Fw: [Diggers350] Osborne now out of options, house building (deliberately) stalled
Zardoz Greek
zardos777 at yahoo.co.uk
Tue Nov 3 11:15:39 GMT 2015
Hi James,
Excellent stuff - but
When replying please be sure to include the list email address in the 'to' field or this will only go to the original poster - not the lisr
Z
>
> Mortgage Floods destroy Houses
>
>
> James Armstrong 01305
> 265510
>
> HEALTH WARNING
> - Understanding the Housing Crisis.
>
> The practical
> causes of the UK housing crisis are very many
> - one hundred and counting. Each
> of us is a housing expert. We all have practical experience,
> we either have a
> house or we are stressed by not
> having one. However
> the determining CAUSE of the
> crisis, which we identify, lies
> hidden- in ‘m-e’ - the macro-economic field of Bank and
> Treasury choice and
> ideology. ‘m-e’ is like house-keeping with the nation’s budget. It involves the strength of sterling, the money supply, regulating banks,
> inflation v deflation,
> balance of trade, risk management…
> Here we show that manipulating house prices,
> upwards, is not the
> result (or only the result) of market mis-management
> or
> failure, but of ongoing Bank of England policy and
> deliberate choice, and in
> the Bank’s view is a success. Centered in the City with
> the ‘most overvalued houses in
> the world’,
> the Bank has lost the housing plot. Individual tales of
> housing distress are
> all too common: in contrast we put forward m-e solutions to
> end the hidden cause
> of the housing crisis which we identify. We heed Adam Smith’s warning that if wellbeing
> doesn’t motivate
> actions, if you rig markets, markets will fail to deliver
> good results.
>
>
>
>
> SUMMARY
>
>
>
>
> Less
> than 18 months before the 2008
> financial crash - caused by
> mis-selling mortgages on houses, Lord Eddie George
> gave evidence to the Treasury Select
> Committee (Hansard, 20 March 2007
> )
>
> “That“
> ( the Bank stimulating consumer spending to levels
> which could not be
> sustained, he explained ) “pushed up
> house prices and increased household debt. That has
> been a legacy to my
> successors; they have to sort it out…” 18 months later the crash sorted it
> out.
>
>
>
> The tearaway success
> - of
> the £1.3 tr. UK mortgage lending market, 79% controlled by
> five banks and one building society, grows
> at 8% per annum - faster than
> China’s reported 6.9% growth
> rate, - is central in setting Bank
> of England policy and results in the housing crisis.
>
>
>
>
> The Bank created £375bn in
> quantitative easing. Can you doubt
> the temptation for B of E
> to manipulate £1.3tr mortgage credit - upwards? This manipulation pushes up house
> prices.
>
>
>
> Rising and out-of reach house
> prices are unsustainable and are the
> foreseen fallout of Bank of England and HM Treasury policy and actions
> to stimulate the economy by increasing household
> debt.
>
>
>
> They demonstrate Government and
> Bank ideology of ‘Growth in the
> Economy’ and its harmful implications.
> Alternative more desirable, less destructive, more
> sustainable national
> goals exist and are achievable.
>
>
>
> The above explains the
> decades long failure of
> successive governments to
> address the harmful, enduring and
> risky effects of rising and out of
> reach UK house prices and rents
> and falling supply while the crisis deepens.
>
>
>
> Practical
> measures
> advanced to end the crisis will
> fail unless its macro-economic and ideological drivers are addressed.
>
>
>
> Good economics requires an ethical
> choice of goals and economic tools. Adam
> Smith, as Professor of Moral Philosophy pursued
> ‘good’. Currently bad economics
> results in bad
> housing.
>
>
>
> Good houses
> can last for
> over 150 years. Each much needed
> house not completed to-day
> causes housing distress now and
> for 150
> years into the future.
>
>
>
> Solutions are advanced, (below)
>
> and actions to achieve good
> housing -
>
>
>
> “Wide choice, from
> a
> plentiful supply, of more beautiful houses, in each area of
> the country, at
> accessible prices and rents.”
>
>
>
>
>
> Mortgage Floods destroy Houses
>
> The
> Numbers Add Up
> to Bad Housing
>
>
> The numbers
> predict a second financial
> crash and back up the call for
> action. The logic of inevitability ensures
> radical solutions will be implemented
> either before or after the expected (second) financial
> crash and
> either less or more painfully.
>
>
>
> Annual output of new
> houses in UK
> 2013-2014
> 141,000p.a.
>
>
> Barker’s 2003 estimate
> of annual new house output to keep house price inflation in
> line
>
>
> with Consumer Price Index*
> general
> inflation of 1.1% p.a. (Barker p 10)
> (300,000p.a)**
>
>
> Annual av. UK
> output of new houses for 12 yrs
> 2003-2014 177,000
> p.a.
>
>
> Est. annual
> shortfall over 12 yrs (123,000 p.a.) Cumulative shortfall
> total (1,476,000)
>
>
>
> Estimate of annual
> output to eliminate backlog by 2027
> also to meet Barker’s 2003
>
>
> unmet estimated
> need of (300,000 ) p.a.
> (423,000p.a.)
>
>
>
> c.f. annual output
> of new houses 1968 post war peak
> 425,000
>
>
> Av. annual
> increase in population 12 yrs since 2003,
> 511,000 p.a. total
> 6,135,000
>
>
> (European countries may expect
> further increases in
> population from abroad)
>
>
>
> In JULY 2012
> the Bank announced a new policy ‘Funding for
> Lending’ explained as a policy
> which made cheap cash available
> to banks and building societies
> to boost lending to the real
> economy. Lending
> to small businesses was highlighted by the Bank but the availability
> of this cheap cash meant yet more
> credit was
> chasing an insufficient
> housing stock. A year later funding
> was restricted to loans for small
> businesses; banks and building societies could no longer use
> these funds
> for mortgages.
> A Treasury spokesman
> explained,” Activity in the housing
> market is picking up and house price inflation appears to be
> gaining momentum.
> As a result there is no longer a need
> to provide further Bank
> support for household lending.”
>
>
>
> Here the Treasury
> acknowledges that its action
> caused house price inflation yet hints at satisfaction at the Treasury/Bank
> success. This illustrates: the exuberant mortgage supply
> causes house price inflation. Bank policies against a
> background of housing dearth procure
> the mortgage bonanza. Regulators’ inaction rewards those physically causing the lack of supply.
>
>
> In December 2014 a new committee, FPC, of the Bank of England was set up to
> identify risks to the
> economy. It is no wonder
> that housing was identified as the prime risk. Their first report
> highlighted the risks attached to the rapid (40%)
> growth of ‘Buy to Let’
> and the likely more rapid movement
> out of that market by investors
> compared with house-owners.
>
>
>
> The Bank is tasked with identifying
> and mitigating the risk especially of the housing
> market, but fails to acknowledge
> that
> actions by the Bank are a fundamental cause of the
> risk. The Bank maintains ‘It is not FPC’s role to control
> house prices, nor can it address the underlying structural
> issues relating to
> the supply of houses. Its role is
> to manage risks to financial stability.’
>
>
> We say this statement is wrong
> because the Regulator
> has within its power and is tasked to end
> monopoly practice. The
> Bank’s own regulator, FCA, fails
> to prosecute errant plc builder-landbankers. The Bank
> invents and promotes the ‘Funding for Lending’
> cheap money scheme and
> makes it available to mortgage lenders, yet discounts
> responsibility for the
> consequent rise in house prices.
> This
> is illogical. Together these failings are an affront to
> reason and truth. They are also an onslaught on
> the well-being of people in need of houses.
>
>
>
> With
> Bank Rate currently at a record low of 0.5% the power of the Bank to regulate the
> economy by changes in
> the rate is curtailed. At this low level
> the effect of cutting the rate
> is limited. There are risks
> to raising the rate. The
> effect on mortgages of raising Bank
> rate is
> that more people would be repossessed and
> would be unable to recapitalise since house prices
> would fall and leave
> them with negative equity.
>
>
> The Bank is facing loss
> of control of the economy. Homeowners
> are at
> increased risk in the anomalous housing
> market. The Governor , Mr Mark Carney is in two
> minds . In July 2014 he said “A dangerous
> housing bubble could develop if
> rates are kept too low. A rise will lessen the
> likelihood of
> other risks developing.” By July 2015 he is reported saying “The
> housing market could collapse
> if a base rates rise hits
> buyer confidence.”
