Economy

Crash: The housing crisis is just beginning

Published 05 June 2008

As Britain wakes up to the nightmare of negative equity, we are facing a housing recession far worse than that of the early 1990s. Iain Macwhirter has a warning: don't buy a house now, at any price. Just say no. You have been warned

Kingston Quay in Glasgow is one of the smart dockside developments that were supposed to help regenerate Britain's older industrial cities. The blocks don't look bad, with generous balconies and double-height penthouses. But the truth is that you can hardly give these flats away. A two-bedroom flat, bought for £215,000 in September 2005, recently sold at auction for £79,000; another went for £86,000. Nine others did not sell at all. "Live the dream," said the promotion for these developments; wake up to the nightmare of negative equity.

This story is being replicated in every city in the country as the housing crash gathers momentum. In areas of Manchester and Leeds, and even parts of London, thousands of new-build flats are being offloaded at auction for 30 per cent less than they cost to buy, according to the auctioneers Allsop. The paradox of Britain's slump is that it isn't being led by a sub-prime underclass in run-down areas - although repossessions are rising fast everywhere - but by the "luxury" end of the market. The biggest falls are for the dinky flats bought by urban professionals as "starter homes", or by well-off parents, such as the Blairs, for their children and as pensions. If you have had the misfortune to invest in any of these, look away now, because what follows could seriously damage your wealth.

Let's get the numbers out of the way first. There is no longer a scintilla of doubt that there is a major, national housing correction under way. Nationwide registered a record 2.5 per cent fall in May alone. Analysts such as Morgan Stanley think there could be a 25 per cent decline in two years. The International Monetary Fund estimates that British house prices are overvalued by 30 per cent. A crash is defined as a 20 per cent fall over two years, so fasten your seat belts. The Financial Services Authority (FSA) says a million people face losing their homes over the next 18 months. Northern Rock was the first banking casualty; the buy-to-let flat specialist Bradford & Bingley is the second; others will follow as this second mortgage-related financial shock shreds banking balance sheets and undermines confidence in the financial system.

Even the government accepts that prices will fall by between 5 and 10 per cent this year alone, as the housing minister Caroline Flint's see-through cabinet briefing papers revealed recently (although, curiously, she didn't see fit to tell the country the news herself). Indeed, the government is still actively encouraging first-time buyers into a market that it knows is collapsing. Ministers should be doing precisely the reverse: warning young families not to take on mortgages for flats that will assuredly land them in negative equity.

But the government still believes that, as the property porn queen Kirstie Allsopp puts it, "house prices always go up". In other words, it believes in fairies, and that money grows on trees. Now comes the big bad wolf to the door, and the last thing anyone should think of doing right now is buying a house. At any price. Just say no. You have been warned.

Tens of thousands of relatively high-income homeowners in south-east England have placed their futures in jeopardy by taking on unsustainable jumbo mortgages. You need only look at estate agents' windows to see that the sums don't add up - London prices average £320,000 and are out of all proportion to ability to pay. Gross median full-time earnings in London last year were only £587 a week, according to government statistics. Many young families took out self-certification "liar loans" at five or six times their income as the only way to get on to the housing ladder. Now the banks are forcing them to remortgage at a higher rate and demanding large deposits. Real fear is stalking the capital's nappy valleys.

This is going to be far, far worse than the housing recession of 1990-92. Fuelled by irresponsible bank lending, UK house prices nearly tripled in the decade to 2007 - a more lunatic rise even than in America. British prices have been running at nearly eight times average earnings against a historic average of 3.5. This was never going to be sustainable. But right at the moment the bubble burst, in August 2007, a combination of related events conspired to turn this boom into an epic bust that is likely to consume the British economy and lead to a depression. You may think the credit crisis is over, but the real crisis is just beginning.

First, the banks found that because of the US sub-prime mess they couldn't borrow cheap money on the international markets any more, so they cut back on lending and increased rates. Banks such as Northern Rock, which had been offering "suicide loans" of up to 120 per cent loan-to-value, stopped lending altogether. Not surprisingly, people stopped buying. The number of first-time buyers in March was the lowest ever recorded, fewer than 18,000 in the whole of the UK.

Apoplexy in No 10

Even before the housing slump, buy-to-let investors were losing money because of low rents; now many are being forced to sell, as the banks require them to remortgage at rates of up to 9 per cent. Overall, mortgage lending this year is expected to fall by nearly half, to £60bn, an unprecedented contraction of the market. Estate agents across the land are shutting shop - not that many tears will be shed at their plight. Nor at the loss of the hard-sell property club Inside Track, which promised to make you a millionaire overnight and has now gone bust, leaving many of its clients with huge losses.

The FSA and the police are now investigating 70 separate valuation scams across Britain whereby surveyors fraudulently overestimated the value of thousands of new-build homes. In cities such as Manchester, organised criminals had recycled drug money into property to such good effect that some of them gave up the narcotics trade and turned to property speculation. Now they are regretting it.

What can the government do? Well, Gordon Brown thought he could revive the market by in effect handing £50bn of public money to the banks through the Special Liquidity Scheme and by leaning on the Bank of England to cut interest rates. Not so. The banks took the £50bn in Treasury swaps in April and promptly put mortgage rates up even further. Then in May, Mervyn King, the governor of the Bank of England, announced that there were likely to be no more cuts in interest rates this year because of rising inflation.

This caused apoplexy in No 10. Brown wanted King to emulate Ben Bernanke of the US Federal Reserve, who slashed rates from more than 5.25 to just 2 per cent in eight months. But King stood his ground, and is right to do so. As anyone who goes to the shops knows only too well, the cost of living is rising faster than at any time in the past two decades. Cutting interest rates now could start 1970s-style hyperinflation.

There has been much debate about the causes of the recent global inflation in commodities, but in the end, in the circular world of economics, it all comes back to housing. It was the attempt by the Federal Reserve to revive the US housing market that ignited the current commodities boom. It hoped that slashing interest rates below inflation would encourage people to put their money back into houses. It didn't. Instead, the big investment houses, the pension funds and thousands of in dividuals ploughed their cash into oil, food - anything that looked as if it might become scarce. Roughly 60 per cent of the recent increase in the cost of oil is down to speculation.

In the US, cutting interest rates has actually made house prices fall faster. The increase in gas and food costs has made consumers tighten their belts and avoid mortgages like the plague. US residential property prices fell 14.4 per cent in the first quarter of 2008 - the fastest drop ever recorded by the benchmark Standard & Poor's/Case-Shiller index. Ten million face negative equity. To top it all, the inflation explosion has forced the Fed to admit that the next movement in US rates will probably be up, though not before the presidential election. Talk about a rock and a hard place. Increasing interest rates in a downturn is what turns recession into depression.

How long will the slump last? Certain demographic factors may prolong the housing depression. The baby-boom generation has now reached retirement age and many couples are relying on their homes as pensions and legacies. If they want to keep their wealth intact, they will have to sell soon. This could lead to an unprecedented number of larger houses coming on the market just at the moment when younger families can't borrow the money to buy them.

Pyramid of credit

The recent house-price boom in Britain has also been fuelled by immigration, much of it from Poland. With the British economy weakening and the pound falling in value, however, many eastern European migrants are returning home. There is still a shortage of houses in Britain, but we are about to find that the shortage is not as great as we thought.

Are falling house prices a bad thing? All things being equal, a return to sanity in the housing market is good for everyone, even estate agents. But we are facing a serious economic dis location here, not just a correction.

It was brought about by the astonishing short-sightedness of central bankers and politicians in Britain and the US who kept interest rates artificially low for more than a decade. A huge inverted pyramid of credit was built on top of the expectation of yields from British and US mortgages. Believing that house prices would rise for ever, and that even if they faltered the Bank of England would cut interest rates to reinflate the bubble, the banks began to lose any sense of financial risk, and started to relax credit standards and lend irresponsibly. Private-equity firms were allowed to borrow huge multiples of their real assets. Banks started to hide their lending in off-balance-sheet devices such as structured investment vehicles.

As house prices fall, this all turns into reverse. Loans de-leverage, derivatives degrade, margin calls are missed. The total value of British residential property is about £3trn. Nearly £1trn of this will now disappear over the next few years if prices fall by 30 per cent. This will have a profoundly deflationary effect, leading to falling high-street sales, business closures, personal bankruptcies and rising unemployment. Mortgage bonds will default, causing further bank crises. Britain depends heavily on the financial services for jobs and 40,000 are about to go in the City alone, according to J P Morgan.

In Britain, homeowners are seeing the value of their properties fall at about £2,000 a month at the same time as the cost of living is rising and their wages and salaries are stagnant. Deluded by house prices, British consumers borrowed and spent like there was no tomorrow. Unfortunately, tomorrow has arrived and consumers are sitting on £1.4trn of debt, the highest for any country in the world. People can no longer defer their loans by remortgaging their properties, and the banks are demanding cash upfront. In the past two months, many consumers have taken out huge one-off credit-card loans, which explains the paradox of recent unsecured lending going up as spending goes down. Shelter has reported that at least a million people are putting mortgage payments on their credit cards - the height of economic madness.

The government is already overdrawn and unable to spend its way out of impending recession. Treasury finances will shrivel after a fall in stamp duty and tax receipts from the collapsing financial services sector. The nationalised Northern Rock has signalled that it won't be able to repay the £26bn it was lent by the government if house prices continue to fall.

No wonder Gordon Brown is looking gloomy. He once joked that there are two kinds of chancellors: failures and those who get out in time. He is no longer chancellor, but as First Lord of the Treasury, the Prime Minister is still in the firing line. The great housing bust of 2008, and the recession that follows it, will be Brown's lasting monument. And poor old prudence never got a look-in.

