Britain’s Trillion Pound Horror Story

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  • Thu, Nov 18, 2010 - 12:31am

    #11
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    Re: Britain’s Trillion Pound Horror Story

[quote=flo]

Britain was worth £6.95 trillion at the end of 2008, down 2pc from the previous year, according to new figures from the Office for National Statistics (ONS). The total, which has fallen for the first time since the last recession in 1992, takes into account all buildings, roads, factories, cars, trains, machinery and financial assets by the end of 2008, minus debts.

The fall was driven largely by a fall in the value of housing which, at £3.7 trillion, constitutes more than half the nation’s net worth.

link

While I get your point, clearly the UK still has positive value, after all debts paid, before the land value is added in. This is not to suggest that all is well in the UK, but not quite as bleak as you have painted it either. Residential housing alone is worth 3.7B, before all the other buildings are added in.

[/quote]

Flo,

I have a two-fold issue with the true value of housing as a projection of what is pertained in the Crash Course. At its most stark, the over-all statistical value’s of housing in the UK have lost something close to a third of there worth since mid 2007 via devaluation in the north of the country. In my book, the drop in price will be equal in parity by 2015, to 1998 prices. These are not however, stated white-paper projection numbers, but from personal experience of the current market in pulling people out of mortgaged housing, and into rental, so that they could draw upon any remaining equity, or remove all chance of being cornered by heavy future negative equity, such as one lady I recently quoted as having gone under water with her equity on her mortgage by £31,500, just between July of 2007, and October of 2010, on a property valued at £94,500 in 2007, now valued at just £63,000.

The second pointer draws on 2014, when the true power of peak oil will be in full effect. How then is it possible to pay forward a mortgage if the energy to create the money supply is shrinking? In the instance of capital growth and gdp expansion of the UK falling into recession under 3% growth, what of the IEA figure’s projecting 6.7% global decline? I may be getting my wires crossed here somewhere, but surely something has to add up here?

I read recently in an article I’ve mislaid that 17% of house value stock was index linked to state pension’s. How does this play out?

I also note that the higher value property is more likely owned by a mature demographic. Who then do they sell to if the value they state is far above what could be afforded by the younger demographic? Therefore, if all of the mature demographic were to downsize … they won’t, but what if …

Speculation I know, but this has to be the best site to discuss this incomplete jigsaw-puzzle that keeps me up nights writing here … Smile

Paul

  • Thu, Nov 18, 2010 - 12:40am

    #12
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    Re: Britain’s Trillion Pound Horror Story

[quote=Damnthematrix]

I only watched the first clip you posted, and another thing that amazed me is how in the one doco they can show the futility of making budgets cuts (pulling egg cups out of a fast filling bath) and still manage to say it would take “generations” to pay the money back….

I wish I could believe in fairies too…

Mike

[/quote]

… you’ll be thinking of the Cottingley Fairies then???

I mean, what a perfect visual for this financial madness, in using an egg-cup in try to empty a bathtub with both its taps running!!!

Out of curiosity, how is the housing sales market going in Australia from your own opinion Mike?

My Best,

Paul

  • Thu, Nov 18, 2010 - 12:44am

    #13
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    Re: So what is the proper equilibrium?

[quote=horstfam]

I’m part way through the second video- I’m surprised at how well it’s done (and, of course, the content is excruciating). But, my question for the brain trust here is: at what percentage is the government at equilibrium with the tax payers? Surely there must be some level of government spending that is the limit that shouldn’t be crossed- something like if government spending crosses over 10% of GDP, then you can begin to hear the huge “flushing” sound kick in. Can’t we, as humanity, say, “Alright Mr. Government, you can spend to this point- and no more, end of story!” At least with this as a reference point, then we can begin to work towards existing perhaps a bit longer as a society, rather than a “free-for-all”.

[/quote]

Hi Horstfam,

I hope you watched to the end, because the true horror of a government that has tripled in size since the late 70’s, and is now sucking the country dry, has basically payed out more in benefits through 2009 alone,  than it took in as taxes …

Paul

 

  • Thu, Nov 18, 2010 - 04:59am

    #14
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    Re: Britain’s Trillion Pound Horror Story

[quote=Vanityfox451]

Out of curiosity, how is the housing sales market going in Australia from your own opinion Mike?

My Best,

Paul

[/quote]

Here in my town, it’s ground to a total halt, prices falling.

AND………

Mr Grantham famously reported a year before the global financial crisis: “In five years, I expect that at least one major bank (broadly defined) will have failed and that up to half the hedge funds and a substantial percentage of the private equity firms in existence today will have simply ceased to exist”.

