I’ll say it again. I think this site routinely underestimates the chances of Boris winning a majority at the next election. It’s not a certain (depends how far down the shitter of inflation the economy goes before correcting) but I think it’s more likely than not.
I think Boris Johnson's chances are almost entirely in the hands of the Russian leadership and the Ukrainian people.
If Putin falls, Russia withdraws from Ukraine, and the oil and gas starts flowing again, the cost of living crisis will rapidly dissipate, and Boris will be a hero. In this scenario, I agree completely that Boris is highly likely to be reelected.
On the other hand, if the conflict drags on, people's utility bills rise sharply, cutting disposable spending, and pushing the UK into a recession, then I suspect he will be lucky to avoid a drubbing.
Just to follow up on this one, it's the second order effects that are the killer.
Right now, people are secure in their jobs, with record vacancies. Rising utility bills (for now) are merely an annoyance that necessitates some lifestyle changes. Maybe go out a little less; or wait on the purchase of that PS5; or choose Tesco Value instead of Finest.
People react to lower disposable income by maybe dipping into their savings a bit, and by spending a little less.
That lower spending is the problem, because it means Joes' Diner, which only barely survived Covid, is now getting less traffic in through the door. And that monthly rent isn't going anywhere. And take out orders are now down 20% too. If they're lucky, they'll be able to get by by just losing one of the waiting staff and someone from the kitchen. If things are tighter, then maybe Joe's has to shut, and everyone has lost their job.
Suddenly those record job vacancies (and is there any more lagging market than employment?) aren't there any more.
But as I said, so long as Ukraine is resolved (i.e. Putin falls), then Boris will be fine. People understand a little transient discomfort, and this isn't as bad as Covid.
If it does not, however, and the sanctions drag on, then the UK economy (and most of the West) will fall into recession, and that will have consequences.
Hopefully those consequences will fall politically on those who are prosecuting this war with not a shred of concern for the British economy or public.
You mean Putin? 🤔
I don't like Boris Johnson, but I could forgive him a triumphal party conference in the autumn if it followed a Ukrainian victory.
It would be Boris wot won it then, not the geriatric Biden or the too hesitant of offending Putin Macron and Scholz
Without wishing to denegrate the UK contribution to Ukraine, the US contribution under the "geriatric Biden" as you put it is just VASTLY more than everyone else in the world put together.
You'd expect that as a military superpower which remains very wealthy with a huge arms industry. And, as I say, not knocking the UK contribution. But there is simply no comparison between anyone else and the US.
In terms of anti tank missiles for instance, pivotal for the Ukranians containing the Russian advance, it was the UK which supplied the most
Aside from cherry picking an admittedly important type of military equipment, this is simply untrue. The US has been pumping Javelins into Ukraine at a vast rate - about one-third of its own (massive) stock.
Again, no wish to denegrate the UK contribution, but you're just living in an absolute John Bull fantasy world in terms of numbers.
It’s been a salutary reminder to the world of the absolute size and power of the US. For years people have been talking about it (wrongly IMHO) being in decline but it’s not - only China could pull that kind of spending out of its backside and provide the sheer volume of weaponry. America is not finished it’s been resting.
I do think in the UK’s defence it’s allowed others such as the US to do everything they can as if the UK can do what it has done with a relatively (to the US) small military it would have been shaming to others if they hadn’t done anything. Same applies of course to a number of Baltic/east European countries.
The UK and friends probably greased the wheels - the US provided the locomotive.
Are you denying America is in RELATIVE decline? That’s fatuous. Of course it is. At the end of World War 2 the USA alone constituted 50% of global GDP, even in the Clinton years it was well over 30%. Now it is about 20% and dropping, inexorably
That is a pretty huge fall, in just 70 years; the upside is that this has happened because so many other countries have lifted billions out of poverty, especially in Asia, especially in China. It’s good news for Homo Sapiens
So America is in relative decline, that is undoubted, and that affects its ability to influence the world - as we see from Iraq to Afghanistan. But is America in ASBOLUTE decline?
Absolute decline is fairly rare, at least in modern times. The UK never experienced it, properly, even as it fell from global supremacy.
But there is an argument that America is, in some ways, facing absolute decline. Drugs, race, culture wars, BLM, homelessness, and so on. Much of it superbly stoked via the Chinese and Russians on social media
You are probably absolutely correct however I have a belief in the US - which the Japanese should have done (and about the UK Liverpool fans and denizens of Hartlepool) that there is something inherently great in their cultures.
We can be boorish, fat, lazy, complacent, smug, whatever, but…… when the chips are down those tools at US college football matches are the guys who go and storm Iwo Jima and the guys booing abide with me at wenbley are the guys who will be brewing up tea in between fighting whoever they need.
A lot of people after WW1 wanted the US to assume it’s mantle and it retreated to an element of isolationalism and people thought they didn’t really have it in them - and then the US eventually showed it did and by god it did.
So it might not be the hegemon it was for actually a short period in time but bugger me no other country can turn it on when it needs to at the moment.
I’d love to think you are right. But my head says no, not at all
America is now in absolute cultural decline, to my mind. It has immense power, still, but the trajectory is set. It feels like it is the Roman Empire but it is *Rome* moving into its decadent, Eastern, Byzantine era (which, to be fair, continued for a LONG time, and Byzantium was powerful centuries after Rome was rubble)
The poignancy is that this cultural decline has been greatly accelerated by the internet and social media, which are, largely, American inventions, turned on America
I honestly hope you are wrong - not just for the joy that it will be the first time ever in your life you have been wrong - but I think there is an inherent cultural thing in Americans where when they feel “attacked” they go strong together.
I’m sure over time people have mocked there cultural decline because “talkies”, Hollywood, the playboy mansion, Woodstock, softness pre 9-11 etc but they really don’t like anyone sticking it to them and forget their differences quite quickly at that point. Pre tue world wars there was lots of talk about how a large slug of the population was “German” and “Irish” so they had no chance of stepping in but they realised their idea of freedom and their interests financially and geopolitically weee at risk and then they went full “USA, USA, USA” and the rest was history.
And it’s hard to say a country is in cultural decline when their “culture” - language, arts, fashion, music, movies etc are still the ones leading the way and being emulated to the masses.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
Agreed. Getting asset price falls like that is a bit cutting off your nose to spite your face. The asset rich will lose some asset value but will still have the cash they had etc. The cash poor will be made even poorer and will struggle the most.
Inflation is a self correcting way the economy takes money out of the economy. By devaluing assets via inflation real money is taken out, without needing to physically take any out. That process has already begun and needs to run its course.
A few years of prices and wages growing 10% but unearned incomes and asset prices frozen in value would very rapidly see a rebalancing of the economy away from unearned wealth and assets towards those who earn incomes.
But we've still got ultra low rates so there's no guarantee that asset prices won't keep rising and keep up with inflation.
If inflation spikes then unearned incomes struggle to keep up with earned incomes. Those with earned incomes get pay rises to meet their obligations, but unearned or fixed incomes see their incomes devalue in real terms which means they can't afford to buy assets anymore.
Workers buying assets isn't a problem, we want working people to be able to afford their own homes. The problem is non working parasites taking and accumulating all the wealth for themselves and pulling up the ladder after they'd finished working, not wanting to pay what they owe for goods and services.
Hmm, that seems an unlikely outcome to me. With ultra low interest rates baked in why wouldn't the asset rich continue to accumulate more assets?
Pushing interest rates up is the only way to push asset prices down and create a more equal society. The government clearly doesn't have the cojones to put non primary housing asset surcharges up to punishing levels to dissuade BTL so interest rates will need to be the way to do it.
And why should it? Literally hundreds of MP's are BTL landlords. Not to mention Tory Party members.
Osborne had the balls to do it and voters responded in 2015. Taking action against landlords is unpopular with a few hundred thousand landlords but extremely popular with millions of people trapped in the private rental sector pissing their money away paying off someone else's mortgage or someone else's retirement.
Fuck the members, because these are election winning policies.
Too many honourable members have been doing too much fucking recently. Don't give them any more ideas...
More seriously, you may be right, but I suspect all that would happen instead is you would see a proliferation of small limited liability companies being set up to hold the asset (house/flat) instead.
Ah but then you can create stamp duty for that too and on transfer into a company.
Stamp duty is a bad tax as it is a tax on mobility, so people cannot afford the cost to move. Applying penal rates to BTL landlords may stop people entering the market, but doesn't force them to leave, and in any case is likely to drive up the rents that they ask.
More effective would be to have an annual property tax, with the tax going to councils in order to provide cheap social housing. This would drive down market rents by providing an alternative. Indeed that was the way we did it before council housing was sold off on the cheap, and wound up as BTL.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
I'm not sure the bottom deciles are most leveraged. One example is pensioners, on low nominal incomes but usually nil debt. I'd imagine the decile 3-9 homebuyers will be most affected, and especially higher earners in frothy markets.
Da fing iz why would raising rates crash asset prices when *real* rates is more negative than any time in history? 9% inflation, doubling interest rates from 1 to 2 only knocks the real interest rate down from -8 to -7.
Indeed.
Plus the problematic parasites that Max has accurately identified in the past tend to not be highly leveraged. The overwhelming majority of first time buyers need a mortgage but most BTL landlords are cash purchasers. So raising rates aids cash buyers but hurts borrowers. Indeed many BTL purchasers struggle to get a mortgage as they're old and don't have an income.
Inflation on the other hand aids borrowers like first time buyers, but hurts the cash rich cash purchasers.
If the purchasing with cash BTL types on a fixed income find their income squeezed then they may not be able to afford assets even if real interest rates are negative.
You have lost me there. Cash rich cash purchasers just gonna purchase even quicker, and become cash poor asset rich.
Inflation makes the cash rich cash poorer though. If you're on a fixed income and inflation goes up you need to reserve more cash for goods and services and have less for assets.
Yeah but that's why they'll push their money into assets rather than keep it in cash, whatever they get from rising asset prices will be better than -7% they get from keeping it in cash.
They're already doing that.
Inflation will devalue their cash though. They'll have higher costs but no more cash, while workers will have more.
Not really because their cash will be invested into rentier asset classes like property or dividend bearing shares, so as those asset values rise they will generate more cash, a real drop of 2-3% for a couple of years is where wage growth will probably come in at as well.
No, the only way to actually get asset prices down is to raise interest rates and the BoE need to stop worrying about the societal or social impact of raising rates because it's not within their remit. That was the whole point of not having the politicians in charge because they would be unable to make the tough choices and now the Bank seems paralysed by the same inaction we expect from the politicians who want to swerve a housing crash in the run up to an election.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
But cutting asset prices is the first step to reducing housing costs for ordinary people.
No. Letting inflation run is.
The problem in the past two decades is we suppressed wage etc inflation too much so money went to assets instead of wages. We need to rebalance that.
Seven years of 10% wage growth for ordinary people but assets frozen in value would see assets halve in real terms costs/value but without any negative equity and without squeezing the living standards of ordinary people.
The myth was allowed to set in that inflation went away. It didn't, it just accumulated with assets, meaning wealth was transferred from earned to unearned income. Inflation in the rest of the economy now can rebalance society away from unearned incomes back to earners benefitting instead.
If you think Mr and Mrs Average are going to get 10% pay rises for one year, let alone seven, then I have a bridge etc., etc.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
Agreed. Getting asset price falls like that is a bit cutting off your nose to spite your face. The asset rich will lose some asset value but will still have the cash they had etc. The cash poor will be made even poorer and will struggle the most.
Inflation is a self correcting way the economy takes money out of the economy. By devaluing assets via inflation real money is taken out, without needing to physically take any out. That process has already begun and needs to run its course.
A few years of prices and wages growing 10% but unearned incomes and asset prices frozen in value would very rapidly see a rebalancing of the economy away from unearned wealth and assets towards those who earn incomes.
But we've still got ultra low rates so there's no guarantee that asset prices won't keep rising and keep up with inflation.
If inflation spikes then unearned incomes struggle to keep up with earned incomes. Those with earned incomes get pay rises to meet their obligations, but unearned or fixed incomes see their incomes devalue in real terms which means they can't afford to buy assets anymore.
Workers buying assets isn't a problem, we want working people to be able to afford their own homes. The problem is non working parasites taking and accumulating all the wealth for themselves and pulling up the ladder after they'd finished working, not wanting to pay what they owe for goods and services.
Hmm, that seems an unlikely outcome to me. With ultra low interest rates baked in why wouldn't the asset rich continue to accumulate more assets?
Pushing interest rates up is the only way to push asset prices down and create a more equal society. The government clearly doesn't have the cojones to put non primary housing asset surcharges up to punishing levels to dissuade BTL so interest rates will need to be the way to do it.
And why should it? Literally hundreds of MP's are BTL landlords. Not to mention Tory Party members.
Osborne had the balls to do it and voters responded in 2015. Taking action against landlords is unpopular with a few hundred thousand landlords but extremely popular with millions of people trapped in the private rental sector pissing their money away paying off someone else's mortgage or someone else's retirement.
Fuck the members, because these are election winning policies.
Too many honourable members have been doing too much fucking recently. Don't give them any more ideas...
More seriously, you may be right, but I suspect all that would happen instead is you would see a proliferation of small limited liability companies being set up to hold the asset (house/flat) instead.
Ah but then you can create stamp duty for that too and on transfer into a company.
Stamp duty is a bad tax as it is a tax on mobility, so people cannot afford the cost to move. Applying penal rates to BTL landlords may stop people entering the market, but doesn't force them to leave, and in any case is likely to drive up the rents that they ask.
More effective would be to have an annual property tax, with the tax going to councils in order to provide cheap social housing. This would drive down market rents by providing an alternative. Indeed that was the way we did it before council housing was sold off on the cheap, and wound up as BTL.
No arguments from me, Foxy. I'd do a one off 15% for any second property and then an annual 3% with five yearly valuations at the expense of the property owner. Hypothecate the money for housing associations and refurbishment/expansion of social housing for sale and rent.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
I'm not sure the bottom deciles are most leveraged. One example is pensioners, on low nominal incomes but usually nil debt. I'd imagine the decile 3-9 homebuyers will be most affected, and especially higher earners in frothy markets.
Da fing iz why would raising rates crash asset prices when *real* rates is more negative than any time in history? 9% inflation, doubling interest rates from 1 to 2 only knocks the real interest rate down from -8 to -7.
Indeed.
Plus the problematic parasites that Max has accurately identified in the past tend to not be highly leveraged. The overwhelming majority of first time buyers need a mortgage but most BTL landlords are cash purchasers. So raising rates aids cash buyers but hurts borrowers. Indeed many BTL purchasers struggle to get a mortgage as they're old and don't have an income.
Inflation on the other hand aids borrowers like first time buyers, but hurts the cash rich cash purchasers.
If the purchasing with cash BTL types on a fixed income find their income squeezed then they may not be able to afford assets even if real interest rates are negative.
You have lost me there. Cash rich cash purchasers just gonna purchase even quicker, and become cash poor asset rich.
Inflation makes the cash rich cash poorer though. If you're on a fixed income and inflation goes up you need to reserve more cash for goods and services and have less for assets.
Yeah but that's why they'll push their money into assets rather than keep it in cash, whatever they get from rising asset prices will be better than -7% they get from keeping it in cash.
They're already doing that.
Inflation will devalue their cash though. They'll have higher costs but no more cash, while workers will have more.
Not really because their cash will be invested into rentier asset classes like property or dividend bearing shares, so as those asset values rise they will generate more cash, a real drop of 2-3% for a couple of years is where wage growth will probably come in at as well.
No, the only way to actually get asset prices down is to raise interest rates and the BoE need to stop worrying about the societal or social impact of raising rates because it's not within their remit. That was the whole point of not having the politicians in charge because they would be unable to make the tough choices and now the Bank seems paralysed by the same inaction we expect from the politicians who want to swerve a housing crash in the run up to an election.
If they're buying for cash as 2/3rds of BTL purchasers are then how does Bank raising rates hurt them? It just hurts the people they're competing against to buy homes.
"I would imagine a lot of thought has been given; the Speaker receives wise counsel from various aides. Let's imagine the evidence against this MP is fairly compelling (too early for us to know, I recognise). You mention safeguarding in schools; does the Speaker not have a similar obligation to protect female staff (of whom there are hundreds, I don't mean MPs) in the HoC from a potentially predatory male?"
This is a fair point.
But we've been told that there are allegations against ca. 50 MPs.
If the Speaker is concerned about the protection of staff from potentially predatory MPs, why aren't all these MPs being asked to stay away from the Commons?
Without wishing to defend any misconduct there is, surely, a difference between an unwanted (and rebuffed) advance, a drunken text message, a history of sexist remarks, or an eyewatering Google history... and an allegation of rape and systematic sexual abuse over several years.
It doesn't diminish misconduct to understand that there are levels of seriousness.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
But cutting asset prices is the first step to reducing housing costs for ordinary people.
No. Letting inflation run is.
The problem in the past two decades is we suppressed wage etc inflation too much so money went to assets instead of wages. We need to rebalance that.
Seven years of 10% wage growth for ordinary people but assets frozen in value would see assets halve in real terms costs/value but without any negative equity and without squeezing the living standards of ordinary people.
The myth was allowed to set in that inflation went away. It didn't, it just accumulated with assets, meaning wealth was transferred from earned to unearned income. Inflation in the rest of the economy now can rebalance society away from unearned incomes back to earners benefitting instead.
If you think Mr and Mrs Average are going to get 10% pay rises for one year, let alone seven, then I have a bridge etc., etc.
Well yes indeed, and by not putting interest rates up the asset rich will continue to concentrate wealth at the very top as they continue to borrow cheap money and buy everything in sight.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
Agreed. Getting asset price falls like that is a bit cutting off your nose to spite your face. The asset rich will lose some asset value but will still have the cash they had etc. The cash poor will be made even poorer and will struggle the most.
Inflation is a self correcting way the economy takes money out of the economy. By devaluing assets via inflation real money is taken out, without needing to physically take any out. That process has already begun and needs to run its course.
A few years of prices and wages growing 10% but unearned incomes and asset prices frozen in value would very rapidly see a rebalancing of the economy away from unearned wealth and assets towards those who earn incomes.
But we've still got ultra low rates so there's no guarantee that asset prices won't keep rising and keep up with inflation.
If inflation spikes then unearned incomes struggle to keep up with earned incomes. Those with earned incomes get pay rises to meet their obligations, but unearned or fixed incomes see their incomes devalue in real terms which means they can't afford to buy assets anymore.
Workers buying assets isn't a problem, we want working people to be able to afford their own homes. The problem is non working parasites taking and accumulating all the wealth for themselves and pulling up the ladder after they'd finished working, not wanting to pay what they owe for goods and services.
Hmm, that seems an unlikely outcome to me. With ultra low interest rates baked in why wouldn't the asset rich continue to accumulate more assets?
Pushing interest rates up is the only way to push asset prices down and create a more equal society. The government clearly doesn't have the cojones to put non primary housing asset surcharges up to punishing levels to dissuade BTL so interest rates will need to be the way to do it.
And why should it? Literally hundreds of MP's are BTL landlords. Not to mention Tory Party members.
Osborne had the balls to do it and voters responded in 2015. Taking action against landlords is unpopular with a few hundred thousand landlords but extremely popular with millions of people trapped in the private rental sector pissing their money away paying off someone else's mortgage or someone else's retirement.
Fuck the members, because these are election winning policies.
Too many honourable members have been doing too much fucking recently. Don't give them any more ideas...
More seriously, you may be right, but I suspect all that would happen instead is you would see a proliferation of small limited liability companies being set up to hold the asset (house/flat) instead.
Ah but then you can create stamp duty for that too and on transfer into a company.
Stamp duty is a bad tax as it is a tax on mobility, so people cannot afford the cost to move. Applying penal rates to BTL landlords may stop people entering the market, but doesn't force them to leave, and in any case is likely to drive up the rents that they ask.
More effective would be to have an annual property tax, with the tax going to councils in order to provide cheap social housing. This would drive down market rents by providing an alternative. Indeed that was the way we did it before council housing was sold off on the cheap, and wound up as BTL.
It is ironic to hear hyper-Thatchetite posters complaining about things like BTL, which are simply the result of four decades of neoliberal economic policies.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
I'm not sure the bottom deciles are most leveraged. One example is pensioners, on low nominal incomes but usually nil debt. I'd imagine the decile 3-9 homebuyers will be most affected, and especially higher earners in frothy markets.
Da fing iz why would raising rates crash asset prices when *real* rates is more negative than any time in history? 9% inflation, doubling interest rates from 1 to 2 only knocks the real interest rate down from -8 to -7.
Indeed.
Plus the problematic parasites that Max has accurately identified in the past tend to not be highly leveraged. The overwhelming majority of first time buyers need a mortgage but most BTL landlords are cash purchasers. So raising rates aids cash buyers but hurts borrowers. Indeed many BTL purchasers struggle to get a mortgage as they're old and don't have an income.
Inflation on the other hand aids borrowers like first time buyers, but hurts the cash rich cash purchasers.
If the purchasing with cash BTL types on a fixed income find their income squeezed then they may not be able to afford assets even if real interest rates are negative.
BTL purchasers are definitely not majority cash buyers. They're usually leveraged up to the eyeballs and very sensitive to falls in house prices as it also has a knock on effect in their rental value. For those few cash buyers out there, yes there's a big gain from falling asset prices but I've said plenty of times the stamp duty surcharge should be raised until it reaches 3-5 years of investment yield so something like 10-15% rather than the pathetic 3% the government has been too scared to raise.
Not seen more recent figures but I'd expect its still majority cash. Indeed the trend is more and more to cash.
When house prices have been essentially artificially forced up by 20% in a couple of years, BTL investors are hardly likely to suffer from a fall less than apocalyptic as they can just sit on any mortgage they might have (which is usually limited to 75% anyway), and are usually buy and hold investors if not basically buy and flip developers - which is a different business.
The Osborne tax has further incentivised long-term buy and hold, which is what has happened.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
I'm not sure the bottom deciles are most leveraged. One example is pensioners, on low nominal incomes but usually nil debt. I'd imagine the decile 3-9 homebuyers will be most affected, and especially higher earners in frothy markets.
Da fing iz why would raising rates crash asset prices when *real* rates is more negative than any time in history? 9% inflation, doubling interest rates from 1 to 2 only knocks the real interest rate down from -8 to -7.
Indeed.
Plus the problematic parasites that Max has accurately identified in the past tend to not be highly leveraged. The overwhelming majority of first time buyers need a mortgage but most BTL landlords are cash purchasers. So raising rates aids cash buyers but hurts borrowers. Indeed many BTL purchasers struggle to get a mortgage as they're old and don't have an income.
Inflation on the other hand aids borrowers like first time buyers, but hurts the cash rich cash purchasers.
If the purchasing with cash BTL types on a fixed income find their income squeezed then they may not be able to afford assets even if real interest rates are negative.
You have lost me there. Cash rich cash purchasers just gonna purchase even quicker, and become cash poor asset rich.
Inflation makes the cash rich cash poorer though. If you're on a fixed income and inflation goes up you need to reserve more cash for goods and services and have less for assets.
Yeah but that's why they'll push their money into assets rather than keep it in cash, whatever they get from rising asset prices will be better than -7% they get from keeping it in cash.
They're already doing that.
Inflation will devalue their cash though. They'll have higher costs but no more cash, while workers will have more.
Not really because their cash will be invested into rentier asset classes like property or dividend bearing shares, so as those asset values rise they will generate more cash, a real drop of 2-3% for a couple of years is where wage growth will probably come in at as well.
No, the only way to actually get asset prices down is to raise interest rates and the BoE need to stop worrying about the societal or social impact of raising rates because it's not within their remit. That was the whole point of not having the politicians in charge because they would be unable to make the tough choices and now the Bank seems paralysed by the same inaction we expect from the politicians who want to swerve a housing crash in the run up to an election.
If they're buying for cash as 2/3rds of BTL purchasers are then how does Bank raising rates hurt them? It just hurts the people they're competing against to buy homes.
No, the thing that hurts cash is inflation.
Because they’re exchanging cash for an asset that is declining in its cash value.
Raising rates hurts the BTL crowd, whether or not they’re mortgaged.
Does anyone know how cash performed during the 70’s? I read a comment on, iirc, Reddit /economics - that cash was one of the best performing assets during that time.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
I'm not sure the bottom deciles are most leveraged. One example is pensioners, on low nominal incomes but usually nil debt. I'd imagine the decile 3-9 homebuyers will be most affected, and especially higher earners in frothy markets.
Da fing iz why would raising rates crash asset prices when *real* rates is more negative than any time in history? 9% inflation, doubling interest rates from 1 to 2 only knocks the real interest rate down from -8 to -7.
Indeed.
Plus the problematic parasites that Max has accurately identified in the past tend to not be highly leveraged. The overwhelming majority of first time buyers need a mortgage but most BTL landlords are cash purchasers. So raising rates aids cash buyers but hurts borrowers. Indeed many BTL purchasers struggle to get a mortgage as they're old and don't have an income.
Inflation on the other hand aids borrowers like first time buyers, but hurts the cash rich cash purchasers.
If the purchasing with cash BTL types on a fixed income find their income squeezed then they may not be able to afford assets even if real interest rates are negative.
You have lost me there. Cash rich cash purchasers just gonna purchase even quicker, and become cash poor asset rich.
Inflation makes the cash rich cash poorer though. If you're on a fixed income and inflation goes up you need to reserve more cash for goods and services and have less for assets.
Yeah but that's why they'll push their money into assets rather than keep it in cash, whatever they get from rising asset prices will be better than -7% they get from keeping it in cash.
