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.
The Liberals have often been the party of the free market, with Labour the party of socialism or social democracy and the Tories often protectionist as much as capitalist free market.
The Social Democrat wing of the LDs might not be free market, the Orange Book wing and Davey was in that 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.
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
If inflation is low then people can get by without pay rises. If inflation is high then people must be told to get by without pay rises, because otherwise there will be a death spiral.
It's remarkable, there's always a dire necessity for pay restraint.
Looking very close in Australia as they enter the day before the election.
The latest Ipsos shows Labor ahead 53-47 in the 2-party preferred vote but that's a 4-point swing since the previous Ipsos poll which now looks a real outlier with its Coalition share of 29% then and 35% now (much more in line with other pollsters).
No poll has yet shown the coalition ahead but it looks, as a famous man once said, a "damned close run thing".
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.
But look, rich people invest on average in big, mature and reliable markets which are highly regulated: property, telecoms, energy, financial services. Not just one of those but all of them because diversification. What you hate, actually, is rich people. Therefore the Tory party persuading you to think you are a Tory is the greatest con of all time.
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.
Wait. You’re arguing that people in the UK and US still listen to acts from the UK and US? Well, yes, wow
Most people do not live in America, Britain, or Europe, they live in Asia. And there they increasingly listen to their own music or to K-pop (the world’s dominant brand of pop music right now)
In Turkey they listen to Turkish pop and watch Turkish soaps, ditto in India and ditto across the world, and this is the point. Western culture was once hegemonic, it really isn’t any more, and we should forget our delusions thereto
One of the few remaining areas of western cultural hegemony is football. English football, in particular. Piquant
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.
But look, rich people invest on average in big, mature and reliable markets which are highly regulated: property, telecoms, energy, financial services. Not just one of those but all of them because diversification. What you hate, actually, is rich people. Therefore the Tory party persuading you to think you are a Tory is the greatest con of all time.
I'm a liberal not a Tory. Just ask HYUFD.
I vote Tory when the Tories are liberal and free market, something the Lib Dems aren't. Sadly the Tories aren't either, so they've lost my support.
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
If inflation is low then people can get by without pay rises. If inflation is high then people must be told to get by without pay rises, because otherwise there will be a death spiral.
It's remarkable, there's always a dire necessity for pay restraint.
It also disregards the fact that the public sector is subject to market forces too. I'm at an Open Day on Monday trying to recruit for the NHS. Oldies want their operations. A 2% pay rise won't cut it I'm afraid. Admin. Porters. Maintenance? Can't get them. Doubtless "front line" will be wheeled out. Well. If you want your op without anyone seeing your records. Walking yourself in and out of theatre. With no lights. Then 2% is fine.
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.
Something forgotten, it seems, is that the original idea of owning your home went like this -
1) you rent forever 2) you pay a mortgage for 20 years. Then live rent free for the rest of your life.
If you have no rent, you can live on a tiny income.
A lot of people are going to find that the amount they are putting in pensions etc is not equal to the cost of property + living.
Dr Palmer - you have very substantial pensions IIRC.
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.
But look, rich people invest on average in big, mature and reliable markets which are highly regulated: property, telecoms, energy, financial services. Not just one of those but all of them because diversification. What you hate, actually, is rich people. Therefore the Tory party persuading you to think you are a Tory is the greatest con of all time.
I'm a liberal not a Tory. Just ask HYUFD.
I vote Tory when the Tories are liberal and free market, something the Lib Dems aren't. Sadly the Tories aren't either, so they've lost my support.
Ed Davey is more pro free market than Boris and Starmer and Sturgeon.
Looking very close in Australia as they enter the day before the election.
The latest Ipsos shows Labor ahead 53-47 in the 2-party preferred vote but that's a 4-point swing since the previous Ipsos poll which now looks a real outlier with its Coalition share of 29% then and 35% now (much more in line with other pollsters).
