Thursday, September 02, 2010

The 'Cloud Cuckoo Land' of the UK Property Market and NHS

The Daily Telegraph's Personal Finance Correspondent writes this week that UK property prices return to 2007 levels until 2014. Read the entirely incredible article from here. Elsewhere the same paper reports that the IMF predicts Britain's gross debt to GDP ratio will reach 109.7% by 2015 (Le Figaro reports the IMF predicts 115% by the same year for France, our supposed ideal partner for future aircract carriers on which more tomorrow). The Telegraph this morning quotes a second month of property price falls, read here and concludes: The average home currently costs £169,347, according to Nationwide. Yet Myra Butterworth, Personal Finance Correspondent of the Daily Telegraph, informs us that homeowners "will have to wait until 2014 for a recovery, when average prices will reach £226,900" We recall that Ambrose Evans-Pritchard, astute finance commentator on the same newspaper, last November reported Société Générale advising its clients of potentiel global collapse and suggesting they buy "sovereign bonds (to) "generate turbo-charged returns" mimicking the secular slide in yields seen in Japan as the slump ground on. At one point Japan's 10-year yield dropped to 0.40pc" What else was forecast in that perceptive report: "Governments have already shot their fiscal bolts. Even without fresh spending, public debt would explode within two years to 105pc of GDP in the UK, 125pc in the US and the eurozone, and 270pc in Japan. Worldwide state debt would reach $45 trillion, up two-and-a-half times in a decade.

(UK figures look low because debt started from a low base. Mr Ferman said the UK would converge with Europe at 130pc of GDP by 2015 under the bear case).

The underlying debt burden is greater than it was after the Second World War, when nominal levels looked similar. Ageing populations will make it harder to erode debt through growth. "High public debt looks entirely unsustainable in the long run. We have almost reached a point of no return for government debt," it said."

And the crowning UK National disaster that is the NHS, read this gob-smacking nonsense from the Daily Mail this morning:

£130,000 to quit now for NHS bosses facing axe as plans are drawn up to sack up to 20,000 managers
Does Lansley not know the nation is bust. Cash from public employees and those sitting on large unearned house equity are the only future source for repaying the debts if private enterprise is to be allowed to play its historical role of wealth creation. Cap public pensions at three times the OAP as a maximum, recoup the wealth with a five year reducing property tax as earlier proposed on this blog (read the Brown Levy from here). In reality there are no other choices!

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3 Comments:

Blogger SellYourHouseUK said...

Just like the slow take supply of property in the UK, buyers and sellers remain cautious making the market fairly static. Good thing that stimulus programs such reduction in VAT, interest rates and banking bailout helped homeowners to be in-control in the recession period.

4:04 AM  
Blogger The overseas investor said...

Nice post. I like the way you start and then conclude your thoughts. Thanks for this information .I really appreciate your work, keep it up.UK property

10:29 AM  
Blogger Martin said...

Thanks Toi for your appreciation. This was an old post I had forgotten. I suppose a follow up is due given the announced scheme of this week to further fiddle with the housing market.

11:23 AM  

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