They're already doing that.
Inflation will devalue their cash though. They'll have higher costs but no more cash, while workers will have more.
Not really because their cash will be invested into rentier asset classes like property or dividend bearing shares, so as those asset values rise they will generate more cash, a real drop of 2-3% for a couple of years is where wage growth will probably come in at as well.
No, the only way to actually get asset prices down is to raise interest rates and the BoE need to stop worrying about the societal or social impact of raising rates because it's not within their remit. That was the whole point of not having the politicians in charge because they would be unable to make the tough choices and now the Bank seems paralysed by the same inaction we expect from the politicians who want to swerve a housing crash in the run up to an election.
If they're buying for cash as 2/3rds of BTL purchasers are then how does Bank raising rates hurt them? It just hurts the people they're competing against to buy homes.
No, the thing that hurts cash is inflation.
But that's new entrants into BTL, the issue isn't them, the withdrawal of higher rate interest allowances has already reduced competition for housing from landlords to FTBs or owner occupiers. It's the huge 4m stock of housing currently in private hands being let out that we need to desperately unlock. The only way to do that is to turn landlords into forced seller, withdrawal of basic rate relief, annual surcharges and all but eliminating new entrants with punishing stamp duty rates would all contribute to normalising the housing market and reversing the flow of wealth from the have nots to the haves.
He gave so many Liverpool fans literally* seminal moments with his goals.
I am going to miss him.
*Yes, literally, he was that good.
Are you a Scouse thug? If not why do you affect to give a fuck about Scouse kickball? Leaving aside the point that Divock's Origins don't seem awfully Merseyside. It's really all about murdering people in Europe one year, Yorkshire the next, from what I can make out. How does that get fun?
Stunning. It's almost as if there was plenty already known that was enough to decide whether or not one felt Boris should go, and a lot people decided to defer their own judgement in hope that someone else could effectively make the hard choice for them.
This is all the continuation of the great game. 'Officials say', 'killer blow' blah blah. There is exactly one group who can determine this and that is Tory MPs. Neither officials nor media comment make any difference.
Tory MPs have two questions: Is Boris a liability of a significant nature
and
Can the position be reliably recovered by the four stage process of getting rid of him (54 letters+MP vote+MP selection of 2+ members' vote.)
The answer to question (1) is Yes, and they all know it.
The answer to Question 2 is that like the rest of us they have absolutely no idea.
So unless Boris robs a bank or something he is safe until the weight of (1) outweighs the risks of (2).
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
But cutting asset prices is the first step to reducing housing costs for ordinary people.
No. Letting inflation run is.
The problem in the past two decades is we suppressed wage etc inflation too much so money went to assets instead of wages. We need to rebalance that.
Seven years of 10% wage growth for ordinary people but assets frozen in value would see assets halve in real terms costs/value but without any negative equity and without squeezing the living standards of ordinary people.
The myth was allowed to set in that inflation went away. It didn't, it just accumulated with assets, meaning wealth was transferred from earned to unearned income. Inflation in the rest of the economy now can rebalance society away from unearned incomes back to earners benefitting instead.
If you think Mr and Mrs Average are going to get 10% pay rises for one year, let alone seven, then I have a bridge etc., etc.
"I would imagine a lot of thought has been given; the Speaker receives wise counsel from various aides. Let's imagine the evidence against this MP is fairly compelling (too early for us to know, I recognise). You mention safeguarding in schools; does the Speaker not have a similar obligation to protect female staff (of whom there are hundreds, I don't mean MPs) in the HoC from a potentially predatory male?"
This is a fair point.
But we've been told that there are allegations against ca. 50 MPs.
If the Speaker is concerned about the protection of staff from potentially predatory MPs, why aren't all these MPs being asked to stay away from the Commons?
Fair question.
On the other hand, there has to be some sort of threshold - and being arrested for alleged rape certainly would cross any reasonable one. We don’t know any detail for the rest.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
Agreed. Getting asset price falls like that is a bit cutting off your nose to spite your face. The asset rich will lose some asset value but will still have the cash they had etc. The cash poor will be made even poorer and will struggle the most.
Inflation is a self correcting way the economy takes money out of the economy. By devaluing assets via inflation real money is taken out, without needing to physically take any out. That process has already begun and needs to run its course.
A few years of prices and wages growing 10% but unearned incomes and asset prices frozen in value would very rapidly see a rebalancing of the economy away from unearned wealth and assets towards those who earn incomes.
But we've still got ultra low rates so there's no guarantee that asset prices won't keep rising and keep up with inflation.
If inflation spikes then unearned incomes struggle to keep up with earned incomes. Those with earned incomes get pay rises to meet their obligations, but unearned or fixed incomes see their incomes devalue in real terms which means they can't afford to buy assets anymore.
Workers buying assets isn't a problem, we want working people to be able to afford their own homes. The problem is non working parasites taking and accumulating all the wealth for themselves and pulling up the ladder after they'd finished working, not wanting to pay what they owe for goods and services.
Hmm, that seems an unlikely outcome to me. With ultra low interest rates baked in why wouldn't the asset rich continue to accumulate more assets?
Pushing interest rates up is the only way to push asset prices down and create a more equal society. The government clearly doesn't have the cojones to put non primary housing asset surcharges up to punishing levels to dissuade BTL so interest rates will need to be the way to do it.
And why should it? Literally hundreds of MP's are BTL landlords. Not to mention Tory Party members.
Osborne had the balls to do it and voters responded in 2015. Taking action against landlords is unpopular with a few hundred thousand landlords but extremely popular with millions of people trapped in the private rental sector pissing their money away paying off someone else's mortgage or someone else's retirement.
Fuck the members, because these are election winning policies.
Too many honourable members have been doing too much fucking recently. Don't give them any more ideas...
More seriously, you may be right, but I suspect all that would happen instead is you would see a proliferation of small limited liability companies being set up to hold the asset (house/flat) instead.
Ah but then you can create stamp duty for that too and on transfer into a company.
Stamp duty is a bad tax as it is a tax on mobility, so people cannot afford the cost to move. Applying penal rates to BTL landlords may stop people entering the market, but doesn't force them to leave, and in any case is likely to drive up the rents that they ask.
More effective would be to have an annual property tax, with the tax going to councils in order to provide cheap social housing. This would drive down market rents by providing an alternative. Indeed that was the way we did it before council housing was sold off on the cheap, and wound up as BTL.
It is ironic to hear hyper-Thatchetite posters complaining about things like BTL, which are simply the result of four decades of neoliberal economic policies.
Bullshit, BTL is Labour, it exploded under Labour and Labour allowed it to engulf millions of people in a rent trap that they are still struggling to escape from. It took two Tories to actually begin to undo the damage of BTL on the UK economy, sadly Theresa May was useless and Philip Hammond was compromised and so are Boris and Rishi all of whom have multiple properties and would see their personal wealth hit significantly if they introduced measures to turn landlords into forced sellers.
I’ll say it again. I think this site routinely underestimates the chances of Boris winning a majority at the next election. It’s not a certain (depends how far down the shitter of inflation the economy goes before correcting) but I think it’s more likely than not.
I think Boris Johnson's chances are almost entirely in the hands of the Russian leadership and the Ukrainian people.
If Putin falls, Russia withdraws from Ukraine, and the oil and gas starts flowing again, the cost of living crisis will rapidly dissipate, and Boris will be a hero. In this scenario, I agree completely that Boris is highly likely to be reelected.
On the other hand, if the conflict drags on, people's utility bills rise sharply, cutting disposable spending, and pushing the UK into a recession, then I suspect he will be lucky to avoid a drubbing.
Just to follow up on this one, it's the second order effects that are the killer.
Right now, people are secure in their jobs, with record vacancies. Rising utility bills (for now) are merely an annoyance that necessitates some lifestyle changes. Maybe go out a little less; or wait on the purchase of that PS5; or choose Tesco Value instead of Finest.
People react to lower disposable income by maybe dipping into their savings a bit, and by spending a little less.
That lower spending is the problem, because it means Joes' Diner, which only barely survived Covid, is now getting less traffic in through the door. And that monthly rent isn't going anywhere. And take out orders are now down 20% too. If they're lucky, they'll be able to get by by just losing one of the waiting staff and someone from the kitchen. If things are tighter, then maybe Joe's has to shut, and everyone has lost their job.
Suddenly those record job vacancies (and is there any more lagging market than employment?) aren't there any more.
But as I said, so long as Ukraine is resolved (i.e. Putin falls), then Boris will be fine. People understand a little transient discomfort, and this isn't as bad as Covid.
If it does not, however, and the sanctions drag on, then the UK economy (and most of the West) will fall into recession, and that will have consequences.
Hopefully those consequences will fall politically on those who are prosecuting this war with not a shred of concern for the British economy or public.
You mean Putin? 🤔
I don't like Boris Johnson, but I could forgive him a triumphal party conference in the autumn if it followed a Ukrainian victory.
It would be Boris wot won it then, not the geriatric Biden or the too hesitant of offending Putin Macron and Scholz
Without wishing to denegrate the UK contribution to Ukraine, the US contribution under the "geriatric Biden" as you put it is just VASTLY more than everyone else in the world put together.
You'd expect that as a military superpower which remains very wealthy with a huge arms industry. And, as I say, not knocking the UK contribution. But there is simply no comparison between anyone else and the US.
In terms of anti tank missiles for instance, pivotal for the Ukranians containing the Russian advance, it was the UK which supplied the most
Aside from cherry picking an admittedly important type of military equipment, this is simply untrue. The US has been pumping Javelins into Ukraine at a vast rate - about one-third of its own (massive) stock.
Again, no wish to denegrate the UK contribution, but you're just living in an absolute John Bull fantasy world in terms of numbers.
The US provided 5,000 anti tank missiles, the UK over 10,000
In any case, an anti-tank missile (especially once translators and journalists have been at it) could be anything from a bazooka rocket to a very expensive TOW. There's a whole range of them. This sort of stat is like counting 23 half-pints, 4 pints and a barrel of beer as 27 beers. NLAW, for instance, is much lighter and shorter range than Javelin.
Yes it is.
They are all anti tank missiles and the UK provided more of them than any other nation and they were pivotal in Ukraine slowing the initial stages of the Russian advance
Look at your sources again. And do some research. Even a NLAW is not equal to a Javelin.
And you still hjaven't justified your claim that Boris Johnson will have won the Ukrainian war. Yes, you said, "won it".
Strange, weren't we told, as Putin unleashed his Dogs of War, that Ukraine should just lie back and take it? And that the West should apologize for provoking the invasion in the first place?
And now the fount of such wisdom is now not only trumpeting victory over the Ruskis, but appropriating credit for it?
Really???
Britain provided plenty of weaponry to Ukraine even before the invasion and was warning of it as Russia's buildup continued.
We have correctly not sent troops or fighter jets to take on the Russians in non NATO Ukraine but that does not mean our military weapons and supplies and anti tank missiles in particular were not pivotal to containing the Russian advance
Those who will be responsible for defeating Putin's invasion are those who are fighting and dying to defend their country.
Any claim that we, or Boris 'won it' is pretty pathetic.
Without western weaponry being supplied to Ukraine, particularly state of the art Western anti tank and anti aircraft missiles and Western economic sanctions on Russia, the Russians would likely have captured Kyiv by now. That in no way diminishes the bravery of Ukrainian fighters
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
I'm not sure the bottom deciles are most leveraged. One example is pensioners, on low nominal incomes but usually nil debt. I'd imagine the decile 3-9 homebuyers will be most affected, and especially higher earners in frothy markets.
Da fing iz why would raising rates crash asset prices when *real* rates is more negative than any time in history? 9% inflation, doubling interest rates from 1 to 2 only knocks the real interest rate down from -8 to -7.
Indeed.
Plus the problematic parasites that Max has accurately identified in the past tend to not be highly leveraged. The overwhelming majority of first time buyers need a mortgage but most BTL landlords are cash purchasers. So raising rates aids cash buyers but hurts borrowers. Indeed many BTL purchasers struggle to get a mortgage as they're old and don't have an income.
Inflation on the other hand aids borrowers like first time buyers, but hurts the cash rich cash purchasers.
If the purchasing with cash BTL types on a fixed income find their income squeezed then they may not be able to afford assets even if real interest rates are negative.
You have lost me there. Cash rich cash purchasers just gonna purchase even quicker, and become cash poor asset rich.
Inflation makes the cash rich cash poorer though. If you're on a fixed income and inflation goes up you need to reserve more cash for goods and services and have less for assets.
Yeah but that's why they'll push their money into assets rather than keep it in cash, whatever they get from rising asset prices will be better than -7% they get from keeping it in cash.
They're already doing that.
Inflation will devalue their cash though. They'll have higher costs but no more cash, while workers will have more.
Not really because their cash will be invested into rentier asset classes like property or dividend bearing shares, so as those asset values rise they will generate more cash, a real drop of 2-3% for a couple of years is where wage growth will probably come in at as well.
No, the only way to actually get asset prices down is to raise interest rates and the BoE need to stop worrying about the societal or social impact of raising rates because it's not within their remit. That was the whole point of not having the politicians in charge because they would be unable to make the tough choices and now the Bank seems paralysed by the same inaction we expect from the politicians who want to swerve a housing crash in the run up to an election.
If they're buying for cash as 2/3rds of BTL purchasers are then how does Bank raising rates hurt them? It just hurts the people they're competing against to buy homes.
No, the thing that hurts cash is inflation.
But that's new entrants into BTL, the issue isn't them, the withdrawal of higher rate interest allowances has already reduced competition for housing from landlords to FTBs or owner occupiers. It's the huge 4m stock of housing currently in private hands being let out that we need to desperately unlock. The only way to do that is to turn landlords into forced seller, withdrawal of basic rate relief, annual surcharges and all but eliminating new entrants with punishing stamp duty rates would all contribute to normalising the housing market and reversing the flow of wealth from the have nots to the haves.
All of those are good proposals but raising base rates doesn't address any of that.
The new entrants into BTL are a huge part of the problem. Hurt them because inflation devalues their cash, there'll be fewer new BTL purchases which will drive down real asset prices.
Perhaps we should treat inflation in the same manner as does the little cluster of anti-vaxers that meet in my local park on Sundays regard the virus: just ignore it and hope it'll go away.
AND here is list of all 57 US House members who voted against final passage of HR 7691 Ukraine supplimental appropriation. (Please note - no US Represenative from WA State is on this list.)
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
But cutting asset prices is the first step to reducing housing costs for ordinary people.
No. Letting inflation run is.
The problem in the past two decades is we suppressed wage etc inflation too much so money went to assets instead of wages. We need to rebalance that.
Seven years of 10% wage growth for ordinary people but assets frozen in value would see assets halve in real terms costs/value but without any negative equity and without squeezing the living standards of ordinary people.
The myth was allowed to set in that inflation went away. It didn't, it just accumulated with assets, meaning wealth was transferred from earned to unearned income. Inflation in the rest of the economy now can rebalance society away from unearned incomes back to earners benefitting instead.
If you think Mr and Mrs Average are going to get 10% pay rises for one year, let alone seven, then I have a bridge etc., etc.
Well yes indeed, and by not putting interest rates up the asset rich will continue to concentrate wealth at the very top as they continue to borrow cheap money and buy everything in sight.
The current inflation is being driven by energy prices, with secondary effect because everything from food to housing includes energy as a cost, as well as costs of the Ukranian war, and covid aftershocks particularly in China. It isn't being driven by overheating of domestic demand. In theory this should be a temporary phenomenon, and will abate naturally, with interest rates having little effect on its course.
I suspect we will see a modest increase in interest rates to 3-4% by 2024. That will be quite painful for those with mortgages. If inflation falls, and it is likely that oil and gas prices will drop fairly quickly as world events resolve, then we may well see inflation of 2% again and interest rates positive at 4%.
That is the zone to aim for, and it is very reasonable for government to smooth the way there by absorbing some of the cost of living increase via increased borrowing. Frankly, I can afford the CoL crisis, but those on lower incomes cannot.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
I'm not sure the bottom deciles are most leveraged. One example is pensioners, on low nominal incomes but usually nil debt. I'd imagine the decile 3-9 homebuyers will be most affected, and especially higher earners in frothy markets.
Da fing iz why would raising rates crash asset prices when *real* rates is more negative than any time in history? 9% inflation, doubling interest rates from 1 to 2 only knocks the real interest rate down from -8 to -7.
Indeed.
Plus the problematic parasites that Max has accurately identified in the past tend to not be highly leveraged. The overwhelming majority of first time buyers need a mortgage but most BTL landlords are cash purchasers. So raising rates aids cash buyers but hurts borrowers. Indeed many BTL purchasers struggle to get a mortgage as they're old and don't have an income.
Inflation on the other hand aids borrowers like first time buyers, but hurts the cash rich cash purchasers.
If the purchasing with cash BTL types on a fixed income find their income squeezed then they may not be able to afford assets even if real interest rates are negative.
You have lost me there. Cash rich cash purchasers just gonna purchase even quicker, and become cash poor asset rich.
Inflation makes the cash rich cash poorer though. If you're on a fixed income and inflation goes up you need to reserve more cash for goods and services and have less for assets.
Yeah but that's why they'll push their money into assets rather than keep it in cash, whatever they get from rising asset prices will be better than -7% they get from keeping it in cash.
They're already doing that.
Inflation will devalue their cash though. They'll have higher costs but no more cash, while workers will have more.
Not really because their cash will be invested into rentier asset classes like property or dividend bearing shares, so as those asset values rise they will generate more cash, a real drop of 2-3% for a couple of years is where wage growth will probably come in at as well.
No, the only way to actually get asset prices down is to raise interest rates and the BoE need to stop worrying about the societal or social impact of raising rates because it's not within their remit. That was the whole point of not having the politicians in charge because they would be unable to make the tough choices and now the Bank seems paralysed by the same inaction we expect from the politicians who want to swerve a housing crash in the run up to an election.
If they're buying for cash as 2/3rds of BTL purchasers are then how does Bank raising rates hurt them? It just hurts the people they're competing against to buy homes.
No, the thing that hurts cash is inflation.
But that's new entrants into BTL, the issue isn't them, the withdrawal of higher rate interest allowances has already reduced competition for housing from landlords to FTBs or owner occupiers. It's the huge 4m stock of housing currently in private hands being let out that we need to desperately unlock. The only way to do that is to turn landlords into forced seller, withdrawal of basic rate relief, annual surcharges and all but eliminating new entrants with punishing stamp duty rates would all contribute to normalising the housing market and reversing the flow of wealth from the have nots to the haves.
All of those are good proposals but raising base rates doesn't address any of that.
The new entrants into BTL are a huge part of the problem. Hurt them because inflation devalues their cash, there'll be fewer new BTL purchases which will drive down real asset prices.
But the point is that while interest rates are low asset prices will keep rising so they benefit from investing said cash into some kind of rent bearing asset such as housing. Only a drop in asset values will end this cycle and fix the housing market. To do that we need rates to be significantly higher than they are, which is scary for me as someone who has a fairly large mortgage and will soon be heading into single income territory on and off for a few years but ultimately 1% or even 2% rates is an insanely low rate of interest and asset values will keep rising and shielding the asset rich.
Perhaps we should treat inflation in the same manner as does the little cluster of anti-vaxers that meet in my local park on Sundays regard the virus: just ignore it and hope it'll go away.
In fairness, if they’ve lasted this long they are probably going to feel like they have been proved right…..
I’ll say it again. I think this site routinely underestimates the chances of Boris winning a majority at the next election. It’s not a certain (depends how far down the shitter of inflation the economy goes before correcting) but I think it’s more likely than not.
I think Boris Johnson's chances are almost entirely in the hands of the Russian leadership and the Ukrainian people.
If Putin falls, Russia withdraws from Ukraine, and the oil and gas starts flowing again, the cost of living crisis will rapidly dissipate, and Boris will be a hero. In this scenario, I agree completely that Boris is highly likely to be reelected.
On the other hand, if the conflict drags on, people's utility bills rise sharply, cutting disposable spending, and pushing the UK into a recession, then I suspect he will be lucky to avoid a drubbing.
Just to follow up on this one, it's the second order effects that are the killer.
Right now, people are secure in their jobs, with record vacancies. Rising utility bills (for now) are merely an annoyance that necessitates some lifestyle changes. Maybe go out a little less; or wait on the purchase of that PS5; or choose Tesco Value instead of Finest.
People react to lower disposable income by maybe dipping into their savings a bit, and by spending a little less.
That lower spending is the problem, because it means Joes' Diner, which only barely survived Covid, is now getting less traffic in through the door. And that monthly rent isn't going anywhere. And take out orders are now down 20% too. If they're lucky, they'll be able to get by by just losing one of the waiting staff and someone from the kitchen. If things are tighter, then maybe Joe's has to shut, and everyone has lost their job.
Suddenly those record job vacancies (and is there any more lagging market than employment?) aren't there any more.
But as I said, so long as Ukraine is resolved (i.e. Putin falls), then Boris will be fine. People understand a little transient discomfort, and this isn't as bad as Covid.
If it does not, however, and the sanctions drag on, then the UK economy (and most of the West) will fall into recession, and that will have consequences.
Hopefully those consequences will fall politically on those who are prosecuting this war with not a shred of concern for the British economy or public.
You mean Putin? 🤔
I don't like Boris Johnson, but I could forgive him a triumphal party conference in the autumn if it followed a Ukrainian victory.
It would be Boris wot won it then, not the geriatric Biden or the too hesitant of offending Putin Macron and Scholz
Without wishing to denegrate the UK contribution to Ukraine, the US contribution under the "geriatric Biden" as you put it is just VASTLY more than everyone else in the world put together.
You'd expect that as a military superpower which remains very wealthy with a huge arms industry. And, as I say, not knocking the UK contribution. But there is simply no comparison between anyone else and the US.
In terms of anti tank missiles for instance, pivotal for the Ukranians containing the Russian advance, it was the UK which supplied the most
Aside from cherry picking an admittedly important type of military equipment, this is simply untrue. The US has been pumping Javelins into Ukraine at a vast rate - about one-third of its own (massive) stock.
Again, no wish to denegrate the UK contribution, but you're just living in an absolute John Bull fantasy world in terms of numbers.
It’s been a salutary reminder to the world of the absolute size and power of the US. For years people have been talking about it (wrongly IMHO) being in decline but it’s not - only China could pull that kind of spending out of its backside and provide the sheer volume of weaponry. America is not finished it’s been resting.
I do think in the UK’s defence it’s allowed others such as the US to do everything they can as if the UK can do what it has done with a relatively (to the US) small military it would have been shaming to others if they hadn’t done anything. Same applies of course to a number of Baltic/east European countries.
The UK and friends probably greased the wheels - the US provided the locomotive.
Are you denying America is in RELATIVE decline? That’s fatuous. Of course it is. At the end of World War 2 the USA alone constituted 50% of global GDP, even in the Clinton years it was well over 30%. Now it is about 20% and dropping, inexorably
That is a pretty huge fall, in just 70 years; the upside is that this has happened because so many other countries have lifted billions out of poverty, especially in Asia, especially in China. It’s good news for Homo Sapiens
So America is in relative decline, that is undoubted, and that affects its ability to influence the world - as we see from Iraq to Afghanistan. But is America in ASBOLUTE decline?
Absolute decline is fairly rare, at least in modern times. The UK never experienced it, properly, even as it fell from global supremacy.
But there is an argument that America is, in some ways, facing absolute decline. Drugs, race, culture wars, BLM, homelessness, and so on. Much of it superbly stoked via the Chinese and Russians on social media
The US is clearly no longer the sole global superpower. There are now 2 superpowers, China as well as the US with India maybe joining them by 2050.
The EU matches them economically but not militarily.
Then come midrank powers like us, Japan, France, Germany and Italy, Brazil and Russia
"I would imagine a lot of thought has been given; the Speaker receives wise counsel from various aides. Let's imagine the evidence against this MP is fairly compelling (too early for us to know, I recognise). You mention safeguarding in schools; does the Speaker not have a similar obligation to protect female staff (of whom there are hundreds, I don't mean MPs) in the HoC from a potentially predatory male?"
This is a fair point.
But we've been told that there are allegations against ca. 50 MPs.
If the Speaker is concerned about the protection of staff from potentially predatory MPs, why aren't all these MPs being asked to stay away from the Commons?
Without wishing to defend any misconduct there is, surely, a difference between an unwanted (and rebuffed) advance, a drunken text message, a history of sexist remarks, or an eyewatering Google history... and an allegation of rape and systematic sexual abuse over several years.
It doesn't diminish misconduct to understand that there are levels of seriousness.
Quite apart from the fact that suspending 50 odd MPs while investigations continue might rather disrupt Parliament significantly. Suspension should be risk assessed on an individual basis.
I’ll say it again. I think this site routinely underestimates the chances of Boris winning a majority at the next election. It’s not a certain (depends how far down the shitter of inflation the economy goes before correcting) but I think it’s more likely than not.
I think Boris Johnson's chances are almost entirely in the hands of the Russian leadership and the Ukrainian people.
If Putin falls, Russia withdraws from Ukraine, and the oil and gas starts flowing again, the cost of living crisis will rapidly dissipate, and Boris will be a hero. In this scenario, I agree completely that Boris is highly likely to be reelected.
On the other hand, if the conflict drags on, people's utility bills rise sharply, cutting disposable spending, and pushing the UK into a recession, then I suspect he will be lucky to avoid a drubbing.
Just to follow up on this one, it's the second order effects that are the killer.
Right now, people are secure in their jobs, with record vacancies. Rising utility bills (for now) are merely an annoyance that necessitates some lifestyle changes. Maybe go out a little less; or wait on the purchase of that PS5; or choose Tesco Value instead of Finest.
