, currently the housing bubble is being maintained in stasis, but something eventually will have to give. In simple economic terms, the average house price has to reflect the average wage, otherwise it will not work.

 

[AronSearle]

But I can't see this lot lasting much longer.

Yeah, lets hope the coalition collapses shortly and we get a tory led government. Then hopefully real swingeining cuts can begin.

does that include your house value being cut in at least half??

I bought my flat (first time buyer) just before the crash.

It's lost value and I am in negative equity.

But I am happy with that (not jumping with joy mind).




House prices went insane, and are still far to high, I don't want future generations to be screwed over, the only way for that to happen is for this generation to take the hit, I can take it, I have to.



Too many of our economic problems stem from this generation not wanting to take economic hits, governments baling out banks or markets only encourages those markets to behave badly.

 

[joe-90]

It's all Gordon Stupid Browns fault - every bit.

 

[Norcon]

chapeau wrote

even those with nice safe public sector jobs will be poor

Down to the same level as the rest of us then. Don't you just love equality.

 

[Micilin]

Chapeau- thanks for the previous link. Any thoughts on its comments about austerity measures being a factor in low growth?

 

[AronSearle]

Chapeau- thanks for the previous link. Any thoughts on its comments about austerity measures being a factor in low growth?

Which austerity measures?

This article may help better explain

http://johnredwoodsdiary.com/2012/08/23/plan-a-plan-b-and-plan-c-how-to-run-the-economy/

I find it difficult to do interviews on the state of the economy. The BBC interviewers all think there have been large cuts in public spending. They want to debate the question should the state spend and borrow more to lift the economy out of recession. I always have to start with explanations of just how much extra the state is spending and borrowing. They cannot point to anyone recommending a large figure for extra state spending and borrowing, who thinks deficit reduction is not important. They cannot explain why so much state spending and borrowing so far has not produced the growth most of us want. Under the Coalition government an expanding state sector has increased national output, but not by enough to offset declines in the private sector.

I am a strong supporter of the government’s Plan A. That Plan was stated in words. It was to remove the structural deficit by 2015. 80% of the work would be done through spending cuts, and just 20% through increased tax revenue. It would actively promote a private sector led recovery by supply side measures. That was a good plan, and would probably have worked fine. The trouble is they never implemented that one.

The embarked on Plan B in their first budget. This kept the sensible idea of eliminating the structural deficit by 2015, but decided to do it by a huge forecast increase in tax revenues, whilst allowing public spending to rise. At the time I suggested the tax forecasts were too optimistic, as the higher rates were always likely to lead to revenue shortfalls. I also suggested that if they simply froze public spending for the first year, they would borrow £160 billion less over the 5 year period of this Parliament. That would have given them more leeway and help secure success. They opted for a plan which proposed borrowing an extra £451 bn over five years instead, to allow a substantial spending rise in the first year.

Now we are on Plan C. Plan C delays eliminating the structural deficit until 2017 or later. It is seeking to reinstate some of the cuts in public capital spending made by Labour and included in Plan B. It recognises that revenue will be lower than forecast in Plan B. It is, if you like, a massive fiscal stimulus plan, based on borrowing £556 billion extra between 2010 and 2015. Latest figures imply they may well add additional fiscal stimulus to this package, as so far this year they have borrowed £9 billion more than budget. How much more borrowing do the additional fiscal stimulus enthusiasts think it takes? Why hasn’t the huge fiscal stimulus administered by the current large structural deficit done the job?

State borrowing is simply deferred taxation. It all has to be paid back, with interest, by taxpayers. Too much deferred taxation is as damaging to enterprise, incomes and prosperity as taxation itself. The government has increased planned borrowing by £105 bn for the period of this Parliament when shifting from Plan B (Budget 2010) to Plan C (budget 2012). How much more deferred tax do people want? This autumn will probably see a further rise in the official forecasts for the borrowing total.