No poll has yet shown the coalition ahead but it looks, as a famous man once said, a "damned close run thing".
We'll know more by Saturday lunchtime (UK).
One more poll to go, Newspoll tomorrow.
I agree it looks close, could even be a hung parliament.
Though if Ipsos is correct it would be a Labor government but other pollsters have it nearly neck and neck with Morrison ahead as preferred PM
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.
Wait. You’re arguing that people in the UK and US still listen to acts from the UK and US? Well, yes, wow
Most people do not live in America, Britain, or Europe, they live in Asia. And there they increasingly listen to their own music or to K-pop (the world’s dominant brand of pop music right now)
In Turkey they listen to Turkish pop and watch Turkish soaps, ditto in India and ditto across the world, and this is the point. Western culture was once hegemonic, it really isn’t any more, and we should forget our delusions thereto
One of the few remaining areas of western cultural hegemony is football. English football, in particular. Piquant
Though the EPL has long ceased to be an English League, apart from the stadium fans. Most teams have only a handful of English players, the rest are immigrants, as are the owners.
Looking very close in Australia as they enter the day before the election.
The latest Ipsos shows Labor ahead 53-47 in the 2-party preferred vote but that's a 4-point swing since the previous Ipsos poll which now looks a real outlier with its Coalition share of 29% then and 35% now (much more in line with other pollsters).
No poll has yet shown the coalition ahead but it looks, as a famous man once said, a "damned close run thing".
We'll know more by Saturday lunchtime (UK).
One more poll to go, Newspoll tomorrow.
I agree it looks close, could even be a hung parliament.
Though if Ipsos is correct it would be a Labor government but other pollsters have it nearly neck and neck with Morrison ahead as preferred PM
If the only time to properly know the final swingback is when the votes have been counted, the clear direction of travel in polling last few weeks pointing to swingback going on, points to only one outcome in my opinion.
Politico.com - Kenney steps down as leader of Alberta’s Conservatives Only half of the United Conservative Party voted in support of his leadership. 'I will respect the decision,' he said.
Alberta Premier Jason Kenney scraped out a narrow win in a referendum on his leadership, then surprised almost everyone Wednesday night by stepping down as leader of the United Conservative Party.
He announced the news Wednesday after earning just 51.4 percent support in a leadership review.
“The result is not what I hoped for, or frankly what I expected,” said Kenney. “But I’ve been clear from day one, that I will respect the decision of the members in this leadership review.”
Kenney had long insisted he would consider anything over 50 percent a passing grade, but on Wednesday night he announced it would be inadequate to get by on a squeaker.
“A large number of our members want to clear the air with a leadership election,” Kenney said. “I fully respect their decision, and I encourage all members to do the same.”
Earlier this week on a trip to Washington he told reporters, “I’ve never lost an election, and I don’t plan on doing so now.”
He said the results were a surprise, though had also prepared remarks. In his resignation speech, Kenney listed the challenges of the past two years.
“We went through three once-in-a-century crises — the largest public health crisis in a century, the largest collapse of the world economy in nearly a century, and — for the first time ever — we experienced negative oil prices.”
Kenney had served as premier of Alberta since 2019. Before that, he’d been an MP for almost 20 years, serving in various posts in Stephen Harper’s Cabinet.
He urged Albertans to move forward. “It’s clear that the past two years were deeply divisive for our province, our party and our caucus,” he said. “But it is my fervent hope that in the months to come, we all move on past the division of Covid.”
Kenney said he has advised his party leadership to schedule a leadership election “in a timely fashion.”
The Calgary Herald reports that the UCP caucus will meet Thursday morning when they are expected to select an interim leader.
Comments
The Social Democrat wing of the LDs might not be free market, the Orange Book wing and Davey was in that group
It's remarkable, there's always a dire necessity for pay restraint.
We were bloody great second half.