People react to lower disposable income by maybe dipping into their savings a bit, and by spending a little less.
That lower spending is the problem, because it means Joes' Diner, which only barely survived Covid, is now getting less traffic in through the door. And that monthly rent isn't going anywhere. And take out orders are now down 20% too. If they're lucky, they'll be able to get by by just losing one of the waiting staff and someone from the kitchen. If things are tighter, then maybe Joe's has to shut, and everyone has lost their job.
Suddenly those record job vacancies (and is there any more lagging market than employment?) aren't there any more.
But as I said, so long as Ukraine is resolved (i.e. Putin falls), then Boris will be fine. People understand a little transient discomfort, and this isn't as bad as Covid.
If it does not, however, and the sanctions drag on, then the UK economy (and most of the West) will fall into recession, and that will have consequences.
Hopefully those consequences will fall politically on those who are prosecuting this war with not a shred of concern for the British economy or public.
You mean Putin? 🤔
I don't like Boris Johnson, but I could forgive him a triumphal party conference in the autumn if it followed a Ukrainian victory.
It would be Boris wot won it then, not the geriatric Biden or the too hesitant of offending Putin Macron and Scholz
Without wishing to denegrate the UK contribution to Ukraine, the US contribution under the "geriatric Biden" as you put it is just VASTLY more than everyone else in the world put together.
You'd expect that as a military superpower which remains very wealthy with a huge arms industry. And, as I say, not knocking the UK contribution. But there is simply no comparison between anyone else and the US.
In terms of anti tank missiles for instance, pivotal for the Ukranians containing the Russian advance, it was the UK which supplied the most
Aside from cherry picking an admittedly important type of military equipment, this is simply untrue. The US has been pumping Javelins into Ukraine at a vast rate - about one-third of its own (massive) stock.
Again, no wish to denegrate the UK contribution, but you're just living in an absolute John Bull fantasy world in terms of numbers.
The US provided 5,000 anti tank missiles, the UK over 10,000
In any case, an anti-tank missile (especially once translators and journalists have been at it) could be anything from a bazooka rocket to a very expensive TOW. There's a whole range of them. This sort of stat is like counting 23 half-pints, 4 pints and a barrel of beer as 27 beers. NLAW, for instance, is much lighter and shorter range than Javelin.
Yes it is.
They are all anti tank missiles and the UK provided more of them than any other nation and they were pivotal in Ukraine slowing the initial stages of the Russian advance
Look at your sources again. And do some research. Even a NLAW is not equal to a Javelin.
And you still hjaven't justified your claim that Boris Johnson will have won the Ukrainian war. Yes, you said, "won it".
Strange, weren't we told, as Putin unleashed his Dogs of War, that Ukraine should just lie back and take it? And that the West should apologize for provoking the invasion in the first place?
And now the fount of such wisdom is now not only trumpeting victory over the Ruskis, but appropriating credit for it?
"I would imagine a lot of thought has been given; the Speaker receives wise counsel from various aides. Let's imagine the evidence against this MP is fairly compelling (too early for us to know, I recognise). You mention safeguarding in schools; does the Speaker not have a similar obligation to protect female staff (of whom there are hundreds, I don't mean MPs) in the HoC from a potentially predatory male?"
This is a fair point.
But we've been told that there are allegations against ca. 50 MPs.
If the Speaker is concerned about the protection of staff from potentially predatory MPs, why aren't all these MPs being asked to stay away from the Commons?
Perhaps it's a matter of degree. The MP in question has been arrested on a charge of rape, inter alia. I suspect the 50 you refer to are less serious allegations (though I can't be sure, of course).
Should something as trivial as the governments plan to deal with migrant crossing by exporting migrants to Rwanda to be processed, be voted on in parliament?
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
But cutting asset prices is the first step to reducing housing costs for ordinary people.
No. Letting inflation run is.
The problem in the past two decades is we suppressed wage etc inflation too much so money went to assets instead of wages. We need to rebalance that.
Seven years of 10% wage growth for ordinary people but assets frozen in value would see assets halve in real terms costs/value but without any negative equity and without squeezing the living standards of ordinary people.
The myth was allowed to set in that inflation went away. It didn't, it just accumulated with assets, meaning wealth was transferred from earned to unearned income. Inflation in the rest of the economy now can rebalance society away from unearned incomes back to earners benefitting instead.
If you think Mr and Mrs Average are going to get 10% pay rises for one year, let alone seven, then I have a bridge etc., etc.
Well yes indeed, and by not putting interest rates up the asset rich will continue to concentrate wealth at the very top as they continue to borrow cheap money and buy everything in sight.
The current inflation is being driven by energy prices, with secondary effect because everything from food to housing includes energy as a cost, as well as costs of the Ukranian war, and covid aftershocks particularly in China. It isn't being driven by overheating of domestic demand. In theory this should be a temporary phenomenon, and will abate naturally, with interest rates having little effect on its course.
I suspect we will see a modest increase in interest rates to 3-4% by 2024. That will be quite painful for those with mortgages. If inflation falls, and it is likely that oil and gas prices will drop fairly quickly as world events resolve, then we may well see inflation of 2% again and interest rates positive at 4%.
That is the zone to aim for, and it is very reasonable for government to smooth the way there by absorbing some of the cost of living increase via increased borrowing. Frankly, I can afford the CoL crisis, but those on lower incomes cannot.
It isn't just that, it's the American Covid stimulus. My Dad is in construction, and prices in that industry have soared because all the timber, steel and other building materials are being sucked into the States.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
I'm not sure the bottom deciles are most leveraged. One example is pensioners, on low nominal incomes but usually nil debt. I'd imagine the decile 3-9 homebuyers will be most affected, and especially higher earners in frothy markets.
Da fing iz why would raising rates crash asset prices when *real* rates is more negative than any time in history? 9% inflation, doubling interest rates from 1 to 2 only knocks the real interest rate down from -8 to -7.
Indeed.
Plus the problematic parasites that Max has accurately identified in the past tend to not be highly leveraged. The overwhelming majority of first time buyers need a mortgage but most BTL landlords are cash purchasers. So raising rates aids cash buyers but hurts borrowers. Indeed many BTL purchasers struggle to get a mortgage as they're old and don't have an income.
Inflation on the other hand aids borrowers like first time buyers, but hurts the cash rich cash purchasers.
If the purchasing with cash BTL types on a fixed income find their income squeezed then they may not be able to afford assets even if real interest rates are negative.
You have lost me there. Cash rich cash purchasers just gonna purchase even quicker, and become cash poor asset rich.
Inflation makes the cash rich cash poorer though. If you're on a fixed income and inflation goes up you need to reserve more cash for goods and services and have less for assets.
Yeah but that's why they'll push their money into assets rather than keep it in cash, whatever they get from rising asset prices will be better than -7% they get from keeping it in cash.
They're already doing that.
Inflation will devalue their cash though. They'll have higher costs but no more cash, while workers will have more.
Not really because their cash will be invested into rentier asset classes like property or dividend bearing shares, so as those asset values rise they will generate more cash, a real drop of 2-3% for a couple of years is where wage growth will probably come in at as well.
No, the only way to actually get asset prices down is to raise interest rates and the BoE need to stop worrying about the societal or social impact of raising rates because it's not within their remit. That was the whole point of not having the politicians in charge because they would be unable to make the tough choices and now the Bank seems paralysed by the same inaction we expect from the politicians who want to swerve a housing crash in the run up to an election.
If they're buying for cash as 2/3rds of BTL purchasers are then how does Bank raising rates hurt them? It just hurts the people they're competing against to buy homes.
No, the thing that hurts cash is inflation.
But that's new entrants into BTL, the issue isn't them, the withdrawal of higher rate interest allowances has already reduced competition for housing from landlords to FTBs or owner occupiers. It's the huge 4m stock of housing currently in private hands being let out that we need to desperately unlock. The only way to do that is to turn landlords into forced seller, withdrawal of basic rate relief, annual surcharges and all but eliminating new entrants with punishing stamp duty rates would all contribute to normalising the housing market and reversing the flow of wealth from the have nots to the haves.
All of those are good proposals but raising base rates doesn't address any of that.
The new entrants into BTL are a huge part of the problem. Hurt them because inflation devalues their cash, there'll be fewer new BTL purchases which will drive down real asset prices.
But the point is that while interest rates are low asset prices will keep rising so they benefit from investing said cash into some kind of rent bearing asset such as housing. Only a drop in asset values will end this cycle and fix the housing market. To do that we need rates to be significantly higher than they are, which is scary for me as someone who has a fairly large mortgage and will soon be heading into single income territory on and off for a few years but ultimately 1% or even 2% rates is an insanely low rate of interest and asset values will keep rising and shielding the asset rich.
Except its not interest that's raising asset prices, since the parasites aren't buying leveraged anyway. Its that cash hasn't had anything else to go to other than assets since inflation was too low. The rise in price/earnings ratios and explosion in BTL under Blair took place with ~5-6% interest rates so why would a rise to 2% make any difference whatsoever?
If cash doesn't have anywhere else to go it goes to assets. If cash is needed for other things, it can't go to assets anymore.
The only way to drive down asset prices is give the cash-rich something else that they need to spend their cash on, like goods and services, instead of assets.
And if the retired on fixed incomes suddenly find their costs rising but their fixed income isn't they might need to sell their BTLs in order to release the money to pay their rising costs.
I’ll say it again. I think this site routinely underestimates the chances of Boris winning a majority at the next election. It’s not a certain (depends how far down the shitter of inflation the economy goes before correcting) but I think it’s more likely than not.
I think Boris Johnson's chances are almost entirely in the hands of the Russian leadership and the Ukrainian people.
If Putin falls, Russia withdraws from Ukraine, and the oil and gas starts flowing again, the cost of living crisis will rapidly dissipate, and Boris will be a hero. In this scenario, I agree completely that Boris is highly likely to be reelected.
On the other hand, if the conflict drags on, people's utility bills rise sharply, cutting disposable spending, and pushing the UK into a recession, then I suspect he will be lucky to avoid a drubbing.
Just to follow up on this one, it's the second order effects that are the killer.
Right now, people are secure in their jobs, with record vacancies. Rising utility bills (for now) are merely an annoyance that necessitates some lifestyle changes. Maybe go out a little less; or wait on the purchase of that PS5; or choose Tesco Value instead of Finest.
People react to lower disposable income by maybe dipping into their savings a bit, and by spending a little less.
That lower spending is the problem, because it means Joes' Diner, which only barely survived Covid, is now getting less traffic in through the door. And that monthly rent isn't going anywhere. And take out orders are now down 20% too. If they're lucky, they'll be able to get by by just losing one of the waiting staff and someone from the kitchen. If things are tighter, then maybe Joe's has to shut, and everyone has lost their job.
Suddenly those record job vacancies (and is there any more lagging market than employment?) aren't there any more.
But as I said, so long as Ukraine is resolved (i.e. Putin falls), then Boris will be fine. People understand a little transient discomfort, and this isn't as bad as Covid.
If it does not, however, and the sanctions drag on, then the UK economy (and most of the West) will fall into recession, and that will have consequences.
Hopefully those consequences will fall politically on those who are prosecuting this war with not a shred of concern for the British economy or public.
You mean Putin? 🤔
I don't like Boris Johnson, but I could forgive him a triumphal party conference in the autumn if it followed a Ukrainian victory.
It would be Boris wot won it then, not the geriatric Biden or the too hesitant of offending Putin Macron and Scholz
Without wishing to denegrate the UK contribution to Ukraine, the US contribution under the "geriatric Biden" as you put it is just VASTLY more than everyone else in the world put together.
You'd expect that as a military superpower which remains very wealthy with a huge arms industry. And, as I say, not knocking the UK contribution. But there is simply no comparison between anyone else and the US.
In terms of anti tank missiles for instance, pivotal for the Ukranians containing the Russian advance, it was the UK which supplied the most
Aside from cherry picking an admittedly important type of military equipment, this is simply untrue. The US has been pumping Javelins into Ukraine at a vast rate - about one-third of its own (massive) stock.
Again, no wish to denegrate the UK contribution, but you're just living in an absolute John Bull fantasy world in terms of numbers.
It’s been a salutary reminder to the world of the absolute size and power of the US. For years people have been talking about it (wrongly IMHO) being in decline but it’s not - only China could pull that kind of spending out of its backside and provide the sheer volume of weaponry. America is not finished it’s been resting.
I do think in the UK’s defence it’s allowed others such as the US to do everything they can as if the UK can do what it has done with a relatively (to the US) small military it would have been shaming to others if they hadn’t done anything. Same applies of course to a number of Baltic/east European countries.
The UK and friends probably greased the wheels - the US provided the locomotive.
Are you denying America is in RELATIVE decline? That’s fatuous. Of course it is. At the end of World War 2 the USA alone constituted 50% of global GDP, even in the Clinton years it was well over 30%. Now it is about 20% and dropping, inexorably
That is a pretty huge fall, in just 70 years; the upside is that this has happened because so many other countries have lifted billions out of poverty, especially in Asia, especially in China. It’s good news for Homo Sapiens
So America is in relative decline, that is undoubted, and that affects its ability to influence the world - as we see from Iraq to Afghanistan. But is America in ASBOLUTE decline?
Absolute decline is fairly rare, at least in modern times. The UK never experienced it, properly, even as it fell from global supremacy.
But there is an argument that America is, in some ways, facing absolute decline. Drugs, race, culture wars, BLM, homelessness, and so on. Much of it superbly stoked via the Chinese and Russians on social media
You are probably absolutely correct however I have a belief in the US - which the Japanese should have done (and about the UK Liverpool fans and denizens of Hartlepool) that there is something inherently great in their cultures.
We can be boorish, fat, lazy, complacent, smug, whatever, but…… when the chips are down those tools at US college football matches are the guys who go and storm Iwo Jima and the guys booing abide with me at wenbley are the guys who will be brewing up tea in between fighting whoever they need.
A lot of people after WW1 wanted the US to assume it’s mantle and it retreated to an element of isolationalism and people thought they didn’t really have it in them - and then the US eventually showed it did and by god it did.
So it might not be the hegemon it was for actually a short period in time but bugger me no other country can turn it on when it needs to at the moment.
I’d love to think you are right. But my head says no, not at all
America is now in absolute cultural decline, to my mind. It has immense power, still, but the trajectory is set. It feels like it is the Roman Empire but it is *Rome* moving into its decadent, Eastern, Byzantine era (which, to be fair, continued for a LONG time, and Byzantium was powerful centuries after Rome was rubble)
The poignancy is that this cultural decline has been greatly accelerated by the internet and social media, which are, largely, American inventions, turned on America
I honestly hope you are wrong - not just for the joy that it will be the first time ever in your life you have been wrong - but I think there is an inherent cultural thing in Americans where when they feel “attacked” they go strong together.
I’m sure over time people have mocked there cultural decline because “talkies”, Hollywood, the playboy mansion, Woodstock, softness pre 9-11 etc but they really don’t like anyone sticking it to them and forget their differences quite quickly at that point. Pre tue world wars there was lots of talk about how a large slug of the population was “German” and “Irish” so they had no chance of stepping in but they realised their idea of freedom and their interests financially and geopolitically weee at risk and then they went full “USA, USA, USA” and the rest was history.
And it’s hard to say a country is in cultural decline when their “culture” - language, arts, fashion, music, movies etc are still the ones leading the way and being emulated to the masses.
To my mind, you are obviously wrong, and simply wishcasting, but I appreciate that won’t persuade you
So let’s take the cultural examples you give
1. Language: well yes, English is supreme, but that’s hardly due to the sole primacy of America, it’\s not even their language, it’s ours. England’s. The hegemony of English (which won’t last forever) is due to the supremacy of the British Empire at a critical time, as technology and industry made the export of languages much easier and more emphatically triumphant. English is supreme in India, for instance (population 1.4bn) and that has very little to do with America
2. Arts. New York City was the artistic capital of the world after WW2, no question. Is it now? Nope. It is maybe the auction capital of the world but that is an entirely different matter (and it might easily get overtaken by Shanghai or Hongers). There isn’t an obvious artistic capital of the world any more, the crown is divided, between NYC, LA, London, Berlin, Shanghai, even Rio and Seoul
3. Fashion? Who cares but Paris is probably more influential in haute couture
4. Music? Hard no. K-pop dominates the world. BTS are the biggest band ever. This IS a significant evolution. For the first time in history “pop music” finds its cutting edge outside the West, and outside America/UK. Latin American pop is also catching up
5. Movies. Absolute no. Hollywood is in sad decline, as even Hollywooders admit.The Chinese now watch Chinese movies, and they are the biggest market of all
For balance, America makes fantastic TV drama now, but then so do a lot of other countries
Where America IS crucially ascendant, is big tech companies. Apple, MS, Meta, Google, Amazon, Europe has nothing to compare and China is only now catching up. Tho TikTok suggests they will indeed catch up
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
I'm not sure the bottom deciles are most leveraged. One example is pensioners, on low nominal incomes but usually nil debt. I'd imagine the decile 3-9 homebuyers will be most affected, and especially higher earners in frothy markets.
Da fing iz why would raising rates crash asset prices when *real* rates is more negative than any time in history? 9% inflation, doubling interest rates from 1 to 2 only knocks the real interest rate down from -8 to -7.
Indeed.
Plus the problematic parasites that Max has accurately identified in the past tend to not be highly leveraged. The overwhelming majority of first time buyers need a mortgage but most BTL landlords are cash purchasers. So raising rates aids cash buyers but hurts borrowers. Indeed many BTL purchasers struggle to get a mortgage as they're old and don't have an income.
Inflation on the other hand aids borrowers like first time buyers, but hurts the cash rich cash purchasers.
If the purchasing with cash BTL types on a fixed income find their income squeezed then they may not be able to afford assets even if real interest rates are negative.
You have lost me there. Cash rich cash purchasers just gonna purchase even quicker, and become cash poor asset rich.
Inflation makes the cash rich cash poorer though. If you're on a fixed income and inflation goes up you need to reserve more cash for goods and services and have less for assets.
Yeah but that's why they'll push their money into assets rather than keep it in cash, whatever they get from rising asset prices will be better than -7% they get from keeping it in cash.
They're already doing that.
Inflation will devalue their cash though. They'll have higher costs but no more cash, while workers will have more.
Not really because their cash will be invested into rentier asset classes like property or dividend bearing shares, so as those asset values rise they will generate more cash, a real drop of 2-3% for a couple of years is where wage growth will probably come in at as well.
No, the only way to actually get asset prices down is to raise interest rates and the BoE need to stop worrying about the societal or social impact of raising rates because it's not within their remit. That was the whole point of not having the politicians in charge because they would be unable to make the tough choices and now the Bank seems paralysed by the same inaction we expect from the politicians who want to swerve a housing crash in the run up to an election.
If they're buying for cash as 2/3rds of BTL purchasers are then how does Bank raising rates hurt them? It just hurts the people they're competing against to buy homes.
No, the thing that hurts cash is inflation.
Because they’re exchanging cash for an asset that is declining in its cash value.
Raising rates hurts the BTL crowd, whether or not they’re mortgaged.
Does anyone know how cash performed during the 70’s? I read a comment on, iirc, Reddit /economics - that cash was one of the best performing assets during that time.
The Seventies were a major bear market, and high interest rates outperformed it, at least in the second half. Overall though the best investment was in Bricks and Mortar.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
But cutting asset prices is the first step to reducing housing costs for ordinary people.
No. Letting inflation run is.
The problem in the past two decades is we suppressed wage etc inflation too much so money went to assets instead of wages. We need to rebalance that.
Seven years of 10% wage growth for ordinary people but assets frozen in value would see assets halve in real terms costs/value but without any negative equity and without squeezing the living standards of ordinary people.
The myth was allowed to set in that inflation went away. It didn't, it just accumulated with assets, meaning wealth was transferred from earned to unearned income. Inflation in the rest of the economy now can rebalance society away from unearned incomes back to earners benefitting instead.
If you think Mr and Mrs Average are going to get 10% pay rises for one year, let alone seven, then I have a bridge etc., etc.
Well yes indeed, and by not putting interest rates up the asset rich will continue to concentrate wealth at the very top as they continue to borrow cheap money and buy everything in sight.
The current inflation is being driven by energy prices, with secondary effect because everything from food to housing includes energy as a cost, as well as costs of the Ukranian war, and covid aftershocks particularly in China. It isn't being driven by overheating of domestic demand. In theory this should be a temporary phenomenon, and will abate naturally, with interest rates having little effect on its course.
I suspect we will see a modest increase in interest rates to 3-4% by 2024. That will be quite painful for those with mortgages. If inflation falls, and it is likely that oil and gas prices will drop fairly quickly as world events resolve, then we may well see inflation of 2% again and interest rates positive at 4%.
That is the zone to aim for, and it is very reasonable for government to smooth the way there by absorbing some of the cost of living increase via increased borrowing. Frankly, I can afford the CoL crisis, but those on lower incomes cannot.
Increase borrowing? It's going to be your grandkids and my kids that will pay for older people's selfishness in not wanting to make any sacrifices to living standards. We're set to see the debt interest bill rise to ca. £90bn this year and you want to borrow more money. Who is going to pay for it?
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
Agreed. Getting asset price falls like that is a bit cutting off your nose to spite your face. The asset rich will lose some asset value but will still have the cash they had etc. The cash poor will be made even poorer and will struggle the most.
Inflation is a self correcting way the economy takes money out of the economy. By devaluing assets via inflation real money is taken out, without needing to physically take any out. That process has already begun and needs to run its course.
A few years of prices and wages growing 10% but unearned incomes and asset prices frozen in value would very rapidly see a rebalancing of the economy away from unearned wealth and assets towards those who earn incomes.
But we've still got ultra low rates so there's no guarantee that asset prices won't keep rising and keep up with inflation.
If inflation spikes then unearned incomes struggle to keep up with earned incomes. Those with earned incomes get pay rises to meet their obligations, but unearned or fixed incomes see their incomes devalue in real terms which means they can't afford to buy assets anymore.
Workers buying assets isn't a problem, we want working people to be able to afford their own homes. The problem is non working parasites taking and accumulating all the wealth for themselves and pulling up the ladder after they'd finished working, not wanting to pay what they owe for goods and services.
Hmm, that seems an unlikely outcome to me. With ultra low interest rates baked in why wouldn't the asset rich continue to accumulate more assets?
Pushing interest rates up is the only way to push asset prices down and create a more equal society. The government clearly doesn't have the cojones to put non primary housing asset surcharges up to punishing levels to dissuade BTL so interest rates will need to be the way to do it.
And why should it? Literally hundreds of MP's are BTL landlords. Not to mention Tory Party members.
Osborne had the balls to do it and voters responded in 2015. Taking action against landlords is unpopular with a few hundred thousand landlords but extremely popular with millions of people trapped in the private rental sector pissing their money away paying off someone else's mortgage or someone else's retirement.
Fuck the members, because these are election winning policies.
Too many honourable members have been doing too much fucking recently. Don't give them any more ideas...
More seriously, you may be right, but I suspect all that would happen instead is you would see a proliferation of small limited liability companies being set up to hold the asset (house/flat) instead.
Ah but then you can create stamp duty for that too and on transfer into a company.
Stamp duty is a bad tax as it is a tax on mobility, so people cannot afford the cost to move. Applying penal rates to BTL landlords may stop people entering the market, but doesn't force them to leave, and in any case is likely to drive up the rents that they ask.
More effective would be to have an annual property tax, with the tax going to councils in order to provide cheap social housing. This would drive down market rents by providing an alternative. Indeed that was the way we did it before council housing was sold off on the cheap, and wound up as BTL.
It is ironic to hear hyper-Thatchetite posters complaining about things like BTL, which are simply the result of four decades of neoliberal economic policies.
You are aware, that in much of Europe, a much higher percentage of property is private owned rental?
Thatcherism was about expanding the home owning group.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
But cutting asset prices is the first step to reducing housing costs for ordinary people.
No. Letting inflation run is.
The problem in the past two decades is we suppressed wage etc inflation too much so money went to assets instead of wages. We need to rebalance that.
Seven years of 10% wage growth for ordinary people but assets frozen in value would see assets halve in real terms costs/value but without any negative equity and without squeezing the living standards of ordinary people.
The myth was allowed to set in that inflation went away. It didn't, it just accumulated with assets, meaning wealth was transferred from earned to unearned income. Inflation in the rest of the economy now can rebalance society away from unearned incomes back to earners benefitting instead.
If you think Mr and Mrs Average are going to get 10% pay rises for one year, let alone seven, then I have a bridge etc., etc.
As the piece you have just quoted itself states, wage growth is not keeping up with inflation in most sectors, and a lot of the minority who have done better are lower paid individuals who (a) experience a higher effective rate of inflation than average, due to the fact that a disproportionate amount of their spending is on basic commodities, and (b) are liable to see what real terms increases they have thus far enjoyed whittled away by further rises in the cost of living.
Employers are going to plead poverty and crack down hard on wages, unless the employment market in their sector remains so tight that they are forced to compete for a finite number of people willing or able to do the work. Worker interest is almost invariably subordinated to the imperative of maximising shareholder returns and executive bonuses, and will continue to be so.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
But cutting asset prices is the first step to reducing housing costs for ordinary people.
No. Letting inflation run is.
The problem in the past two decades is we suppressed wage etc inflation too much so money went to assets instead of wages. We need to rebalance that.
Seven years of 10% wage growth for ordinary people but assets frozen in value would see assets halve in real terms costs/value but without any negative equity and without squeezing the living standards of ordinary people.
The myth was allowed to set in that inflation went away. It didn't, it just accumulated with assets, meaning wealth was transferred from earned to unearned income. Inflation in the rest of the economy now can rebalance society away from unearned incomes back to earners benefitting instead.
If you think Mr and Mrs Average are going to get 10% pay rises for one year, let alone seven, then I have a bridge etc., etc.
Well yes indeed, and by not putting interest rates up the asset rich will continue to concentrate wealth at the very top as they continue to borrow cheap money and buy everything in sight.
The current inflation is being driven by energy prices, with secondary effect because everything from food to housing includes energy as a cost, as well as costs of the Ukranian war, and covid aftershocks particularly in China. It isn't being driven by overheating of domestic demand. In theory this should be a temporary phenomenon, and will abate naturally, with interest rates having little effect on its course.
I suspect we will see a modest increase in interest rates to 3-4% by 2024. That will be quite painful for those with mortgages. If inflation falls, and it is likely that oil and gas prices will drop fairly quickly as world events resolve, then we may well see inflation of 2% again and interest rates positive at 4%.
That is the zone to aim for, and it is very reasonable for government to smooth the way there by absorbing some of the cost of living increase via increased borrowing. Frankly, I can afford the CoL crisis, but those on lower incomes cannot.
Increase borrowing? It's going to be your grandkids and my kids that will pay for older people's selfishness in not wanting to make any sacrifices to living standards. We're set to see the debt interest bill rise to ca. £90bn this year and you want to borrow more money. Who is going to pay for it?
Generally I am dry as dust on borrowing and would agree, but the next couple of years are going to be much tougher on low income families than on property owning retired people, who can afford to sit it out. People struggling to pay the bills are not going to be saving for a house deposit, those savings will be soon exhausted.
If ideologically opposed to increases in benefits, then increase the minimum wage (safe in a time of full employment) and cut taxes on low incomes.
"I would imagine a lot of thought has been given; the Speaker receives wise counsel from various aides. Let's imagine the evidence against this MP is fairly compelling (too early for us to know, I recognise). You mention safeguarding in schools; does the Speaker not have a similar obligation to protect female staff (of whom there are hundreds, I don't mean MPs) in the HoC from a potentially predatory male?"
This is a fair point.
But we've been told that there are allegations against ca. 50 MPs.
If the Speaker is concerned about the protection of staff from potentially predatory MPs, why aren't all these MPs being asked to stay away from the Commons?
Perhaps it's a matter of degree. The MP in question has been arrested on a charge of rape, inter alia. I suspect the 50 you refer to are less serious allegations (though I can't be sure, of course).
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
I'm not sure the bottom deciles are most leveraged. One example is pensioners, on low nominal incomes but usually nil debt. I'd imagine the decile 3-9 homebuyers will be most affected, and especially higher earners in frothy markets.
Da fing iz why would raising rates crash asset prices when *real* rates is more negative than any time in history? 9% inflation, doubling interest rates from 1 to 2 only knocks the real interest rate down from -8 to -7.
Indeed.
Plus the problematic parasites that Max has accurately identified in the past tend to not be highly leveraged. The overwhelming majority of first time buyers need a mortgage but most BTL landlords are cash purchasers. So raising rates aids cash buyers but hurts borrowers. Indeed many BTL purchasers struggle to get a mortgage as they're old and don't have an income.
Inflation on the other hand aids borrowers like first time buyers, but hurts the cash rich cash purchasers.
If the purchasing with cash BTL types on a fixed income find their income squeezed then they may not be able to afford assets even if real interest rates are negative.
You have lost me there. Cash rich cash purchasers just gonna purchase even quicker, and become cash poor asset rich.
Inflation makes the cash rich cash poorer though. If you're on a fixed income and inflation goes up you need to reserve more cash for goods and services and have less for assets.
Yeah but that's why they'll push their money into assets rather than keep it in cash, whatever they get from rising asset prices will be better than -7% they get from keeping it in cash.
They're already doing that.
Inflation will devalue their cash though. They'll have higher costs but no more cash, while workers will have more.
Not really because their cash will be invested into rentier asset classes like property or dividend bearing shares, so as those asset values rise they will generate more cash, a real drop of 2-3% for a couple of years is where wage growth will probably come in at as well.
No, the only way to actually get asset prices down is to raise interest rates and the BoE need to stop worrying about the societal or social impact of raising rates because it's not within their remit. That was the whole point of not having the politicians in charge because they would be unable to make the tough choices and now the Bank seems paralysed by the same inaction we expect from the politicians who want to swerve a housing crash in the run up to an election.
If they're buying for cash as 2/3rds of BTL purchasers are then how does Bank raising rates hurt them? It just hurts the people they're competing against to buy homes.
No, the thing that hurts cash is inflation.
But that's new entrants into BTL, the issue isn't them, the withdrawal of higher rate interest allowances has already reduced competition for housing from landlords to FTBs or owner occupiers. It's the huge 4m stock of housing currently in private hands being let out that we need to desperately unlock. The only way to do that is to turn landlords into forced seller, withdrawal of basic rate relief, annual surcharges and all but eliminating new entrants with punishing stamp duty rates would all contribute to normalising the housing market and reversing the flow of wealth from the have nots to the haves.
All of those are good proposals but raising base rates doesn't address any of that.
The new entrants into BTL are a huge part of the problem. Hurt them because inflation devalues their cash, there'll be fewer new BTL purchases which will drive down real asset prices.
How many new entrants into BTL are there? Do you have a number? Investment in London for example reduced significantly from about 2015/6, and I suspect that much of the growth has come from corporates such as L&G.
Regulation for the last decade has sought to make it less and less attractive, and I'm not convinced that it is very many.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
Agreed. Getting asset price falls like that is a bit cutting off your nose to spite your face. The asset rich will lose some asset value but will still have the cash they had etc. The cash poor will be made even poorer and will struggle the most.
Inflation is a self correcting way the economy takes money out of the economy. By devaluing assets via inflation real money is taken out, without needing to physically take any out. That process has already begun and needs to run its course.
A few years of prices and wages growing 10% but unearned incomes and asset prices frozen in value would very rapidly see a rebalancing of the economy away from unearned wealth and assets towards those who earn incomes.
But we've still got ultra low rates so there's no guarantee that asset prices won't keep rising and keep up with inflation.
If inflation spikes then unearned incomes struggle to keep up with earned incomes. Those with earned incomes get pay rises to meet their obligations, but unearned or fixed incomes see their incomes devalue in real terms which means they can't afford to buy assets anymore.
Workers buying assets isn't a problem, we want working people to be able to afford their own homes. The problem is non working parasites taking and accumulating all the wealth for themselves and pulling up the ladder after they'd finished working, not wanting to pay what they owe for goods and services.
Hmm, that seems an unlikely outcome to me. With ultra low interest rates baked in why wouldn't the asset rich continue to accumulate more assets?
Pushing interest rates up is the only way to push asset prices down and create a more equal society. The government clearly doesn't have the cojones to put non primary housing asset surcharges up to punishing levels to dissuade BTL so interest rates will need to be the way to do it.
And why should it? Literally hundreds of MP's are BTL landlords. Not to mention Tory Party members.
Osborne had the balls to do it and voters responded in 2015. Taking action against landlords is unpopular with a few hundred thousand landlords but extremely popular with millions of people trapped in the private rental sector pissing their money away paying off someone else's mortgage or someone else's retirement.
Fuck the members, because these are election winning policies.
Too many honourable members have been doing too much fucking recently. Don't give them any more ideas...
More seriously, you may be right, but I suspect all that would happen instead is you would see a proliferation of small limited liability companies being set up to hold the asset (house/flat) instead.
Ah but then you can create stamp duty for that too and on transfer into a company.
Stamp duty is a bad tax as it is a tax on mobility, so people cannot afford the cost to move. Applying penal rates to BTL landlords may stop people entering the market, but doesn't force them to leave, and in any case is likely to drive up the rents that they ask.
More effective would be to have an annual property tax, with the tax going to councils in order to provide cheap social housing. This would drive down market rents by providing an alternative. Indeed that was the way we did it before council housing was sold off on the cheap, and wound up as BTL.
It is ironic to hear hyper-Thatchetite posters complaining about things like BTL, which are simply the result of four decades of neoliberal economic policies.
Bullshit, BTL is Labour, it exploded under Labour and Labour allowed it to engulf millions of people in a rent trap that they are still struggling to escape from. It took two Tories to actually begin to undo the damage of BTL on the UK economy, sadly Theresa May was useless and Philip Hammond was compromised and so are Boris and Rishi all of whom have multiple properties and would see their personal wealth hit significantly if they introduced measures to turn landlords into forced sellers.
Thatcher wanted to see a massive expansion of the private rental sector. The 1980 Housing Act encouraged right to buy which led to the decline of social housing (which competed with private landlords and helped to cap rents). The 1988 Housing Act introduced the Assured Shorthold Tenancy, which shifted the power from tenants to landlords, kickstarting BTL. Sure much of the growth occurred under Labour, but that's simply because Labour didn't reverse the policies that Thatcher introduced, so the process she started just continued. And you have Thatcher's cuts to the top rate of income tax to blame for why you have all these rich people searching for somewhere to park their money. If you create massive inequality and sell off social housing then BTL is the consequence. It's just capitalism.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
Agreed. Getting asset price falls like that is a bit cutting off your nose to spite your face. The asset rich will lose some asset value but will still have the cash they had etc. The cash poor will be made even poorer and will struggle the most.
Inflation is a self correcting way the economy takes money out of the economy. By devaluing assets via inflation real money is taken out, without needing to physically take any out. That process has already begun and needs to run its course.
A few years of prices and wages growing 10% but unearned incomes and asset prices frozen in value would very rapidly see a rebalancing of the economy away from unearned wealth and assets towards those who earn incomes.
But we've still got ultra low rates so there's no guarantee that asset prices won't keep rising and keep up with inflation.
If inflation spikes then unearned incomes struggle to keep up with earned incomes. Those with earned incomes get pay rises to meet their obligations, but unearned or fixed incomes see their incomes devalue in real terms which means they can't afford to buy assets anymore.
Workers buying assets isn't a problem, we want working people to be able to afford their own homes. The problem is non working parasites taking and accumulating all the wealth for themselves and pulling up the ladder after they'd finished working, not wanting to pay what they owe for goods and services.
Hmm, that seems an unlikely outcome to me. With ultra low interest rates baked in why wouldn't the asset rich continue to accumulate more assets?
Pushing interest rates up is the only way to push asset prices down and create a more equal society. The government clearly doesn't have the cojones to put non primary housing asset surcharges up to punishing levels to dissuade BTL so interest rates will need to be the way to do it.
And why should it? Literally hundreds of MP's are BTL landlords. Not to mention Tory Party members.
Osborne had the balls to do it and voters responded in 2015. Taking action against landlords is unpopular with a few hundred thousand landlords but extremely popular with millions of people trapped in the private rental sector pissing their money away paying off someone else's mortgage or someone else's retirement.
Fuck the members, because these are election winning policies.
Too many honourable members have been doing too much fucking recently. Don't give them any more ideas...
More seriously, you may be right, but I suspect all that would happen instead is you would see a proliferation of small limited liability companies being set up to hold the asset (house/flat) instead.
Ah but then you can create stamp duty for that too and on transfer into a company.
Stamp duty is a bad tax as it is a tax on mobility, so people cannot afford the cost to move. Applying penal rates to BTL landlords may stop people entering the market, but doesn't force them to leave, and in any case is likely to drive up the rents that they ask.
More effective would be to have an annual property tax, with the tax going to councils in order to provide cheap social housing. This would drive down market rents by providing an alternative. Indeed that was the way we did it before council housing was sold off on the cheap, and wound up as BTL.
It is ironic to hear hyper-Thatchetite posters complaining about things like BTL, which are simply the result of four decades of neoliberal economic policies.
Bullshit, BTL is Labour, it exploded under Labour and Labour allowed it to engulf millions of people in a rent trap that they are still struggling to escape from. It took two Tories to actually begin to undo the damage of BTL on the UK economy, sadly Theresa May was useless and Philip Hammond was compromised and so are Boris and Rishi all of whom have multiple properties and would see their personal wealth hit significantly if they introduced measures to turn landlords into forced sellers.
Thatcher wanted to see a massive expansion of the private rental sector. The 1980 Housing Act encouraged right to buy which led to the decline of social housing (which competed with private landlords and helped to cap rents). The 1988 Housing Act introduced the Assured Shorthold Tenancy, which shifted the power from tenants to landlords, kickstarting BTL. Sure much of the growth occurred under Labour, but that's simply because Labour didn't reverse the policies that Thatcher introduced, so the process she started just continued. And you have Thatcher's cuts to the top rate of income tax to blame for why you have all these rich people searching for somewhere to park their money. If you create massive inequality and sell off social housing then BTL is the consequence. It's just capitalism.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
Agreed. Getting asset price falls like that is a bit cutting off your nose to spite your face. The asset rich will lose some asset value but will still have the cash they had etc. The cash poor will be made even poorer and will struggle the most.
Inflation is a self correcting way the economy takes money out of the economy. By devaluing assets via inflation real money is taken out, without needing to physically take any out. That process has already begun and needs to run its course.
A few years of prices and wages growing 10% but unearned incomes and asset prices frozen in value would very rapidly see a rebalancing of the economy away from unearned wealth and assets towards those who earn incomes.
But we've still got ultra low rates so there's no guarantee that asset prices won't keep rising and keep up with inflation.
If inflation spikes then unearned incomes struggle to keep up with earned incomes. Those with earned incomes get pay rises to meet their obligations, but unearned or fixed incomes see their incomes devalue in real terms which means they can't afford to buy assets anymore.
Workers buying assets isn't a problem, we want working people to be able to afford their own homes. The problem is non working parasites taking and accumulating all the wealth for themselves and pulling up the ladder after they'd finished working, not wanting to pay what they owe for goods and services.
Hmm, that seems an unlikely outcome to me. With ultra low interest rates baked in why wouldn't the asset rich continue to accumulate more assets?
Pushing interest rates up is the only way to push asset prices down and create a more equal society. The government clearly doesn't have the cojones to put non primary housing asset surcharges up to punishing levels to dissuade BTL so interest rates will need to be the way to do it.
And why should it? Literally hundreds of MP's are BTL landlords. Not to mention Tory Party members.
Osborne had the balls to do it and voters responded in 2015. Taking action against landlords is unpopular with a few hundred thousand landlords but extremely popular with millions of people trapped in the private rental sector pissing their money away paying off someone else's mortgage or someone else's retirement.
Fuck the members, because these are election winning policies.
Too many honourable members have been doing too much fucking recently. Don't give them any more ideas...
More seriously, you may be right, but I suspect all that would happen instead is you would see a proliferation of small limited liability companies being set up to hold the asset (house/flat) instead.
Ah but then you can create stamp duty for that too and on transfer into a company.
Stamp duty is a bad tax as it is a tax on mobility, so people cannot afford the cost to move. Applying penal rates to BTL landlords may stop people entering the market, but doesn't force them to leave, and in any case is likely to drive up the rents that they ask.
More effective would be to have an annual property tax, with the tax going to councils in order to provide cheap social housing. This would drive down market rents by providing an alternative. Indeed that was the way we did it before council housing was sold off on the cheap, and wound up as BTL.
It is ironic to hear hyper-Thatchetite posters complaining about things like BTL, which are simply the result of four decades of neoliberal economic policies.
You are aware, that in much of Europe, a much higher percentage of property is private owned rental?
Thatcherism was about expanding the home owning group.
Though France and Spain, Italy and most of Eastern Europe now have a higher rate of property ownership than us. As does the USA, Canada, Australia and New Zealand.
Only really Germany and Switzerland, Japan, Denmark and South Korea of Western nations have more renters percentage wise than we do now
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
But cutting asset prices is the first step to reducing housing costs for ordinary people.
No. Letting inflation run is.
The problem in the past two decades is we suppressed wage etc inflation too much so money went to assets instead of wages. We need to rebalance that.
Seven years of 10% wage growth for ordinary people but assets frozen in value would see assets halve in real terms costs/value but without any negative equity and without squeezing the living standards of ordinary people.
The myth was allowed to set in that inflation went away. It didn't, it just accumulated with assets, meaning wealth was transferred from earned to unearned income. Inflation in the rest of the economy now can rebalance society away from unearned incomes back to earners benefitting instead.
If you think Mr and Mrs Average are going to get 10% pay rises for one year, let alone seven, then I have a bridge etc., etc.
Well yes indeed, and by not putting interest rates up the asset rich will continue to concentrate wealth at the very top as they continue to borrow cheap money and buy everything in sight.
The current inflation is being driven by energy prices, with secondary effect because everything from food to housing includes energy as a cost, as well as costs of the Ukranian war, and covid aftershocks particularly in China. It isn't being driven by overheating of domestic demand. In theory this should be a temporary phenomenon, and will abate naturally, with interest rates having little effect on its course.
I suspect we will see a modest increase in interest rates to 3-4% by 2024. That will be quite painful for those with mortgages. If inflation falls, and it is likely that oil and gas prices will drop fairly quickly as world events resolve, then we may well see inflation of 2% again and interest rates positive at 4%.
That is the zone to aim for, and it is very reasonable for government to smooth the way there by absorbing some of the cost of living increase via increased borrowing. Frankly, I can afford the CoL crisis, but those on lower incomes cannot.
Increase borrowing? It's going to be your grandkids and my kids that will pay for older people's selfishness in not wanting to make any sacrifices to living standards. We're set to see the debt interest bill rise to ca. £90bn this year and you want to borrow more money. Who is going to pay for it?
Generally I am dry as dust on borrowing and would agree, but the next couple of years are going to be much tougher on low income families than on property owning retired people, who can afford to sit it out. People struggling to pay the bills are not going to be saving for a house deposit, those savings will be soon exhausted.
If ideologically opposed to increases in benefits, then increase the minimum wage (safe in a time of full employment) and cut taxes on low incomes.
I have no problem with either of those policies (raising the minimum wage or tax cuts for lower income people), I just want it to be funded, not borrowed. Maybe taxing those older wealthy people would be a good place to start, but then if the Lib Dems proposed that all of their gains in the south of England suddenly evaporate as older wealthy people go back to the Tories.
According to the Guardian there seems to be some blowback from the minions who received FPNs for attending the same events as Johnson, who has pretty much been fully exonerated by the Met.
It seems as though the juniors cooperated with Gray unaware that her work would be handed over to to the Met for them to be prosecuted. Senior Civil Servants and Politicians on the other hand were less cooperative with Gray and subsequently troubled less by the Met.
I am not sure this is as over as Johnson assumes it might be.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
Agreed. Getting asset price falls like that is a bit cutting off your nose to spite your face. The asset rich will lose some asset value but will still have the cash they had etc. The cash poor will be made even poorer and will struggle the most.
Inflation is a self correcting way the economy takes money out of the economy. By devaluing assets via inflation real money is taken out, without needing to physically take any out. That process has already begun and needs to run its course.
A few years of prices and wages growing 10% but unearned incomes and asset prices frozen in value would very rapidly see a rebalancing of the economy away from unearned wealth and assets towards those who earn incomes.
But we've still got ultra low rates so there's no guarantee that asset prices won't keep rising and keep up with inflation.
If inflation spikes then unearned incomes struggle to keep up with earned incomes. Those with earned incomes get pay rises to meet their obligations, but unearned or fixed incomes see their incomes devalue in real terms which means they can't afford to buy assets anymore.
Workers buying assets isn't a problem, we want working people to be able to afford their own homes. The problem is non working parasites taking and accumulating all the wealth for themselves and pulling up the ladder after they'd finished working, not wanting to pay what they owe for goods and services.
Hmm, that seems an unlikely outcome to me. With ultra low interest rates baked in why wouldn't the asset rich continue to accumulate more assets?
Pushing interest rates up is the only way to push asset prices down and create a more equal society. The government clearly doesn't have the cojones to put non primary housing asset surcharges up to punishing levels to dissuade BTL so interest rates will need to be the way to do it.
And why should it? Literally hundreds of MP's are BTL landlords. Not to mention Tory Party members.
Osborne had the balls to do it and voters responded in 2015. Taking action against landlords is unpopular with a few hundred thousand landlords but extremely popular with millions of people trapped in the private rental sector pissing their money away paying off someone else's mortgage or someone else's retirement.
Fuck the members, because these are election winning policies.
Too many honourable members have been doing too much fucking recently. Don't give them any more ideas...
More seriously, you may be right, but I suspect all that would happen instead is you would see a proliferation of small limited liability companies being set up to hold the asset (house/flat) instead.
Ah but then you can create stamp duty for that too and on transfer into a company.
Stamp duty is a bad tax as it is a tax on mobility, so people cannot afford the cost to move. Applying penal rates to BTL landlords may stop people entering the market, but doesn't force them to leave, and in any case is likely to drive up the rents that they ask.
More effective would be to have an annual property tax, with the tax going to councils in order to provide cheap social housing. This would drive down market rents by providing an alternative. Indeed that was the way we did it before council housing was sold off on the cheap, and wound up as BTL.
It is ironic to hear hyper-Thatchetite posters complaining about things like BTL, which are simply the result of four decades of neoliberal economic policies.
You are aware, that in much of Europe, a much higher percentage of property is private owned rental?
Thatcherism was about expanding the home owning group.
Thatcher wanted to expand the private rental market and put policies in place to do that.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
I'm not sure the bottom deciles are most leveraged. One example is pensioners, on low nominal incomes but usually nil debt. I'd imagine the decile 3-9 homebuyers will be most affected, and especially higher earners in frothy markets.
Da fing iz why would raising rates crash asset prices when *real* rates is more negative than any time in history? 9% inflation, doubling interest rates from 1 to 2 only knocks the real interest rate down from -8 to -7.
Indeed.
Plus the problematic parasites that Max has accurately identified in the past tend to not be highly leveraged. The overwhelming majority of first time buyers need a mortgage but most BTL landlords are cash purchasers. So raising rates aids cash buyers but hurts borrowers. Indeed many BTL purchasers struggle to get a mortgage as they're old and don't have an income.
Inflation on the other hand aids borrowers like first time buyers, but hurts the cash rich cash purchasers.
If the purchasing with cash BTL types on a fixed income find their income squeezed then they may not be able to afford assets even if real interest rates are negative.
You have lost me there. Cash rich cash purchasers just gonna purchase even quicker, and become cash poor asset rich.
Inflation makes the cash rich cash poorer though. If you're on a fixed income and inflation goes up you need to reserve more cash for goods and services and have less for assets.
Yeah but that's why they'll push their money into assets rather than keep it in cash, whatever they get from rising asset prices will be better than -7% they get from keeping it in cash.
They're already doing that.
Inflation will devalue their cash though. They'll have higher costs but no more cash, while workers will have more.
Not really because their cash will be invested into rentier asset classes like property or dividend bearing shares, so as those asset values rise they will generate more cash, a real drop of 2-3% for a couple of years is where wage growth will probably come in at as well.
No, the only way to actually get asset prices down is to raise interest rates and the BoE need to stop worrying about the societal or social impact of raising rates because it's not within their remit. That was the whole point of not having the politicians in charge because they would be unable to make the tough choices and now the Bank seems paralysed by the same inaction we expect from the politicians who want to swerve a housing crash in the run up to an election.
If they're buying for cash as 2/3rds of BTL purchasers are then how does Bank raising rates hurt them? It just hurts the people they're competing against to buy homes.
No, the thing that hurts cash is inflation.
But that's new entrants into BTL, the issue isn't them, the withdrawal of higher rate interest allowances has already reduced competition for housing from landlords to FTBs or owner occupiers. It's the huge 4m stock of housing currently in private hands being let out that we need to desperately unlock. The only way to do that is to turn landlords into forced seller, withdrawal of basic rate relief, annual surcharges and all but eliminating new entrants with punishing stamp duty rates would all contribute to normalising the housing market and reversing the flow of wealth from the have nots to the haves.
All of those are good proposals but raising base rates doesn't address any of that.
The new entrants into BTL are a huge part of the problem. Hurt them because inflation devalues their cash, there'll be fewer new BTL purchases which will drive down real asset prices.
But the point is that while interest rates are low asset prices will keep rising so they benefit from investing said cash into some kind of rent bearing asset such as housing. Only a drop in asset values will end this cycle and fix the housing market. To do that we need rates to be significantly higher than they are, which is scary for me as someone who has a fairly large mortgage and will soon be heading into single income territory on and off for a few years but ultimately 1% or even 2% rates is an insanely low rate of interest and asset values will keep rising and shielding the asset rich.
Except its not interest that's raising asset prices, since the parasites aren't buying leveraged anyway. Its that cash hasn't had anything else to go to other than assets since inflation was too low. The rise in price/earnings ratios and explosion in BTL under Blair took place with ~5-6% interest rates so why would a rise to 2% make any difference whatsoever?
If cash doesn't have anywhere else to go it goes to assets. If cash is needed for other things, it can't go to assets anymore.
The only way to drive down asset prices is give the cash-rich something else that they need to spend their cash on, like goods and services, instead of assets.
And if the retired on fixed incomes suddenly find their costs rising but their fixed income isn't they might need to sell their BTLs in order to release the money to pay their rising costs.
Demented gibberish. BTL owners by definition are not on fixed income, so why sell the property rather than hiking the rent? You obviously hate the rich and that's fine but then you hate capitalism. There is no wrong sort of rich any more than there's a wrong sort of snow; you like them or you don't. If you don't why do you think you're a Tory?
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
But cutting asset prices is the first step to reducing housing costs for ordinary people.
No. Letting inflation run is.
The problem in the past two decades is we suppressed wage etc inflation too much so money went to assets instead of wages. We need to rebalance that.
Seven years of 10% wage growth for ordinary people but assets frozen in value would see assets halve in real terms costs/value but without any negative equity and without squeezing the living standards of ordinary people.
The myth was allowed to set in that inflation went away. It didn't, it just accumulated with assets, meaning wealth was transferred from earned to unearned income. Inflation in the rest of the economy now can rebalance society away from unearned incomes back to earners benefitting instead.
If you think Mr and Mrs Average are going to get 10% pay rises for one year, let alone seven, then I have a bridge etc., etc.
Well yes indeed, and by not putting interest rates up the asset rich will continue to concentrate wealth at the very top as they continue to borrow cheap money and buy everything in sight.
The current inflation is being driven by energy prices, with secondary effect because everything from food to housing includes energy as a cost, as well as costs of the Ukranian war, and covid aftershocks particularly in China. It isn't being driven by overheating of domestic demand. In theory this should be a temporary phenomenon, and will abate naturally, with interest rates having little effect on its course.
I suspect we will see a modest increase in interest rates to 3-4% by 2024. That will be quite painful for those with mortgages. If inflation falls, and it is likely that oil and gas prices will drop fairly quickly as world events resolve, then we may well see inflation of 2% again and interest rates positive at 4%.
That is the zone to aim for, and it is very reasonable for government to smooth the way there by absorbing some of the cost of living increase via increased borrowing. Frankly, I can afford the CoL crisis, but those on lower incomes cannot.
It isn't just that, it's the American Covid stimulus. My Dad is in construction, and prices in that industry have soared because all the timber, steel and other building materials are being sucked into the States.
I would include that as a covid aftershock (and didnt mention Brexit as an inflationary factor, though it probably is). It isn't a factor that would be diminished by a domestic interest rise though.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
Agreed. Getting asset price falls like that is a bit cutting off your nose to spite your face. The asset rich will lose some asset value but will still have the cash they had etc. The cash poor will be made even poorer and will struggle the most.
Inflation is a self correcting way the economy takes money out of the economy. By devaluing assets via inflation real money is taken out, without needing to physically take any out. That process has already begun and needs to run its course.
A few years of prices and wages growing 10% but unearned incomes and asset prices frozen in value would very rapidly see a rebalancing of the economy away from unearned wealth and assets towards those who earn incomes.
But we've still got ultra low rates so there's no guarantee that asset prices won't keep rising and keep up with inflation.
If inflation spikes then unearned incomes struggle to keep up with earned incomes. Those with earned incomes get pay rises to meet their obligations, but unearned or fixed incomes see their incomes devalue in real terms which means they can't afford to buy assets anymore.
Workers buying assets isn't a problem, we want working people to be able to afford their own homes. The problem is non working parasites taking and accumulating all the wealth for themselves and pulling up the ladder after they'd finished working, not wanting to pay what they owe for goods and services.
Hmm, that seems an unlikely outcome to me. With ultra low interest rates baked in why wouldn't the asset rich continue to accumulate more assets?
Pushing interest rates up is the only way to push asset prices down and create a more equal society. The government clearly doesn't have the cojones to put non primary housing asset surcharges up to punishing levels to dissuade BTL so interest rates will need to be the way to do it.
And why should it? Literally hundreds of MP's are BTL landlords. Not to mention Tory Party members.
Osborne had the balls to do it and voters responded in 2015. Taking action against landlords is unpopular with a few hundred thousand landlords but extremely popular with millions of people trapped in the private rental sector pissing their money away paying off someone else's mortgage or someone else's retirement.
Fuck the members, because these are election winning policies.
Too many honourable members have been doing too much fucking recently. Don't give them any more ideas...
More seriously, you may be right, but I suspect all that would happen instead is you would see a proliferation of small limited liability companies being set up to hold the asset (house/flat) instead.
Ah but then you can create stamp duty for that too and on transfer into a company.
Stamp duty is a bad tax as it is a tax on mobility, so people cannot afford the cost to move. Applying penal rates to BTL landlords may stop people entering the market, but doesn't force them to leave, and in any case is likely to drive up the rents that they ask.
More effective would be to have an annual property tax, with the tax going to councils in order to provide cheap social housing. This would drive down market rents by providing an alternative. Indeed that was the way we did it before council housing was sold off on the cheap, and wound up as BTL.
It is ironic to hear hyper-Thatchetite posters complaining about things like BTL, which are simply the result of four decades of neoliberal economic policies.
You are aware, that in much of Europe, a much higher percentage of property is private owned rental?
Thatcherism was about expanding the home owning group.
In general the most modern and strongest European economies have the lowest ownership shares, like the Netherlands, Germany, Denmark and Switzerland, nor by any means is the remainder predominantly rented from government. However, the private rental sectors do tend to be more price-regulated.
The highest European home ownership rates are in transition economies like Romania. It is very hard to find empirical evidence that home ownership rates make a society overall better-off.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
But cutting asset prices is the first step to reducing housing costs for ordinary people.
No. Letting inflation run is.
The problem in the past two decades is we suppressed wage etc inflation too much so money went to assets instead of wages. We need to rebalance that.
Seven years of 10% wage growth for ordinary people but assets frozen in value would see assets halve in real terms costs/value but without any negative equity and without squeezing the living standards of ordinary people.
The myth was allowed to set in that inflation went away. It didn't, it just accumulated with assets, meaning wealth was transferred from earned to unearned income. Inflation in the rest of the economy now can rebalance society away from unearned incomes back to earners benefitting instead.
If you think Mr and Mrs Average are going to get 10% pay rises for one year, let alone seven, then I have a bridge etc., etc.
As the piece you have just quoted itself states, wage growth is not keeping up with inflation in most sectors, and a lot of the minority who have done better are lower paid individuals who (a) experience a higher effective rate of inflation than average, due to the fact that a disproportionate amount of their spending is on basic commodities, and (b) are liable to see what real terms increases they have thus far enjoyed whittled away by further rises in the cost of living.
Employers are going to plead poverty and crack down hard on wages, unless the employment market in their sector remains so tight that they are forced to compete for a finite number of people willing or able to do the work. Worker interest is almost invariably subordinated to the imperative of maximising shareholder returns and executive bonuses, and will continue to be so.
Expect a wave of NHS industrial action and early retirements if the mooted 2% increase is implemented this year. It is the thing that can and will crash the NHS recovery drive.
I’ll say it again. I think this site routinely underestimates the chances of Boris winning a majority at the next election. It’s not a certain (depends how far down the shitter of inflation the economy goes before correcting) but I think it’s more likely than not.
I think Boris Johnson's chances are almost entirely in the hands of the Russian leadership and the Ukrainian people.
If Putin falls, Russia withdraws from Ukraine, and the oil and gas starts flowing again, the cost of living crisis will rapidly dissipate, and Boris will be a hero. In this scenario, I agree completely that Boris is highly likely to be reelected.
On the other hand, if the conflict drags on, people's utility bills rise sharply, cutting disposable spending, and pushing the UK into a recession, then I suspect he will be lucky to avoid a drubbing.
Just to follow up on this one, it's the second order effects that are the killer.
Right now, people are secure in their jobs, with record vacancies. Rising utility bills (for now) are merely an annoyance that necessitates some lifestyle changes. Maybe go out a little less; or wait on the purchase of that PS5; or choose Tesco Value instead of Finest.
People react to lower disposable income by maybe dipping into their savings a bit, and by spending a little less.
That lower spending is the problem, because it means Joes' Diner, which only barely survived Covid, is now getting less traffic in through the door. And that monthly rent isn't going anywhere. And take out orders are now down 20% too. If they're lucky, they'll be able to get by by just losing one of the waiting staff and someone from the kitchen. If things are tighter, then maybe Joe's has to shut, and everyone has lost their job.
Suddenly those record job vacancies (and is there any more lagging market than employment?) aren't there any more.
But as I said, so long as Ukraine is resolved (i.e. Putin falls), then Boris will be fine. People understand a little transient discomfort, and this isn't as bad as Covid.
If it does not, however, and the sanctions drag on, then the UK economy (and most of the West) will fall into recession, and that will have consequences.
Hopefully those consequences will fall politically on those who are prosecuting this war with not a shred of concern for the British economy or public.
You mean Putin? 🤔
I don't like Boris Johnson, but I could forgive him a triumphal party conference in the autumn if it followed a Ukrainian victory.
It would be Boris wot won it then, not the geriatric Biden or the too hesitant of offending Putin Macron and Scholz
Without wishing to denegrate the UK contribution to Ukraine, the US contribution under the "geriatric Biden" as you put it is just VASTLY more than everyone else in the world put together.
You'd expect that as a military superpower which remains very wealthy with a huge arms industry. And, as I say, not knocking the UK contribution. But there is simply no comparison between anyone else and the US.
In terms of anti tank missiles for instance, pivotal for the Ukranians containing the Russian advance, it was the UK which supplied the most
Aside from cherry picking an admittedly important type of military equipment, this is simply untrue. The US has been pumping Javelins into Ukraine at a vast rate - about one-third of its own (massive) stock.
Again, no wish to denegrate the UK contribution, but you're just living in an absolute John Bull fantasy world in terms of numbers.
It’s been a salutary reminder to the world of the absolute size and power of the US. For years people have been talking about it (wrongly IMHO) being in decline but it’s not - only China could pull that kind of spending out of its backside and provide the sheer volume of weaponry. America is not finished it’s been resting.
I do think in the UK’s defence it’s allowed others such as the US to do everything they can as if the UK can do what it has done with a relatively (to the US) small military it would have been shaming to others if they hadn’t done anything. Same applies of course to a number of Baltic/east European countries.
The UK and friends probably greased the wheels - the US provided the locomotive.
Are you denying America is in RELATIVE decline? That’s fatuous. Of course it is. At the end of World War 2 the USA alone constituted 50% of global GDP, even in the Clinton years it was well over 30%. Now it is about 20% and dropping, inexorably
That is a pretty huge fall, in just 70 years; the upside is that this has happened because so many other countries have lifted billions out of poverty, especially in Asia, especially in China. It’s good news for Homo Sapiens
So America is in relative decline, that is undoubted, and that affects its ability to influence the world - as we see from Iraq to Afghanistan. But is America in ASBOLUTE decline?
Absolute decline is fairly rare, at least in modern times. The UK never experienced it, properly, even as it fell from global supremacy.
But there is an argument that America is, in some ways, facing absolute decline. Drugs, race, culture wars, BLM, homelessness, and so on. Much of it superbly stoked via the Chinese and Russians on social media
You are probably absolutely correct however I have a belief in the US - which the Japanese should have done (and about the UK Liverpool fans and denizens of Hartlepool) that there is something inherently great in their cultures.
We can be boorish, fat, lazy, complacent, smug, whatever, but…… when the chips are down those tools at US college football matches are the guys who go and storm Iwo Jima and the guys booing abide with me at wenbley are the guys who will be brewing up tea in between fighting whoever they need.
A lot of people after WW1 wanted the US to assume it’s mantle and it retreated to an element of isolationalism and people thought they didn’t really have it in them - and then the US eventually showed it did and by god it did.
So it might not be the hegemon it was for actually a short period in time but bugger me no other country can turn it on when it needs to at the moment.
I’d love to think you are right. But my head says no, not at all
America is now in absolute cultural decline, to my mind. It has immense power, still, but the trajectory is set. It feels like it is the Roman Empire but it is *Rome* moving into its decadent, Eastern, Byzantine era (which, to be fair, continued for a LONG time, and Byzantium was powerful centuries after Rome was rubble)
The poignancy is that this cultural decline has been greatly accelerated by the internet and social media, which are, largely, American inventions, turned on America
I honestly hope you are wrong - not just for the joy that it will be the first time ever in your life you have been wrong - but I think there is an inherent cultural thing in Americans where when they feel “attacked” they go strong together.
I’m sure over time people have mocked there cultural decline because “talkies”, Hollywood, the playboy mansion, Woodstock, softness pre 9-11 etc but they really don’t like anyone sticking it to them and forget their differences quite quickly at that point. Pre tue world wars there was lots of talk about how a large slug of the population was “German” and “Irish” so they had no chance of stepping in but they realised their idea of freedom and their interests financially and geopolitically weee at risk and then they went full “USA, USA, USA” and the rest was history.
And it’s hard to say a country is in cultural decline when their “culture” - language, arts, fashion, music, movies etc are still the ones leading the way and being emulated to the masses.
To my mind, you are obviously wrong, and simply wishcasting, but I appreciate that won’t persuade you
So let’s take the cultural examples you give
1. Language: well yes, English is supreme, but that’s hardly due to the sole primacy of America, it’\s not even their language, it’s ours. England’s. The hegemony of English (which won’t last forever) is due to the supremacy of the British Empire at a critical time, as technology and industry made the export of languages much easier and more emphatically triumphant. English is supreme in India, for instance (population 1.4bn) and that has very little to do with America
2. Arts. New York City was the artistic capital of the world after WW2, no question. Is it now? Nope. It is maybe the auction capital of the world but that is an entirely different matter (and it might easily get overtaken by Shanghai or Hongers). There isn’t an obvious artistic capital of the world any more, the crown is divided, between NYC, LA, London, Berlin, Shanghai, even Rio and Seoul
3. Fashion? Who cares but Paris is probably more influential in haute couture
4. Music? Hard no. K-pop dominates the world. BTS are the biggest band ever. This IS a significant evolution. For the first time in history “pop music” finds its cutting edge outside the West, and outside America/UK. Latin American pop is also catching up
5. Movies. Absolute no. Hollywood is in sad decline, as even Hollywooders admit.The Chinese now watch Chinese movies, and they are the biggest market of all
For balance, America makes fantastic TV drama now, but then so do a lot of other countries
Where America IS crucially ascendant, is big tech companies. Apple, MS, Meta, Google, Amazon, Europe has nothing to compare and China is only now catching up. Tho TikTok suggests they will indeed catch up
Ok I surrender - and yes a lot of it is wishcasting. In my terms of surrender may I make the final points?
1. Language, we started it, the US made it essential.
2.arts shift constantly and whether it’s literature, painting, sculpture, new tech arts the US will have a leading role because that is where a lot of the arts world still is. Oscars, Emmy’s, Golden Globes, Tony’s are still “global” standard - not maybe the absolute best but still have the most pull - who in the world watches the BAFTAs or salivates over the Palme D’or?
3. Who gives a shit about Haute Couture. It’s still American derived styles that the kids in Korea or Moscow want - black culture is massive in every day fashion and that black culture is American black culture largely. Which influences the outfits of high top trainers or skate shoes of K-pop bands which leads us to
4. K-pop is a phenom. It’s massive in a short time frame but again based on Miami dance /EDM roots. Most modern music is still to one extent or another aping or adapting US music - rap, rock, country whatever and US music will adapt too because as a music industry it’s gigantic and has the money to search for, develop and market new styles.
5. Again with cheese movies you are comparing raw figures of movie goers in China, India etc watching a narrow range of movies. But what the world is watching is either US, US remakes, US influenced “western films” to a huge scale - yes they might be dwarfed in box office terms by India or China but they will still adapt, develop, copy, and be the yardstick.
As for the tach world - they really do hold sway there globally and that’s a massive cultural advantage.
As Tom Cruise famously said in Top Gun and repeats in the sequel : “ Don’t be such a downer Leon.”
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
I'm not sure the bottom deciles are most leveraged. One example is pensioners, on low nominal incomes but usually nil debt. I'd imagine the decile 3-9 homebuyers will be most affected, and especially higher earners in frothy markets.
Da fing iz why would raising rates crash asset prices when *real* rates is more negative than any time in history? 9% inflation, doubling interest rates from 1 to 2 only knocks the real interest rate down from -8 to -7.
Indeed.
Plus the problematic parasites that Max has accurately identified in the past tend to not be highly leveraged. The overwhelming majority of first time buyers need a mortgage but most BTL landlords are cash purchasers. So raising rates aids cash buyers but hurts borrowers. Indeed many BTL purchasers struggle to get a mortgage as they're old and don't have an income.
Inflation on the other hand aids borrowers like first time buyers, but hurts the cash rich cash purchasers.
If the purchasing with cash BTL types on a fixed income find their income squeezed then they may not be able to afford assets even if real interest rates are negative.
You have lost me there. Cash rich cash purchasers just gonna purchase even quicker, and become cash poor asset rich.
Inflation makes the cash rich cash poorer though. If you're on a fixed income and inflation goes up you need to reserve more cash for goods and services and have less for assets.
Yeah but that's why they'll push their money into assets rather than keep it in cash, whatever they get from rising asset prices will be better than -7% they get from keeping it in cash.
They're already doing that.
Inflation will devalue their cash though. They'll have higher costs but no more cash, while workers will have more.
Not really because their cash will be invested into rentier asset classes like property or dividend bearing shares, so as those asset values rise they will generate more cash, a real drop of 2-3% for a couple of years is where wage growth will probably come in at as well.
No, the only way to actually get asset prices down is to raise interest rates and the BoE need to stop worrying about the societal or social impact of raising rates because it's not within their remit. That was the whole point of not having the politicians in charge because they would be unable to make the tough choices and now the Bank seems paralysed by the same inaction we expect from the politicians who want to swerve a housing crash in the run up to an election.
If they're buying for cash as 2/3rds of BTL purchasers are then how does Bank raising rates hurt them? It just hurts the people they're competing against to buy homes.
No, the thing that hurts cash is inflation.
But that's new entrants into BTL, the issue isn't them, the withdrawal of higher rate interest allowances has already reduced competition for housing from landlords to FTBs or owner occupiers. It's the huge 4m stock of housing currently in private hands being let out that we need to desperately unlock. The only way to do that is to turn landlords into forced seller, withdrawal of basic rate relief, annual surcharges and all but eliminating new entrants with punishing stamp duty rates would all contribute to normalising the housing market and reversing the flow of wealth from the have nots to the haves.
All of those are good proposals but raising base rates doesn't address any of that.
The new entrants into BTL are a huge part of the problem. Hurt them because inflation devalues their cash, there'll be fewer new BTL purchases which will drive down real asset prices.
But the point is that while interest rates are low asset prices will keep rising so they benefit from investing said cash into some kind of rent bearing asset such as housing. Only a drop in asset values will end this cycle and fix the housing market. To do that we need rates to be significantly higher than they are, which is scary for me as someone who has a fairly large mortgage and will soon be heading into single income territory on and off for a few years but ultimately 1% or even 2% rates is an insanely low rate of interest and asset values will keep rising and shielding the asset rich.
Except its not interest that's raising asset prices, since the parasites aren't buying leveraged anyway. Its that cash hasn't had anything else to go to other than assets since inflation was too low. The rise in price/earnings ratios and explosion in BTL under Blair took place with ~5-6% interest rates so why would a rise to 2% make any difference whatsoever?
If cash doesn't have anywhere else to go it goes to assets. If cash is needed for other things, it can't go to assets anymore.
The only way to drive down asset prices is give the cash-rich something else that they need to spend their cash on, like goods and services, instead of assets.
And if the retired on fixed incomes suddenly find their costs rising but their fixed income isn't they might need to sell their BTLs in order to release the money to pay their rising costs.
Demented gibberish. BTL owners by definition are not on fixed income, so why sell the property rather than hiking the rent? You obviously hate the rich and that's fine but then you hate capitalism. There is no wrong sort of rich any more than there's a wrong sort of snow; you like them or you don't. If you don't why do you think you're a Tory?
There are plenty of things you can own other than other people's houses. Invest in a business and put effort in and work to grow that, while others can compete with you, and I fully respect that.
Buy up homes then object to other people competing with you by building their own? That's not worthy of respect.
According to the Guardian there seems to be some blowback from the minions who received FPNs for attended the same events as Johnson, who has pretty much been fully exonerated by the Met.
It seems as though the juniors cooperated with Gray unaware that her work would be handed over to to the Met for them to be prosecuted. Senior Civil Servants and Politicians on the other hand were less cooperative with Gray and subsequently troubled less by the Met.
I am not sure this is as over as Johnson assumes it might be.
It is over, effectively. The Tories aren't going to ditch Johnson, and all the voters who are angry enough over this to desert them have already done so.
Barring the unknowable, such as a serious health setback or perhaps being struck by an asteroid, Johnson will fight the next election as Prime Minister and has a reasonable chance of winning it.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
Agreed. Getting asset price falls like that is a bit cutting off your nose to spite your face. The asset rich will lose some asset value but will still have the cash they had etc. The cash poor will be made even poorer and will struggle the most.
Inflation is a self correcting way the economy takes money out of the economy. By devaluing assets via inflation real money is taken out, without needing to physically take any out. That process has already begun and needs to run its course.
A few years of prices and wages growing 10% but unearned incomes and asset prices frozen in value would very rapidly see a rebalancing of the economy away from unearned wealth and assets towards those who earn incomes.
But we've still got ultra low rates so there's no guarantee that asset prices won't keep rising and keep up with inflation.
If inflation spikes then unearned incomes struggle to keep up with earned incomes. Those with earned incomes get pay rises to meet their obligations, but unearned or fixed incomes see their incomes devalue in real terms which means they can't afford to buy assets anymore.
Workers buying assets isn't a problem, we want working people to be able to afford their own homes. The problem is non working parasites taking and accumulating all the wealth for themselves and pulling up the ladder after they'd finished working, not wanting to pay what they owe for goods and services.
Hmm, that seems an unlikely outcome to me. With ultra low interest rates baked in why wouldn't the asset rich continue to accumulate more assets?
Pushing interest rates up is the only way to push asset prices down and create a more equal society. The government clearly doesn't have the cojones to put non primary housing asset surcharges up to punishing levels to dissuade BTL so interest rates will need to be the way to do it.
And why should it? Literally hundreds of MP's are BTL landlords. Not to mention Tory Party members.
Osborne had the balls to do it and voters responded in 2015. Taking action against landlords is unpopular with a few hundred thousand landlords but extremely popular with millions of people trapped in the private rental sector pissing their money away paying off someone else's mortgage or someone else's retirement.
Fuck the members, because these are election winning policies.
Too many honourable members have been doing too much fucking recently. Don't give them any more ideas...
More seriously, you may be right, but I suspect all that would happen instead is you would see a proliferation of small limited liability companies being set up to hold the asset (house/flat) instead.
Ah but then you can create stamp duty for that too and on transfer into a company.
Stamp duty is a bad tax as it is a tax on mobility, so people cannot afford the cost to move. Applying penal rates to BTL landlords may stop people entering the market, but doesn't force them to leave, and in any case is likely to drive up the rents that they ask.
More effective would be to have an annual property tax, with the tax going to councils in order to provide cheap social housing. This would drive down market rents by providing an alternative. Indeed that was the way we did it before council housing was sold off on the cheap, and wound up as BTL.
It is ironic to hear hyper-Thatchetite posters complaining about things like BTL, which are simply the result of four decades of neoliberal economic policies.
You are aware, that in much of Europe, a much higher percentage of property is private owned rental?
Thatcherism was about expanding the home owning group.
In general the most modern and strongest European economies have the lowest ownership shares, like the Netherlands, Germany, Denmark and Switzerland, nor by any means is the remainder predominantly rented from government. However, the private rental sectors do tend to be more price-regulated.
The highest European home ownership rates are in transition economies like Romania. It is very hard to find empirical evidence that home ownership rates make a society overall better-off.
Indeed, investment in property speculation, rather than businesses has been a part of the British economic malaise for a long time. Like gold, property may be a wise investment in inflationary times, but it isn't a productive investment in economic terms.
According to the Guardian there seems to be some blowback from the minions who received FPNs for attended the same events as Johnson, who has pretty much been fully exonerated by the Met.
It seems as though the juniors cooperated with Gray unaware that her work would be handed over to to the Met for them to be prosecuted. Senior Civil Servants and Politicians on the other hand were less cooperative with Gray and subsequently troubled less by the Met.
I am not sure this is as over as Johnson assumes it might be.
It is over, effectively. The Tories aren't going to ditch Johnson, and all the voters who are angry enough over this to desert them have already done so.
Barring the unknowable, such as a serious health setback or perhaps being struck by an asteroid, Johnson will fight the next election as Prime Minister and has a reasonable chance of winning it.
Its the economy, stupid.
The economy will determine how the next couple of years go, not cake, korma, beer or wine.
And Scholz and Lindner are saying some of the right things about him:
“The very best thing would be for Gerhard Schroeder to resign from his posts” with the Russian energy industry, Scholz said at a news conference alongside his Dutch counterpart in The Hague.
Finance Minister Christian Lindner welcomed Thursday's German parliament decision, tweeting that “a former chancellor who today lobbies openly for Putin's criminal rule shouldn't be provided with an office by taxpayers for this.” Lindner is a member of the pro-business Free Democrats.
Perhaps we should treat inflation in the same manner as does the little cluster of anti-vaxers that meet in my local park on Sundays regard the virus: just ignore it and hope it'll go away.
In fairness, if they’ve lasted this long they are probably going to feel like they have been proved right…..
Three pure anecdotals (to coin a noun):
A good friend's sister has become a conspiracy adherent. She and her husband caught the virus early on. She didn't believe it was any such thing, but had trouble breathing. In hospital she fought a nurse.
A friend's friend is an antivaxxer too. When our friend wanted to arrange a day out with her she couldn't go because said she'd been under the weather for some weeks.
The cluster in our park is smaller these days. One of them is a sweet friend. She sent me a well written web site that insists that polio isn't caused by a virus because people have been getting sore limbs and paralysis for centuries.
Many people still believe trump won.
