Government rejects EU call to cut deficit faster

A government that thinks it knows more than the market is dangerous. It is a fair argument that things should have been better regulated over the last few years but now we have a monster. There is no point in trying to make a decision about your future (should I buy a house, should I save (interest rates are below inflation), should I invest in shares, should I accept that job?) because most things economic now depend on government decisions which means you need to second guess the government, make friends with the government or (I hope we don’t get there) bribe the government. The government should be a referee for the system not a playmaker.

Buy-to-let tax break plan attacked as further blow to first-time buyers

Stories like this can easily be missed so i bring it to your attention.


http://www.guardian.co.uk/business/2010/mar/15/first-time-buyers-priced-out

Will this make it easier for landlords to extend their portfolios? Lower costs always help.

It is interesting to note that Britons entry into the Forbes richest list was a man who inherited his fortune and makes money from rent. America has people who made their money themselves from very competitive industries (computers and the internet).

Rank 45

http://www.forbes.com/lists/2010/10/billionaires-2010_The-Worlds-Billionaires_Rank_2.html

The housing market Feb 2010. Broken.

Nationwide house price index since September (unadjusted)


Sep 09 - 322.8
Oct 09 - 323.2
Nov 09 - 324.7
Dec 09 - 323.4
Jan 10 - 326.1
Feb 10 - 321.8

So it is clear that prices have not moved since september. The bounce of 2009 started in March (feb index = 294.7) and ended in september. It loooks like January and Feb 2010 cancel each other.

A point for reference is that the peak was 368.5 in September 2007. The index now is 12.7% below this,

House prices did not recover that much last year (except for 2 million + houses in central london)

The problem at the moment is that there is no market as sellers are protected by low interest rates and are still under the illusion that houses are worth 2007 prices.

It is very hard to sell or buy a house. This point is missed by the press and government.

UK Youth Rebel

The argument that the massive ‘bail out’ was necessary to save the whole financial system and therefore “all of us” is wearing thin. The only people who have been bailed out are those with assets, large savings and those who rely on pension’s funds and insurance policies dependant on the stock market.


Since the bail out, the value of houses has risen as has the stock market. Those with money, assets and pension funds have been saved. Those who did not have lots of money, assets or pensions will be paying for this for years to come. Generally these people are under 30. They will almost definitely not receive a pension. If house prices keep rising they will probably never own their own home and with interest rates lower than inflation they will never really be able to save any money.

The youth today should not vote Labour or Conservative. They should rebel and force both parties from power.

Northern Rock: more than 4% of mortgage customers are in arrears

Northern rock needs house prices to go up by 10% to 15% to be saved.


The current government policy seems to be to bail out those who borrowed too much. With inflation at around 4% and interest rates on saving at around 2.5%, sensible people really are paying for those who spent too much and can’t afford to pay it back.

Negative returns on savings with rising house prices punishes people who make the right decisions.

Savers revolt

January trade deficit widens as exports fall

A weaker pound makes UK goods cheaper, but not necessarily more attractive. Quality is another factor as is the ability to guarantee supply.
I guess there is not enough confidence in the UK from international markets, probably because we have a government that does not believe in markets.

Buy-to-let king and queen dismantle property portfolio

The argument that we had to bail out the banks, reduce interest rates and start quantitative easing or it would be the end of the world is wearing thin.


Low interest rates and quantitative easing has bailed out those who made mistakes and those who were sensible are paying for it. This article (1)  backs up this point with Fergus admitting that the low interest rate has kept them going. These low rates come as a cost to the next generation and those who are not in debt.

1 http://www.guardian.co.uk/money/2010/mar/06/buy-to-let-fergus-judith-wilson?showallcomments=true#end-of-comments