Thursday, 3 July 2014

Is Housing the biggest risk to the UK economy- no, here are 5 bigger risks

This is what the Bank of England say. here are 5 much bigger risks though:

1. FRANCE - The Country is on its knees and led by a completely ineffectual left-wing Government. At the rate of decline it is experiencing France is going o drag the Eurozone back into a crisis.

2. EUROZONE - This has never gone away as an issue, the currency will not in the long-term work out for the Southern European states. We are only ever a quarter or two away from a renewed crisis.

3. SCOTTISH Referendum - If the Scots vote yes there will definitely be a run on the markets and a big hit to economic confidence for a few years.

4. CHINA - There is a huge debt bubble in China, no idea when it is going to break, but surely it will, if China catches a cold, we will get pneumonia.

5. IRAQ - A further escalation in Iraq, which may include fighting South of Baghdad would see a big jump in oil prices- oil prices over $120 have always caused a recession in the West - 100% of the time.

12 comments:

Jer said...

Agree with 2,4 and 5.

I think a weak France, ideally one divided into three parts, id generally good for the UK as French foreign policy is to shaft the English wherever possible, apparently. Maybe my bias is showing though...

In the short term I agree with 3, but surely the nation of Adam Smith would experience a general energising of the economy as they get used to the idea?

I am more worried by the USA than any other country in terms of foreign policy. I wish I knew what they were actually trying to achieve with regard to Russia especially.

Blue Eyes said...

I am amazed that France has not already collapsed. When it does, Zie Germans will have a decision to make.

Nick Drew said...

... when France collapses

well we know what Churchill had in mind when this happened for real in 1940: he planned to offer full merger between UK and France into a single country!

Blue Eyes said...

Which was accepted in 1950, by which time we had foolishly gone off the idea. Just imagine how good life would be if France had an English legal setup and England had TGVs and a wine glut.

CityUnslicker said...

BE - Yellow car - borderline red offence, for suggesting it would IN ANY WAY be good for us to be merged with the les enfants terribles...

CityUnslicker said...

card, even.

Yeux Bleus said...

We could be like Canada, but with better weather and cheese.

MyThursdayName said...

With household incomes at 2001-ish levels (http://www.theguardian.com/business/2014/jul/01/household-incomes-no-higher-2002) and house prices above 2007 levels the disconnect between earnings and prices is vast.
This is a huge threat to the UK because of the social backlash it will cause.
I predict the next election will hinge on the EU, housing and the intergenerational theft that is occuring by policy.

- Providing social housing will strengthen Labour for a generation.
- I'm already seeing signs of over-availability of rental properties in Manchester. If rents fall and rates rise, even slightly we are going to see a fair portion of the over-50s decimated financially.

This boom has been engineered to allow those invested in property to get OUT of the market, but so many of them are getting deeper IN to the market that its not funny.
Their pensions are going to be destroyed. This is also why the govt is allowing greater withdrawls from pensions from next year.

***If you are not selling into this boom you are a total mug.***

Oh and remember - Tenants Dont Vote Tory.

CityUnslicker said...

Thursday name.

This boom is not engineered. It is a by-product of flight of wealth to safe haven and tax haven of London, follwoed by trickle down to elsewhere.

There is a net transfer of billions into the UK - sadly it has helped the have's and not the have's nots, because the latter were too poor or too young to already own property.

Anonymous said...

"This boom is not engineered."

You. Cannot. Be. Serious.

Sometimes I think people have the memory of a goldfish.
You remember UKAR which was set up to prevent properties being repo'd in 2010?
You know that almost 50% of mortgages given out during the 2k boom were interest only and interest rates have been nailed to the floor to protect these debtors. These people cannot handle even a small rise in rates and all this time they're not even making capital payments on their mortgages. I'd wager 95% of them have no plan in place to pay off the debt either except to sell the property.
Are you telling me that a market that requires a 20% subsidy from the govt is in a healthy state?

What do YOU think will happen if (when) rates rise and subsidies are withdrawn?
Well I'll tell you - one monumental clusterfuck of a housing and pensions crash.

Increases in valuations can only be sustained by having ever more people wanting to buy. That, in turn, requires ever more borrowing and ever more lending. It also requires ever more rises in wages which, as I've previously pointed out, are actually falling.
There is no way to look at UK property other than a total disaster waiting to happen.

Appealing to the chinese/eastern fairy to keep buying ever more expensive flats in docklands is not an intelligent social or economic strategy. Hot money comes but hot money goes too.

Its not a 'net transfer of billions to the UK'. Its hot money goosing a fucked market place. Foreign buyers dont pay CGT - hows that fair? The government are complicit in this - both labour and tory.
Its temporary funds resting here until other uses can be found for it. Meanwhile its screwing the British people out of the very fabric of the state and democracy - a stake in their own land.
This is why UKIP are on the rise.

Blue Eyes said...

If off-the-scale house prices are behind UKIP's rise, how come the least affordable part of the country lent UKIP its weakest support?

JeremyOlm said...

People always have this mentality that housing is the market everybody should fear of. It is mainly because of the mortgage interest bubble that often jeopardizes people’s lives and makes their finances go haywire. However, with sound financial understanding and background, a person can well manage their own finances and see the housing market as an opportunity instead. A credible estate agent could be of help should anyone require assistance.