The latest Ipsos shows Labor ahead 53-47 in the 2-party preferred vote but that's a 4-point swing since the previous Ipsos poll which now looks a real outlier with its Coalition share of 29% then and 35% now (much more in line with other pollsters).
No poll has yet shown the coalition ahead but it looks, as a famous man once said, a "damned close run thing".
We'll know more by Saturday lunchtime (UK).
8 minutes of Fergie Time. I thought that was a thing of the past
Surely there must be something you can do.
DCL: I’m doing everything I can… and stop calling me Shirley!
Wait. You’re arguing that people in the UK and US still listen to acts from the UK and US? Well, yes, wow
Most people do not live in America, Britain, or Europe, they live in Asia. And there they increasingly listen to their own music or to K-pop (the world’s dominant brand of pop music right now)
In Turkey they listen to Turkish pop and watch Turkish soaps, ditto in India and ditto across the world, and this is the point. Western culture was once hegemonic, it really isn’t any more, and we should forget our delusions thereto
One of the few remaining areas of western cultural hegemony is football. English football, in particular. Piquant
I vote Tory when the Tories are liberal and free market, something the Lib Dems aren't. Sadly the Tories aren't either, so they've lost my support.
I'm at an Open Day on Monday trying to recruit for the NHS.
Oldies want their operations. A 2% pay rise won't cut it I'm afraid. Admin. Porters. Maintenance? Can't get them.
Doubtless "front line" will be wheeled out.
Well. If you want your op without anyone seeing your records. Walking yourself in and out of theatre. With no lights. Then 2% is fine.
1) you rent forever
2) you pay a mortgage for 20 years. Then live rent free for the rest of your life.
If you have no rent, you can live on a tiny income.
A lot of people are going to find that the amount they are putting in pensions etc is not equal to the cost of property + living.
Dr Palmer - you have very substantial pensions IIRC.
Most people don’t
I am not however a pure free marketeer
this thread has lost on penalties
I agree it looks close, could even be a hung parliament.
Though if Ipsos is correct it would be a Labor government but other pollsters have it nearly neck and neck with Morrison ahead as preferred PM
Politico.com - Kenney steps down as leader of Alberta’s Conservatives
Only half of the United Conservative Party voted in support of his leadership. 'I will respect the decision,' he said.
Alberta Premier Jason Kenney scraped out a narrow win in a referendum on his leadership, then surprised almost everyone Wednesday night by stepping down as leader of the United Conservative Party.
He announced the news Wednesday after earning just 51.4 percent support in a leadership review.
“The result is not what I hoped for, or frankly what I expected,” said Kenney. “But I’ve been clear from day one, that I will respect the decision of the members in this leadership review.”
Kenney had long insisted he would consider anything over 50 percent a passing grade, but on Wednesday night he announced it would be inadequate to get by on a squeaker.
“A large number of our members want to clear the air with a leadership election,” Kenney said. “I fully respect their decision, and I encourage all members to do the same.”
Earlier this week on a trip to Washington he told reporters, “I’ve never lost an election, and I don’t plan on doing so now.”
He said the results were a surprise, though had also prepared remarks. In his resignation speech, Kenney listed the challenges of the past two years.
“We went through three once-in-a-century crises — the largest public health crisis in a century, the largest collapse of the world economy in nearly a century, and — for the first time ever — we experienced negative oil prices.”
Kenney had served as premier of Alberta since 2019. Before that, he’d been an MP for almost 20 years, serving in various posts in Stephen Harper’s Cabinet.
He urged Albertans to move forward. “It’s clear that the past two years were deeply divisive for our province, our party and our caucus,” he said. “But it is my fervent hope that in the months to come, we all move on past the division of Covid.”
Kenney said he has advised his party leadership to schedule a leadership election “in a timely fashion.”
The Calgary Herald reports that the UCP caucus will meet Thursday morning when they are expected to select an interim leader.
https://www.politico.com/news/2022/05/18/kenney-steps-down-leader-albertas-conservatives-00033655