Iain Macwhirter is an award-winning political columnist for the Glasgow Herald

Housing by numbers

250,000 UK households in negative equity
50% fall in net mortgage lending expected this year (down from £108bn to £55bn)
12m mortgages outstanding in 2007
25% predicted average house-price drop during current crash
3,775 mortgage products available now
15,599 mortgage products available in July 2007

Research by Katie Wake

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81 comments from readers

Isabel
05 June 2008 at 11:19

Excellent article...but gloomy times ahead for many of us in the UK.

bobed
05 June 2008 at 12:37

But if you watch Location, Location, Location and listen to Kirsty Allsopp everything is fine and we must accept the price that the estate agent asks for. Only a stamp duty cut will help us poor buyers out. What planet is she on?

Bob
05 June 2008 at 13:04

Excellent article describing reality instead of false hope or more of the past.

Other articles complaining that interest rates should fall to protect the housing market are completely stupid and only demonstrates self interest by the writer.

The quicker house prices fall to the average 3.5 x salary the quicker everything will be back to normal and houses will once again sell.

Surely this is in the interests of everyone.

So let the interest rates go up to control inflation and everything else will will follow by restoring itself back to normality as quick as possible.

JezSalis
05 June 2008 at 16:25

Spot on article. I can see this one hitting particularly hard.

Gordon's liquidity present merely put a £50bn copper bottom on the boats of the big banks before the big wave hits - had nothing to do with making houses more affordable.

antileft
05 June 2008 at 16:42

"don't buy a house now, at any price. Just say no. You have been warned"

Oh well, I can see that you studied economics. Also, dont stab yourself in the eye with a knife. You have been warned.

Carl Jones
05 June 2008 at 17:07

What we need to avoid is this mantra from Brown that banks should take it easy on defaulting homeowners...homes are for living in, and anyone defaulting because if the interest rate trap should die by the sward...investments can go up and down.

The people of Britain need to get away form this City of London construct that everyone must spend 25 years with a millstone around their necks. Britain is upto is neck in debt because of this stupid capitalist system. If we don`t break free this time round, just take a look over the pond...US banks are facing a tidal wave of housing debt which will swamp sub-prime.

If Britain is to persist with this capitalist scam, then the government must back homeowners who default for fair reason....just like ther support for Northernrock. When the government takes on this burdon, the banks lose their money. Only when facing total loss will banks behave responsibilly.

Maybe the government should bypass the banks altogether and offer citizens government mortgages, instead of bailing out the banks.

antileft
05 June 2008 at 17:29

"If Britain is to persist with this capitalist scam, then the government must back homeowners who default for fair reason...."

Well, at least you didnt mention the NWO. Two things though Carl.

1. What would you recommend instead of capitalism?

2. How can you "default by a fair reason"?! Ive had enough money for a very big mortgage for a few years. Why didnt I buy one? Because I could see that houses were overvalued. So why should the government help those without my restraint USING THE BRITISH PEOPLE'S TAX MONEY while those who are waiting for the prices to stop being overvalued still dont own a house? If you were dumb enough to take the risk, it's you who should pay for the consequences- not the taxpayer, who may or may not have a house. Bailing out everyone who spends money on something they cant afford is very, very bad economics and brings about a culture in which youd be stupid not to take a stupid risk.

Carl Jones
05 June 2008 at 18:27

Britain is a close second to the US in the capitalism states nd the gap is closing.

If there is one thing which we have learned over the last few months, it is that capitalism, the ""FREE MARKET" (NWO illusiuon) doesn`t work. The Fed/BofE credit line is public money and it is only this intervention that has kept the banks in business.

"Fair Reason"..Northernrock worked on a business plan which was known to regulators (inc BofE).....no one, including Northernrock expected the banks to break their "cardinal rule"...the never ending free flow of money....this is what Thatcher let out of the bag....and as I understand it, the moment it started, she is alledged to have said "what have I done" (please correct). Northernrock was a "fair reason" victim. If you are a citizen, employed, meet a reasonable criteria for credit and more importantly, offered debt like US sub-prime, then you defalted on "fair reason". In fact, the scandle which is unraveling in the US, could see many of these "sub-prime" defaulters being compensated....many believe they are victims of fraud.....if you can save banks (all)their own corruption, then why not save ordinary people??

"Risk", this is and interesting term. There should be no risk......the big banks spend BILLIONS on eliminating risk...ok, they may encourage brokers to go out on a limb, but another broker is supposed to have it covered. Risk is for idiots and there are plenty around, but being an idiot doesn`t make you guilty if someone traps you in a fraud. I might add that it does`t help whe the financial media are careful with the truth....any BBC Radio 4 message boarders out there? They might remember that I was predicting this crash and I was saying it would be the worst in living memory....much like Soros is today.

We are the little people, the victims of fraud. It doesn`t matter if its housing, or that you are 20% poorer than you were 20 years ago....I know most of you are, but most of you can`t see it....you are victims of globalization and its just another NWO fraud. It is amazing that a family can lose its home, because someone lost their job "fair reason". If banks faced losing their debt and all cliams on the house, they would never impart risk of the citizen.

antileft
06 June 2008 at 04:33

Oh Carl you just dont understand the way that the economy works at all, do you?

""Risk", this is and interesting term. There should be no risk......the big banks spend BILLIONS on eliminating risk..."

and...

"Risk is for idiots and there are plenty around..."

What a completely boneheaded idea!!! Ok Carl, let me explain to you why this is completely stupid. Imagine, if you will, that there is an investment which, as you say contains no risk. EVERYONE who has spare money and knows about this investment will invest in it, raising it's price infinitely. See the problem?! It's not possible to have something that is risk free. Because when people think that something is risk free (like the idiots who thought that houses can never go down in price) they push up the price to unsustainable levels, and a bubble occurs. Doesnt take a genious, does it Carl?! Look, you just read an article about the housing crisis. Pay attention. A seemingly risk-free investment just turned out to be a bad idea.

And, predictably, youve completely failed to answer my first question, because of course, your thoughts are very weak intellectually. Try again. Youve said that capitalism doesnt work:

What would you recommend instead of capitalism?

Bob
06 June 2008 at 09:00

I would suggest that antileft is extreme right wing hence his tunnel vision on nothing can replace capitalism.

There is nothing wrong with people trying to earn a living and making a reasonable profit for re-investment to maintain their living. However when this capitalist mentality is allowed to manoeuvre with no constraints resulting in extreme consequences, and no-one can be held accountable even though millions of innocent people suffer as a result, then I would say that this capitalist system is out of control and needs to be immediately constrained and completely overhauled.

Hence Capitalism as we know it does not work, What shall we call the new modified Capitalism?

How about "antiright" or Economism.

antileft
06 June 2008 at 09:16

Oh Nazb, what an incredibly half-assed comment! Not too bright, are ya? Look above. Carl Jones has already said that capitalism doesnt work. TWICE. And Ive asked, TWICE, what the alternative is. What youve said here, is a simple, moronic repeat of what he said- that is doesnt work, and like him, you havent even attempted to suggest any kind of alternative. What a waste of time. Why did you even post?

If there is no alternative, you should simply accept that it works better than anything else and quit moaning. And if there is an alternative, quit being such wimps and name the alternative so we can all see how radical and idiotic you are.

Again- Ive heard you all say, time and again, that capitalism doesnt work. Now, defend your beliefs, and answer my question. What is the alternative?

Bob
06 June 2008 at 10:01

I Think my description of tunnel vision was spot on.

That is why you will not agree that the existing system is flawed.

The alternative to the existing form of capitalism is not to allow it to continue as if it is perfect, but to learn from the mistakes and to prevent irresponsible people or organisations to continue to do what ever they want irrespective of who gets hurt.

If you can't see that you are not to clever are ya?

antileft
06 June 2008 at 10:15

"That is why you will not agree that the existing system is flawed."

What on earth are you talking about?! I never said that capitalism is perfect!!! Of course, it's full of problems and in need of constant reform! If all youre saying is that it needs reform, then why do you even bother to post something so blindingly obvious?! Every system, and every part of our system needs reform as the world changes and as we advance. That doesnt mean that "our capitalist system 'doesnt work'". Typical leftie- completely inarticulate and full of apocalyptic retoric which doesnt actually mean anything anything at all. Quit trying to sound as though youre saying something more important than you actually are.

charles.beresford@btinternet.com
06 June 2008 at 11:35

In the Last 11 years this Government led by Blair and Brown did everything possible to get their hands on our money. First they went after the easy money, sell our gold, sell the airwaves,

sell government buildings and land, the proper gander machine continually talked verbal garbage about our economic success. The feel good factor had to help them out so they employed a million pen pushers! Result, low unemployment, and with low inflation, a legacy of the last administration the “feel good factor” had been created. Now was the time for the real growth of credit, they channeled debit onto the housing market onto the publics shoulders. To continue with their ideas the only way forward was to increase government and public debit, the credit bubble began to grow. The U Ks' massive debit bubble reached an unsustainable level a number of years ago, they could and should have stopped this lunacy but their only concern was to stay in power at any cost, their ill throughout ideology has ruined the Country for at lest the next decade, maybe even longer, Blair and Brown failed to tell the population the true facts that our growth was built on the populations indebtedness rather than a efficient manufacturing base. The perceived economic success of the UK economy continually talked up by our politicians succeeded in turning the population into the Counties Bankers. Blair and Brown failed to tell the British people that a house is a place to live! not an ever increasing savings bank account. The “City” should have been regulated, but they were allowed to be very creative, 125% mortgage deals were totally stupid, paying back 90% takes a lifetime, were there's money there's greed. Now we are being told by Brown and Darling every thing in the garden is coming up roses! Our strong economy will weather the World economic downturn, anyway people it's not our faulty it's all the faulty of the US. Blair and Brown have created the conditions for the perfect storm, baton down the hatches you ain't seen nothing yet

Bob
06 June 2008 at 12:07

It seems antileft is a very calm well mannered person who doesn't get very irritated not even when he stabs himself in eye with a knife.

