Re: Osborne Anounces Another £140 Billion Bank Bailout : Fri Jun 15, 2012 4:35 pm  

Standee wrote:

so, if we can spend our way out, give the cash direct to anyone who pays tax, some will bank it and some will spend it.

I am a conservative, but this bunch do look more and more clueless by the week.

In an uncertain economic period like we have now, if you give individuals money (presumably through tax cuts) all they will do is save it, not spend it. By investing in a massive, short-term infrastructure project such as increasing the social housing stock, you get people off benefits and into work. These people then inject their newly disposable income into the retail and service sectors by buying goods and services. The Treasury gets back some of its investment through an increased tax take and reduced numbers on benefits.

Re: Osborne Anounces Another £140 Billion Bank Bailout : Fri Jun 15, 2012 4:44 pm  

Andy Gilder wrote:

In an uncertain economic period like we have now, if you give individuals money (presumably through tax cuts) all they will do is save it, not spend it. By investing in a massive, short-term infrastructure project such as increasing the social housing stock, you get people off benefits and into work. These people then inject their newly disposable income into the retail and service sectors by buying goods and services. The Treasury gets back some of its investment through an increased tax take and reduced numbers on benefits.

and who would increase social housing stock, which builders, which contractors, the same one's that raped the exchequor for Decent Homes and we saw no economic benefit?

Re: Osborne Anounces Another £140 Billion Bank Bailout : Fri Jun 15, 2012 4:56 pm  

Andy Gilder wrote:

In an uncertain economic period like we have now, if you give individuals money (presumably through tax cuts) all they will do is save it, not spend it. By investing in a massive, short-term infrastructure project such as increasing the social housing stock, you get people off benefits and into work. These people then inject their newly disposable income into the retail and service sectors by buying goods and services. The Treasury gets back some of its investment through an increased tax take and reduced numbers on benefits.

People would not spend or save but pay down debt (at least the majority, who have debt). That's the logical thing to do. It's what has been happening. On one level it's also a good thing, on another it means the economy is quite slow. In fact what we really need is to export. Consumer spending within a purely domestic context is fine, but the reality is consumers buy stuff from abroad creating a balance of payments deficit. We need to pay down debt and export alot more. If we ride out the huge storm ahead (and that won't be easy, given the Eurozone bank losses will stop somewhere - my guess is in the UK - given the increased frequency and panic within Osborne's speeches aimed at telling the EZ politicians) and get an export led economy steaming forward (we can dream!). Then we should engineer a huge reduction in real house prices over a period of years.

Re: Osborne Anounces Another £140 Billion Bank Bailout : Fri Jun 15, 2012 10:22 pm  

There is no demand abroad so we can't grow through exports.

We have a Treasury that is doing nothing and a central bank that is trying to support the economy but we're in a position where monetary policy is not being effective on stimulating demand (ie a liquidity trap).

We will be stuck in recession/low growth for years waiting for the market to 'self correct' and we will lose masses of lost output in that time.

The economy needs to be kickstarted by an increase in government spending ideally on some infrastructure to address problem areas etc the housing stock. As regards concerns over borrowing its a different situation to Greece, UK government borrowing costs are at record lows anyway so price signals are telling us that its a sensible time to borrow to get the economy moving again. You can tighten fiscal policy as the economy grows again, its much easier to rebalance a budget when you are back in a 3% growth spell.

Re: Osborne Anounces Another £140 Billion Bank Bailout : Sat Jun 16, 2012 6:29 am  

I know I've mentioned this before but:

Between central and local government, there are thousands of hectares of land available, suitable for housebuilding. Invite charities and not-for-profit organisations to lease this land on 99 year, peppercorn rent agreements. The average cost of building a house (materials & labour) is about 40% of the total value (including land), so pension funds and insurance groups would be falling over themselves to lend the money to build because the returns would be far greater than government bonds could offer. These houses could then be rented at 50% of the prevailing rentals.

Some caveats would need to be built into the system such as: the houses could NEVER be available on a "right-to-buy" basis and the remuneration of executives of the housing management companies (non-profit remember) should be subject to a cap - say £100,000.

Such a scheme would:

Return unused land back into useful land and promote community

Create jobs through a building programme

Stimulate demand for goods to furnish the homes

Reduce the amount of housing benefits paid (the vast majority of the current recipients are already working)

Increase revenue to the exchequer through PAYE & NI and VAT

It wouldn't cost the government a single penny, the land is already there, they own it, they simply decide to do absolutely nothing with it.

Re: Osborne Anounces Another £140 Billion Bank Bailout : Sat Jun 16, 2012 6:44 am  

cod'ead wrote:

I know I've mentioned this before but:

Between central and local government, there are thousands of hectares of land available, suitable for housebuilding. Invite charities and not-for-profit organisations to lease this land on 99 year, peppercorn rent agreements. The average cost of building a house (materials & labour) is about 40% of the total value (including land), so pension funds and insurance groups would be falling over themselves to lend the money to build because the returns would be far greater than government bonds could offer. These houses could then be rented at 50% of the prevailing rentals.