Some other sweet friends really do believe the world is about 6000 years old. I'm an argumentative old guy, but I cannot bring myself to upset them. I grieve, however, that they are missing thereby much beauty.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
I'm not sure the bottom deciles are most leveraged. One example is pensioners, on low nominal incomes but usually nil debt. I'd imagine the decile 3-9 homebuyers will be most affected, and especially higher earners in frothy markets.
Da fing iz why would raising rates crash asset prices when *real* rates is more negative than any time in history? 9% inflation, doubling interest rates from 1 to 2 only knocks the real interest rate down from -8 to -7.
Indeed.
Plus the problematic parasites that Max has accurately identified in the past tend to not be highly leveraged. The overwhelming majority of first time buyers need a mortgage but most BTL landlords are cash purchasers. So raising rates aids cash buyers but hurts borrowers. Indeed many BTL purchasers struggle to get a mortgage as they're old and don't have an income.
Inflation on the other hand aids borrowers like first time buyers, but hurts the cash rich cash purchasers.
If the purchasing with cash BTL types on a fixed income find their income squeezed then they may not be able to afford assets even if real interest rates are negative.
You have lost me there. Cash rich cash purchasers just gonna purchase even quicker, and become cash poor asset rich.
Inflation makes the cash rich cash poorer though. If you're on a fixed income and inflation goes up you need to reserve more cash for goods and services and have less for assets.
Yeah but that's why they'll push their money into assets rather than keep it in cash, whatever they get from rising asset prices will be better than -7% they get from keeping it in cash.
They're already doing that.
Inflation will devalue their cash though. They'll have higher costs but no more cash, while workers will have more.
Not really because their cash will be invested into rentier asset classes like property or dividend bearing shares, so as those asset values rise they will generate more cash, a real drop of 2-3% for a couple of years is where wage growth will probably come in at as well.
No, the only way to actually get asset prices down is to raise interest rates and the BoE need to stop worrying about the societal or social impact of raising rates because it's not within their remit. That was the whole point of not having the politicians in charge because they would be unable to make the tough choices and now the Bank seems paralysed by the same inaction we expect from the politicians who want to swerve a housing crash in the run up to an election.
If they're buying for cash as 2/3rds of BTL purchasers are then how does Bank raising rates hurt them? It just hurts the people they're competing against to buy homes.
No, the thing that hurts cash is inflation.
But that's new entrants into BTL, the issue isn't them, the withdrawal of higher rate interest allowances has already reduced competition for housing from landlords to FTBs or owner occupiers. It's the huge 4m stock of housing currently in private hands being let out that we need to desperately unlock. The only way to do that is to turn landlords into forced seller, withdrawal of basic rate relief, annual surcharges and all but eliminating new entrants with punishing stamp duty rates would all contribute to normalising the housing market and reversing the flow of wealth from the have nots to the haves.
All of those are good proposals but raising base rates doesn't address any of that.
The new entrants into BTL are a huge part of the problem. Hurt them because inflation devalues their cash, there'll be fewer new BTL purchases which will drive down real asset prices.
But the point is that while interest rates are low asset prices will keep rising so they benefit from investing said cash into some kind of rent bearing asset such as housing. Only a drop in asset values will end this cycle and fix the housing market. To do that we need rates to be significantly higher than they are, which is scary for me as someone who has a fairly large mortgage and will soon be heading into single income territory on and off for a few years but ultimately 1% or even 2% rates is an insanely low rate of interest and asset values will keep rising and shielding the asset rich.
Except its not interest that's raising asset prices, since the parasites aren't buying leveraged anyway. Its that cash hasn't had anything else to go to other than assets since inflation was too low. The rise in price/earnings ratios and explosion in BTL under Blair took place with ~5-6% interest rates so why would a rise to 2% make any difference whatsoever?
If cash doesn't have anywhere else to go it goes to assets. If cash is needed for other things, it can't go to assets anymore.
The only way to drive down asset prices is give the cash-rich something else that they need to spend their cash on, like goods and services, instead of assets.
And if the retired on fixed incomes suddenly find their costs rising but their fixed income isn't they might need to sell their BTLs in order to release the money to pay their rising costs.
Demented gibberish. BTL owners by definition are not on fixed income, so why sell the property rather than hiking the rent? You obviously hate the rich and that's fine but then you hate capitalism. There is no wrong sort of rich any more than there's a wrong sort of snow; you like them or you don't. If you don't why do you think you're a Tory?
There are plenty of things you can own other than other people's houses. Invest in a business and put effort in and work to grow that, while others can compete with you, and I fully respect that.
Buy up homes then object to other people competing with you by building their own? That's not worthy of respect.
Oh look, a windmill, it's tilting time.
Being rich is being rich, and most investment in business is investment in big oil and big tech and big retail and it's just watching dem divvies roll in. You may think the system sucks; I do. but why do you think you are a Tory?
According to the Guardian there seems to be some blowback from the minions who received FPNs for attended the same events as Johnson, who has pretty much been fully exonerated by the Met.
It seems as though the juniors cooperated with Gray unaware that her work would be handed over to to the Met for them to be prosecuted. Senior Civil Servants and Politicians on the other hand were less cooperative with Gray and subsequently troubled less by the Met.
I am not sure this is as over as Johnson assumes it might be.
It is over, effectively. The Tories aren't going to ditch Johnson, and all the voters who are angry enough over this to desert them have already done so.
Barring the unknowable, such as a serious health setback or perhaps being struck by an asteroid, Johnson will fight the next election as Prime Minister and has a reasonable chance of winning it.
Its the economy, stupid.
The economy will determine how the next couple of years go, not cake, korma, beer or wine.
Yeah, not looking good is it?
It is individuals and their own family economic that matter, not some abstract measure like GDP, growth, and even that is negative at the moment.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
I'm not sure the bottom deciles are most leveraged. One example is pensioners, on low nominal incomes but usually nil debt. I'd imagine the decile 3-9 homebuyers will be most affected, and especially higher earners in frothy markets.
Da fing iz why would raising rates crash asset prices when *real* rates is more negative than any time in history? 9% inflation, doubling interest rates from 1 to 2 only knocks the real interest rate down from -8 to -7.
Indeed.
Plus the problematic parasites that Max has accurately identified in the past tend to not be highly leveraged. The overwhelming majority of first time buyers need a mortgage but most BTL landlords are cash purchasers. So raising rates aids cash buyers but hurts borrowers. Indeed many BTL purchasers struggle to get a mortgage as they're old and don't have an income.
Inflation on the other hand aids borrowers like first time buyers, but hurts the cash rich cash purchasers.
If the purchasing with cash BTL types on a fixed income find their income squeezed then they may not be able to afford assets even if real interest rates are negative.
You have lost me there. Cash rich cash purchasers just gonna purchase even quicker, and become cash poor asset rich.
Inflation makes the cash rich cash poorer though. If you're on a fixed income and inflation goes up you need to reserve more cash for goods and services and have less for assets.
Yeah but that's why they'll push their money into assets rather than keep it in cash, whatever they get from rising asset prices will be better than -7% they get from keeping it in cash.
They're already doing that.
Inflation will devalue their cash though. They'll have higher costs but no more cash, while workers will have more.
Not really because their cash will be invested into rentier asset classes like property or dividend bearing shares, so as those asset values rise they will generate more cash, a real drop of 2-3% for a couple of years is where wage growth will probably come in at as well.
No, the only way to actually get asset prices down is to raise interest rates and the BoE need to stop worrying about the societal or social impact of raising rates because it's not within their remit. That was the whole point of not having the politicians in charge because they would be unable to make the tough choices and now the Bank seems paralysed by the same inaction we expect from the politicians who want to swerve a housing crash in the run up to an election.
If they're buying for cash as 2/3rds of BTL purchasers are then how does Bank raising rates hurt them? It just hurts the people they're competing against to buy homes.
No, the thing that hurts cash is inflation.
But that's new entrants into BTL, the issue isn't them, the withdrawal of higher rate interest allowances has already reduced competition for housing from landlords to FTBs or owner occupiers. It's the huge 4m stock of housing currently in private hands being let out that we need to desperately unlock. The only way to do that is to turn landlords into forced seller, withdrawal of basic rate relief, annual surcharges and all but eliminating new entrants with punishing stamp duty rates would all contribute to normalising the housing market and reversing the flow of wealth from the have nots to the haves.
All of those are good proposals but raising base rates doesn't address any of that.
The new entrants into BTL are a huge part of the problem. Hurt them because inflation devalues their cash, there'll be fewer new BTL purchases which will drive down real asset prices.
But the point is that while interest rates are low asset prices will keep rising so they benefit from investing said cash into some kind of rent bearing asset such as housing. Only a drop in asset values will end this cycle and fix the housing market. To do that we need rates to be significantly higher than they are, which is scary for me as someone who has a fairly large mortgage and will soon be heading into single income territory on and off for a few years but ultimately 1% or even 2% rates is an insanely low rate of interest and asset values will keep rising and shielding the asset rich.
Except its not interest that's raising asset prices, since the parasites aren't buying leveraged anyway. Its that cash hasn't had anything else to go to other than assets since inflation was too low. The rise in price/earnings ratios and explosion in BTL under Blair took place with ~5-6% interest rates so why would a rise to 2% make any difference whatsoever?
If cash doesn't have anywhere else to go it goes to assets. If cash is needed for other things, it can't go to assets anymore.
The only way to drive down asset prices is give the cash-rich something else that they need to spend their cash on, like goods and services, instead of assets.
And if the retired on fixed incomes suddenly find their costs rising but their fixed income isn't they might need to sell their BTLs in order to release the money to pay their rising costs.
Demented gibberish. BTL owners by definition are not on fixed income, so why sell the property rather than hiking the rent? You obviously hate the rich and that's fine but then you hate capitalism. There is no wrong sort of rich any more than there's a wrong sort of snow; you like them or you don't. If you don't why do you think you're a Tory?
There are plenty of things you can own other than other people's houses. Invest in a business and put effort in and work to grow that, while others can compete with you, and I fully respect that.
Buy up homes then object to other people competing with you by building their own? That's not worthy of respect.
Oh look, a windmill, it's tilting time.
Being rich is being rich, and most investment in business is investment in big oil and big tech and big retail and it's just watching dem divvies roll in. You may think the system sucks; I do. but why do you think you are a Tory?
I believe in the free market and competition.
People who rig the market to drive their own assets up and competition out? No thank you.
I’ll say it again. I think this site routinely underestimates the chances of Boris winning a majority at the next election. It’s not a certain (depends how far down the shitter of inflation the economy goes before correcting) but I think it’s more likely than not.
I think Boris Johnson's chances are almost entirely in the hands of the Russian leadership and the Ukrainian people.
If Putin falls, Russia withdraws from Ukraine, and the oil and gas starts flowing again, the cost of living crisis will rapidly dissipate, and Boris will be a hero. In this scenario, I agree completely that Boris is highly likely to be reelected.
On the other hand, if the conflict drags on, people's utility bills rise sharply, cutting disposable spending, and pushing the UK into a recession, then I suspect he will be lucky to avoid a drubbing.
Just to follow up on this one, it's the second order effects that are the killer.
Right now, people are secure in their jobs, with record vacancies. Rising utility bills (for now) are merely an annoyance that necessitates some lifestyle changes. Maybe go out a little less; or wait on the purchase of that PS5; or choose Tesco Value instead of Finest.
People react to lower disposable income by maybe dipping into their savings a bit, and by spending a little less.
That lower spending is the problem, because it means Joes' Diner, which only barely survived Covid, is now getting less traffic in through the door. And that monthly rent isn't going anywhere. And take out orders are now down 20% too. If they're lucky, they'll be able to get by by just losing one of the waiting staff and someone from the kitchen. If things are tighter, then maybe Joe's has to shut, and everyone has lost their job.
Suddenly those record job vacancies (and is there any more lagging market than employment?) aren't there any more.
But as I said, so long as Ukraine is resolved (i.e. Putin falls), then Boris will be fine. People understand a little transient discomfort, and this isn't as bad as Covid.
If it does not, however, and the sanctions drag on, then the UK economy (and most of the West) will fall into recession, and that will have consequences.
Hopefully those consequences will fall politically on those who are prosecuting this war with not a shred of concern for the British economy or public.
You mean Putin? 🤔
I don't like Boris Johnson, but I could forgive him a triumphal party conference in the autumn if it followed a Ukrainian victory.
It would be Boris wot won it then, not the geriatric Biden or the too hesitant of offending Putin Macron and Scholz
Without wishing to denegrate the UK contribution to Ukraine, the US contribution under the "geriatric Biden" as you put it is just VASTLY more than everyone else in the world put together.
You'd expect that as a military superpower which remains very wealthy with a huge arms industry. And, as I say, not knocking the UK contribution. But there is simply no comparison between anyone else and the US.
In terms of anti tank missiles for instance, pivotal for the Ukranians containing the Russian advance, it was the UK which supplied the most
Aside from cherry picking an admittedly important type of military equipment, this is simply untrue. The US has been pumping Javelins into Ukraine at a vast rate - about one-third of its own (massive) stock.
Again, no wish to denegrate the UK contribution, but you're just living in an absolute John Bull fantasy world in terms of numbers.
It’s been a salutary reminder to the world of the absolute size and power of the US. For years people have been talking about it (wrongly IMHO) being in decline but it’s not - only China could pull that kind of spending out of its backside and provide the sheer volume of weaponry. America is not finished it’s been resting.
I do think in the UK’s defence it’s allowed others such as the US to do everything they can as if the UK can do what it has done with a relatively (to the US) small military it would have been shaming to others if they hadn’t done anything. Same applies of course to a number of Baltic/east European countries.
The UK and friends probably greased the wheels - the US provided the locomotive.
Are you denying America is in RELATIVE decline? That’s fatuous. Of course it is. At the end of World War 2 the USA alone constituted 50% of global GDP, even in the Clinton years it was well over 30%. Now it is about 20% and dropping, inexorably
That is a pretty huge fall, in just 70 years; the upside is that this has happened because so many other countries have lifted billions out of poverty, especially in Asia, especially in China. It’s good news for Homo Sapiens
So America is in relative decline, that is undoubted, and that affects its ability to influence the world - as we see from Iraq to Afghanistan. But is America in ASBOLUTE decline?
Absolute decline is fairly rare, at least in modern times. The UK never experienced it, properly, even as it fell from global supremacy.
But there is an argument that America is, in some ways, facing absolute decline. Drugs, race, culture wars, BLM, homelessness, and so on. Much of it superbly stoked via the Chinese and Russians on social media
You are probably absolutely correct however I have a belief in the US - which the Japanese should have done (and about the UK Liverpool fans and denizens of Hartlepool) that there is something inherently great in their cultures.
We can be boorish, fat, lazy, complacent, smug, whatever, but…… when the chips are down those tools at US college football matches are the guys who go and storm Iwo Jima and the guys booing abide with me at wenbley are the guys who will be brewing up tea in between fighting whoever they need.
A lot of people after WW1 wanted the US to assume it’s mantle and it retreated to an element of isolationalism and people thought they didn’t really have it in them - and then the US eventually showed it did and by god it did.
So it might not be the hegemon it was for actually a short period in time but bugger me no other country can turn it on when it needs to at the moment.
I’d love to think you are right. But my head says no, not at all
America is now in absolute cultural decline, to my mind. It has immense power, still, but the trajectory is set. It feels like it is the Roman Empire but it is *Rome* moving into its decadent, Eastern, Byzantine era (which, to be fair, continued for a LONG time, and Byzantium was powerful centuries after Rome was rubble)
The poignancy is that this cultural decline has been greatly accelerated by the internet and social media, which are, largely, American inventions, turned on America
I honestly hope you are wrong - not just for the joy that it will be the first time ever in your life you have been wrong - but I think there is an inherent cultural thing in Americans where when they feel “attacked” they go strong together.
I’m sure over time people have mocked there cultural decline because “talkies”, Hollywood, the playboy mansion, Woodstock, softness pre 9-11 etc but they really don’t like anyone sticking it to them and forget their differences quite quickly at that point. Pre tue world wars there was lots of talk about how a large slug of the population was “German” and “Irish” so they had no chance of stepping in but they realised their idea of freedom and their interests financially and geopolitically weee at risk and then they went full “USA, USA, USA” and the rest was history.
And it’s hard to say a country is in cultural decline when their “culture” - language, arts, fashion, music, movies etc are still the ones leading the way and being emulated to the masses.
To my mind, you are obviously wrong, and simply wishcasting, but I appreciate that won’t persuade you
So let’s take the cultural examples you give
1. Language: well yes, English is supreme, but that’s hardly due to the sole primacy of America, it’\s not even their language, it’s ours. England’s. The hegemony of English (which won’t last forever) is due to the supremacy of the British Empire at a critical time, as technology and industry made the export of languages much easier and more emphatically triumphant. English is supreme in India, for instance (population 1.4bn) and that has very little to do with America
2. Arts. New York City was the artistic capital of the world after WW2, no question. Is it now? Nope. It is maybe the auction capital of the world but that is an entirely different matter (and it might easily get overtaken by Shanghai or Hongers). There isn’t an obvious artistic capital of the world any more, the crown is divided, between NYC, LA, London, Berlin, Shanghai, even Rio and Seoul
3. Fashion? Who cares but Paris is probably more influential in haute couture
4. Music? Hard no. K-pop dominates the world. BTS are the biggest band ever. This IS a significant evolution. For the first time in history “pop music” finds its cutting edge outside the West, and outside America/UK. Latin American pop is also catching up
5. Movies. Absolute no. Hollywood is in sad decline, as even Hollywooders admit.The Chinese now watch Chinese movies, and they are the biggest market of all
For balance, America makes fantastic TV drama now, but then so do a lot of other countries
Where America IS crucially ascendant, is big tech companies. Apple, MS, Meta, Google, Amazon, Europe has nothing to compare and China is only now catching up. Tho TikTok suggests they will indeed catch up
Ok I surrender - and yes a lot of it is wishcasting. In my terms of surrender may I make the final points?
1. Language, we started it, the US made it essential.
2.arts shift constantly and whether it’s literature, painting, sculpture, new tech arts the US will have a leading role because that is where a lot of the arts world still is. Oscars, Emmy’s, Golden Globes, Tony’s are still “global” standard - not maybe the absolute best but still have the most pull - who in the world watches the BAFTAs or salivates over the Palme D’or?
3. Who gives a shit about Haute Couture. It’s still American derived styles that the kids in Korea or Moscow want - black culture is massive in every day fashion and that black culture is American black culture largely. Which influences the outfits of high top trainers or skate shoes of K-pop bands which leads us to
4. K-pop is a phenom. It’s massive in a short time frame but again based on Miami dance /EDM roots. Most modern music is still to one extent or another aping or adapting US music - rap, rock, country whatever and US music will adapt too because as a music industry it’s gigantic and has the money to search for, develop and market new styles.
5. Again with cheese movies you are comparing raw figures of movie goers in China, India etc watching a narrow range of movies. But what the world is watching is either US, US remakes, US influenced “western films” to a huge scale - yes they might be dwarfed in box office terms by India or China but they will still adapt, develop, copy, and be the yardstick.
As for the tach world - they really do hold sway there globally and that’s a massive cultural advantage.
As Tom Cruise famously said in Top Gun and repeats in the sequel : “ Don’t be such a downer Leon.”
Let’s call it a score draw
I will make one final point. I don’t know how much you travel but I travel A LOT and what has struck me in recent years is how much the world - outside the West - is culturally detaching from America and the West in general, and gravitating towards Asia or themselves. K-pop is just one example, but a highly significant example
I remember being in Bangkok in about 2008 and hearing tens of thousand of kids in Siam Square screaming for a boy band. I glibly presumed it was American or British, but I investigated and: no. It was K-pop.
America and the West is not so salient in global eyes any more. It is one powerful culture amongst other powerful cultures. That is the future. Great powers will jostle, cultures will compete, it may end up being good for humanity
According to the Guardian there seems to be some blowback from the minions who received FPNs for attended the same events as Johnson, who has pretty much been fully exonerated by the Met.
It seems as though the juniors cooperated with Gray unaware that her work would be handed over to to the Met for them to be prosecuted. Senior Civil Servants and Politicians on the other hand were less cooperative with Gray and subsequently troubled less by the Met.
I am not sure this is as over as Johnson assumes it might be.
It is over, effectively. The Tories aren't going to ditch Johnson, and all the voters who are angry enough over this to desert them have already done so.
Barring the unknowable, such as a serious health setback or perhaps being struck by an asteroid, Johnson will fight the next election as Prime Minister and has a reasonable chance of winning it.
Oh yes, Johnson is safe as far as his MPs are concerned. I am not sure the voters who doubted Johnson on Partygate are yet as convinced as the Met were of his innocence.
BartyBobbins is correct that it is the economy that will make or break the Conservatives. I have said this throughout Covid, and post-Brexit. I thought the Conservatives would lose control of inflation and interest rates but I hadn't even considered Putin's insanity.
I can't see this perfect storm clearing as soon as some on here suggest.
I’ll say it again. I think this site routinely underestimates the chances of Boris winning a majority at the next election. It’s not a certain (depends how far down the shitter of inflation the economy goes before correcting) but I think it’s more likely than not.
I think Boris Johnson's chances are almost entirely in the hands of the Russian leadership and the Ukrainian people.
If Putin falls, Russia withdraws from Ukraine, and the oil and gas starts flowing again, the cost of living crisis will rapidly dissipate, and Boris will be a hero. In this scenario, I agree completely that Boris is highly likely to be reelected.
On the other hand, if the conflict drags on, people's utility bills rise sharply, cutting disposable spending, and pushing the UK into a recession, then I suspect he will be lucky to avoid a drubbing.
Just to follow up on this one, it's the second order effects that are the killer.
Right now, people are secure in their jobs, with record vacancies. Rising utility bills (for now) are merely an annoyance that necessitates some lifestyle changes. Maybe go out a little less; or wait on the purchase of that PS5; or choose Tesco Value instead of Finest.
People react to lower disposable income by maybe dipping into their savings a bit, and by spending a little less.
That lower spending is the problem, because it means Joes' Diner, which only barely survived Covid, is now getting less traffic in through the door. And that monthly rent isn't going anywhere. And take out orders are now down 20% too. If they're lucky, they'll be able to get by by just losing one of the waiting staff and someone from the kitchen. If things are tighter, then maybe Joe's has to shut, and everyone has lost their job.
Suddenly those record job vacancies (and is there any more lagging market than employment?) aren't there any more.
But as I said, so long as Ukraine is resolved (i.e. Putin falls), then Boris will be fine. People understand a little transient discomfort, and this isn't as bad as Covid.
If it does not, however, and the sanctions drag on, then the UK economy (and most of the West) will fall into recession, and that will have consequences.
Hopefully those consequences will fall politically on those who are prosecuting this war with not a shred of concern for the British economy or public.
You mean Putin? 🤔
I don't like Boris Johnson, but I could forgive him a triumphal party conference in the autumn if it followed a Ukrainian victory.
It would be Boris wot won it then, not the geriatric Biden or the too hesitant of offending Putin Macron and Scholz
Without wishing to denegrate the UK contribution to Ukraine, the US contribution under the "geriatric Biden" as you put it is just VASTLY more than everyone else in the world put together.
You'd expect that as a military superpower which remains very wealthy with a huge arms industry. And, as I say, not knocking the UK contribution. But there is simply no comparison between anyone else and the US.
In terms of anti tank missiles for instance, pivotal for the Ukranians containing the Russian advance, it was the UK which supplied the most
Aside from cherry picking an admittedly important type of military equipment, this is simply untrue. The US has been pumping Javelins into Ukraine at a vast rate - about one-third of its own (massive) stock.
Again, no wish to denegrate the UK contribution, but you're just living in an absolute John Bull fantasy world in terms of numbers.
It’s been a salutary reminder to the world of the absolute size and power of the US. For years people have been talking about it (wrongly IMHO) being in decline but it’s not - only China could pull that kind of spending out of its backside and provide the sheer volume of weaponry. America is not finished it’s been resting.
I do think in the UK’s defence it’s allowed others such as the US to do everything they can as if the UK can do what it has done with a relatively (to the US) small military it would have been shaming to others if they hadn’t done anything. Same applies of course to a number of Baltic/east European countries.
The UK and friends probably greased the wheels - the US provided the locomotive.
Are you denying America is in RELATIVE decline? That’s fatuous. Of course it is. At the end of World War 2 the USA alone constituted 50% of global GDP, even in the Clinton years it was well over 30%. Now it is about 20% and dropping, inexorably
That is a pretty huge fall, in just 70 years; the upside is that this has happened because so many other countries have lifted billions out of poverty, especially in Asia, especially in China. It’s good news for Homo Sapiens
So America is in relative decline, that is undoubted, and that affects its ability to influence the world - as we see from Iraq to Afghanistan. But is America in ASBOLUTE decline?
Absolute decline is fairly rare, at least in modern times. The UK never experienced it, properly, even as it fell from global supremacy.
But there is an argument that America is, in some ways, facing absolute decline. Drugs, race, culture wars, BLM, homelessness, and so on. Much of it superbly stoked via the Chinese and Russians on social media
You are probably absolutely correct however I have a belief in the US - which the Japanese should have done (and about the UK Liverpool fans and denizens of Hartlepool) that there is something inherently great in their cultures.
We can be boorish, fat, lazy, complacent, smug, whatever, but…… when the chips are down those tools at US college football matches are the guys who go and storm Iwo Jima and the guys booing abide with me at wenbley are the guys who will be brewing up tea in between fighting whoever they need.
A lot of people after WW1 wanted the US to assume it’s mantle and it retreated to an element of isolationalism and people thought they didn’t really have it in them - and then the US eventually showed it did and by god it did.
