tag:blogger.com,1999:blog-5312853715123370916.post5426509034217805816..comments2024-03-17T00:10:44.022+00:00Comments on From Arse To Elbow: When leverage isn't debtDavid Timoneyhttp://www.blogger.com/profile/03568348438980023320noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-5312853715123370916.post-52851873054919710212012-09-24T11:46:40.423+01:002012-09-24T11:46:40.423+01:00David,
I agree, and thanks for the link to my blo...David,<br /><br />I agree, and thanks for the link to my blog post on this issue. I'm just working on the side on an analysis of market and economic performance over a number of economies. One interesting thing I've identified is the extent to which the bubble in asset prices occurred under Thatcher and Reagan. <br /><br />Although, the quantity of money printing over the last decade dwarfs that of previous decades, the inflation of asset prices in property and shares, was much greater in the 1980's to 2000, than it has been in the last decade. This is true whether you look atchanges in nominal or constant (2005) money terms.<br /><br />What is also interesting is the significant outperformance of economies both in nominal and (2005) terms in the Long Wave Boom period (I've taken 1950-1980 though the Boom ended in 1974) compared with the subsequent period. Yet, despite the massive growth during that period, the rise in property and share prices was relatively modest. The graph of house prices both for the US and UK for the period 1900 to 2010 is horrifying. It is basically flat line along the floor until around 1960, when it rises slightly, but steadily, and then over the last 30 years goes parabolic!<br /><br />Although, the increase in the last decade has been lower in percentage terms, it is a lower percentage on an already bubbled up base figure.<br /><br />Ros Altman on BBC News yesterday pointed out the real problem was massively inflated house prices. She spoiled it by saying that parents could borrow money against their own homes rather than pensions. As I said on my blog, its intended to bolster the banks, and as you've quoted pressure kids not to walk away from properties their parents might have a stake in.<br /><br />I look at properties around me, and see £1.5 million places now down to £800,000, I see places advertised at £400,000 sold for £300,000. I've seen places sold for £180,000 that someone has spent at least £20,000 on to do up and re-sell, going for just £160,000. These proposals are like putting your finger in the dyke of a rapidly falling property market. Anyone with any sense would be getting out of it while they still can, before it collapses, as every other such bubble has done.<br /><br />Finally, absolutely right about the hypocrisy of the Liberals on borrowing, but that is a sign of their desperation.Boffyhttps://www.blogger.com/profile/08157650969929097569noreply@blogger.com