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Steve

Listed below are comments made by Steve between Thursday, 3rd September 2009 and Sunday, 6th December 2009.

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Flattening, not falling? 11:43am on 06 Dec 2009 "Statistically speaking, a decline of 0.1% is really no decline at all. It's also not far off what many independent economists were expecting when that first estimate came out on 23 October - and caused such a shock."

I read three reports in the two to three weeks prior to the last GDP figure that predicted we would still be in recession. Do you read the papers - or do you just listen to the spin from your banking chums? Quite frankly, it would have been a shock if we had come out. There's a very obvious correlation anyway between the Countries with the biggest housing bubbles and those still in recesion.

What's the point of this nonsense anyway? - if GDP swings to 1% annualised for the next quarter, then -1% the next and keeps doing that for the next decade, but with unemployment constantly at 3M, then we will have avoided recession for the next decade, so everyone will be happy presumably? Wake up.
Winners and losers 8:14pm on 25 Nov 2009 It's amazing how many people are missing the point here. By lending the money to people beyond the overdraft limit, it is the banks that have agreed to lend the money. They could choose to prevent people withdrawing money over their limits; They don't. They don't because they calculated they could make lots of money by charging outrageous fees for people that stray, quite often pennies, over their limit. Let's face it, it's not difficult to do with direct debits, etc, these days.

My current account has a £200 'arranged' overdraft facility and a £2000 'unarranged' overdraft limit (at a ridiculous APR). When I log on to my account online it tells me what I have available to spend - if I have a balance of £0 it says that I have £2000 to spend. I didn't ask for these overdraft facility and despite their best attempts to persuade me to go overdrawn, I have strangely resisted so far.

As for free banking: It was always free before these charges came along, so what's different now? Oh, I see, the banks have an entitlement to take as big a margin as they see fit now, regardless of their own massive inability to lend money sensibly and their own inability to provide a service to the consumer - I'm talking about retail banks here - not investment banks. It is the retail banks that are the scum of the earth. Only in this Country would we put up with this outrageous behaviour.

Like every aspect of life in this Country now, banks try to maximise their profits by deception and abuse of their most vulnerable customers.

Why Steph do you fall for the false spin argument that the ruling would end free banking? The idea of a bank is they make a profit by lending money at a higher rate of interest than they pay on deposits.
The economist's new clothes 6:16pm on 03 Nov 2009 "After the financial crisis, where now for economics? "

The fact that you think the financial crisis is over says it all.
House prices: Too good to be true? 1:57pm on 02 Oct 2009 Housing myth Number 738 busted:

I lived in Newcastle for a decade during which time the population actually got slightly smaller (I'm taking the word of my ex-flat-mate here who is a city councillor). The number of houses and flats incrreased during the same time period. So did prices go down because of supply? Nope - they went up 200% - why? Something to do with a bank on the road I lived on that suddenly started taking on a large number of employees and started lending huge salary multiples. Easy credit caused the house price bubble and it definitely became a bubbles around 2001 (which is when the remortgage credit started keeping GDP above water) and that's how far prices will retrace. And then the rest - the overshoot on the downside.

Nothing to do with supply.
House prices: Too good to be true? 1:21pm on 02 Oct 2009 "BTW my local estate agent says business is very brisk - both lettings and sales and there just isn't enough local supply of either to meet demand."

Sorry, but you believed an estate agent?

The number of mortgage approvals dropped by 17% last month. Sales volumes are still around half the pre-crunch levels - although admittedly slightly higher than a few monthss ago. If there was a shortage of supply, then houses would be being snapped up in no time whatsoever. Look on the mouseprice website and type in some postcodes to see the average time on te market and compare it with pre-vrunch levels. There is no shortage of supply - it's a myth being put out by the mortgage lenders and estate agents to try and justify the irrational upturn in prices at the moment. There is, however, a shortage of supply of sellers willing to drop their price - that will soon be rectified though.
House prices: Too good to be true? 10:29am on 02 Oct 2009 Thanks for writing this article Stephanie - unusually intelligent and well thought out for a BBC reporter, regarding house prices that is. I would say some of the estimates for further falls are a little on the conservative side though.

However, it is an absolute myth that there is a shortage of supply at the moment. This can easily be verified by looking at the time on the market (try looking at mouseprice) which is typically double the pre-crunch levels. Houses aren't selling very quickly - even now. What there is a shortage of is vendors prepared to sell at reduced price (that is the level at which normal volumes can be supported). This is partly due to the relatively low numbers of forced sellers presently (because of base rate slashing and repayment windows for those in trouble).

@CaledonianComment
"There is probably huge pent-up demand for people to move home, a demand that has been thwarted by the lack of mortgage finance for the last 18 months as banks have starved the economy of credit. House prices have been falling because of this lack of finance, not because of lack of demand."

