Fortsätt till huvudinnehåll

Negative Equity panic

The newspapers today are full of talk about negative equity. But interestingly, there was a warning of a major house price fall in 2003.

Writing in The Guardian in February 2003, we read that "Andrew Oswald, professor of economics specialising in the housing market at Warwick University, has predicted that negative equity will start in London and spread out across the country, just as the boom in house prices started in the capital and eventually reached the provinces...

"Prof Oswald has said he expects house prices to fall by 30% between the middle of this year and the end of 2005. This would leave at least 500,000 people with negative equity."

He was right in principle, but as we now know, the boom had four more years to run, which seems to give credence to the notion of an 18 year cycle. Whether there is any truth in that is another matter, but the bust will be far deeper than it would have been had the collapse occurred in 2005. Yet until less than a year ago most "experts" were talking about coming out of the boom with a "soft landing". It now looks as if the worst recession since 1929 is on its way.
Etiketter:

Kommentarer

Skicka en kommentar

Populära inlägg i den här bloggen

Importing people to sustain demand

I got involved in a discussion with a Youtuber called “Philosophy all along”. This was in connection with criticism of Trump’s policy of deporting illegal migrants, which he argued would be bad for the economy as it would reduce demand. This implies that there is a need to import people to sustain demand. There is no obvious reason why a population should not be able to consume everything that the same population produces. If it can not, then something else is going on. It is a basic principle that wages are the least that workers will accept to do a job. Wages are a share of the value added by workers through their wages. The remainder is distributed as economic rent, after government has taken its cut in taxes. Monopoly profit is a temporary surplus that after a delay gets absorbed into economic rent. Land values in Silicon Valley are an example of this; it's like a gold rush. The miners get little out of it. Rent and tax syphon purchasing power away from those who produce the g...
Skicka en kommentar
Läs mer

The dreadfulness of British governance

I wrote to my MP on two entirely separate issues recently. The first was to do with the replacement for the Inter City 125 train, which at £2.6 million per vehicle, is twice as expensive as it ought to be. The second concerned the benefits of a switch from business rate and Council Tax to a tax based on site values. In both cases, the replies were full of spurious, unsubstantiated assertions and completely flawed arguments. This is typical. You will not get an iota of sense from the government on any area of public policy at all - finance, economics, trade and employment, agriculture, housing, health, transport, energy. All junk. If you write to your MP you will invariably receive answers that are an insult to your intelligence, no matter what subject you are writing about. Of course they cannot understand statistics. They are innumerate. Whitehall is staffed with idiots with a high IQ. Look at their IT projects. And mind your purse, they will have that too.
Skicka en kommentar
Läs mer

How much more will the British tolerate?

The British are phlegmatic, tolerant and slow to rouse. Thus there was no great reaction after the terrorist attack in July 2005. The murder of Lee Rigby created a sense of outrage, but nothing more, since it appeared to be an isolated incident. Two serious incidents within a fortnight are another matter. Since the first major terrorist incident in 2001, authority has tried to persuade the public that Islam is a religion of peace, that these were isolated events, or the actions of deranged "lone wolves", having nothing to do with Islam, or to reassure that the chances of being killed in a terrorist attack were infinitesimally small. These assurances are are beginning to wear thin. They no longer convince. If government does not act effectively, people will take the law into their own hands. What, however, would effective action look like? What sort of effective action would not amount to rough justice for a lot of innocent people? Given the difficulties of keeping large n...
Skicka en kommentar
Läs mer