New Labour's crime: house prices out of control

mkpdavies · 15-10-2006, 08:07 AM

http://firstrung.co.uk/articles.asp?...113&cat=44-0-0

Quote:

UKIP press release:

Perhaps one of the most obvious lies/spin from New Labour has been Gordon Brown's "end to boom and bust" line.

The phrase was delivered to reassure the public that Labour would not make the same mistakes as the Tories over the economy when, in reality, they have succumb to the same temptation; the tempation to let a boom run too long than is economically safe because they do not want to "end the good times".

I can see why it is tempting but uncontrolled boom always ends in uncontrolled bust because financial bubbles always burst.

Between 2001-2002, house prices in the UK were left accelerate without the slightest intervention by the government because this wealth illusion (unrealised equity) enabled people to feel rich despite high taxation because they could borrow off their houses in a low interest-rate environment.

How many times did the government repeat the lie that there was no problem as interest rates were so low, when in truth the lower rates, the more people borrow and thus the more sensitive they are to tiny increases in rates.

Low rates with loose borrowing restrictions have created a ticking time bomb that is currently being put back by a weak Bank of England that knows it needs to slow down house prices but is too scared to do so.

All the government and BoE had to do was to effectively increase rates during 2001-2002 when house prices started to accelerate widely and the problem would have been avoided, but because of their lack of action we have a property market that will eventually snap back to its long-term mean and this will be ugly.

As Hayek noted, private ownership of property is the cornerstone to freedom, but increasingly a whole new generation is being denied the chance to maintain this freedom.

Even for those who can stretch themselves to buy, the potential downside risk is worse than we faced in the early 1990's and that was ugly enough.

So what do families like mine do? Well, in the absence of the government acting responsibly and bringing prices down to their long-term average, it is simply too risky to buy a house in England, and thus many of us are now looking outside this country.

This is a much better alternative to finding ourselves with a lifetime's worth of debt on a property that could and should easily lose 20% of its value, just for the government to disown the 'correction' as a normal part of market economics.

Lack of action has left Labour balancing two difficult situations; those who borrowed too much for whom any further interest rate rises could see them going bankrupt and those who have been priced out of home ownership.

This problem was caused by Labour's economic incompetence, and before you say it, no, the Tories have not proposed the tough action that is needed either.

For families like mine, right now, the UK is too expensive and too risky a place to stake our claim to property ownership and thus freedom.

So don't be fooled by those "house prices increased by x% last month" headlines as all they are really telling us is that there is a really ugly period of decline some point in the future.

Neither Labour nor the Tories want to take the necessary tough action to bring about this correction in a controlled way because it will not be popular, however they are fooling themselves. If the government does not bring down house prices in a controlled way, then eventually market forces will pop the bubble.

The UK doesn't need new borrowing ideas like 'mates mortgages' etc, it needs house prices to come back down to their long-term average then house price inflation should be added to the BoE's inflation target to stop the uncontrolled booms happening again.

This is a release from Chads UKIP Home site.

C_steam · 15-10-2006, 08:12 AM

A bit of a flyer IMHO - it is easy to look at things that have gone wrong over the period of a government and then, with 20/20 hindsight, make some unprovable claim that UKIP would have done it differently and better.

Quote:

Neither Labour nor the Tories want to take the necessary tough action to bring about this correction in a controlled way

What would have been far better would have been to identify the problem (as done) and then clearly stated what 'necessary tough action' UKIP would do now if in power to reverse the situation.

Just pointless rhetoric otherwise

Bluemerle · 15-10-2006, 09:27 AM

Brown has raided the pension funds to the tune of £100 billion since he became Chancellor.

That alone should wake up the public, except of course, all those public service workers who have had their pension funds increased at our expense. :evil:

BASILDON BOY · 15-10-2006, 10:33 AM

Now officialy sanctioned by UKIP ro make up policy and issue press releases on behalf of UKIP?

Surely statements like this should be checked by UKIP HQ and issued by a UKIP big hitter like Nogel or another of our MEPs for maximum impact?