>
> The worst houses are not those in
> the favelas of Brazil nor beside the
> railway tracks in Calcutta. They are the 1.5million much
> needed houses (above) not
> built in UK over the last twelve years.
>
>
> To build them is not a problem of
> bricks and mortar
> nor of absolute land shortage nor of
> investment funds but lack of
> the novel building material – ‘goodness’ and
> ‘will to build’. Good houses
> like the thousands of tenement homes
> in Leith
> and Edinburgh built in the 1860’s
> ’s last over 150 years . Not
> building good houses today creates
> a 150 year problem for future families. *Barker follows the
> Bank conservative
> CPI measure of inflation. CPI.
>
>
> Mortgage
> Floods destroy Houses
>
>
>
> The
> Tearaway Success of the UK
> Mortgage Market
>
> explains out of reach house prices
> and rents.
>
>
>
> What
> explains the failure of successive governments to cure the
> housing crisis which
> has been with us for decades? We read from a
> government
> report of 2003 “The long term upward trend in house
> prices and
> recent problems of affordability are the clearest
> manifestation of a housing
> shortage in the UK.” That was in
> 2003.(Barker Review page 1)
>
> In that year UK
> output of new houses was 183,825. Eleven years later in
> 2014
>
> following
> increases in the population of some six millions, output had fallen to 141,000 from the
> 1967 output peak of
> 450,000. To-day prices and rents have risen to out of reach
> levels.
>
>
> Does this prove Government incompetence? We would make a
> more
> serious allegation. It shows the
> success of government policy -
> measured by the
> profitability and ever growing
> value of the mortgage industry and
> of government meeting the needs of the housing finance
> industry, a choice which
> benefits City mortgage lenders
> harms the welfare of the people.
>
> Even if
> government aims are wrong, surely the
> laws of supply and demand should
> cure the problem? The upward trend in prices
> should, according to
> theory, have drawn in increased supply and caused prices
> to
> fall? Why did this not happen? “Why can’t we build
> 240,000 houses a
> year? asks a recent BBC NEWS commentator. We ask
> different
> questions
>
> Q1
> “Why won’t plc housebuilders and the
> government build, or cause to be built, the extra houses
> needed?” Our explanation is
> that the present shortage and consequent high prices and
> out of reach
> rents meet the objectives of those who control the purse
> strings
> and land. What appears as a disaster to those who cannot
> save deposits, aspire
> to meet the out of reach house prices or struggle to pay
> rents,
> from the viewpoint of other groups
> and of the government, is a sustained, tearaway
> housing debt
> success story - for banks– for mortgage lenders-for
> investment bankers- a success which successive governments applaud.
>
>
>
> The Government’s positive view of the banking
> sector is illustrated by a
> speech by Gordon Brown as Prime Minister in 2007.
>
> “The financial services sector in Britain and
> the City of London at the centre of it, is a great example
> of a highly skilled, high
> value-added,
> talent driven industry that shows how we can excel in a
> world of global
> competition. Britain needs more of the vigour, aspirations
> and ingenuity that
> you already demonstrate…..”
>
> Q2 Why don’t
> builders build? We say, Because plc
> house builders and others unlawfully
> monopolise valuable surplus building land.
> This keeps out competition and
> value of the undeveloped land in their balance sheets
> increases as house prices rise.
>
>
> What to millions of
> home owners are high house prices, to another group,
> the mortgage morticians - six mortgage lenders - is a £1.3 trillion market which has
> sustained growth over
> decades of 7.9% per annum. Compare China’s claimed GDP
> growth at 6.9%.p.a. ,
> and UK’s GDP growth currently at 0.7%p.a.
>
> Just five banks and one building society
> (Nationwide) control 79% of this, UK’s biggest market -
> mortgage debt. Each of these five banks has
> incurred one fine of
> £1million and one a fine of $1bn. Each of the banks has
> incurred
> numerous other major regulatory fines.
>
> Who is
> to call them ‘crooks’ and the sector ‘the
> syndicate’? Not Government
> –who do not rein in excessive and
> destructive growth because the
> success of the banking sector
> achieves government aims. The banks, HM Treasury, FCA and
> the Bank know this.