Some caveats would need to be built into the system such as: the houses could NEVER be available on a "right-to-buy" basis and the remuneration of executives of the housing management companies (non-profit remember) should be subject to a cap - say £100,000.

Such a scheme would:

Return unused land back into useful land and promote community

Create jobs through a building programme

Stimulate demand for goods to furnish the homes

Reduce the amount of housing benefits paid (the vast majority of the current recipients are already working)

Increase revenue to the exchequer through PAYE & NI and VAT

It wouldn't cost the government a single penny, the land is already there, they own it, they simply decide to do absolutely nothing with it.

Problem is, as I have said earlier, the social housing sector cannot finance the investment, direct payment of benefits means that pension funds etc are totally disinteretsted in future investment. and why should senior management of social housing be capped, I know of some very good people earning £200k a year that could get more in the private sector.

for once, listen to someone who knows about the issues.

Re: Osborne Anounces Another £140 Billion Bank Bailout : Sat Jun 16, 2012 7:50 am  

Standee wrote:

Problem is, as I have said earlier, the social housing sector cannot finance the investment, direct payment of benefits means that pension funds etc are totally disinteretsted in future investment. and why should senior management of social housing be capped, I know of some very good people earning £200k a year that could get more in the private sector.

for once, listen to someone who knows about the issues.

Did you completely miss the bit about finance coming from Insurance groups and pension funds? Both are big buyers of gilts because they see a steady, if unspectacular return, such a scheme would offer better returns than government bonds. If UK institutions weren't interested, there are plenty of European ones who already make substantial investments in similar schemes and would be willing to invest here.

The reason for capping senior executive pay is simple: although an organisation may be prima-facie "not-for-profit", that doesn't prevent the executives from divvying up what would be deemed profits among themselves. Hence the need for a cap. Any surplus revenues should be earmarked for re-investment back into the projects or to cover contingencies such as maintenance & repairs etc.

The only drawbacks I could foresee to such a scheme would be: private landlords would see their revenues from rents reduce as a knock-on effect. The banks who hold the motgages on buy-to-let properties may also see their liabilities increase because the mortgage may be higher than the value of the property. Tough, they were happy to trouser the profits in good times, it's high time they stopped trying to socialise debts in difficult times. But the main drawback remains that this government would be required to conduct a complete sea-change in ideological approach to housing.

Re: Osborne Anounces Another £140 Billion Bank Bailout : Sat Jun 16, 2012 8:05 am  

cod'ead wrote:

Did you completely miss the bit about finance coming from Insurance groups and pension funds? Both are big buyers of gilts because they see a steady, if unspectacular return, such a scheme would offer better returns than government bonds. If UK institutions weren't interested, there are plenty of European ones who already make substantial investments in similar schemes and would be willing to invest here.

The reason for capping senior executive pay is simple: although an organisation may be prima-facie "not-for-profit", that doesn't prevent the executives from divvying up what would be deemed profits among themselves. Hence the need for a cap. Any surplus revenues should be earmarked for re-investment back into the projects or to cover contingencies such as maintenance & repairs etc.

The only drawbacks I could foresee to such a scheme would be: private landlords would see their revenues from rents reduce as a knock-on effect. The banks who hold the motgages on buy-to-let properties may also see their liabilities increase because the mortgage may be higher than the value of the property. Tough, they were happy to trouser the profits in good times, it's high time they stopped trying to socialise debts in difficult times. But the main drawback remains that this government would be required to conduct a complete sea-change in ideological approach to housing.

you clearly have anecdotal knowledge of the sector, so I'll leave you too your Indy informed rants, I KNOW the sector and I KNOW how it works.

Re: Osborne Anounces Another £140 Billion Bank Bailout : Sat Jun 16, 2012 8:40 am  

if there was a sensible time for government borrowing it is now when govt debt is as cheap as it as ever been. That ability to borrow at record lows should be used to finance capital projects not just poured into banks bottom line, There are two fundamental flaws with this current plan to inject capital that must be relent. Firstly the condems have scared any confidence out of the economy which has suppressed demand. Secondly the banks wont pass the low interest rates on. Thye will profiteer by charging ridiculously high rates and charges on any money they do re-lend again suppressing demand. I think its a safe bet that in twelve months the banks will come out pleading that they wanted to lend but nobody wanted their money just like they did with project merlin. If gideon had any sense he would have taken advantage of the state owned banks to get this money into the economy at sensible rates the competitive pressure of a state bank lending at reasonable rates would also push the others into lending at sensible rates.

Re: Osborne Anounces Another £140 Billion Bank Bailout : Sat Jun 16, 2012 8:46 am  

Standee wrote:

you clearly have anecdotal knowledge of the sector, so I'll leave you too your Indy informed rants, I KNOW the sector and I KNOW how it works.

So come on then, what would you actually propose?

You know, make some suggestions instead of pontificating that because you "Know" the sector (same as you "know" how the Olympics works etc), anyone else who proposes a break from the traditional way of doing things is an Indy-reading idiot. Why should the provison of housing be yet another commodity to be traded and profited from?

BTW you really should try reading the Independent, they have contributors and columnists who would appeal to your venal tory ideals too.