Anthony Butcher · 15-10-2006, 10:38 AM

Chad's site is, I believe, officially sanctioned by UKIP now isn't it? Someone told me that it was promoted by the party at the conference?

BASILDON BOY · 15-10-2006, 10:43 AM

So he now writes UKIP policy as well now?

mkpdavies · 15-10-2006, 10:44 AM

Yes. I believe it is. John Moran was using it's material before the election of Nigel to attack Richard.

He also broke the plum jam story.

It has the leaderships full backing, though I would imagine they won't admit to that as it is supposed to be an unoffical site.

BASILDON BOY · 15-10-2006, 10:53 AM

In with the new - and out with the old

brian pearson · 15-10-2006, 12:09 PM

The fact that rising house price bubbles rarely burst slowly is indeed a ticking time bomb imo. The term "wealth illusion" is a good one. The economy is so overly dependant on credit fueled by huge house price inflation that when it does go wrong the downturn could be very ugly.

At the moment we are still in the " need to get on the ladder" phase. Next comes the "lets wait till next month and see how much the prices will drop by" phase. This is when it goes pear shaped.

The loss of tax reciepts from consumers combined with the huge spending of this chancellor could spell very difficult times ahead.

C_steam · 15-10-2006, 12:10 PM

Quote:

Chad's site is, I believe, officially sanctioned by UKIP now isn't it? Someone told me that it was promoted by the party at the conference?

Oh good, another reason for me to feel smug for going!

15-10-2006, 10:44 AM	#7 (permalink)
mkpdavies Uber Member Join Date: Sep 2004 Location: Woking Posts: 31,053 Party: Libertarian Party	Yes. I believe it is. John Moran was using it's material before the election of Nigel to attack Richard. He also broke the plum jam story. It has the leaderships full backing, though I would imagine they won't admit to that as it is supposed to be an unoffical site. __________________ http://brits4ronpaul.blogspot.com/ http://wokinglibertarians.blogspot.com/ http://lpuk.org My ignore list Labour, Blue Labour, Lib Dems

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15-10-2006, 09:27 AM	#3 (permalink)
Bluemerle Uber Member Join Date: Jan 2005 Location: Dorset. Posts: 3,252	Brown has raided the pension funds to the tune of £100 billion since he became Chancellor. That alone should wake up the public, except of course, all those public service workers who have had their pension funds increased at our expense. :evil:

15-10-2006, 10:33 AM	#4 (permalink)
BASILDON BOY Senior Member Join Date: May 2005 Location: N'Djamena, Chad Posts: 1,819	Now officialy sanctioned by UKIP ro make up policy and issue press releases on behalf of UKIP? Surely statements like this should be checked by UKIP HQ and issued by a UKIP big hitter like Nogel or another of our MEPs for maximum impact?

15-10-2006, 10:38 AM	#5 (permalink)
Anthony Butcher Administrator Join Date: Sep 2004 Location: Long Ashton, Bristol Posts: 10,187 Party: None	Chad's site is, I believe, officially sanctioned by UKIP now isn't it? Someone told me that it was promoted by the party at the conference?

15-10-2006, 10:43 AM	#6 (permalink)
BASILDON BOY Senior Member Join Date: May 2005 Location: N'Djamena, Chad Posts: 1,819	So he now writes UKIP policy as well now?

15-10-2006, 10:53 AM	#8 (permalink)
BASILDON BOY Senior Member Join Date: May 2005 Location: N'Djamena, Chad Posts: 1,819	In with the new - and out with the old

15-10-2006, 12:09 PM	#9 (permalink)
brian pearson Senior Member Join Date: Dec 2005 Location: nottinghanshire Posts: 753	The fact that rising house price bubbles rarely burst slowly is indeed a ticking time bomb imo. The term "wealth illusion" is a good one. The economy is so overly dependant on credit fueled by huge house price inflation that when it does go wrong the downturn could be very ugly. At the moment we are still in the " need to get on the ladder" phase. Next comes the "lets wait till next month and see how much the prices will drop by" phase. This is when it goes pear shaped. The loss of tax reciepts from consumers combined with the huge spending of this chancellor could spell very difficult times ahead.