"Not very clever are ya"

antileft
06 June 2008 at 12:21

And Bob is too thick to have any opinions- which is why he has nothing to say, and why he cant debate any of my points.

dindon
06 June 2008 at 12:36

this kind of articles are made by property speculators,

they sold their portfolios in 2007 at its peak and now are eager to rebuild their portfolios at silly prices, expecting 30, 40% drop...

ahahah...lets' see , what happened...

Bob
06 June 2008 at 12:45

I'm sorry antileft but opinions are like Arseholes everybody has one, even an half arsehole like you who has nothing to debate except his right wing we know best.

Lets get Capitalism regulated and moved as far away from political influence as practically possible.

power also to the people not only the wealthy and influential.

antileft
06 June 2008 at 12:47

Oh very deep, Bob, well done. Now get back to watching TV and drinking beer.

Bob
06 June 2008 at 13:00

Good! I'm pleased you finally agree on the first three points of reform

gcarth
06 June 2008 at 13:35

I suggest that 'anti-left' curbs his juvenile outbursts and personal insults and looks a little inward for a change; then he might just see how right the previous critics were when they said how blinkered he really was.

His previous critics did actually come up with alternatives to the present chaos we have in capitalism. They rightly mentioned how the system needs seriously overhauling and how unfair it is. I don't think they suggested we should actually replace capitalism.

I do agree with 'anti-left' that many people very foolishly get into debt over house prices and other matters; but the banks, other lending institutions and governments have to share much if not most of the responsibility for encouraging irresponsible and unrealistic loans. Don't forget that some people have had little choice than to get into debt. Luckily, I'm not one of them!

Another fact is that not enough homes are being built to keep prices lower.

Since Thatcher and Reagan we have had an unfettered 'free market' and it has caused untold hardship to many. It's interesting to note that Scandinavian countries like Sweden seem to be better off than we are. Could it be because they curb the ugly excesses of capitalism and don't kow tow to the US as much as we do?

Wembley71
06 June 2008 at 14:26

This is, of course, nonesense.

The stabiliser that underpins the housing market is the rental market. For as long as an interest-only mortgage costs less than the rental return of a property, then the investor sector will hold or increase its portfolio of rental properties....

...so what happens in a credit crunch/market slowdown? First time buyers stop buying, either because they can't get finance or (more often) because they are scared by ill-informed, economically-spurious articles like this. So the whole market slows...

...but people still have to move. Families grow, or separate, kids turn into adults, singles couple-up... and those one-time 'new' buyers want their own space... so they go into RENTED....

..house prices fall a bit, but rental prices go up... and up... and so, eventually, investors pile their cash back into the lucrative returns of property, the depression levels off, and the market starts to rise again... and all those holding off and building up deposits suddenly come back into the market with avengence.

I bought my first place at the lowpoint of the market in 1994... purely by good fortune. I bought a 1-bed London flat for mortgage payments of £350 a month, and only because I couldn't afford to pay the then-going-rate of £650 a month for a rented flat...

..but things are NOTHING LIKE that at the moment. A rental property at £700 in my town (Exeter) would cost about £600 in interest-only mortgage payments, or about £900 for a repayment mortgage. House prices are static, it's the bank rates that are higher/more punitive, but investors have no need to sell, and its a line call for buyers/renters as to which they choose.

More to the point, we've had a solid basis for land valuation in England, at least, since the first full national audit, the Domesday Book. There are blips, peaks, troughs, local factors (pit closed? new call centre opened?), and macro economic factors at work over any short term or geographic analysis, but in broad terms property values have consistently escalated at 7% in England for 900 years... as set against a national inflation rate of c.3.5%.

Why? because we're an island, with limited space, with a burgeoning population, with increasing wealth reflected in better constructed/maintained housing stock, with geographical hotspots called 'cities', with a demographic trent towards more and smaller familiy units, with a welfare system underpinning rental returns from the meanest and poorest market, with a sophisticated free-market system of finance that has democratised the ability to buy and retain wealth through, primarily, land and property.

james54864618
06 June 2008 at 15:57

To Wembley71.

I live in South London (zone 3). My rent is £800pm for a nice two bedroom flat in a very pleasant SE postcode. And it's about on a par with the others around here, except it is probably a little cheaper as it is not top-spec.

It's probably 'worth' £220k. Using the BBC Mortgage Calculator it appears the interest-only payments would be £1500pm (assuming a £20K deposit on a £200K 90% mortgage at 9% (we would be First Time Buyers)).

Joint net income is about £3200pm so the rent is approx 25% of that. Going over to the 90% interest-only mortgage option and it shoots up to nearly 47%.

Quite a disparity, don't you think? Doesn't sound like prices are static to me. Sounds like the House Price Inflation has been de-tethered from reality and has some distance to descend in the Great Housing Bust of 2008.

Coming down by a third sounds right on the money.

As for "those one-time 'new' buyers want their own space... so they go into RENTED...." - most people start off in rented anyway. Certainly most of the people I know, following unversity, end up in some flavour of rented accommodation, basically meaning that all we do is to stay put until the market becomes sane.

Granted, the BIG picture is that house prices always go up, perhaps at 7% like you suggest, but over the last 10 years prices have TRIPLED. It'll take a huge pendulumesque downswing before we get anywhere close to the 7% average.

Plus consider the likely overcorrection factor as assuming properties do fall by a third over 2 years. It is extremely naïve to think that by 2010 the market will suddenly be flat and/or rise up again. All of this will probably take 5-6 years to finally settle down (judging by the timing of the last crash (early 1990s) to the start of the subsequent bubble, 1996/1997).

Coming down by a mere third suddenly sounds very optimistic.

The only reason that "the bank rates that are higher/more punitive" is because of self-certificate mortgages (liar loans), easy credit and a certain washing-ones'-hands-of-risk kind of madness.

Finally, the remark that "first time buyers stop buying, either because they can't get finance or (more often) because they are scared by ill-informed, economically-spurious articles like this" is spiteful and arrogant in the face of economic danger.

The reason why I, as a POTENTIAL first time buyer in my mid-twenties, have not bought since theoretically being able to do so since 2005 (and defiantly fighting the pressure from my partner's family to do so) is that it is obvious the whole market had gone crazy already.

I suppose I have a certain sense of extended memory whereby my innocent (albeit admittedly financially naïve) family were stung by the 1990s crash through no fault of their own (apart from being financially naïve - this was the pre-internet days and they are straightforward working class folk). I have NO INTENTION of getting myself into a similar scenario.

And no, I don't think this article is doom-mongering. I'm more disturbed by the OBVIOUS vested interests throughout the media and the chickens are surely coming home to roost.

Carl Jones
06 June 2008 at 16:02

Wembley71, its not about how the mechanism works....it is a mechanism and you are selective with the truth.

Britain has had record year on year immigration for a decade...I`d love to quote numbers, but no one seems to know, or wants to know the truth. This immigration along with cheap reckless credit has over inflated the property market...of course....

....the capitalist system requires a theater with no limits...an ever increasing population, unlimited land....I could go on, but these two points alone are enough. Britain is a small island (as stated above), so in order to make capitalism work, everyone must suffer. We don`t need immigrants....out of all the developed nations, Britain is the least productive, we have policies designed to breakup families, we have a generation of children who have no idea what a proper family relationship is, a generation of feminized young men who have never had a male role model....women have become the largest protest group as men wrangle with the CSA.

I can`t believe your last paragraph; a few years (longer) ago the Newstatesman carried a major front page article calling for a revolution in land ownership....this was based on the last property crash. Nothing has changed. You don`t own your home until its paid for....before the crash, the average age of the first time buyer (London/South East) was 41 with no deposit, provided they take on no extra debt and on a typical mortgage term of 25 years, they will be 66 years old when they own their home.

This rasis another issue. average life expectancy stats aren`t true. Oh, I`m sure some are living longer, but not as many as they`d like you to believe. Where are all these old people...? In old peoples homes spoofing their property wealth....if you aren`t in the property trap, the establishment can`t take their cut, if the state funded care, the establishment couldn`t take their cut. If we lived in a society with properly funded benefits, lots of state housing and a decent healthcare system....we wouldn`t need insurance! Sure, we can have businesses...real businesses....for goodness sake get rid of thse monstrous Investment Banks, get rid of these pension funds who will NEVER payout what they promiss.

Just imagine a world without the City of London and Wall Street? We don`t need them, we can save ourselves a fortune by cutting them out of the loop. The banksters would love you to believe they create wealth....they don`t. All they do is pray on people who have built a reasonable sized business and all they are looking for is floatation or merger, sack some staff, collect their fat bonus.

Take a good look at our world and tell me what you see....what do you see that was built with capitalist intent and is worth looking at....there isn`t much. There is nothing wrong with trade, manufacturing, technology, invention and hard work....this was going on before we had the BIG UGLY MONEY GRABBING BANKS.