>
>
> The
> first
> of these government aims is all encompassing and we may
> call it an
> ideology – something so universal so oft repeated that
> we may take it for
> granted. It is ‘growth in
> the economy’. The means by which this is achieved by
> HMG is by
> promoting consumer debt, especially housing debt. Rising
> house prices is
> the Bank of England’s chief means of avoiding the bogey
> of
> deflation. The Bank formally fails to acknowledge the
> elephant
> in the board room - house price and rent inflation - by not
> consulting the Retail Price
> Index.
>
>
>
>
>
>
> Mortgage
> Floods destroy Houses
>
>
> WARNING Solutions not implemented to-day
> will
> require more radical solutions later.
>
>
>
>
> SOLUTIONS
> -
> IDEOLOGICAL At their heart is
> injecting
> Goodness - wellbeing into the provision of housing
> (which in UK is
> currently bad). This entails a primary commitment to the
> goal of wellbeing
> not growth .
>
> SOLUTIONS -
> PRACTICAL Publicise the institutional causes of the crisis.
>
> especially
> – government
> and B of E manipulating houseprices up -
> and - PLC’s reducing the availability
> of housing land by “landbanking ‘ or
> ‘strategic land’ speculation
>
>
>
> Expose the misinformation of spurious ‘structural’ excuses advanced
> for the crisis. Expose the
> distortion of the
> language of debate by errant corporate lobby groups.
>
>
>
> B of E Regulators punish
> unlawful
> large scale land banking by plc h-builders
> and….
>
> using the
> 1947 Compulsory
> Purchase Act, Regulators essential
> unlawfully withheld housing land (local monopolies.)
> confiscate or compensate
> with government bonds.
>
> Sell the land in individual plots
> to self build groups to
> reinvigorate the
> housebuilding sector on a ‘use it or lose it’
> principle.
>
>
>
> HMG use proceeds to fund
> Council House building.
>
>
>
> Formally require each UK company
> to pursue the wellbeing of the
> generality of people as its first principle in its
> constitution in return for
> the privilege of incorporation.
>
>
>
> Set a Renewable Termination Date
> (25yrs suggested) for each plc incorporation, £m fines being ineffective, reduce the
> life span of a plc
> for major regulatory infractions.
>
>
>
> Reduce impact on land prices of
> £bn CAP annual payments to landowners
> by converting grants to loans.
> Publicise this £3.9bn p.a. handout to millionaire
> landowners.
>
>
>
> Include details of £bn CAP
> payments in Budget speeches, and
> in ONS Blue Book.
>
>
>
> Share burden of failed mortgages
> between lender and borrower. End
> evictions , convert failed owners to tenants.
>
>
>
> Promote self build , and
> Community Land Trusts to supply 50% of dwellings as
> in France Germany
> and U.S.
>
>
>
> Reverse
> Build ratio to achieve
> accessibly
> priced and rented houses 4 : spec built
> :1
>
> (noting
> that self builders
> achieve accessible priced houses
> 1: spec built nil.)
>
> Put in
> place moratorium on expensive
> specification
> upgrades until supply increases.
>
>
>
> B of E and
> HMT to formally
> consult RPI not CPI in setting interest rates.
>
> B of E to establish and monitor
> a “Mortgage marker ratio” (MMR) balancing and regulating
> mortgage funds
> availability to the fluctuating
> supply
> of new houses.
>
>
>
> End Stamp Duty and council tax on
> houses : replace with Land Value Tax
> on unimproved land.
>
>
>
> Note specific ‘solutions’ as
> above will fail unless the motivational issue
> is addressed, particularly end manipulation of house prices
> (up) to meet B of E
> HMT ideology.
>
>
>
> J
> Armstrong October 2015
>
>
>
>
>
>
>
>
>
>
>
> To:
> Diggers350 at yahoogroups.com
> From:
> Diggers350-noreply at yahoogroups.com
> Date:
> Sat, 31 Oct 2015 21:15:10 +0000
> Subject:
> [Diggers350] Now house building has stalled, Osborne is now
> out of options
>
>
>
>
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> Millions need homes but can't afford
> to buy at bubble prices, so building has stalled.
> Unexplained story of the week
> https://mobile.twitter.com/TonyGosling/status/660563009413242880
>
> BBC story...
> https://t.co/W35X6BLWxN
>
> Jargon busting analysis
> Straight talking with old Labour Oxford
> economist Martin Summers
> https://politicsthisweek.wordpress.com/2015/10/30/bcfms-weekly-politics-show-presented-by-tony-gosling-10/
>
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