So it might not be the hegemon it was for actually a short period in time but bugger me no other country can turn it on when it needs to at the moment.
I’d love to think you are right. But my head says no, not at all
America is now in absolute cultural decline, to my mind. It has immense power, still, but the trajectory is set. It feels like it is the Roman Empire but it is *Rome* moving into its decadent, Eastern, Byzantine era (which, to be fair, continued for a LONG time, and Byzantium was powerful centuries after Rome was rubble)
The poignancy is that this cultural decline has been greatly accelerated by the internet and social media, which are, largely, American inventions, turned on America
I honestly hope you are wrong - not just for the joy that it will be the first time ever in your life you have been wrong - but I think there is an inherent cultural thing in Americans where when they feel “attacked” they go strong together.
I’m sure over time people have mocked there cultural decline because “talkies”, Hollywood, the playboy mansion, Woodstock, softness pre 9-11 etc but they really don’t like anyone sticking it to them and forget their differences quite quickly at that point. Pre tue world wars there was lots of talk about how a large slug of the population was “German” and “Irish” so they had no chance of stepping in but they realised their idea of freedom and their interests financially and geopolitically weee at risk and then they went full “USA, USA, USA” and the rest was history.
And it’s hard to say a country is in cultural decline when their “culture” - language, arts, fashion, music, movies etc are still the ones leading the way and being emulated to the masses.
To my mind, you are obviously wrong, and simply wishcasting, but I appreciate that won’t persuade you
So let’s take the cultural examples you give
1. Language: well yes, English is supreme, but that’s hardly due to the sole primacy of America, it’\s not even their language, it’s ours. England’s. The hegemony of English (which won’t last forever) is due to the supremacy of the British Empire at a critical time, as technology and industry made the export of languages much easier and more emphatically triumphant. English is supreme in India, for instance (population 1.4bn) and that has very little to do with America
2. Arts. New York City was the artistic capital of the world after WW2, no question. Is it now? Nope. It is maybe the auction capital of the world but that is an entirely different matter (and it might easily get overtaken by Shanghai or Hongers). There isn’t an obvious artistic capital of the world any more, the crown is divided, between NYC, LA, London, Berlin, Shanghai, even Rio and Seoul
3. Fashion? Who cares but Paris is probably more influential in haute couture
4. Music? Hard no. K-pop dominates the world. BTS are the biggest band ever. This IS a significant evolution. For the first time in history “pop music” finds its cutting edge outside the West, and outside America/UK. Latin American pop is also catching up
5. Movies. Absolute no. Hollywood is in sad decline, as even Hollywooders admit.The Chinese now watch Chinese movies, and they are the biggest market of all
For balance, America makes fantastic TV drama now, but then so do a lot of other countries
Where America IS crucially ascendant, is big tech companies. Apple, MS, Meta, Google, Amazon, Europe has nothing to compare and China is only now catching up. Tho TikTok suggests they will indeed catch up
Ok I surrender - and yes a lot of it is wishcasting. In my terms of surrender may I make the final points?
1. Language, we started it, the US made it essential.
2.arts shift constantly and whether it’s literature, painting, sculpture, new tech arts the US will have a leading role because that is where a lot of the arts world still is. Oscars, Emmy’s, Golden Globes, Tony’s are still “global” standard - not maybe the absolute best but still have the most pull - who in the world watches the BAFTAs or salivates over the Palme D’or?
3. Who gives a shit about Haute Couture. It’s still American derived styles that the kids in Korea or Moscow want - black culture is massive in every day fashion and that black culture is American black culture largely. Which influences the outfits of high top trainers or skate shoes of K-pop bands which leads us to
4. K-pop is a phenom. It’s massive in a short time frame but again based on Miami dance /EDM roots. Most modern music is still to one extent or another aping or adapting US music - rap, rock, country whatever and US music will adapt too because as a music industry it’s gigantic and has the money to search for, develop and market new styles.
5. Again with cheese movies you are comparing raw figures of movie goers in China, India etc watching a narrow range of movies. But what the world is watching is either US, US remakes, US influenced “western films” to a huge scale - yes they might be dwarfed in box office terms by India or China but they will still adapt, develop, copy, and be the yardstick.
As for the tach world - they really do hold sway there globally and that’s a massive cultural advantage.
As Tom Cruise famously said in Top Gun and repeats in the sequel : “ Don’t be such a downer Leon.”
Also 3 is totally wrong
Manga and Anime and Japanese/Korean/Asian subcultures arising therefrom are now more powerful than black American culture. Globally
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
Agreed. Getting asset price falls like that is a bit cutting off your nose to spite your face. The asset rich will lose some asset value but will still have the cash they had etc. The cash poor will be made even poorer and will struggle the most.
Inflation is a self correcting way the economy takes money out of the economy. By devaluing assets via inflation real money is taken out, without needing to physically take any out. That process has already begun and needs to run its course.
A few years of prices and wages growing 10% but unearned incomes and asset prices frozen in value would very rapidly see a rebalancing of the economy away from unearned wealth and assets towards those who earn incomes.
But we've still got ultra low rates so there's no guarantee that asset prices won't keep rising and keep up with inflation.
If inflation spikes then unearned incomes struggle to keep up with earned incomes. Those with earned incomes get pay rises to meet their obligations, but unearned or fixed incomes see their incomes devalue in real terms which means they can't afford to buy assets anymore.
Workers buying assets isn't a problem, we want working people to be able to afford their own homes. The problem is non working parasites taking and accumulating all the wealth for themselves and pulling up the ladder after they'd finished working, not wanting to pay what they owe for goods and services.
Hmm, that seems an unlikely outcome to me. With ultra low interest rates baked in why wouldn't the asset rich continue to accumulate more assets?
Pushing interest rates up is the only way to push asset prices down and create a more equal society. The government clearly doesn't have the cojones to put non primary housing asset surcharges up to punishing levels to dissuade BTL so interest rates will need to be the way to do it.
And why should it? Literally hundreds of MP's are BTL landlords. Not to mention Tory Party members.
Osborne had the balls to do it and voters responded in 2015. Taking action against landlords is unpopular with a few hundred thousand landlords but extremely popular with millions of people trapped in the private rental sector pissing their money away paying off someone else's mortgage or someone else's retirement.
Fuck the members, because these are election winning policies.
Too many honourable members have been doing too much fucking recently. Don't give them any more ideas...
More seriously, you may be right, but I suspect all that would happen instead is you would see a proliferation of small limited liability companies being set up to hold the asset (house/flat) instead.
Ah but then you can create stamp duty for that too and on transfer into a company.
Stamp duty is a bad tax as it is a tax on mobility, so people cannot afford the cost to move. Applying penal rates to BTL landlords may stop people entering the market, but doesn't force them to leave, and in any case is likely to drive up the rents that they ask.
More effective would be to have an annual property tax, with the tax going to councils in order to provide cheap social housing. This would drive down market rents by providing an alternative. Indeed that was the way we did it before council housing was sold off on the cheap, and wound up as BTL.
It is ironic to hear hyper-Thatchetite posters complaining about things like BTL, which are simply the result of four decades of neoliberal economic policies.
You are aware, that in much of Europe, a much higher percentage of property is private owned rental?
Thatcherism was about expanding the home owning group.
In general the most modern and strongest European economies have the lowest ownership shares, like the Netherlands, Germany, Denmark and Switzerland, nor by any means is the remainder predominantly rented from government. However, the private rental sectors do tend to be more price-regulated.
The highest European home ownership rates are in transition economies like Romania. It is very hard to find empirical evidence that home ownership rates make a society overall better-off.
Indeed, investment in property speculation, rather than businesses has been a part of the British economic malaise for a long time. Like gold, property may be a wise investment in inflationary times, but it isn't a productive investment in economic terms.
It's hard to finance businesses through moral exhortation. Generally they should try to attract investors with a profit. So why are American households happy to buy equities and even meme coins, while British households stick to the old reliable BTL? I think the historical diagnosis for this problem has been low-quality management limiting growth, but that seems impossibly general to prescribe a cure for. Union power used to be a problem historically, surely not now. I'd add that British people probably focus a lot on the evils of big companies while Americans with cash are more likely to see the opportunities in getting on board with Amazon / Facebook shares.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
Agreed. Getting asset price falls like that is a bit cutting off your nose to spite your face. The asset rich will lose some asset value but will still have the cash they had etc. The cash poor will be made even poorer and will struggle the most.
Inflation is a self correcting way the economy takes money out of the economy. By devaluing assets via inflation real money is taken out, without needing to physically take any out. That process has already begun and needs to run its course.
A few years of prices and wages growing 10% but unearned incomes and asset prices frozen in value would very rapidly see a rebalancing of the economy away from unearned wealth and assets towards those who earn incomes.
But we've still got ultra low rates so there's no guarantee that asset prices won't keep rising and keep up with inflation.
If inflation spikes then unearned incomes struggle to keep up with earned incomes. Those with earned incomes get pay rises to meet their obligations, but unearned or fixed incomes see their incomes devalue in real terms which means they can't afford to buy assets anymore.
Workers buying assets isn't a problem, we want working people to be able to afford their own homes. The problem is non working parasites taking and accumulating all the wealth for themselves and pulling up the ladder after they'd finished working, not wanting to pay what they owe for goods and services.
Hmm, that seems an unlikely outcome to me. With ultra low interest rates baked in why wouldn't the asset rich continue to accumulate more assets?
Pushing interest rates up is the only way to push asset prices down and create a more equal society. The government clearly doesn't have the cojones to put non primary housing asset surcharges up to punishing levels to dissuade BTL so interest rates will need to be the way to do it.
And why should it? Literally hundreds of MP's are BTL landlords. Not to mention Tory Party members.
Osborne had the balls to do it and voters responded in 2015. Taking action against landlords is unpopular with a few hundred thousand landlords but extremely popular with millions of people trapped in the private rental sector pissing their money away paying off someone else's mortgage or someone else's retirement.
Fuck the members, because these are election winning policies.
Too many honourable members have been doing too much fucking recently. Don't give them any more ideas...
More seriously, you may be right, but I suspect all that would happen instead is you would see a proliferation of small limited liability companies being set up to hold the asset (house/flat) instead.
Ah but then you can create stamp duty for that too and on transfer into a company.
Stamp duty is a bad tax as it is a tax on mobility, so people cannot afford the cost to move. Applying penal rates to BTL landlords may stop people entering the market, but doesn't force them to leave, and in any case is likely to drive up the rents that they ask.
More effective would be to have an annual property tax, with the tax going to councils in order to provide cheap social housing. This would drive down market rents by providing an alternative. Indeed that was the way we did it before council housing was sold off on the cheap, and wound up as BTL.
It is ironic to hear hyper-Thatchetite posters complaining about things like BTL, which are simply the result of four decades of neoliberal economic policies.
You are aware, that in much of Europe, a much higher percentage of property is private owned rental?
Thatcherism was about expanding the home owning group.
In general the most modern and strongest European economies have the lowest ownership shares, like the Netherlands, Germany, Denmark and Switzerland, nor by any means is the remainder predominantly rented from government. However, the private rental sectors do tend to be more price-regulated.
The highest European home ownership rates are in transition economies like Romania. It is very hard to find empirical evidence that home ownership rates make a society overall better-off.
Personally I've always lived in rental accommodation - growing up abroad, I never got the idea that tying up my savings and taking on decades of debt so I could own a building made sense. Good landlords look after the place far better than I could. An annual property tax to finance low-rent properties sounds an excellent idea.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
Agreed. Getting asset price falls like that is a bit cutting off your nose to spite your face. The asset rich will lose some asset value but will still have the cash they had etc. The cash poor will be made even poorer and will struggle the most.
Inflation is a self correcting way the economy takes money out of the economy. By devaluing assets via inflation real money is taken out, without needing to physically take any out. That process has already begun and needs to run its course.
A few years of prices and wages growing 10% but unearned incomes and asset prices frozen in value would very rapidly see a rebalancing of the economy away from unearned wealth and assets towards those who earn incomes.
But we've still got ultra low rates so there's no guarantee that asset prices won't keep rising and keep up with inflation.
If inflation spikes then unearned incomes struggle to keep up with earned incomes. Those with earned incomes get pay rises to meet their obligations, but unearned or fixed incomes see their incomes devalue in real terms which means they can't afford to buy assets anymore.
Workers buying assets isn't a problem, we want working people to be able to afford their own homes. The problem is non working parasites taking and accumulating all the wealth for themselves and pulling up the ladder after they'd finished working, not wanting to pay what they owe for goods and services.
Hmm, that seems an unlikely outcome to me. With ultra low interest rates baked in why wouldn't the asset rich continue to accumulate more assets?
Pushing interest rates up is the only way to push asset prices down and create a more equal society. The government clearly doesn't have the cojones to put non primary housing asset surcharges up to punishing levels to dissuade BTL so interest rates will need to be the way to do it.
And why should it? Literally hundreds of MP's are BTL landlords. Not to mention Tory Party members.
Osborne had the balls to do it and voters responded in 2015. Taking action against landlords is unpopular with a few hundred thousand landlords but extremely popular with millions of people trapped in the private rental sector pissing their money away paying off someone else's mortgage or someone else's retirement.
Fuck the members, because these are election winning policies.
Too many honourable members have been doing too much fucking recently. Don't give them any more ideas...
More seriously, you may be right, but I suspect all that would happen instead is you would see a proliferation of small limited liability companies being set up to hold the asset (house/flat) instead.
Ah but then you can create stamp duty for that too and on transfer into a company.
Stamp duty is a bad tax as it is a tax on mobility, so people cannot afford the cost to move. Applying penal rates to BTL landlords may stop people entering the market, but doesn't force them to leave, and in any case is likely to drive up the rents that they ask.
More effective would be to have an annual property tax, with the tax going to councils in order to provide cheap social housing. This would drive down market rents by providing an alternative. Indeed that was the way we did it before council housing was sold off on the cheap, and wound up as BTL.
It is ironic to hear hyper-Thatchetite posters complaining about things like BTL, which are simply the result of four decades of neoliberal economic policies.
You are aware, that in much of Europe, a much higher percentage of property is private owned rental?
Thatcherism was about expanding the home owning group.
Though France and Spain, Italy and most of Eastern Europe now have a higher rate of property ownership than us. As does the USA, Canada, Australia and New Zealand.
Only really Germany and Switzerland, Japan, Denmark and South Korea of Western nations have more renters percentage wise than we do now
In reply to EPG in terms of wealth per adult, Germany is only 29th, we are 11th, Australia is second.
Those figures for Australia are largely down to high home ownership rates and high prices for those homes. Luxembourg too is first with a 70% home ownership rate.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
But cutting asset prices is the first step to reducing housing costs for ordinary people.
No. Letting inflation run is.
The problem in the past two decades is we suppressed wage etc inflation too much so money went to assets instead of wages. We need to rebalance that.
Seven years of 10% wage growth for ordinary people but assets frozen in value would see assets halve in real terms costs/value but without any negative equity and without squeezing the living standards of ordinary people.
The myth was allowed to set in that inflation went away. It didn't, it just accumulated with assets, meaning wealth was transferred from earned to unearned income. Inflation in the rest of the economy now can rebalance society away from unearned incomes back to earners benefitting instead.
If you think Mr and Mrs Average are going to get 10% pay rises for one year, let alone seven, then I have a bridge etc., etc.
As the piece you have just quoted itself states, wage growth is not keeping up with inflation in most sectors, and a lot of the minority who have done better are lower paid individuals who (a) experience a higher effective rate of inflation than average, due to the fact that a disproportionate amount of their spending is on basic commodities, and (b) are liable to see what real terms increases they have thus far enjoyed whittled away by further rises in the cost of living.
Employers are going to plead poverty and crack down hard on wages, unless the employment market in their sector remains so tight that they are forced to compete for a finite number of people willing or able to do the work. Worker interest is almost invariably subordinated to the imperative of maximising shareholder returns and executive bonuses, and will continue to be so.
Expect a wave of NHS industrial action and early retirements if the mooted 2% increase is implemented this year. It is the thing that can and will crash the NHS recovery drive.
Well quite. The central problem is that there will be no improvement in the situation of the great mass of working people, especially at the lower end of the income scale, so long as both public and private sector policy is completely dominated by the interest of the asset-holding class: plutocrats, high earners and monied pensioners sitting on valuable houses.
Unfortunately these groups also constitute between them the bulk of the membership of the Conservative Party, its core vote, and the dominant segment of the electorate to boot.
The Government will offer your colleagues a shit-on-a-stick wage deal (again) and try to muddle through any industrial action with the aid of staff nicked from developing world healthcare systems.
I’ll say it again. I think this site routinely underestimates the chances of Boris winning a majority at the next election. It’s not a certain (depends how far down the shitter of inflation the economy goes before correcting) but I think it’s more likely than not.
I think Boris Johnson's chances are almost entirely in the hands of the Russian leadership and the Ukrainian people.
If Putin falls, Russia withdraws from Ukraine, and the oil and gas starts flowing again, the cost of living crisis will rapidly dissipate, and Boris will be a hero. In this scenario, I agree completely that Boris is highly likely to be reelected.
On the other hand, if the conflict drags on, people's utility bills rise sharply, cutting disposable spending, and pushing the UK into a recession, then I suspect he will be lucky to avoid a drubbing.
Just to follow up on this one, it's the second order effects that are the killer.
Right now, people are secure in their jobs, with record vacancies. Rising utility bills (for now) are merely an annoyance that necessitates some lifestyle changes. Maybe go out a little less; or wait on the purchase of that PS5; or choose Tesco Value instead of Finest.
People react to lower disposable income by maybe dipping into their savings a bit, and by spending a little less.
That lower spending is the problem, because it means Joes' Diner, which only barely survived Covid, is now getting less traffic in through the door. And that monthly rent isn't going anywhere. And take out orders are now down 20% too. If they're lucky, they'll be able to get by by just losing one of the waiting staff and someone from the kitchen. If things are tighter, then maybe Joe's has to shut, and everyone has lost their job.
Suddenly those record job vacancies (and is there any more lagging market than employment?) aren't there any more.
But as I said, so long as Ukraine is resolved (i.e. Putin falls), then Boris will be fine. People understand a little transient discomfort, and this isn't as bad as Covid.
If it does not, however, and the sanctions drag on, then the UK economy (and most of the West) will fall into recession, and that will have consequences.
Hopefully those consequences will fall politically on those who are prosecuting this war with not a shred of concern for the British economy or public.
You mean Putin? 🤔
I don't like Boris Johnson, but I could forgive him a triumphal party conference in the autumn if it followed a Ukrainian victory.
It would be Boris wot won it then, not the geriatric Biden or the too hesitant of offending Putin Macron and Scholz
Without wishing to denegrate the UK contribution to Ukraine, the US contribution under the "geriatric Biden" as you put it is just VASTLY more than everyone else in the world put together.
You'd expect that as a military superpower which remains very wealthy with a huge arms industry. And, as I say, not knocking the UK contribution. But there is simply no comparison between anyone else and the US.
In terms of anti tank missiles for instance, pivotal for the Ukranians containing the Russian advance, it was the UK which supplied the most
Aside from cherry picking an admittedly important type of military equipment, this is simply untrue. The US has been pumping Javelins into Ukraine at a vast rate - about one-third of its own (massive) stock.
Again, no wish to denegrate the UK contribution, but you're just living in an absolute John Bull fantasy world in terms of numbers.
It’s been a salutary reminder to the world of the absolute size and power of the US. For years people have been talking about it (wrongly IMHO) being in decline but it’s not - only China could pull that kind of spending out of its backside and provide the sheer volume of weaponry. America is not finished it’s been resting.
I do think in the UK’s defence it’s allowed others such as the US to do everything they can as if the UK can do what it has done with a relatively (to the US) small military it would have been shaming to others if they hadn’t done anything. Same applies of course to a number of Baltic/east European countries.
The UK and friends probably greased the wheels - the US provided the locomotive.
Are you denying America is in RELATIVE decline? That’s fatuous. Of course it is. At the end of World War 2 the USA alone constituted 50% of global GDP, even in the Clinton years it was well over 30%. Now it is about 20% and dropping, inexorably
That is a pretty huge fall, in just 70 years; the upside is that this has happened because so many other countries have lifted billions out of poverty, especially in Asia, especially in China. It’s good news for Homo Sapiens
So America is in relative decline, that is undoubted, and that affects its ability to influence the world - as we see from Iraq to Afghanistan. But is America in ASBOLUTE decline?
Absolute decline is fairly rare, at least in modern times. The UK never experienced it, properly, even as it fell from global supremacy.
But there is an argument that America is, in some ways, facing absolute decline. Drugs, race, culture wars, BLM, homelessness, and so on. Much of it superbly stoked via the Chinese and Russians on social media
You are probably absolutely correct however I have a belief in the US - which the Japanese should have done (and about the UK Liverpool fans and denizens of Hartlepool) that there is something inherently great in their cultures.
We can be boorish, fat, lazy, complacent, smug, whatever, but…… when the chips are down those tools at US college football matches are the guys who go and storm Iwo Jima and the guys booing abide with me at wenbley are the guys who will be brewing up tea in between fighting whoever they need.
A lot of people after WW1 wanted the US to assume it’s mantle and it retreated to an element of isolationalism and people thought they didn’t really have it in them - and then the US eventually showed it did and by god it did.
So it might not be the hegemon it was for actually a short period in time but bugger me no other country can turn it on when it needs to at the moment.
I’d love to think you are right. But my head says no, not at all
America is now in absolute cultural decline, to my mind. It has immense power, still, but the trajectory is set. It feels like it is the Roman Empire but it is *Rome* moving into its decadent, Eastern, Byzantine era (which, to be fair, continued for a LONG time, and Byzantium was powerful centuries after Rome was rubble)
The poignancy is that this cultural decline has been greatly accelerated by the internet and social media, which are, largely, American inventions, turned on America
I honestly hope you are wrong - not just for the joy that it will be the first time ever in your life you have been wrong - but I think there is an inherent cultural thing in Americans where when they feel “attacked” they go strong together.
I’m sure over time people have mocked there cultural decline because “talkies”, Hollywood, the playboy mansion, Woodstock, softness pre 9-11 etc but they really don’t like anyone sticking it to them and forget their differences quite quickly at that point. Pre tue world wars there was lots of talk about how a large slug of the population was “German” and “Irish” so they had no chance of stepping in but they realised their idea of freedom and their interests financially and geopolitically weee at risk and then they went full “USA, USA, USA” and the rest was history.
And it’s hard to say a country is in cultural decline when their “culture” - language, arts, fashion, music, movies etc are still the ones leading the way and being emulated to the masses.
To my mind, you are obviously wrong, and simply wishcasting, but I appreciate that won’t persuade you
So let’s take the cultural examples you give
1. Language: well yes, English is supreme, but that’s hardly due to the sole primacy of America, it’\s not even their language, it’s ours. England’s. The hegemony of English (which won’t last forever) is due to the supremacy of the British Empire at a critical time, as technology and industry made the export of languages much easier and more emphatically triumphant. English is supreme in India, for instance (population 1.4bn) and that has very little to do with America
2. Arts. New York City was the artistic capital of the world after WW2, no question. Is it now? Nope. It is maybe the auction capital of the world but that is an entirely different matter (and it might easily get overtaken by Shanghai or Hongers). There isn’t an obvious artistic capital of the world any more, the crown is divided, between NYC, LA, London, Berlin, Shanghai, even Rio and Seoul
3. Fashion? Who cares but Paris is probably more influential in haute couture
4. Music? Hard no. K-pop dominates the world. BTS are the biggest band ever. This IS a significant evolution. For the first time in history “pop music” finds its cutting edge outside the West, and outside America/UK. Latin American pop is also catching up
5. Movies. Absolute no. Hollywood is in sad decline, as even Hollywooders admit.The Chinese now watch Chinese movies, and they are the biggest market of all
For balance, America makes fantastic TV drama now, but then so do a lot of other countries
Where America IS crucially ascendant, is big tech companies. Apple, MS, Meta, Google, Amazon, Europe has nothing to compare and China is only now catching up. Tho TikTok suggests they will indeed catch up
Ok I surrender - and yes a lot of it is wishcasting. In my terms of surrender may I make the final points?
1. Language, we started it, the US made it essential.
2.arts shift constantly and whether it’s literature, painting, sculpture, new tech arts the US will have a leading role because that is where a lot of the arts world still is. Oscars, Emmy’s, Golden Globes, Tony’s are still “global” standard - not maybe the absolute best but still have the most pull - who in the world watches the BAFTAs or salivates over the Palme D’or?
3. Who gives a shit about Haute Couture. It’s still American derived styles that the kids in Korea or Moscow want - black culture is massive in every day fashion and that black culture is American black culture largely. Which influences the outfits of high top trainers or skate shoes of K-pop bands which leads us to
4. K-pop is a phenom. It’s massive in a short time frame but again based on Miami dance /EDM roots. Most modern music is still to one extent or another aping or adapting US music - rap, rock, country whatever and US music will adapt too because as a music industry it’s gigantic and has the money to search for, develop and market new styles.
5. Again with cheese movies you are comparing raw figures of movie goers in China, India etc watching a narrow range of movies. But what the world is watching is either US, US remakes, US influenced “western films” to a huge scale - yes they might be dwarfed in box office terms by India or China but they will still adapt, develop, copy, and be the yardstick.
As for the tach world - they really do hold sway there globally and that’s a massive cultural advantage.
As Tom Cruise famously said in Top Gun and repeats in the sequel : “ Don’t be such a downer Leon.”
