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Tuesday, October 07, 2008
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Magrathea
Activist
Posts:430
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| 29/06/2008 9:36 AM |
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"I don't want to "empower people to buy houses easily" - I want to preserve the value of money - thus avoiding government inflicted asset bubbles that are extremely damaging to the economy and to the lives not only of domestic citizens, but also foreign citizens subject to exploitative outwards direct (and indirect) investment."
As Sliced cake has pointed out even when we have the controls on credit that you advocate we still have hugely damaging bubbles in real estate. My soft position is that your suggestions are necessary but nothing like sufficient at all - but i lean towards my hard position, that what you're suggesting is not even necessary and that the dishonesty you complain about is a feature of a dishonest system. If you set up a GARGANTUAN, FREEBIE DRIPPING ROAST in the centre of the community's economic life, it will naturally create the dishonesty as people try to grab it. |
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Asteve
Activist
Posts:922
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| 29/06/2008 10:10 AM |
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If you want to suggest a basis for humanity without a monetary system, be my guest... I think it makes you sound like a crank.
Land has always been important - as has accountability.
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slicedcake
Activist
Posts:272
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| 30/06/2008 10:13 AM |
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| I assume that there was a sensible limit on the loan to income ratio in the previous housing bubble in the late 80's? I can't remember the details too well, but I think that it's correct. Imposing such loan limits seems like good sense to me, but additional property inflation prevention measures are needed. By that, I'm thinking of some kind of land/property hogging taxes. Was anyone suggesting having a system which wasn't mainly based on money? |
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Asteve
Activist
Posts:922
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| 30/06/2008 11:50 AM |
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In the last bubble, as I understand it, a typical LTV for first time buyers was 80% - with significantly higher premiums if you went beyond this. More important than the LTV, however, are the income multiples... it was remarkably difficult to go beyond 3.5X single income or 3X joint income. By year 2000, this had slipped to 5X single income and 95% LTV being typical... with only small premiums to go to 100% LTV or beyond - and fees, rather than being paid up-front were added to the mortgage principle too. Another major difference today is that BTL has allowed speculators to undertake arbitrary leverage by accepting predicted rental income in place of earnings multiples... thus allowing even those approaching retirement to borrow many times more than the expected gross earnings for the rest of their lives. If this wasn't bad enough, a new model of mortgage origination was embraced - which paid commissions to brokers... who would go out of their way to ensure that clients, on paper at least, met the requirements of lenders... a distortion that lenders were willing to undertake as they thought they were parcelling up debt and selling it to someone else's pension fund.
While I can see the appeal of loan limits, I think it a mistake to legislate for these... it is inevitable that the legislation will either be too lax - and hence a worthless bureaucratic cost... maybe leading to other undesirable unforeseen consequences; or too strict - and hence unfairly discriminatory. What we really need is clear accountability - an end to smoke and mirrors in order to get past the year-end and pocket a huge bonus. An end to the idea that banks need only think as far ahead as their year-end. Thereafter a sane mortgage market should emerge - one where people expect to repay their loans - and preferred customers are those who can repay quickly and minimise risk... rather than, as it has been in recent years, where those who obviously could not afford debt were targeted in order to trap them as "revolvers" unable to escape a lifetime of significantly expensive borrowing... likely finding these same individuals dependent upon state support in the form of family tax credits and the like.
I am definitely in favour of a property tax over income tax or national insurance, for example, but I think this would be problematic in the extreme from a practical perspective. The key attribute of real-estate is that it is illiquid and of subjective value... I can see no fair way to suitably tax real-estate... and if I can't - you can rest assured that vested interests could turn this into a political war lasting millennia. What you are more likely to see is politically motivated punitive taxes that disproportionately affect those who are not in power. Expect that to start to come into effect in Britain in about 2 years time. There will be no idealism - just political manoeuvres putting the boot into those who had benefit under the previous government's rules.
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chefdave
Activist
Posts:470
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| 05/07/2008 12:14 PM |
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Asteve wrote:
"Compare, for example, council tax with taxes on earned income. Sure, basic tax is "only" 22% (or 20% next year)"
Untrue, the 10p rate has already been abolished and the straight 20p rate started at the beginning of this tax year. http://www.hmrc.gov.uk/rates/it.htm
The u-turn consisted of raising the personal tax allowance by £600, but its for this year only.
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Asteve
Activist
Posts:922
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| 05/07/2008 7:38 PM |
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Erm, Dave, that's the most anyone has agreed with me while still starting with a quote followed by "Untrue..."
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chefdave
Activist
Posts:470
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| 05/07/2008 11:57 PM |
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No, i'm disagreeing with you. You're being charged 20% this tax year not 22%. (perhaps you're self employed though rather than PAYE) however, whatever way you slice it I'm right and no one is going to take that away from me! |
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Magrathea
Activist
Posts:430
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| 17/07/2008 7:08 AM |
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Astev wrote:
“I am definitely in favour of a property tax over income tax or national insurance, for example, but I think this would be problematic in the extreme from a practical perspective.”
Too bad
“we can’t do anything that will work, so will do something that doesn’t (again)” is useless; the problem needs to be solved.
Anything that actually addresses the problem is going to be VERY, VERY bad for the elites and consequently very, very hard to implement. We can be almost sure the regulation of banks and loans will do little or nothing to solve the problem because this is precisely what is now being advocated by the elites.
“The key attribute of real-estate is that it is illiquid and of subjective value...”
Everything has a subjective value, value itself is subjective; you are just throwing gunk around hoping some will stick somewhere. Price is objective (I have pointed this out before)
“I can see no fair way to suitably tax real-estate...”
I can
Importantly, I can also see that there isn’t any alternative that is remotely fair. I should point out that I am not measuring ‘fairness’ only by the size of the interest payments on your deposit account
“What you are more likely to see is politically motivated punitive taxes that disproportionately affect those who are not in power.”
The likely fall guys will be the poor, the unemployed, immigrants, the Muslims and the Jews etc etc. The way to stop this is for them to understand what is happening, what forces caused it and how it can be prevented and mended.
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Asteve
Activist
Posts:922
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| 18/07/2008 9:50 AM |
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"Anything that actually addresses the problem is going to be VERY, VERY bad for the elites and consequently very, very hard to implement."
I think you massively underestimate the complacency of elites.
If you feel that you can see a fair way to tax real-estate, I suggest that you turn it into a detailed proposal. Assuming that it isn't riddled with flaws, then, you can establish its likely influences... assuming that no catastrophic oversights come to light, maybe - then - it can be promoted. Until then, it seems remarkably pointless to persist that I must be wrong in considering different influences and incremental ideas.
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