Saturday, July 17, 2010

Announcing FF15MP's new Property and Investment supplement

One thing this blog has always lacked is its own Property feature.

I'm going to rectify that right now and inaugurate my new UK Property supplement with a high quality investment opportunity that's only just come to the market...

Ordinarily, I wouldn't publicise the existence of such a screaming bargain and would hope to quietly snap it up for myself but a) I do not have 250 Large to spend on a cell, and b) I am not insane

In its favour, as well as being in a desirable (sic.) part of North London and close to a railway station, when the time comes, anyone shrewd enough to invest in this compact and bijou residence can have their executor shovel a few spadefuls of earth on it and have it double as their grave

Only the chances are that whoever buys this place will die still owing money on it. So, their corpse would have to turfed out and dumped on a tip and the property put back on the market for the next smart cookie to buy it

Assuming a 10% deposit, a loan of £225,000 at a 5% mortgage rate, this slave hutch can be yours for £1,350 (repayment) or £950 (interest only) per month. When the banking industry decides it wants to take some more money out of your pocket and mortgage interest rates go up to 8% that will be £1,750 and £1,500 respectively. At 10% that will be £2,050 and £1,850

The really insane thing is that I know people who will tell me how much sense this makes. People who have made a *lot* of money flipping properties in the same area that are even more ghastly than this one

The trick is the flipping part

Millions of people in the UK have been playing a nationwide game of financial pass the parcel and as long as they're not the ones left holding the over-priced property with the eye-watering mortgage when the music stops they've won

Only they won't have won, because the economic lives of millions of people left holding over-priced properties with eye-watering mortgages are going to go tits up and everyone is going to have to bear the cost. People who played the property game and those who stayed out of it, all of them.

(As an aside, I understand typical mortgage rates in the UK to be currently in the region of 5% to 6% whereas the savings rate on a typical bog standard deposit account is 0.25%. That's a 20 fold gross profit on the banks' cost of funds. An absolutely eye-watering level of usury by any measure. I suspect that there isn't much outcry over that as most people don't have much in the way of savings and those who do made them off the back of property inflation. However, the banks are getting a lot of that 0.25% money from the government (i.e. the citizens of the UK) and then charging people 5%+ to borrow it back. So, one way or another, people are funding their own debt slavery, whether they are conscious of it or not)

And whether you smell the whiff of conspiracy, or plain stupidity, it's worth asking yourself why virtually no-one, actually I believe no-one, in the mainstream press or government ever questioned the sustainability of house prices rising three, four, five times faster than wages indefinitely. The insane and ruinous inflation of the cost of a fundamental requirement of life, as necessary as food or water, was trumpeted to the heavens

Why are all of those fuckers claiming the Crunch was an unpredictable surprise?

How dumb would you have to be not to see it coming? At the very least this demonstrates that the entire existing system of financial regulation and education needs razing to the ground and rebuilding from scratch

That is if you assume our system of financial regulation and education was put in place to protect and nuture the ordinary muppet on the street.

I've worked in finance so I don't

So, we can't afford our own homes, mum and dad are both working to pay the bills, mum and dad are also maxed out on debt, deposit interest rates have been reduced to virtually zero, most of our shit is manufactured by 3rd world slaves, the UK's sold all its oil, most of the infrastructure has been sold off, the financial future of the next few generations has been mortgaged to the hilt, a bugger load of spend has been hidden temporarily in PFI deals and the government has written a lot of bad cheques. Like a junkie or a gambler with an incurable addiction the UK, and the rest of the West, has sold, pawned, borrowed or stolen everything it can just to get through each day, with no thought of tomorrow

Now what?



Anon said...

Of course, this interest factors into the rents non-owners like myself have to pay...not to mention tax hikes and the effect of job losses.

stef said...

in the Elizabeth Warren video I
linked to a couple of posts back she makes the point that now that two incomes are required to buy a family home that doubles the chance of families being blown out of the water by a job loss

and that's before you consider job security is becoming increasingly precarious

Renters, like savers, are essentially unpatriotic individuals who are betraying our wonderful economy. Until they get out there and buy $250k slave hutches and 400 quid stainless steel coffee machines on tick they deserve everything they get or, rather, don't get

stef said...