The rot started when the Rothschilds started controlling our governments through war funding. Since then they have never lost control. The public have been brianwashed into believing they hold wealth, so you can see why they stopped making shows like Dynasty...I doubt the budgets could keep pace and if they did make programmes showing how the rich really live, the capitalist illusion would be shattered and the public would realise how grim their lives really were.

Today I was chatting to a very nice Canadian chap about the class system. I told him that "working class" means you have to go to work on a regular basis, thats why its called "WORKING CLASS". Middle class is where you don`t have to work, you may work, you may have interests, but you don`t have to work. This truth has been turned on its head by the NWO brainwashing MSM....the majority of people believe they are middle class....what a laff.....if you work through need, you are "working class".LOL

PS, maybe the NS should dig out that article on "land ownership" and run it again. I`ve got it somwhere in a box.LOL

antileft
06 June 2008 at 17:11

Oh Carl you are just such a raving fantasist. You wont answer any of my questions because you know full well that your opinions are pathetically weak intellectually and you couldnt defend them in a serious debate against anyone. So instead of asking you more questions and debating you in a way which shows how nutty you are, Im just going to make fun of you.

"I told him that "working class" means you have to go to work on a regular basis, thats why its called "WORKING CLASS"."

So, I suppose that makes you "middle class", does it Carl? Because my understanding is that youve never done a serious days work in your life, unless you count selling big issues, which I dont count because I consider it to be charity.

"in order to make capitalism work, everyone must suffer."

I think what youre saying here, Carl, is that youre suffering. Not everyone else is. Im personally having a great time. I spend a good third of my life on exotic asian beaches with the girlfriend drinking mango juice. Most people enjoy their lives. Most people arent chronically overweight, and most people dont spend their days selling magazines that no one reads for people who take pity on them. Get a life, Carl. And get an intellect too.

taghioff.info
06 June 2008 at 17:55

Uuuhmm I think this discussion has turned just slightly Ad Hominem. Perhaps Carl Jones and Antileft could swap emails and trade abuse with each other in private?

taghioff.info
06 June 2008 at 18:01

Actually sorry Carl it is antileft who is being generally obnoxious.

Anti-left, I think you should calm it down or the moderators should consider banning you.

As for housing, the topic is too depressing. Even with a "crash" I see little prospect of my generation seeing affordable housing in the UK, which is a good reason to emigrate.

Carl Jones
06 June 2008 at 18:06

Looks like I touched a nerve....in the last email that I sent NS web-editor Ben Davis, I offered to do lunch....such a shame that Ben didn`t accept the offer, then he could verify that I work....maybe I should send him my business card.LOL

I actually get rather fed up with BIG ISSUE sellers as I drive about in London...usually on the Northside of Vauxhall bridge....all I can say is thank God for aircon!!!lol

BTW, the only thing I`m suffering from is your rightwing simpleton abuse!lol Maybe the NS should do a collection for treatment?:)

To the genuinely interested, I found this link.

hhtp://www.rumormillnews.com/cgi-bin/forum.cgi?read=125669

"Drinking mango juice" and chatting to the ---------- bar---.lol

"Most people enjoy their lives"....one third of British men have a criminal record, half of Brits are on, or have been on anti-depressants most of our youth are binge drinking, or high on drugs and white collar crime is so high the police pretend to be busy with RTA`s......

....sure, for some strange reason, the NWO brainwashing hasn`t affected me yet.....oh dear, its just gone 6pm....time for claret.lol

DCarins
06 June 2008 at 18:27

Ah yes taghiof, the perfect response - emigration. Maybe you could join the queue of other splitters and deserters who have also found that other countries have plenty of housing problems too?

Why are we so obsessed with owning freehold titles? Most owner-occupiers appear to move home once or twice (anyone know any figures?) so the permanence of a freehold doesn't seem to matter; and then we seem to have accepted that the profit made on selling a house will pay for our care when we're old and infirm (because we either haven't bothered to have children, or they've p*ssed off and abandoned us). Either way, if we know we're going to sell a house, why bother with freehold?

On a longterm lease you get security, you can modify your property, and you can renegotiate your lease to take into account any improvements to the property you have made. And it's a lot cheaper. It's just we're obsessed with not spending "dead money", even if it means paying twice the value of the house in interest to a bank over the length of the mortgage.

Wembley71
06 June 2008 at 21:23

To james54864618

A considered and reasoned response, if you don;t fell patronised by my saying so. The only flaw I can find in what you're saying is that you are quoting an interest rate of 9%.

It isn't. As it goes, I've just remortgaged that first London flat I bought... B2L rates are around 6.5%, first time buyer rates on fixed/discount deals are markedly lower.

Even so, you're right that you could end up paying around £1000 a month for an interest only mortgage on the flat you can rent for £800, pushing your costs up to around a third of your net income...

...but... it takes a while for rent increases to show, partly because contracts are usually 6 months at least, partly because landlords (especially those who's properties are not 'top notch') often don't push up rents for good, regular-paying tenants, at least until they themselves are forced to remortgage to higher rates...

..and, besides, London is a weird and special case... its transport infrastructure means the commuter-zone into London is more than 60 miles in all directions (the population within the M25 doubles in office hours).

You probably could afford to buy - tens of thousands in the capital couldn't - and you may (stress may) be advised to wait for a 're-adjustment' in prices, which could well be the same or slightly less in a year's time. But even if you did buy, so long as you fix your mortgage rate, you'll be fine to ride out any market slide so long as you don't have to sell, and don't lose your job... two pretty major considerations which caused the mid 90's crash and which are not - yet - likely scenarios at the moment.

You seem shocked that prices have tripled in 10 years, and you are right to point out that's over the average 7%PA increase... you'd be right to expect a correction, although at least some of that increase is itself a correction on the previous 10 years...

...but at 7% increase PA, how long do you think it takes for house prices to double? 10 years, that's all, once you factor in compounding.

A helpful, bizarre mathematical quirk for you, called the rule of 72. To find out the time (in years) it takes prices to double at a given interest rate, divide 72 by the rate... or alternatively divide 72 by the time it takes to double to give you the rate of increase.

Prices tripling in 10 years is 'only' a 14.1% year-on-year increase (less if you compound monthly, which is actually what happens)... so, well over the average, but not quite demanding of the huge adjustment you say (particularly considering the 'crash' aka 'blip' in the predecing decade...

you are right, I think, to suggest that the current downturn will take a while to turn around, measured in years not months... but in general terms (at least outside London's execeptional though important market) the broad economics of buying over renting are solid enough that investors are not likely to sell... and there is a much larger and more democratised private rented sector now than in the 90's (by which I mean people in average jobs who've used their own equity growth to buy one or two rental properties).

Last, like you I went into rented accommodation post uni, and of course that's most people's first experience. But... those who've been in rented for a few years are still getting older, getting partners, getting wed, getting divorced... unless the age at which people move out from home increases, then the number of people entering the housing market as a buyer or tenant will remain about the same.

You and your partner have not bought, but neither do you live in a bedsit with your other post-uni mates, nor do you live with your extended family... whether you choose to rent or buy... either way, you are in a home owned by someone who can afford it, and the next wave of post-grad, post-flatshare people can't live there until you step out to the suburbs, or a 3-bed place for your 2 new kids, or to your two one-bed studios of you, god forbid, should separate. Hey, if your landlord can't actually afford it and you get evicted as a part of his/her repossession, then that puts even more pressure on the rental sector... you become more prospective tenants competing for less available rented housing.

I'm not going to join your inlaws in encouraging you to buy, but I will point out that if you had bought in 2005, you're current property value would 'probably' be sufficient that your putative home didn't fall below the price that you paid for it... meanwhile, if your landlord decides to sell up, you may well struggle to find another 2 bed in one 3 at £800pcm by the time you're back in the market for a place to live.

Kaitain
07 June 2008 at 03:23

Wembley:

"you may (stress may) be advised to wait for a 're-adjustment' in prices, which could well be the same or slightly less in a year's time. "

"so long as you don't have to sell, and don't lose your job... two pretty major considerations which caused the mid 90's crash and which are not - yet - likely scenarios at the moment."

(Thumps ground with fists, eyes streaming with tears of laughter.)

You don't quite get it, do you?

The curtain has been pulled back. The UK economy has been revealed as a house of cards. It's a debt-fuelled sham. You're treating the housing market and the job market as independent variables. They're not. They're INEXTRICABLY LINKED. We're witnessing the start of the chain reaction, and it will be very painful. People in the UK have lived off borrowed money for over a decade, and have felt rich. But they weren't rich at all. The income streams they were able to leverage were based on an assumption of future productivity that is totally implausible given Britain's pitiful ability to generate real wealth. The spiv decade is over; now countries with real economies such as Germany will surge ahead again. The UK has been living way beyond its means, like a roadsweeper who borrowed thirty grand to buy a BMW and felt rich and successful as a result. That's it, the pyramid scheme is over. The UK is f**ked for at least the next five years. House prices will drop at LEAST 35% in real terms. Past performance may not be a guide to future performance, my naive, recency-effect-led little optimist.

The UK party is over. No more Cool Britannia, no more money for nothing. Real work will be required to get out of real debt.

Get used to the idea.

cpark3r
07 June 2008 at 04:29

Don't despair everyone! We are simply at the turning point of the 5th Kondratiev. It's only a 45 - 60 year cycle, so by 2030 or so things will shaping up quite nicely.

knave
07 June 2008 at 07:01

Brown deserves the stick he gets but before you foaming right supporters gloat.

The US economy is in a bigger mess than the UK's and that has been run by a conservative tax cutting US administration.

This a fact that the right wing numpty who wrote this article forgets to emphasize.

