Tradefair & Financials
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fasten seatbelts
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Replies: 20
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Always on the cards, and more severe than the first one.
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lets hope so the 1st one was a big let down and had been and gone before 90% of the country had noticed
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So what exactly are the advantages you are looking for?
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...hoping for.
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short term, increase in interest rates to realistic levels, ie 4% plus to get a decent return for savers, long term property returning to affordable levels and able to sustain growth for an indefinite period, the medicine must be taken first tho, and the next 2 years will be painfull for many.
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Splicer - well said
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Obv hoping that inflation does not get out of hand and the time is not right for a (or many) currency devaluation.
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Also agreed with Splicer, but no chance of it happening... I'm keeping my bullion for now!
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While we insist on defering a real property crash by keeping unrealistic interest rates, we will not solve any of the problems, merely defer them, medicine now for a couple of years, or the country stagnates for 10, take your pick coalition.
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Which problems exactly does a property crash solve?
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It's not so much that the crash solves the problems as such, just that the medicine to solve problems would cause one which is why the politicians are chickening out. Another reason to remove such power from the state.
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The whole economy has been property driven for years, i know i am in the industry and have felt a huge reversal of fortune, propertyneeds to bottom to get realistic prices out there to people who want to get on the ladder, if they were affordable people would buy them,there are 4m people on housing waiting lists apparently, simples.
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The problem is if average property values do drop say 20% in the next two years where will that leave the banks?
Whether or not we have a double dip is immaterial, growth is important but it has to be the right kind of growth. It's no use growing the economy by importing foreign goods, or by taking on more debt, or through temporary stimulus. It has to be real growth. |
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Let the banks go. State it now - ban bailouts. This would go hand in hand with higher rates. We'd cut down the number of banks to what's necessary and capital would be 'respected' again, innit.
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'real growth' hasnt occured since north sea oil peaked at the turn of the century
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Which problems exactly does a property crash solve?
a property crash, huge defaults in consumer credit and the subsequent failure of the banking system is probably the only thing that can shake sense into our modern farcical view of economics. Its impossible to have any long term increased standards of living when the banks are lulled into misallocating capital to useless consumer credit and mortgages when it should be allocated towards business and entrepreneurs that actually make our lives better. Surely that is pretty obvious? |
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And you think a property crash, huge defaults in consumer credit and the subsequent failure of the banking system will result in capital being allocated as you suggest?!
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Yes. The first thing it would do is encourage savings rather than consumerism. A pre-requisite for investment.
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What about the paradox of thrift?
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Well, if we all save more money, total revenues decline, yes but that doesn't mean lower growth. Productivity is determined by the consumption-investment ratio, and the demand for money only tells us the degree to which people prefer the utility of money to the utility of goods.
Suppose that we squirrel so much that the level of spending in the economy fell by half. If the remaining spending is still divided into the old consumption-investment ratio, then all prices would simply fall by half and productivity would remain unchanged. |