I only have a GCSE in economics but even I know that the finance IS DEMAND. There may well be a huge pent up desire to buy property - that's what happends in bubbles. The demand will not return as lending is now back to proper levels - i.e pre-bubble. Even if lending was at the same level then demand would still be lower because of rising unemployment and supply of distressed sellers would be up for the same reason. There is a huge wave of repossessions due to hit the housing market in the coming months as Gordon's repayment windows (he forced the courts to take on) run out. House price have a long way to fall - and I say that as a homeowner.

And then there's public sector cuts...

Not a happy outlook for property rampers.
G20 do what needed to be done 07:28am on 06 Sep 2009 #8 Andronichuk

Exactly.
Exceptional times 08:10am on 03 Sep 2009 But of course when she mentioned the period of 8 years I should have assumed that we all understand that house prices only ever go up. After all, she does work for the BBC.

Let's see what effect the 50% fall in property prices will bring to this total debt figure.
Exceptional times 08:03am on 03 Sep 2009 #75crispblog

If house prices remain stationary for the next 20 years and the number of new mortgagees remains the same for the next 20 years, the level of mortgage debt will eventually find a constant level after the effects of previous inflation have worked through the system (as you mentioned) - but that isn't what Stephanie scribbled:

"As Kevin Daly at Goldman Sachs reminded me, the average house in Britain only changes hands every 8 years, meaning the people selling the house, on average, should have a smaller mortgage than the people buying it.

So - even if house prices have been falling for a year - you'd expect the buyer's new mortgage to be larger than the old mortgage being repaid.

Net lending would carry on rising, even if house prices were falling, and even if households were saving more."

Complete and utter nonsense.

You are absolutely right to mention that previous price inflation will take its time to work its way through the system, however there is no mention of this in the argument put forward by Stephanie - it is simply wrong - or she's misunderstood what Kevin Daly told her.

"meaning the people selling the house, on average, should have a smaller mortgage than the people buying it. "

Just because the people selling the house have an average outstanding mortgage that is less than the new mortgagee does not mean that the total debt will increase. She clearly misunderstands the point.
Exceptional times 00:31am on 03 Sep 2009 #70 GlenisDevereux

Absolute drivel.

"a) : 'If all of us - government included - had borrowed less in the boom years, we'd now be very grateful for our restraint.' - If we had borrowed less then we would not have had a boom - Why should we be grateful for being poorer for the past 20-30 years ?"

Most money is debt it's true, but the idea that printing lots of it (or creating lots of it as new debt) makes you richer is just about the dumbest idea I've ever heard. All it does is create inflation - in the case of mortgage lending it created house price inflation - this meant that money was worth less relative to houses. There were still the same number of houses the last time I checked so I don't know how printing lots of money to represent houses made us better off.

b)" 'In 1993 - when, I might add, personal debt was £1 Trillion lower than it is today.' That means that between 1993 and 2009 we have had £ 1 Trillion extra cash to spend than we were paid in wages - That’s how companies make profit and keep going - they get more money in sales that they spend in wages. "

You miss the point. We have an expansionary debt-based system for sure - as the money is printed in terms of debt creation it creates inflation - what is important is that the average debt per worker is serviceable - as the average debt / earnings ratio has increased it is now less serviceable. Hence we're not doing too well and we're going to be doing very well for a long time.

"If we didn't have this extra cash we would be broke - there would be no economy."

Erm, we are broke - if it escaped your notice, almost the entire financial system of the western world collapsed, precisely because there were too many unserviceable debts created by too much lending in relation to earnings.

d) "And you would certainly want households to start saving more -saving means I pay you 1p to make a car and you don't spend the 1p you save it - so I go bust - what kind of a certain want is that ?"

Again you miss the point - there has to be a balance in our system between people taking on debt (for house purchase and businesses) and saving for a time in life called 'retirement' - this is when we stop working and enjoy ourselves. Unfortunately this won't be happening for lots of people for a very long time because they will be servicing large debts on houses that are now likely to depreciate in value for the best part of a decade or two and they haven't made adequate provision in terms of savings and pensions because they are too indebted. I would say that this is not good news for this Country, because all of the 'wealth' that you say has been created by printing more money is in actual fact an IOU that has to be paid back during the course of a working life time to a bunch of broke losers in the City who miraculously have managed to persuade the people they got into debt to bail them out because they're worth so much to the economy we can't risk losing them. There could be a major problem here - mass default if enough people think they can't be bothered paying back the IOUs - or maybe rioting when there's enough unemployed owing enough money to a bunch of champagne swigging toffs. But I'm sure you wiill be happy with your monopoly money.

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