He said yesterday that Australia had an unmistakable housing bubble and that prices would need to come down by 42 per cent to return to the long-term trend.

“You cannot possibly miss it,” he said.

  • Thu, Nov 18, 2010 - 04:41pm

    #15
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    Re: Britain’s Trillion Pound Horror Story

EXCELLENT!!!

  • Thu, Nov 18, 2010 - 11:29pm

    #16
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    Re: Britain’s Trillion Pound Horror Story

For those in the UK the program is available on the Channel4 website’s 4OD. This is an excellent documentary.

http://www.channel4.com/programmes/britains-trillion-pound-horror-story/

There is also a Channel4 Dispatches episode entitled Riding Europe’s Gravy Train about how European Ministers (EMP’s) are making, and thus costing us, a fortune through expenses etc. Also an excellent program worth watching.

http://www.channel4.com/programmes/dispatches/episode-guide/series-58/episode-4

 

  • Thu, Nov 18, 2010 - 11:35pm

    #17
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    Re: So what is the proper equilibrium?

[quote=horstfam]

I’m part way through the second video- I’m surprised at how well it’s done (and, of course, the content is excruciating). But, my question for the brain trust here is: at what percentage is the government at equilibrium with the tax payers? Surely there must be some level of government spending that is the limit that shouldn’t be crossed- something like if government spending crosses over 10% of GDP, then you can begin to hear the huge “flushing” sound kick in. Can’t we, as humanity, say, “Alright Mr. Government, you can spend to this point- and no more, end of story!” At least with this as a reference point, then we can begin to work towards existing perhaps a bit longer as a society, rather than a “free-for-all”.

[/quote]

There is a study on optimal goverment spending for maximal ‘quality of life’ here: http://www.ncpa.org/pdfs/st232.pdf

The report is from 2000, so it is a bit, but I think it is still relevant. The plots manage to show that goverment spending increases quality of life – to some point, and thereafter slightly decreases it. The optimum seems to fall between 17-35%; the paper prefers to focus on $/capita spent rather than % of GDP.

Otherwise, the documentary was a powerful piece indeed. The reality of the British predicament sinks in. Also, as a Swede, there has been some doubt within me whether the private sector is best suited to take care of things like health care or education. This documentary shakes that belief. (Side note: there is good documentary that compares different health care systems around the world:  http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/view/?utm_campaign=viewpage&utm_medium=grid&utm_source=grid )

 

  • Thu, Nov 18, 2010 - 11:38pm

    #18
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    Re: Britain’s Trillion Pound Horror Story

Mike,

Hey, “… and now back to our regular scheduled viewing … ” Frown

I’ve just had the pleasure of meeting a friend of a friend at the weekend who’s partner is thinking about purchasing his first house in Australia next year. Could I disuade her? These people are lemmings. It’s a time bomb ticking …

Thanks as ever for your input Mike,

Paul

  • Fri, Nov 19, 2010 - 12:13am

    #19
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    Re: Britain’s Trillion Pound Horror Story

I caught this interview with Catherine Austin Fitts about a day ago

Great interview. What she says around 6:30 in the 3rd segment about attack poodles made me think of Julian Assange of Wikileaks.

 

  • Fri, Nov 19, 2010 - 07:47pm

    #20
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    Re: Britain’s Trillion Pound Horror Story

UK PM’s aide quits after playing down austerity impact

http://www.abc.net.au/news/stories/2010/11/20/3071863.htm?section=justin

One of Prime Minister David Cameron’s business advisors has quit after causing outrage by saying that Britons had “never had it so good”.

David Young, a member of the House of Lords hired by Cameron earlier this month as his enterprise adviser, told the Daily Telegraph that a drop in mortgage interest rates amid the downturn had benefited many homeowners.

“For the vast majority of people in the country today, they have never had it so good ever since this recession – this so-called recession – started,” the 78-year-old said in Friday’s edition of the newspaper.

Mr Cameron’s office immediately condemned the remarks as “offensive” and “inaccurate” and Mr Young, a former trade and industry minister under then prime minister Margaret Thatcher in the 1980s, was forced to issue an apology.

The apology was apparently accepted by the prime minister, who told reporters: “He should get on with what he has been doing and he was obviously extremely embarrassed and he was very quick to retract completely what he said.”

But later, a spokeswoman for Mr Cameron said Mr Young had offered his resignation and it had been accepted.

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