Let’s call it a score draw
I will make one final point. I don’t know how much you travel but I travel A LOT and what has struck me in recent years is how much the world - outside the West - is culturally detaching from America and the West in general, and gravitating towards Asia or themselves. K-pop is just one example, but a highly significant example
I remember being in Bangkok in about 2008 and hearing tens of thousand of kids in Siam Square screaming for a boy band. I glibly presumed it was American or British, but I investigated and: no. It was K-pop.
America and the West is not so salient in global eyes any more. It is one powerful culture amongst other powerful cultures. That is the future. Great powers will jostle, cultures will compete, it may end up being good for humanity
It is rather ironic that K Pop is so dominant in teen culture while ROK has one of the lowest fertility rates in the world. Where will the next generation of K poppers come from?
I was chatting with one of our Filipino nurses recently* and she reckons that Korea is so admired in part because of the historical baggage of China and Japan in the rest of East Asia. South Koreans are not thought arrogant or hegemonic.
*lots of Filipinos including her sister have emigrated there too.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
I'm not sure the bottom deciles are most leveraged. One example is pensioners, on low nominal incomes but usually nil debt. I'd imagine the decile 3-9 homebuyers will be most affected, and especially higher earners in frothy markets.
Da fing iz why would raising rates crash asset prices when *real* rates is more negative than any time in history? 9% inflation, doubling interest rates from 1 to 2 only knocks the real interest rate down from -8 to -7.
Indeed.
Plus the problematic parasites that Max has accurately identified in the past tend to not be highly leveraged. The overwhelming majority of first time buyers need a mortgage but most BTL landlords are cash purchasers. So raising rates aids cash buyers but hurts borrowers. Indeed many BTL purchasers struggle to get a mortgage as they're old and don't have an income.
Inflation on the other hand aids borrowers like first time buyers, but hurts the cash rich cash purchasers.
If the purchasing with cash BTL types on a fixed income find their income squeezed then they may not be able to afford assets even if real interest rates are negative.
You have lost me there. Cash rich cash purchasers just gonna purchase even quicker, and become cash poor asset rich.
Inflation makes the cash rich cash poorer though. If you're on a fixed income and inflation goes up you need to reserve more cash for goods and services and have less for assets.
Yeah but that's why they'll push their money into assets rather than keep it in cash, whatever they get from rising asset prices will be better than -7% they get from keeping it in cash.
They're already doing that.
Inflation will devalue their cash though. They'll have higher costs but no more cash, while workers will have more.
Not really because their cash will be invested into rentier asset classes like property or dividend bearing shares, so as those asset values rise they will generate more cash, a real drop of 2-3% for a couple of years is where wage growth will probably come in at as well.
No, the only way to actually get asset prices down is to raise interest rates and the BoE need to stop worrying about the societal or social impact of raising rates because it's not within their remit. That was the whole point of not having the politicians in charge because they would be unable to make the tough choices and now the Bank seems paralysed by the same inaction we expect from the politicians who want to swerve a housing crash in the run up to an election.
If they're buying for cash as 2/3rds of BTL purchasers are then how does Bank raising rates hurt them? It just hurts the people they're competing against to buy homes.
No, the thing that hurts cash is inflation.
But that's new entrants into BTL, the issue isn't them, the withdrawal of higher rate interest allowances has already reduced competition for housing from landlords to FTBs or owner occupiers. It's the huge 4m stock of housing currently in private hands being let out that we need to desperately unlock. The only way to do that is to turn landlords into forced seller, withdrawal of basic rate relief, annual surcharges and all but eliminating new entrants with punishing stamp duty rates would all contribute to normalising the housing market and reversing the flow of wealth from the have nots to the haves.
All of those are good proposals but raising base rates doesn't address any of that.
The new entrants into BTL are a huge part of the problem. Hurt them because inflation devalues their cash, there'll be fewer new BTL purchases which will drive down real asset prices.
But the point is that while interest rates are low asset prices will keep rising so they benefit from investing said cash into some kind of rent bearing asset such as housing. Only a drop in asset values will end this cycle and fix the housing market. To do that we need rates to be significantly higher than they are, which is scary for me as someone who has a fairly large mortgage and will soon be heading into single income territory on and off for a few years but ultimately 1% or even 2% rates is an insanely low rate of interest and asset values will keep rising and shielding the asset rich.
Except its not interest that's raising asset prices, since the parasites aren't buying leveraged anyway. Its that cash hasn't had anything else to go to other than assets since inflation was too low. The rise in price/earnings ratios and explosion in BTL under Blair took place with ~5-6% interest rates so why would a rise to 2% make any difference whatsoever?
If cash doesn't have anywhere else to go it goes to assets. If cash is needed for other things, it can't go to assets anymore.
The only way to drive down asset prices is give the cash-rich something else that they need to spend their cash on, like goods and services, instead of assets.
And if the retired on fixed incomes suddenly find their costs rising but their fixed income isn't they might need to sell their BTLs in order to release the money to pay their rising costs.
Demented gibberish. BTL owners by definition are not on fixed income, so why sell the property rather than hiking the rent? You obviously hate the rich and that's fine but then you hate capitalism. There is no wrong sort of rich any more than there's a wrong sort of snow; you like them or you don't. If you don't why do you think you're a Tory?
There are plenty of things you can own other than other people's houses. Invest in a business and put effort in and work to grow that, while others can compete with you, and I fully respect that.
Buy up homes then object to other people competing with you by building their own? That's not worthy of respect.
Oh look, a windmill, it's tilting time.
Being rich is being rich, and most investment in business is investment in big oil and big tech and big retail and it's just watching dem divvies roll in. You may think the system sucks; I do. but why do you think you are a Tory?
I believe in the free market and competition.
People who rig the market to drive their own assets up and competition out? No thank you.
But capitalism depends on capital owners passively sponsoring players in the free market. That's what it is. You don't get capitalist systems where everybody is the entrepreneur and nobody is the backer. It's yin and yang. And these market riggers: who are they? Trick question: they are the Tory party.
Levelling up is working, at last. Liverpool and south London - all level.
Leeds doomed now.
Not remotely funny.
I just cannot see Leeds turning it around at Brentford.
Mid table obscurity for Leicester this year, so a relaxed Sunday of footy for me. A bit disappointing compared to last year, but to keep it in perspective our 4th best season in the last decades
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
But cutting asset prices is the first step to reducing housing costs for ordinary people.
No. Letting inflation run is.
The problem in the past two decades is we suppressed wage etc inflation too much so money went to assets instead of wages. We need to rebalance that.
Seven years of 10% wage growth for ordinary people but assets frozen in value would see assets halve in real terms costs/value but without any negative equity and without squeezing the living standards of ordinary people.
The myth was allowed to set in that inflation went away. It didn't, it just accumulated with assets, meaning wealth was transferred from earned to unearned income. Inflation in the rest of the economy now can rebalance society away from unearned incomes back to earners benefitting instead.
If you think Mr and Mrs Average are going to get 10% pay rises for one year, let alone seven, then I have a bridge etc., etc.
As the piece you have just quoted itself states, wage growth is not keeping up with inflation in most sectors, and a lot of the minority who have done better are lower paid individuals who (a) experience a higher effective rate of inflation than average, due to the fact that a disproportionate amount of their spending is on basic commodities, and (b) are liable to see what real terms increases they have thus far enjoyed whittled away by further rises in the cost of living.
Employers are going to plead poverty and crack down hard on wages, unless the employment market in their sector remains so tight that they are forced to compete for a finite number of people willing or able to do the work. Worker interest is almost invariably subordinated to the imperative of maximising shareholder returns and executive bonuses, and will continue to be so.
Expect a wave of NHS industrial action and early retirements if the mooted 2% increase is implemented this year. It is the thing that can and will crash the NHS recovery drive.
Well quite. The central problem is that there will be no improvement in the situation of the great mass of working people, especially at the lower end of the income scale, so long as both public and private sector policy is completely dominated by the interest of the asset-holding class: plutocrats, high earners and monied pensioners sitting on valuable houses.
Unfortunately these groups also constitute between them the bulk of the membership of the Conservative Party, its core vote, and the dominant segment of the electorate to boot.
The Government will offer your colleagues a shit-on-a-stick wage deal (again) and try to muddle through any industrial action with the aid of staff nicked from developing world healthcare systems.
A 2% payrise would have been above inflation 2 years ago. It is rising inflation that needs to be tackled, not creating an inflationary wage spiral
We shouldn't exaggerate on K-pop. The US and UK charts nowadays show you what people are listenting to, not buying. This should in principle help new genres without physical distribution networks. But the charts are still overwhelmingly Anglo-American. There are a bunch of Spanish-speaking American-but-not-U.S. acts, and a few Euros. The exact same pattern with local flavour persists in the continental European and Australian markets. So if your case is that "Asia matters", it's a little trickier - because you'd have to show it was American acts who were displaced and not local or Japanese acts.
I believe the idiotic way HMG are dealing (or not dealing) with the cost of living crisis is becoming far more toxic then partygate and unless they step up to the plate quickly they will have scored an own goal of immense consequences to their electoral hopes
This seems confirmed by Savanta in this tweet where partygate is nowhere to be seen
There will be a crisis budget before end of June, won’t there?
No chance
We have full employment, discretionary spending is still happpening big time, house prices continue upwards.
Money needs to be taken out of the economy.
I disagree.
Over the next six months, pretty much every household in the UK will see their gas and electricity bills rise - in some cases as much as 150 or 200%.
People in the bottom two income deciles will see enormous drops in their disposable income. And even people in the next two or three will see pretty significant ones.
Raising interest rates will do little to reduce energy imported inflation, and would take money out of exactly those people most on the edge.
Raising rates would cause asset prices to fall which surely hits the wealthy asset rich more than it does the asset poor.
From an asset wealth perspective, you are absolutely right.
From a disposable income perspective, I'm not sure you are.
I'm not sure the bottom deciles are most leveraged. One example is pensioners, on low nominal incomes but usually nil debt. I'd imagine the decile 3-9 homebuyers will be most affected, and especially higher earners in frothy markets.
Da fing iz why would raising rates crash asset prices when *real* rates is more negative than any time in history? 9% inflation, doubling interest rates from 1 to 2 only knocks the real interest rate down from -8 to -7.
Indeed.
Plus the problematic parasites that Max has accurately identified in the past tend to not be highly leveraged. The overwhelming majority of first time buyers need a mortgage but most BTL landlords are cash purchasers. So raising rates aids cash buyers but hurts borrowers. Indeed many BTL purchasers struggle to get a mortgage as they're old and don't have an income.
Inflation on the other hand aids borrowers like first time buyers, but hurts the cash rich cash purchasers.
If the purchasing with cash BTL types on a fixed income find their income squeezed then they may not be able to afford assets even if real interest rates are negative.
You have lost me there. Cash rich cash purchasers just gonna purchase even quicker, and become cash poor asset rich.
Inflation makes the cash rich cash poorer though. If you're on a fixed income and inflation goes up you need to reserve more cash for goods and services and have less for assets.
Yeah but that's why they'll push their money into assets rather than keep it in cash, whatever they get from rising asset prices will be better than -7% they get from keeping it in cash.
They're already doing that.
Inflation will devalue their cash though. They'll have higher costs but no more cash, while workers will have more.
Not really because their cash will be invested into rentier asset classes like property or dividend bearing shares, so as those asset values rise they will generate more cash, a real drop of 2-3% for a couple of years is where wage growth will probably come in at as well.
No, the only way to actually get asset prices down is to raise interest rates and the BoE need to stop worrying about the societal or social impact of raising rates because it's not within their remit. That was the whole point of not having the politicians in charge because they would be unable to make the tough choices and now the Bank seems paralysed by the same inaction we expect from the politicians who want to swerve a housing crash in the run up to an election.
If they're buying for cash as 2/3rds of BTL purchasers are then how does Bank raising rates hurt them? It just hurts the people they're competing against to buy homes.
No, the thing that hurts cash is inflation.
But that's new entrants into BTL, the issue isn't them, the withdrawal of higher rate interest allowances has already reduced competition for housing from landlords to FTBs or owner occupiers. It's the huge 4m stock of housing currently in private hands being let out that we need to desperately unlock. The only way to do that is to turn landlords into forced seller, withdrawal of basic rate relief, annual surcharges and all but eliminating new entrants with punishing stamp duty rates would all contribute to normalising the housing market and reversing the flow of wealth from the have nots to the haves.
All of those are good proposals but raising base rates doesn't address any of that.
The new entrants into BTL are a huge part of the problem. Hurt them because inflation devalues their cash, there'll be fewer new BTL purchases which will drive down real asset prices.
But the point is that while interest rates are low asset prices will keep rising so they benefit from investing said cash into some kind of rent bearing asset such as housing. Only a drop in asset values will end this cycle and fix the housing market. To do that we need rates to be significantly higher than they are, which is scary for me as someone who has a fairly large mortgage and will soon be heading into single income territory on and off for a few years but ultimately 1% or even 2% rates is an insanely low rate of interest and asset values will keep rising and shielding the asset rich.
Except its not interest that's raising asset prices, since the parasites aren't buying leveraged anyway. Its that cash hasn't had anything else to go to other than assets since inflation was too low. The rise in price/earnings ratios and explosion in BTL under Blair took place with ~5-6% interest rates so why would a rise to 2% make any difference whatsoever?
If cash doesn't have anywhere else to go it goes to assets. If cash is needed for other things, it can't go to assets anymore.
The only way to drive down asset prices is give the cash-rich something else that they need to spend their cash on, like goods and services, instead of assets.
And if the retired on fixed incomes suddenly find their costs rising but their fixed income isn't they might need to sell their BTLs in order to release the money to pay their rising costs.
Demented gibberish. BTL owners by definition are not on fixed income, so why sell the property rather than hiking the rent? You obviously hate the rich and that's fine but then you hate capitalism. There is no wrong sort of rich any more than there's a wrong sort of snow; you like them or you don't. If you don't why do you think you're a Tory?
There are plenty of things you can own other than other people's houses. Invest in a business and put effort in and work to grow that, while others can compete with you, and I fully respect that.
Buy up homes then object to other people competing with you by building their own? That's not worthy of respect.
Oh look, a windmill, it's tilting time.
Being rich is being rich, and most investment in business is investment in big oil and big tech and big retail and it's just watching dem divvies roll in. You may think the system sucks; I do. but why do you think you are a Tory?
I believe in the free market and competition.
People who rig the market to drive their own assets up and competition out? No thank you.
But capitalism depends on capital owners passively sponsoring players in the free market. That's what it is. You don't get capitalist systems where everybody is the entrepreneur and nobody is the backer. It's yin and yang. And these market riggers: who are they? Trick question: they are the Tory party.
I have no qualms people sponsoring people in a free market, the free market works. The problem is where the market isn't free.
Where the Tory party stands against the free market, I am against the Tory party. If the Lib Dems stood for the free market, I'd vote for them instead.
Comments
I’m sure over time people have mocked there cultural decline because “talkies”, Hollywood, the playboy mansion, Woodstock, softness pre 9-11 etc but they really don’t like anyone sticking it to them and forget their differences quite quickly at that point. Pre tue world wars there was lots of talk about how a large slug of the population was “German” and “Irish” so they had no chance of stepping in but they realised their idea of freedom and their interests financially and geopolitically weee at risk and then they went full “USA, USA, USA” and the rest was history.
And it’s hard to say a country is in cultural decline when their “culture” - language, arts, fashion, music, movies etc are still the ones leading the way and being emulated to the masses.
More effective would be to have an annual property tax, with the tax going to councils in order to provide cheap social housing. This would drive down market rents by providing an alternative. Indeed that was the way we did it before council housing was sold off on the cheap, and wound up as BTL.
Besides, once this games out the way the fixtures get easier.
No, the only way to actually get asset prices down is to raise interest rates and the BoE need to stop worrying about the societal or social impact of raising rates because it's not within their remit. That was the whole point of not having the politicians in charge because they would be unable to make the tough choices and now the Bank seems paralysed by the same inaction we expect from the politicians who want to swerve a housing crash in the run up to an election.
No, the thing that hurts cash is inflation.
It doesn't diminish misconduct to understand that there are levels of seriousness.
The Osborne tax has further incentivised long-term buy and hold, which is what has happened.
Raising rates hurts the BTL crowd, whether or not they’re mortgaged.
Does anyone know how cash performed during the 70’s? I read a comment on, iirc, Reddit /economics - that cash was one of the best performing assets during that time.
Tory MPs have two questions: Is Boris a liability of a significant nature
and
Can the position be reliably recovered by the four stage process of getting rid of him (54 letters+MP vote+MP selection of 2+ members' vote.)
The answer to question (1) is Yes, and they all know it.
The answer to Question 2 is that like the rest of us they have absolutely no idea.
So unless Boris robs a bank or something he is safe until the weight of (1) outweighs the risks of (2).
On the other hand, there has to be some sort of threshold - and being arrested for alleged rape certainly would cross any reasonable one.
We don’t know any detail for the rest.
The new entrants into BTL are a huge part of the problem. Hurt them because inflation devalues their cash, there'll be fewer new BTL purchases which will drive down real asset prices.
I suspect we will see a modest increase in interest rates to 3-4% by 2024. That will be quite painful for those with mortgages. If inflation falls, and it is likely that oil and gas prices will drop fairly quickly as world events resolve, then we may well see inflation of 2% again and interest rates positive at 4%.
That is the zone to aim for, and it is very reasonable for government to smooth the way there by absorbing some of the cost of living increase via increased borrowing. Frankly, I can afford the CoL crisis, but those on lower incomes cannot.
Only solace is Leeds still need a win at Brentford.
The EU matches them economically but not militarily.
Then come midrank powers like us, Japan, France, Germany and Italy, Brazil and Russia
https://www.itv.com/news/2022-05-19/inquiry-launched-into-handling-of-controversial-uk-rwanda-asylum-seekers-deal
https://www.spectator.co.uk/article/zelenskys-choice-can-ukraine-force-russia-to-negotiate
If cash doesn't have anywhere else to go it goes to assets. If cash is needed for other things, it can't go to assets anymore.
The only way to drive down asset prices is give the cash-rich something else that they need to spend their cash on, like goods and services, instead of assets.
And if the retired on fixed incomes suddenly find their costs rising but their fixed income isn't they might need to sell their BTLs in order to release the money to pay their rising costs.
So let’s take the cultural examples you give
1. Language: well yes, English is supreme, but that’s hardly due to the sole primacy of America, it’\s not even their language, it’s ours. England’s. The hegemony of English (which won’t last forever) is due to the supremacy of the British Empire at a critical time, as technology and industry made the export of languages much easier and more emphatically triumphant. English is supreme in India, for instance (population 1.4bn) and that has very little to do with America
2. Arts. New York City was the artistic capital of the world after WW2, no question. Is it now? Nope. It is maybe the auction capital of the world but that is an entirely different matter (and it might easily get overtaken by Shanghai or Hongers). There isn’t an obvious artistic capital of the world any more, the crown is divided, between NYC, LA, London, Berlin, Shanghai, even Rio and Seoul
3. Fashion? Who cares but Paris is probably more influential in haute couture
4. Music? Hard no. K-pop dominates the world. BTS are the biggest band ever. This IS a significant evolution. For the first time in history “pop music” finds its cutting edge outside the West, and outside America/UK. Latin American pop is also catching up
5. Movies. Absolute no. Hollywood is in sad decline, as even Hollywooders admit.The Chinese now watch Chinese movies, and they are the biggest market of all
For balance, America makes fantastic TV drama now, but then so do a lot of other countries
Where America IS crucially ascendant, is big tech companies. Apple, MS, Meta, Google, Amazon, Europe has nothing to compare and China is only now catching up. Tho TikTok suggests they will indeed catch up
Come on!
Thatcherism was about expanding the home owning group.
A similar thing has happened at Villa, too I hear.
Employers are going to plead poverty and crack down hard on wages, unless the employment market in their sector remains so tight that they are forced to compete for a finite number of people willing or able to do the work. Worker interest is almost invariably subordinated to the imperative of maximising shareholder returns and executive bonuses, and will continue to be so.
If ideologically opposed to increases in benefits, then increase the minimum wage (safe in a time of full employment) and cut taxes on low incomes.
Regulation for the last decade has sought to make it less and less attractive, and I'm not convinced that it is very many.
It is an intriguing list
Only really Germany and Switzerland, Japan, Denmark and South Korea of Western nations have more renters percentage wise than we do now
https://en.m.wikipedia.org/wiki/List_of_countries_by_home_ownership_rate
It seems as though the juniors cooperated with Gray unaware that her work would be handed over to to the Met for them to be prosecuted. Senior Civil Servants and Politicians on the other hand were less cooperative with Gray and subsequently troubled less by the Met.
I am not sure this is as over as Johnson assumes it might be.
The highest European home ownership rates are in transition economies like Romania. It is very hard to find empirical evidence that home ownership rates make a society overall better-off.
1. Language, we started it, the US made it essential.
2.arts shift constantly and whether it’s literature, painting, sculpture, new tech arts the US will have a leading role because that is where a lot of the arts world still is. Oscars, Emmy’s, Golden Globes, Tony’s are still “global” standard - not maybe the absolute best but still have the most pull - who in the world watches the BAFTAs or salivates over the Palme D’or?
3. Who gives a shit about Haute Couture. It’s still American derived styles that the kids in Korea or Moscow want - black culture is massive in every day fashion and that black culture is American black culture largely. Which influences the outfits of high top trainers or skate shoes of K-pop bands which leads us to
4. K-pop is a phenom. It’s massive in a short time frame but again based on Miami dance /EDM roots. Most modern music is still to one extent or another aping or adapting US music - rap, rock, country whatever and US music will adapt too because as a music industry it’s gigantic and has the money to search for, develop and market new styles.
5. Again with cheese movies you are comparing raw figures of movie goers in China, India etc watching a narrow range of movies. But what the world is watching is either US, US remakes, US influenced “western films” to a huge scale - yes they might be dwarfed in box office terms by India or China but they will still adapt, develop, copy, and be the yardstick.
As for the tach world - they really do hold sway there globally and that’s a massive cultural advantage.
As Tom Cruise famously said in Top Gun and repeats in the sequel : “ Don’t be such a downer Leon.”
Buy up homes then object to other people competing with you by building their own? That's not worthy of respect.
Barring the unknowable, such as a serious health setback or perhaps being struck by an asteroid, Johnson will fight the next election as Prime Minister and has a reasonable chance of winning it.
Its the economy, stupid.
The economy will determine how the next couple of years go, not cake, korma, beer or wine.
And Scholz and Lindner are saying some of the right things about him:
Delle Alli assist!!
A good friend's sister has become a conspiracy adherent. She and her husband caught the virus early on. She didn't believe it was any such thing, but had trouble breathing. In hospital she fought a nurse.
A friend's friend is an antivaxxer too. When our friend wanted to arrange a day out with her she couldn't go because said she'd been under the weather for some weeks.
The cluster in our park is smaller these days. One of them is a sweet friend. She sent me a well written web site that insists that polio isn't caused by a virus because people have been getting sore limbs and paralysis for centuries.
Many people still believe trump won.
Some other sweet friends really do believe the world is about 6000 years old. I'm an argumentative old guy, but I cannot bring myself to upset them. I grieve, however, that they are missing thereby much beauty.
Being rich is being rich, and most investment in business is investment in big oil and big tech and big retail and it's just watching dem divvies roll in. You may think the system sucks; I do. but why do you think you are a Tory?
It is individuals and their own family economic that matter, not some abstract measure like GDP, growth, and even that is negative at the moment.
Looking a lot better for you guys than it did at half time.
People who rig the market to drive their own assets up and competition out? No thank you.
I will make one final point. I don’t know how much you travel but I travel A LOT and what has struck me in recent years is how much the world - outside the West - is culturally detaching from America and the West in general, and gravitating towards Asia or themselves. K-pop is just one example, but a highly significant example
I remember being in Bangkok in about 2008 and hearing tens of thousand of kids in Siam Square screaming for a boy band. I glibly presumed it was American or British, but I investigated and: no. It was K-pop.
America and the West is not so salient in global eyes any more. It is one powerful culture amongst other powerful cultures. That is the future. Great powers will jostle, cultures will compete, it may end up being good for humanity
BartyBobbins is correct that it is the economy that will make or break the Conservatives. I have said this throughout Covid, and post-Brexit. I thought the Conservatives would lose control of inflation and interest rates but I hadn't even considered Putin's insanity.
I can't see this perfect storm clearing as soon as some on here suggest.
Also 3 is totally wrong
Manga and Anime and Japanese/Korean/Asian subcultures arising therefrom are now more powerful than black American culture. Globally
Those figures for Australia are largely down to high home ownership rates and high prices for those homes. Luxembourg too is first with a 70% home ownership rate.
https://en.m.wikipedia.org/wiki/List_of_countries_by_wealth_per_adult
Unfortunately these groups also constitute between them the bulk of the membership of the Conservative Party, its core vote, and the dominant segment of the electorate to boot.
The Government will offer your colleagues a shit-on-a-stick wage deal (again) and try to muddle through any industrial action with the aid of staff nicked from developing world healthcare systems.
I was chatting with one of our Filipino nurses recently* and she reckons that Korea is so admired in part because of the historical baggage of China and Japan in the rest of East Asia. South Koreans are not thought arrogant or hegemonic.
*lots of Filipinos including her sister have emigrated there too.
Mid table obscurity for Leicester this year, so a relaxed Sunday of footy for me. A bit disappointing compared to last year, but to keep it in perspective our 4th best season in the last decades
Where the Tory party stands against the free market, I am against the Tory party. If the Lib Dems stood for the free market, I'd vote for them instead.