Carl Jones
07 June 2008 at 09:11

Don`t worry....as I tap away, the likes of George Osborn, Ken Clarke and the rest of the Bilderberg shower are meeting in Chantilly (US)....we are heading towards WW3....get used to it.

rodmc
07 June 2008 at 10:34

The impending problems should come as no surprise to anyone, however Bush, Blair. Brown and friends had too much at personal stake to intervene earlier both politically and is now the case with Blair post-PM employment (he has a nice deal with JP Morgan). In the end we are paying for their greed.

Carl Jones
07 June 2008 at 12:46

rodmc, greed is the oil that lubricates the NWO mechnism. Greenspan and Bush overheated the global economy so they could do Iraq and Afghanistan. We are now facing the worst depression in living memory...this is also part of their plan. The NWO has applied the brakes...globalization will either stop, or continue very slowly. There are indications that China and India are slowing.

I believe this whole mess was designed. The Bilderberg Group are meeting in Chantilly (US) this weekend....George Osborn and Ken Clarke are in attendance....meanwhile, in Japan energy ministers are meeting....no doubt this is just a decoy.

I can`t wait to see what happens when the current oil price feeds into the food chian. This morning BBC News 24 was injecting some NWO fear into the public by running a story that employees were being asked to take a 40% paycut, or lose their jobs!! I can just imagine the queues of mortgage defalters looking for social housing.

Pat
08 June 2008 at 04:12

WE NEED TO REGULATE LANDLORDS

There are a lot of amateur landlords around, they think they have a god given right to money, and they are treating their tenants very badly.

People are going to be going into rented acccommodation more and more over the next couple of years, much of it slums owned by landlords who bought repossessions at auction. I will be one of these landlords, and looking around even I think we need to be regulated.

proudlyleft
08 June 2008 at 09:01

What can you recommend instead of Capitalism, asks 'Antileft' again and again. It is a valid question and, in its framing, a superfluous one. It can only bother people who have not understood what Capitalism is. If Antileft, or leftists, would care to read Marx on Capitalism (and not on Communism, where he was mostly forced into reluctant guesswork) they would realise that Marx at least did not want to 'suggest something instead of Capitalism.' He wanted to go THROUGH and BEYOND Capitalism. And his basic premises were these:

In Capitalism, Capital is put before labour (you can say 'people' if that makes you feel better!) as the source of value, wealth etc.

Capital is by definition more mobile than Labour. (And this puts Labour at an added disadvantage.)

The famous Liberalist myth of the trickle-down effects of Capitalism is not credible; there is more evidence that Capital attracts more Capital and hence Capital tends to accumulate in certain hands/areas.

Capital is NOT money or cash. Capital is a SOCIAL relation, based on the above factors. In other, simpler, words, it is a social relation in which the capacity of Labour to create value is denied in favour of the myth of Capital as the main or only source of value/wealth. (This also effects the very DEFINITION of WHAT is value/wealth!)Hence, Capital moves towards greater abstraction (much of it exists in numbers now!), and one of the things it gets very abstract about is the material body of labour!

You put these perceptions together and you can start figuring various ways out of and beyond CAPITALISM, Antileft, yon confident chum. But you can only do so if you honestly look at the facts of Capitalism, clean up your definitions and make space for the creation of ANOTHER LANGUAGE of value. And that is exactly what our current version of neo-liberalist hegemony allows less and less space for.

So, please, stop asking rhetorical questions and start thinking!

MACD
08 June 2008 at 11:35

Re: Kondratiev waves post.

Is that 830pm tonight?

fairplay
08 June 2008 at 12:50

capatilism is ok if its sustainable legally.

but, as we have seen the banks, banking institutions, large accounting firms, governments etc etc have been trading under and hiding cases of "insolvent circumstances" before our very eys and doing nothing about it.

IT IS FRAUD!!!

but hey, the elite powerbrokers who run our world all have their fingers in the pie so no-one is brought to book. maybe a couple of sacrificial lambs from time to time, thats all.

the running down of the middle class, hard working people who were becoming less and less dependent on the banks, was high on the elite's agenda. now with all these middlemen raping the economy, they look like they have achieved their goal.

the mass media have a lot to answer for. they have helped cover it all up and should be held responsible for a large part of it.

the whole system stinks. thank god for the internet. we are starting to finally see the light

antileft
08 June 2008 at 14:33

"If Antileft, or leftists, would care to read Marx on Capitalism (and not on Communism, where he was mostly forced into reluctant guesswork) they would realise that Marx at least did not want to 'suggest something instead of Capitalism.' He wanted to go THROUGH and BEYOND Capitalism."

Oh dear proudlyleft, youre one of the last remaining commies left in this world. It must be tough. You can define marxism however you want. You can play with definitions and words all day long. It doesnt, however, take away from the fact that marxism/communism/revolutionary socialism/whatever you want to call it DOES NOT WORK. Why? Because it has some blatant flaws which cant be erased without erasing the roots. Let's look at one of these problems, shall we? Maybe you can explain to me how to get around it.

"We re all equal". Not true at all. Some of us work very hard indeed, while others barely do anything at all. Not that I have a problem with them- in a capitalist country, youre free to work as little as you want providing you can still pay for your bare necessities. How are you going to motivate people to work hard when you arent going to pay them much more? How are you going to make anyone do anything more than the bare minimum? If you say "we re all equal. We re all going to pick apples today. You will be given three meals for your work today" then you know what Ill do? A half-arsed job, that's what. And Im usually a hard worker. The only reason I work very hard is because I want a nice, big house, lots of technology including music systems and computers, and decent meals in high quality restaurants. Why on earth would I keep this up in a marxist country? Please explain that one to me, if you could, because commies have never been able to. I await your (or any other commie's) answer.

knave
08 June 2008 at 16:09

"And Im usually a hard worker."

You seem to have a lot of time to post though. Also in my experience those who say they are hard workers are usually slackers

"The only reason I work very hard is because I want a nice, big house, lots of technology including music systems and computers, and decent meals in high quality restaurants"

Honestly, in that one statement psychologically sums you up Antileft.

Not to have family or enjoy the money with your extended family.

I geniunely feel sorry for you. Relationships are secondary to material goods.

You are not to be despised but pityed

A good book to read is Oliver james "Afleunza".

With your massive intellect you should finish it in 10 minutes. But you will put it down to "commie " nonsense.

antiright
08 June 2008 at 16:59

i sincerely wish carl jones and antileft would shut up with their silly ranting, do they think it makes them look big with these pathetic long posts all round the newstatesman comment boards .. do you think anyone reads them lads ? grow up and get back under the bridge you pair of pseudo intellectual trolls !

Carl Jones
08 June 2008 at 17:31

Oh dear....I`m no interlectual. I suppose its sooo un-pc to give a ----. Let get back to reading the Mail and watching BBC News. Everytime a politician opens their mouth, I`ll be there saying "yes, yes, I agree, you can have my DNA for the eugenics data base.

Here we are talking about the housing crisis, which is linked to the fact that the big banks are BUST after a decade of record profits....

....if you ran a small business and had made excellent profits for ten years and were now technically bust and sitting down with your bank manager, expecting him/her to offer you a limitless credit line...yes its very unlikely to happen, but YOUR money is keeping these corrupt banks going. Its not only a scandle, it is a crime.

Greenspan and Bush are to blame for this specific slump, but it was Thatcher who deregulated the markets, the financial elite got what they wanted, but the moment THEIR system threatens to bring them down, they stop following their cardinal rule, that money should flow freely, and then expect you, me and the rest of the gullible masses to cough up our money....which you are unlikely to see again.

Sure, lets limit our comments to 25 words and 1 comment a week....there you go, you can have a nice nap now.LOL

antileft
08 June 2008 at 17:52

You made an error over here, Carl. LOL!

http://www.newstatesman.com/north-america/2008/06/obama-vote...#reader-comments

You just make up this gibberish off the top of your head, dont you?

knave
08 June 2008 at 18:22

"Typical, isnt it? You think that people with lots of money are somehow worse with relationships."

When did i say that . The point as that you put material good above relationships

"Bizarre. What a bizarre idea. Surely it's the other way round, isnt it? Who wants to spend time with a loser? "

After reaching your posts I better keep quite on that issue

"Who wants to spend time with someone who has to count the change they get when they buy a pot noodle?"

I don't no I bet Jesus and Buddha were interesting company. Also Mozart and van Gogh died in poverty.

So you pick your friends on how much they earn. I picture the scene with antileft in a pub telling one of his company he/she has to go because they are not on £30K.

" Who wants to go to dinner with someone who's idea of eating out is lunch at macdonalds? "

Have you not had their happy meal. It is aimed at your age. You get a toy.

" Honestly, I just took my girlfriend (Is that the one with non return valve and real hair) " out for a weekend to taiwan just because I felt like a break (I live in Japan).

Is that Japan (in Neasden or Peckham)

" No, she isnt with me for the money- we were together back when I was poor like you. "

No I imagine she is their for the laughs.

Yes I know, you dont have to be rich to have fun. You dont need to take someone to taiwan to enjoy their company. But one things for sure: we had a good time and I prefer it to an evening in front of the tv with cheap beer, cheap chinese takeaway, and a dull, untravelled sod like you.

Your right about the dull but wrong about the untravelled.

" Ask your wife- I bet shed like a trip to taiwan once in a while. Shame you cant provide it."

No she prefers Blackpool.

knave
08 June 2008 at 19:22

Also antileft you a say you are living in Japan but that is 9 hours ahead of UK time. That means your posting in the middle night. This means either one of two things.

1.You are a liar

2 You are very sad.

Np 08 June 2008 at 19:54

Some of the price drop predictions are a bit old now (things are happening very quickly) and hence optimistic. The latest figures from people like the Hlifax suggest to me drops of 50% are reasonable to expect.

Apparently the recent drops have been at a rate that is twice as much as the fastest drops in the 90's, and max drps then were 33%.

When new figures are released, they increase in magnitude each time.

It's going to be interesting.

The people of the UK are their own worse enemy. We rush out and push prices up. We don't seem to understand the value of anything. And don't rely on Gordan BoomBust-Brown to protect you. They have their snouts in the trough.

Cybertiger
08 June 2008 at 22:04

@knave - of Harrytimmyantileft

"This means either one of two things.

1.You are a liar

2 You are very sad."

It could mean that timmyantileft is both these things ....

charlie.
08 June 2008 at 23:18

antileft - full marks for yumming down your slice of the big sh*t pie with a smile!

"Crapitalism" is my alternative to Capitalism - that is where people work hard and might earn more than others, but then spend their money in such a way as it does not simply give them material benefit (e.g. LCD TV, expensive wine/meals, good-looking but ultimately gold-digging girlfriend), but also intellectual or moral benefit. For example, people who give to charity because some people are born or become disadvantaged.

Let's not forget that some people are not as 'bright' as you, but at the same time there are far brighter people than you who are earning significantly more from their capitalist-gotten gains, doing much more for the benefit of the people around them than you are.

Also, bring on the house price crash - I have been saving and working hard over the last 3-4 years and am now completely debt-free and hold a lovely fat deposit for when the rain turns to a maelstrom.

BillN
08 June 2008 at 23:44

@Antileft. I have to laugh when you attempt to lay claim to having enaged in intelligent debate across your posts. I have seen zero evidence to support this claim in any of your text.

I find that there is an inverse relationship between the volume of insults a poster makes concerning the intelligence of other posters and the intelligence evidenced by that postert. I am glad you are doing well in the financial capital stakes; it will compensate for your negative equity in intellectual capital.

Your crass calls for other posters to describe a full blown alternative to capitalism and your demonstration of a total ignoranceof Marx's writings, or incapcaity to undertsand if you have read any, make you appear a total buffoon.

None of the so called communist societies could be said to be based on Marx's "system". As proudlefty indicated Marx never developed a communist system.

His work was primarily an historical political economy that analaysed the capitalist system that replaced feudal political economy. Based on his theory of the structural dynamic of of capitalism he made predictions and tied these to a poltical program.

In terms of communism all Marx really did was paint some broad brush strokes of what a political economy based on enlightenment values would look like.

He made predictions for the future course of events based on his anlaysis of the day. Put yourself in Marx's time and you will appreciate what a brilliant nalysis he actually made and the many ways in which he captured elements of the structural dynamic of capitalism.

He predictions for the collapse of capitalism did not anticipate future developments that rendered them invalid. But it was the essence of Marx's method that analysis should be ongoing and continue to synthesise empirical evidence to develop the theoretical understanding and inform the politcal struggle. Critics often try to discredit Marx's work because hi spredictions did not come true. We are talking about a gu who lived in the 19C remember, that he has any relevence is a testament to his intellectual stature.

What does it say of todays economic commnetators when you consider it is difficult to find one whose predictions still have any credibility within a week of making them.

What is the alternative to Capitalism? It will evolve gradually not as the result of a blueprint, as was the case with capitalism.

But don't make the error of identifying markets with capitalis, markets long predated Capitalism and will no doubht long post date it. Markets exist in shifting institutionalcultural forms and, as a poster above noted, and Sweden demonstartes an excellent exampl eof how shaping the forms from a social democratic politics.

Co-Ops, scoail firms and other forms could gradualy grow in importance, Citizen's incomes, germinal forms exist, could come to be a significant part of each persons income.

As with the tranistion from Feudalism to Capitalism, it will be difficult to know when one starts and the other ends. There will come a time when blogs such as these, or probably some new technological form, will be filled with debats about whether we still live in a capitalist system or not. Transistions can be messy affairs.

stevie dee
09 June 2008 at 00:22

@Antileft, I must say, I have found reading your posts both interesting and amusing. I agree that a capitalist or "free market" system is most preferable to any alternative. As in truth, the alternative system is in place at present.. This is not a "Free Market", it is Communism/fascism with flashing lights. I say this for the corruption & criminality now being exposed in relation to the housing market. And with government intervention, special interested mega rich families & corporations, bankers, we are currently experiencing a modern & more refined or sophisticated version of Nazism. Unfortunately, the invisible hand & human nature will either destroy this system or enslave us all still further or for the optimist, bring about positive change. In the worst scenario, they could always rename the planet to "Arbeit machts frei".

hotairmail
09 June 2008 at 08:26

Excellent article. Just a couple of points. The value of UK housing is about £4 trillion with £1.2 trillion borrowed against it. A fall in the value of equity (or 'notional wealth') is not 'deflationary' in itself. See http://diaryofapropertybear.blogspot.com/2008/06/loss-of-wea...

You will note that net lending continues to rise even though transactions are well down - because of the past inflation of house prices being monetised!

charlie.
09 June 2008 at 08:31

Er, "fantasy utopia"? I'm afraid it's very much reality, little man: altruism really exists in the world, just as capitalism does. Therefore it is obviously a behaviour that people generally see as worthwhile and reasonable, or they wouldn't give money away, would they (Hunter, Buffet, Gates, Soros all actually give away 100s of millions of pounds a year - they don't just give it away in the "fantasy utopia" you suggested)?

If it's a "fantasy utopia", how do you think millions of charities exist and survive? Answer: from millions of people selflessly giving their hard-earned cash away to no benefit to themselves. You aren't a very well-developed human being are you? I think you're bitter that, for all your apparent "success", you're still just a tiny little cog in the bigger scheme of things.

charlie.
09 June 2008 at 09:29

Not just billionaires, but billions of perfectly normal people give away money for causes like Children in Need, Comic Relief, etc, you silly selfish extremist.

I work hard for a living in the private sector, but I know that rampant, unthinking capitalism is not an all-encompassing basis for living life. Many successful people (not just billionaires, although I was using them as an example because their type are supposedly the greatest proponents of the capitalism you preach) give money away, support charities, etc, because they know that there is an aspect to human nature that doesn't end with taking money from the weak but also giving some of it to the deserving / needy.

How do you think modern systems that cater to human beings like "Justgiving.com" came about? Answer: because human nature says we need those systems to bahave in an altruistic way that is just as much a part of human nature as your selfish, greedy, extremist aspect is.

I suggest you get out and start volunteering and giving to charity now, before your meaningless, childless life turns out to be meaningless, childless AND very very forgettable. Nobody is "forcing" you (as you posit in such an infantile way) - I'm sure a clever little chap like you can see the benefits of this for yourself!

Carl Jones
09 June 2008 at 11:30

stevie dee; I must agree with your analysis, but one has to use terminology which people understand....they don`t see our communist system with incentives backed with debt.. You are one of the few people on here who are willing/able to think and debate outside the box. :)

mitchy
09 June 2008 at 13:10

Remember not to feed the trolls folks, they prefer even negative attention to none at all.

Empty vessels make the most noise, eh harry/ antileft...?

tonys9168
09 June 2008 at 14:35

On the issue of capitalism, I agree that it doesn't work in its pure form. Left to own devices industry will satisfy itself to detriment of the people, with the reduction of quality, increase in corruption etc (much like communism in fact).

What is a replacement? Well I don't think there is a magic cure, other than simple hard graft in politics and having someone with power on the side of the people, so that companies don't have an unfair advantage.

The gov't is supposed to do this but seems unable and tends to satisfy the companies that fund the voting campaigns. Capitalism has done its job in many areas, so we are left with lots of goods/services for a low cost, but quality has been sacrificed along with ripping off and general out of control markets like housing. Simply we need to spend more on independent regulation.

Big companies and high house prices do not make a good economy. Comparing us to Germany, who has one of biggest and stable economies in the world, they have persued quality and anti-corruption at the expense of temporary jobs shortage (competing against countries that didn't worry about those things), but it has paid off and they are now doing very well.

The whole politics system is a bit like ISO9000 quality standard. Those who saw its weakness said 'oh you need this new system called TQM', and then others saw its weaknesses and said 'oh you need 6 sigma', but actually those that used ISO9000 to create a quality system with that intention (of quality) performed just aswell as those that used 6 sigma.

tristrum
09 June 2008 at 15:03

Charlie, I hate to say it but "antileft" does have a point that you have n't answered. I assume that you are a marxist? At least you seem to want co-operatives. But anti-left is right to ask why the workers would work hard when they are not paid more. I understand that charities do exist but you can't expect everyone to want to work for charity, can you?

GlenMichael
09 June 2008 at 17:22

Oh Iain!! How can we trust an article that gives misinformation in the first paragraph. Perhaps you should read your sister paper a wee bit more often. There's more to Kingston Quay than the current economic FACTORS - (hint hint). By the way Iain, your sister paper is called the Evening Times.

Redview
09 June 2008 at 19:37

Great article.

However at the risk of attracting the opprobrium of all might I suggest that a bit of moderation is called for. It is not obligatory to be schizophrenic over this - 1 minute hysterically about house price rises the next completely despairing and despondent. Yes there will be a recession (a mild one) . Yes house prices are going to fall by 20% over the next 2 years- then they will slowly start rising again. There will be repossessions- but a depression? Come on guys get a grip on your gloom

Carl Jones
09 June 2008 at 20:20

Errrr, Redview....factory inflation at 27% in no time.LOL

Put your head back in the sand.

BTW; "moderation" is a dirty, filthy word around here.LOL

Carl Jones
09 June 2008 at 22:02

The end is neigh.lol

http://www.rumormillnews.com/cgi-bin/forum.cgi?read=125864

http://www.rumormillnews.com/cgi-bin/forum.cgi?read=125832

One view from the US and one from the Southwest. Some of those numbers from the US are scary. As I said in my last comment, factory inflation at 27% (The Telegraph) and current oil prices will take 1/2 years to work their way into the food chain....its not just a depression, its potentially the greatest threat since the plague and all our leaders can do is wallow, or maybe they knew it was coming.lol

Better ask a Biderberger.

charlie.
09 June 2008 at 22:23

Tristrum, no I'm not a Marxist in the slightest. I'm a most decided Right-winger, but I'm not a hard-liner and I think that he is living in denial not to have any understanding or acceptance of the fact of human altruism or people that work for charity. They are generally fantastic people. Misguided, perhaps, but nonetheless fantastic and worthwhile.

Antileft may have money to spend (and I bet it's not a fortune), but his extreme capitalist stance just sounds like some stubborn child's security blanket.

As for the house price crash, I agree with him: let's see this baby blow sky high.

Dom Peridone
09 June 2008 at 23:30

The current system should more properly be called "monoply capitalism" because of its structure. The structure, for each "vertical" consists of a handful of huge corporations or "players" who "compete" for a captive audience. For example, say I wish to buy a motor insurance policy. I could take my pick from a selection of apparently seperate companies. These companies appear to be competing for my business because they have different names. A quick look behind the scenes will reveal perhaps 3 or 4 huge underwriters. The huge corporations find it convenient to drive prices down to a level which is just enough to satisfy their shareholders and offer just enough incidences of "good value" to make customers believe they are buying their policies in a competitive marketplace. In reality, there is not competition between these corporations. They collude behind the scenes to fix the price of products like insurance, mortgages, oil and other goods and services. Add to this the fractional reserve banking system and you have a recipe for never-ending , selective inflation and perpetual indebtedness. Capitalism in its current monopoly form is indeed in desperate need of reform. When organisations of any form become too big (remember the soviet union), they become inefficient, uncompetitive (remember the GPO) and anti-social. Kennedy threatened to smash a large organisation (the CIA) into a million pieces. Look what happened to him.

Sirro
10 June 2008 at 07:33

Everything in our world is cyclical by nature. We have seen 15 years plus of good/easier times. It is natural that we will have some period of tough times to balance this. Its all part of the life cycle of all things in our world. The trick is maximising ones experience in the good times so that when the inevitable tough time comes along we have enough in the pantry to get us through. We should not walk away from personal responsibility whichever political system we feel is best. At the moment property prices appear to be falling and the economy is in a downturn. After so many years of growth, why is this a major surprise? If we all live long enough I guarentee you that this will happen a number of times in your life. Dont blame the system or the banks or the rich or poor. Its a fact of every polical economy since the world began regardless of where they sit on the political spectrum. Maximise your efforts at all times and try to maximise your level of utility at all times. Look after your family and be fair and respectful to all.

Frank Fields
10 June 2008 at 11:25

Don't expect any sympathy from anyone over this downturn. It was brought o by greed and nasty behaviour; and in time, greed and nasty behaviour gets punished. Always keep in mind, what matters is who are your friends in bad times, not good. And I can tell you the UK shafted any hope of retaining friends from trawling around drunk and foul-mouthed in the good times; don't expect many friends in the bad times.

Carl Jones
10 June 2008 at 11:41

UK house exchanges at lowest for 30 years....and the fun has only just begun.LOL

If I didn`t LOL, I`d cry.LOL

Colonel Blimp
10 June 2008 at 12:40

It's nice to have a giggle.

JonMellon
11 June 2008 at 15:58

I'm sure someone has mentioned this but the government warning buyers away from houses is precisely the worst possible thing they could do. If you reduce demand by telling people not to buy houses, you depress the market further putting more buyers into negative equity. The market does not look set for a permanent downturn over the long term because the pressures of population increase (via immigration), and rising incomes will put upwards pressure on prices over time. Unless the government actually went ahead with increasing the supply of housing the market will continue to go up once the recession ends.

James
11 June 2008 at 16:42

" And I can tell you the UK shafted any hope of retaining friends from trawling around drunk and foul-mouthed in the good times"

Yeah, sorry about that Frank Fields. Tell me this though: do you have any spare change?

Redview
15 June 2008 at 20:13

Carl.

A rise in factory gate prices suggests that inflation is on its way. We are therefore not entering even a recession. Unless you are suggesting that we are in for a dose of 70s' style stagflation. This however is quite different from a depression when the price of everything collapsed along with banks. By the way banks are already recapitalising (check out the interest rates on savings) and in the States which is one year on from us in terms of the crisis unemployment is rising at 50,000 a month while in past recessions it has risen at 200,000 per month.

I haven't got my head in the sand- things are going to get unpleasant all I'm saying is we're not heading for a depression - The growth rate in China is still at approx 6-8% p.a. and the oil states are accumulating trillions of dollars from the oil bubble- what are they going to do with the money ?

Don't forget no western economy including the U.S. is yet in negative territory in respect of growth. Even if house prices fell by 30% it would put house prices back to where they were in November 2004 - a 50% drop ( which is unlikely in my view) would put house price back to where they were in 2002.

I just wish we weren't all so bi-polar on this issue.

eddie
27 June 2008 at 00:56

Surely the real 'crisis' in housing has been that those low earners who would once have been able to afford a little terraced house in South Wales for £20,000, a back to back in Leeds for £25,000 or a two up two down in South Manchester for £30,000 in 1996 were suddenly disenfranchised and left scrabbling for a place to house themselves and their families. For many people the only options were the insecurity of renting privately or social housing with all the stigma that goes with it. We now have many thousands of children living in temporary and substandard housing because of the boom in prices. For them the crisis has been sustained and will have an impact on the rest of their lives. Look at Shelter's website for evidence that links poor, overcrowded housing conditions with educational underachievement and psychological damage in children. The sad thing is that whilst a return to 'normal' prices means emerging house buyers will eventually be able to secure themselves a home, many people will have their homes repossessed and then they will enter the nightmare that is queing to be housed by the local authority or the vulnerability of a short tenancy with a private landlord.

gnuneo
27 June 2008 at 19:42

one possible fix for the mess:

double council tax on residential properties where the owner owns more than 2. Quadruple it for those who own 4. Octuple it for those who own 5.

the resulting scramble to offload property by land rentiers will drive the housing market down as fast as blair went down on bush.

whilst this will have severe short-term repercussions, it will have the effect of rapidly making available cheaper housing for those who wish to purchase, and will restabilise the UK housing market in the shortest possible time - and don't delude ourselves, the market will continue to fall until the cost of housing matches people's incomes again anyway.

to shelter those who are in negative equity (and that will increase dramatically soon), set up a mutual society backed with govt funds, and then advise people to claim bankruptcy, dropping their mortgage.

let the mutual society then purchase the homes at the vastly reduced market rate, and offer a stable, reliable and non-international-market-reliant morgage for the former owners, legislation can quickly be passed to prevent rapid eviction to allow this to happen.

the UK will come out of this with a *higher* level of home ownership, a ridiculously stable point-of-centre mortgage lender, and people once again able to afford housing, on what for most are stagnating or falling real incomes.

the ones who lose will be the ultra-wealthy who own banks, the rentier class who own far too much of the UK housing market, and the international financiers who will not be able to bleed off our internal mortgage providers anymore.

higher home ownership, stable mortgages, and a rationally priced housing market - but our political masters would have to annoy those who will pay them their various retirement packages and bonuses.

the People and sanity v the Ultra-wealthy and an irrational market that will drive us into severe depression if left festering long enough - why do i suspect that once again the People will be left to pay the price?

oh yes, based upon former experience.

this crisis has been coming for well over a decade, and has been warned about almost as long, yet our political masters allowed it to continue. This is not a surprise to them, although it *seems* unplanned for - this is certainly an absolute failure of our political and economic leaders, who seem only to want power given to them so they can line their own nests, instead of doing for the British People their absolute best.

and the revolting thing is, if we get rid of the current lot of power-hungry narcissistic toadies, the likliehood is we will simply get another of the same, possible worse, under the blue banner.

are these twats *trying* to foment revolution in the UK??? Or are they just incapable of actual leadership and problem solving?

gnuneo
28 June 2008 at 03:39

knave: "The US economy is in a bigger mess than the UK's and that has been run by a conservative tax cutting US administration.

"This a fact that the right wing numpty who wrote this article forgets to emphasize."

tax-cutting, but spending increasing. Over $1,000,000,000 - the wealth of a thousand billionaires - has gone directly into the war on Iraq. That is entirely ignoring the increases in 'normal' military spending, and the investments in military research the US Govt has underwritten.

this is a Radical Govt - not one rooted in american 'conservative' values of fiscal responsibility, state power and economic *competition* (ie anti-monopolism), nor american 'liberal' values of religious tolerance and freedom, noblesse oblige and civil rights.

redview: "the oil states are accumulating trillions of dollars from the oil bubble- what are they going to do with the money ?"

most of them are in debt from buying arms and defence systems, radar at military levels for civilian use for instance. The world's money is going into purchasing arms, and the families who control these companies and wealth do not seem to have the goal of maintaining our living standards.

"A rise in factory gate prices suggests that inflation is on its way. We are therefore not entering even a recession. Unless you are suggesting that we are in for a dose of 70s' style stagflation. This however is quite different from a depression when the price of everything collapsed along with banks. By the way banks are already recapitalising (check out the interest rates on savings) and in the States which is one year on from us in terms of the crisis unemployment is rising at 50,000 a month while in past recessions it has risen at 200,000 per month."

the rise in factory prices IS indicative of a depression, as with wages not keeping pace with cost of products/services, then there will be less consumers of the goods/services, which will mean more lay-offs, which will mean less consumers, which will mean more lay-offs...

this is of course the very essence of a depression, or what marx called "a crisis of capitalism", the economy goes into negative feedback loops, reaching a point where the 'average citizen' cannot afford to purchase any more than the absolute basics, and without any safety net, often not even that.

the formula for a depression in an advanced society, is that the workers cannot afford to purchase the goods and services they create. Note the often trumpeted formula henry ford came up with - pay enough the workers can buy the cars they are themselves producing, kickstarting an upward chain out of the Great Depression.

now, how can depressions happen? How can a market economy go backwards? After all every working person is adding value, therefore in classical liberal economics the process should all be upwards - as value is created, incomes increase, so more (or better) products/services are consumed, which employs more, so income/consumption increases in an upward spiral to something very similar to a lifestyle in scandinavia.

so why hasn't it worked here, why are the UK and US economies about to spasm?

usually it is because of two things, both of which operate similarly - they remove the surplus from the workers work, instead of allowing the cycle upwards through increased consumption/income.

the Govt is the first, if it taxes its citizens and wastes the money (such as building personal palaces like saddam, buying arms for wars like bush, or paying for spine-removals like our own politicians), instead of spending it providing decent social services for the citizens, better schools and pedagogic practices for our children (such as sweden's child-care and democratic pedagogy policies), an investment for our society's future, a better health service that trains its own nurses instead of using high levels of expensive agency nurses (ie let the bloody *health professionals* design the system, not corporate managers in the pay of the multi-nationals), and quite essential in a modern economy, high levels of social benefits to ensure the economy keeps functioning - consumption is absolutely vital, there is no doubt the high levels of social benefit in scandinavia, along with an effective minimum wage at almost double the rate of the UK, are some of the strongest reasons why the scandiavian living standards are so far above the UK norm.

so - high taxes, where the money gets wasted, is an inefficiency that if burdensome enough can drive the economy into recession, and also depression.

the second element of what can turn a market economy into going backwards, is if the owners are taking too much profit. It is exactly the same principle - the worker produces a certain amount of added value in their work per week (what they have produced), if the tax man takes 40% of their income, then essentialy they work monday and tues for the tax-man, and only wednesday, thurs and friday for themselves. However if the profit margin for the owners is also 20%, then that is only thursday and friday the worker gets paid for - and in some places the profit margin is far higher than that, so out of an entire week, the worker effectively gets paid only for one day.

this is like a leech sucking the blood out of the healthy market economy, there is no way such workers can actually maintain the consumption that is required to keep high levels of employment - unless they go into debt. Yes, the very people who are leeching their hard work and productivity, will lend them the money back they have leeched, to purchase the goods and services they are producing, to keep the economy running - with interest, naturally.

viola! - the neo-feudalist thatcher, credit 'relaxation', deregulation, and a credit bubble in currency worth only its accepted value, not being underwritten by anything except the promise to swap it for the same.

bear in mind also that the ultra-wealthy have doubled their holdings of UK wealth in the last 10 years, whilst the majority have seen stagnation or falling in real terms.

interestingly, the swedish ultra-wealthy company owners are happy to pay high taxes, as they wish to live in a decent, constantly improving society, rather than one that seems ruled by people pining for the time of Dickens.

also interestingly, denmark has a very high level of cooperatives, or small family businesses, also tending to avoid the trap of profiteers sucking the economic life-blood out to tax-havens.

still with me? :)

these two leeches, bad govt spending on things purely to benefit the minority ruling class, or tax-evading minority ownership of businesses, are what drag an efficent, market driven capitalist economy into depression. Woe betide a society that has both!

tsepiso
03 July 2008 at 19:30

This the best news we've had for 30 years. For the young who want to buy houses, that is.

Paulo

john61
31 July 2008 at 01:31

the phony "economics" is finally layed bare. the cash register is empty . welcome to capitalism 2008.

Boadicea
04 August 2008 at 22:19

No-one has mentioned that since 1997 Brown did nothing to discourage irresponsible lending by mortgage providers. Elephant in the room?

Mark Anthony Taylor
29 August 2008 at 14:46

3.5 is no longer affordable with our punctuated careers, I figure 2-2.5 is more realistic for most people.

cazzabean
24 September 2008 at 08:52

Will everyone please remember that there are more reasons to buy a house than just as an investment. Having rented since I was 18, and been in boarding school for 6 years before that with my parents overseas in the forces I have not had a proper home since then – this is not a sob story just the facts. 10 years on I am still living like a student in flat shares - no table to eat off, 5 people coming home at all different hours of the day…… and the rest, you’ve all lived this was I am sure. Renting a single property in London is costly - roughly 10k a year in London so over 3 years you have lost 30k just in rent with nothing to show for it, this does not include all the bills on top as well.

Buying a house is one way of having a home rather than just a place to sleep for the night that is not just a temporary stop over. While it could loose 30k in 3 years on the price the mortgage payments are far below the rent for a London flat, I will still be at a loss but it will be a far happier 3 years than living the way I have been for years. Why is property ownership never seen as anything else other than an investment.

Ignoring all of the advice I am now buying a house and am happy to do so, I can stop moving, live somewhere without white washed walls and rotating flatmates and get settled for the first time in 16 years. Sod the money, at some point people are going to have to start buying again, 190k for a 3 bed house within 20mins of central London suits me just fine.

Randall Vincent Lowell
05 October 2008 at 21:21

I am writing to you in hopes that you will allow me 30 minutes of your time. Our appointment may take an hour as my presentation may be cause for questions or comments. As you are fully aware in business it is many times the “who you know” which enables the “what you know” being properly disseminated. While whom you know is important, your opinion and insight may prove far more valuable. Besides the overwhelming need for our plan we feel that the time frames necessary to implement can occur in less then 3 months. We have a comprehensive power point presentation detailing our proposal and implementation process. We will include our process patent number.

We have created extremely important formulas for stopping foreclosures and preventing them in the future. Having made that statement, we have the modern day ‘cure” and we need an accelerated platform for the implementation. I realize you are extremely busy and your presence is sought after by every person with or without a plan. If you take the time to read the rest of this letter, perhaps you will permit us a place on your schedule?

Approximately two weeks ago I approached Washington State Senator Rosemary McAuliffe. The purpose of my contact was to submit a power point presentation to "cure" the housing crisis now and in the future. Senator McAuliffe felt that there was sufficient merit and sent a request to DFI to hear our proposal. Having said that, on October 1st 2008 our non-profit company, US Credit Advisory Group met with (DFI) Department of Financial Institutions in Washington State to present our plan. Present in this meeting were Randall Lowell, Brian Carl and Anthony Conrad representing US Credit Advisory Group. Also present were Cindy Fazio Staff Attorney and Joseph Vincent General Counsel representing DFI. In our presentation we outlined a "cure" for the current foreclosure crisis and a future foreclosure prevention plan.

At the end of our outline we posed the following question, "is this the cure for the foreclosure crisis now and looking forward"? The answer "you definitely have the cure to stop future foreclosures" and "you may very well have today's "cure". After our meeting we were asked to present our proposal again next Wednesday, to which we have agreed. Now here are my concerns. While I love Washington State I also see the urgency and the need for a national "cure". We would like to meet with you and share a 30-35 minute power point presentation. Our proposal is not diminished in any way by the 700 Billion dollar bill passage or defeat. Please make this a priority and we will do our part to not waste your time.

As of now we have created a finalized proprietary power point presentation, met with legal counsel and contracted for process patent protection rights of our intellectual data. We have meeting dates Wednesday and Friday of the 2nd week in October. If you have times between those dates we would like to share our presentation with you. Please let me know who in your hierarchy would have the necessary next step contacts? We are trying to fast track this while offering our consulting services to any entities seeking to administer our plan.

We will need to have anyone wishing to participate in our presentation sign our meeting non-disclosure agreement. If you would like to review this before our meeting please contact me and we will be happy to provide a copy.

Our proposal will include the following provisions:

A) Guaranteed returns for the Lender/Investors.

B) Self Bailout Plans for Borrowers.

C Savings programs maintained as “forced savings”.

D Properly allocates costs, fees and expenses to the entity which receives benefit.

E) Streamlines all current defaults and implements programs to avoid future defaults.

F) Does not require any legislative changes.

G) Does not violate RESPA.

H) Does not violate HOEPA.

I) No co-dependency with the new 700 billion dollar bail out passage.

J) Has built in provisions to avoid predatory claims or violations.

K) Provides a model for “ALL” loan modifications and stream lines the process.

L) Provides a model for all new loans.

M) Creates new jobs.

N) Stabilizes property values.

O) Brings values back to “non-performing assets”.

P) Restores Government confidence.

Q) Restores Consumer confidence.

R) Time to implement, less 3 months.

These are just a few of the real time benefits created by implementing our proprietary program and action plan.

I anxiously await your call.

Respectfully,

Randall Lowell

US Credit Advisory Group

22019 Highway 99, Suite B

Edmonds, WA 98026

425-775-2929

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