Moneyweek: The End of Britain

lancasterlad · Post by **lancasterlad** » 17 Sep 2013, 14:30

OK, they want to get subscriptions but this article and video give their point of view.

Article - http://moneyweek.com/endofbritain/

Video - http://pro.moneyweek.com/myk-eob-tpr-cut/PMYKP905

woodburner · Post by **woodburner** » 17 Sep 2013, 14:51

Not sure where, but you will find this on PS already.

lancasterlad · Post by **lancasterlad** » 17 Sep 2013, 14:53

I did search before posting but couldn't see it. Sorry if it's already posted.

woodburner · Post by **woodburner** » 17 Sep 2013, 14:55

Search facilities on phpBB leave something to be desired.

UndercoverElephant · Post by **UndercoverElephant** » 17 Sep 2013, 15:10

They are predicting a massive property crash, and I'm not sure they are right.

Their analysis of the situation is spot on, apart from one thing. What is happening right now has never happened before on the global scale it is happening now, and that means the outcome is going to be different to all the times something like this happened on a national or regional scale. In other words, it is effectively the whole world that is in trouble, because everywhere is using the same fiat currency system - even the countries that aren't broke (e.g. China). In previous instances when a country or region suffered financial collapse, that collapse was measured relative to the non-collapse of the rest of the world. But what if it is the whole world that is going down together? This has not happened.

My guess is that we are going to see money-printing on a scale unprecedented even now. Every country with fiat money will keep printing, resulting in a runaway house price boom - we are just as likely to see hyperinflation in house prices as we are to see a house price crash.

I don't think anybody can predict how this ends, apart from that it is going to be very messy. There is simply NO way for anybody to protect themselves. Doesn't matter if your wealth is in bonds, stocks/shares, cash, property or gold. Any of them could go tits up, one way or another.

Post by **kenneal - lagger** » 17 Sep 2013, 15:31

I don't think that you will see a runaway house price boom in the situation where governments are printing huge amounts of money. People won't commit to spending that amount of money in a dodgy financial situation. With high inflation/hyper inflation the price of a house could double in the time it takes to get the purchase through. Sellers are going to want/need a hike in the price half way through. That sort of thing will kill what market there is left.

RenewableCandy · Post by **RenewableCandy** » 17 Sep 2013, 15:36

Aren't they starting to slow QE down in the USA tomorrow? (I read it on Kunstlerfeck Nation or somesuch). I wonder what effect that will have?..

jonny2mad · Post by **jonny2mad** » 17 Sep 2013, 15:54

lead will keep its value and porridge .

bullets and beans will stay a good investment

I have a 2 gauge punt gun, but I’m on the lookout for maybe a 4 gauge double barrel elephant gun so I can cradle it while eating my collapse popcorn that I have a stored on my old rocking chair

yup I will go” I warned them could see this a coming sure enough

as the cannibal hordes run hither and thither devouring the unwary, likely a crowd chasing biff down the road as he tries to out distance them in fine running sandals

Anyways stock up, buy your running sandals while there are still some to buy

we dont know whats going to happen but stored stuff you need are what to do now

RenewableCandy · Post by **RenewableCandy** » 17 Sep 2013, 16:24

Porridge (well, oats in general) is grossly under-rated.

fifthcolumn · Post by **fifthcolumn** » 17 Sep 2013, 17:32

So I'm not arguing that taking on a huge amount of debt is a "good thing" but....

Since the argument is that the debt has risen and the hypothesis is that this means it's now impossible to pay back: it's important to look at the chart of an exponential rise and ask what it means.

Well: is the pound still worth what it was then?
Is income still the same as what it was then?

If the answers are yes and yes then Britain is indeed fecked.
If not then what is the debt/income service ratio? Is it higher or lower?

Anyone old enough to remember what the average income was in Britain in 1970? By proxy I can only remember the price of a packet of crisps: 3p or thereabouts. What's a price of a packet of crisps today? 45p?
I can remember back in 1990 the starting salary for someone out of yooni was about eight grand a year. What is it now? 15? I have no idea.

I doubt, seriously, however, that the avergage income in 1970 was anywhere near what it is today. So... I hypothesis that things are bad, but *not that bad*.

Over to you lot.

RenewableCandy · Post by **RenewableCandy** » 17 Sep 2013, 17:36

In my experience income has tripled since about 1980 (graduate then ca. £7,000, now ca £21,000).

House prices are up by a factor of 10 (ten): flat in Brighton then £20k, now £200k.

Sorry, I seem to have lost the bit that 5th was replying to, but does that help at all?

UndercoverElephant · Post by **UndercoverElephant** » 17 Sep 2013, 17:43

kenneal - lagger wrote:I don't think that you will see a runaway house price boom in the situation where governments are printing huge amounts of money. People won't commit to spending that amount of money in a dodgy financial situation.

Won't they? They won't do so if it requires taking on debt, but what if the alternative is leaving money in a bank, or an investment perceived to be even riskier? At least if you own a house, then you own it.

fifthcolumn · Post by **fifthcolumn** » 17 Sep 2013, 17:49

Candy,

So looks like Graduates are basicaly fecked (if it's a single income).

But here's another question: was the family paying the mortgage in 1970 a single earner mainly (whereas today usually the family is a double earner)?

If so then you have to use family income.

If this is the case then on the doomer side I'd argue that house prices simply can't go much higher because there is no third person to help pay the mortgage.

The limiting factor on credit booms is income to service the debt.

JavaScriptDonkey · Post by **JavaScriptDonkey** » 17 Sep 2013, 17:59

Yep, the time is long gone when one average earner can keep their family and but a house.
Two average incomes are now required in most places with a healthy dollop of inherited cash required on top for Southerners.

The question is for how much longer can we keep stealing from the next generation?

fifthcolumn · Post by **fifthcolumn** » 17 Sep 2013, 18:04

lynezian,

Yeah don't disagree mate. Looks to me that the way it goes is that credit boom takes place due to perceived affordability (and or cheap money lent by banks) - debt zooms up to the maximum carrying capacity and then a bust takes place as the last person left holding the bag realizes there is nobody else left who can afford to pay a higher price. Then the shit hits the fan and most of the people struggle on for up to ten years paying down their huge millstone. In the meantime, the next generation comes on at a *nominally* (though not actually) higher rate of income and over the course of the next ten years increases their earnings capacity enough to believe they can cover it and the bag of sh!te is passed to them. At no point does the credit bubble continue increasing ad-infinitum past the carrying capacity because it can't.

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Moneyweek: The End of Britain

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