... I've made this point before but, thanks to debt-fuelled property inflation virtually every business is reduced to a money collection mechanism for the banks

whatever you spend your money on a large slab of that business' income is devoted to servicing debt and property costs. You pay for property inflation in virtually every transaction you are engaged in

Given that the banks pay out relatively little in the way of dividends and fuck all in the way of deposit interest you shouldn't have to be a Loon to ask yourself where is all that money going to?

Anon said...

That, and the debt-based money premium...although most of the property costs are really just land price inflation due to artificially constrained access.

Try to build your own home on a spare piece of land and watch the police turn up to enforce "planning" laws. Speaking of which, this is a useful primer on the mostly ignored effect of land on the economy:

Lukiftian said...

It looks like a carport.

I've seen worse, for more.. much more. But then, I lived in Vancouver.

An earthquake would be a kindness compared to what's going to happen there.

stef said...

two approving thunbs up for Henry George

lwtc247 said...

IMHO Henry George tries to do what Tim Harford did in his book 'The Undercover Economist' but George doesn't do as good a job.
62 used from £0.39

Quite readable IMHO

Stef said...

thx for the tip


NS&I withdraws index-linked savings certificates
National Savings & Investments has withdrawn its popular inflation-beating certificates from sale.

Anon said...

State owned? Say no more.

paul said...

ah the "find someone dumber than you" school of house pricing, (un)fortunately a finite resource

Anonymous said...

looks like something two large well heeled Rabbits might buy.
In Germany it might cost €50-€60,000

Anonymous said...

Capitalism does not involve a private central bank setting interest rates.

Capitalism does not involve a private central bank adjusting the money supply.

Capitalism does not involve a system of fiat currency that requires legal tender laws to make people use it.

Capitalism does not involve protection for lenders, such as commercial bank bailouts.

Capitalism does not involve protections for investors, such as FDIC deposit insurance or investment firm bailouts.

Capitalism does not involve a government responsible for spending 40% of the nations GDP.

Capitalism does not involve massive amounts of regulations on business.

Capitalism does not involve government subsidies to certain industries.

Capitalism does not involve government contracts with corporations.

Capitalism does not involve using tax payer dollars to clean up private corporate disasters.

Capitalism does not involve government buying up the majority of resource rich land, then leasing that land out to favored corporations, such as major oil producers and mining corporations.

Capitalism does not involve restrictions on private property owners being able to harvest resources from the land they own.

Capitalism does not involve tax payer backed mortgage firms.

Capitalism does not involve a massive military industrial complex that makes all of its profits from tax dollars, unwillingly taken from the public.

Capitalism does not involve government seizing private property through eminent domain and then handing that land to private developers.

Capitalism does not involve government creating jobs.

Capitalism does not involve taxes on money (real money, such as gold and silver).

Capitalism does not involve corporate lobbying for government contracts, kickbacks, tax breaks, subsidies, favorable regulations, regulations that hinder competition, regulations that hinder startups from competing, or any other government involvement in industry.

Capitalism does not involve forcible redistribution of wealth.

Capitalism does not involve a heavy progressive income tax on people’s labor.


What does capitalism involve?

Protection of private property rights, where a person can use their property as they see fit.

Protection of private property rights, where a person gets to keep what they produce (money).

Protection of private contracts, where people are free to negotiate voluntary contracts with each other and have the courts uphold those contracts.

Free markets, where people can voluntarily exchange goods and services with each other as they see fit.

Protection of money’s value, where those who counterfeit and artificially inflate the money supply are charged with a crime, rather than be rewarded with profits.


“Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power”

-Benito Mussolini, author of The Doctrine of Fascism, Italian Fascist Dictator (Duce) 1943 – 1945

“The theory of Communism may be summed up in one sentence: Abolish all private property. “

-Karl Marx, author of The Communist Manifesto

The Antagonist said...

Protection of private property rights, where a person gets to keep what they produce (money).

Interesting that you felt the need to explain explicitly what you think it is a person produces under capitalism; 'money', in parentheses.

Interesting because -- employees of banks, bankers, governments and assorted other well-armed groupings of gangsters aside -- most people don't directly produce 'money'.

Anonymous said...

Two hundred and fifty thousand quid for a rabbit hutch? Good deal, I'd say, compared with this crack shack in Vancouver for $3.2 million: