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>I don't think bubbles need a complex financial system to form (the famous example of the tulips). And a society can sustain any bubble. The tulip bubble was s

>I don't think bubbles need a complex financial system to form (the famous example of the tulips). And a society can sustain any bubble. The tulip bubble was small and did not have knock on effects for the Dutch economy, and for what it's worth, there was a futures market for tulips in 1637. Complex financial systems are not new. >I live in the UK and I am always perplex when I see how natural it is for people here to mobilise all their financial resources, bury themselves into debt through all the means possible in order to bid as much as they physically can on a house. And this is encouraged by the government who pushes for 100% LTV loans. Guess who gets the government to push loans on people? People take loans and buy a house because they're told by those above them that it's "the responsible thing to do". This message is echoed around the media as well. >One can blame bankers and speculators but I think this is missing the big picture here. No, that is the big picture. They are the ones who benefit from an over-leveraged economy and they are the ones who are pushing for it. Ordinary people certainly aren't dying to drown themselves in debt, just as they weren't the ones pushing for student loans. In five years time they won't be the ones pushing for the student loan book to be privatized either, but guess what? Someone out there is salivating over it.

walshemj 12y ago
Because they see that paying a similar amount of money to a landlord plus all the extra fees renting requires - is not a sensible use of income/capital
notahacker 12y ago
Ordinary people certainly are the ones pushing for home ownership, for the simple reason that when homes are in a serious shortage, it makes a lot of economic sense to own them if you can commit to the mortgage payments. It's the same reason as people with no connection to the UK whatsoever and piles of their own cash to spend think that London property is a good place to park it. The government is buying electoral support with Help to Buy schemes and Right to Buy extensions; the fact the banks also like it is incidental.
- m-i-l 12y ago
  Yes, wanting to put money in a physical asset which has utility value (like a property people can live in), especially when it is in genuine (rather than artificial) and difficult-to-reverse short supply (like property in London), does make financial sense. I think of the Right to Buy as being a bit like giving away the family silver in return for a few transient votes, and in doing so committing your children to a future where they'll have to rent expensive stainless steel cutlery.
- digi_owl 12y ago
  There is a claim out there that the US gov have been pushing for homeownership because "homeowners don't riot". Or to put it in other words, when someone is saddled with a property and a family they are more likely to go "yes masta, right away masta".
- crdoconnor 12y ago
  >Ordinary people certainly are the ones pushing for home ownership, for the simple reason that when homes are in a serious shortage A) No, they're not. B) Home ownership doesn't solve the shortage problem. Actually, it can exacerbate it because it gives landlords an opportunity to gouge you. Building more council housing might help, but is that on the table? No. Banks wouldn't want that. That's rental income that is not being diverted to their pockets. >The government is buying electoral support with Help to Buy schemes and Right to Buy extensions; This is just the most palatable way of giving help to the banks. If electoral support were what they were really after, they would build more homes to offset the shortage. >the fact the banks also like it is incidental. You misspelled 'central'.
  - notahacker 12y ago
    Home ownership obviously does solve the housing shortage for the homeowner, since (i) they have a home and (ii) the ensuing rise in the cost of housing is their capital gain; far in excess of any mortgage interest they pay in most parts of the UK. Hence home ownership being desirable for renters with stable employment. Which was my point, rather than the straw man you chose to truncate my sentence to attack. Help to Buy is tiny in the scheme of banks' balance sheets, huge in the scheme of the household finances of those wishing to join the majority of Britons in owning their own home.
learnstats2 12y ago
Ordinary people are pushing to own their own homes; not only for financial reasons. Rental agreements in the UK greatly favour landlords and typically don't allow you to own a cat or paint your own walls. Renters have limited security of tenure in a sense which can be very apparent: even if you meet all the conditions of rental, you can be kicked out of your own home when the landlord decides their interests lie elsewhere.
- m-i-l 12y ago
  > you can be kicked out of your own home Tenants do not own the property - the landlord does (or the bank that provides the landlord's mortgage).
  - learnstats2 12y ago
    I use 'home' here in the sense of a dwelling, a residence: a place where someone lives. You seem to be saying that tenants don't have a right to call somewhere home, which is exactly my point.
    - m-i-l 12y ago
      No I'm not - when I say "tenants do not own the property" I'm referring to the definition of "own" rather than "home". Of course tenants have a right to call somewhere home, but owning and renting are different things with their own set of advantages/disadvantages and obligations. For example, if you bought a book from a shop you would expect to be able to do what you want with it (e.g. paint all over it and keep it indefinitely), but if you borrowed a book from a library you would be expected to return it in reasonable condition within a finite period of time.

walshemj 12y ago

Because they see that paying a similar amount of money to a landlord plus all the extra fees renting requires - is not a sensible use of income/capital

notahacker 12y ago

Ordinary people certainly are the ones pushing for home ownership, for the simple reason that when homes are in a serious shortage, it makes a lot of economic sense to own them if you can commit to the mortgage payments. It's the same reason as people with no connection to the UK whatsoever and piles of their own cash to spend think that London property is a good place to park it. The government is buying electoral support with Help to Buy schemes and Right to Buy extensions; the fact the banks also like it is incidental.

m-i-l 12y ago
Yes, wanting to put money in a physical asset which has utility value (like a property people can live in), especially when it is in genuine (rather than artificial) and difficult-to-reverse short supply (like property in London), does make financial sense. I think of the Right to Buy as being a bit like giving away the family silver in return for a few transient votes, and in doing so committing your children to a future where they'll have to rent expensive stainless steel cutlery.
digi_owl 12y ago
There is a claim out there that the US gov have been pushing for homeownership because "homeowners don't riot". Or to put it in other words, when someone is saddled with a property and a family they are more likely to go "yes masta, right away masta".
crdoconnor 12y ago
>Ordinary people certainly are the ones pushing for home ownership, for the simple reason that when homes are in a serious shortage A) No, they're not. B) Home ownership doesn't solve the shortage problem. Actually, it can exacerbate it because it gives landlords an opportunity to gouge you. Building more council housing might help, but is that on the table? No. Banks wouldn't want that. That's rental income that is not being diverted to their pockets. >The government is buying electoral support with Help to Buy schemes and Right to Buy extensions; This is just the most palatable way of giving help to the banks. If electoral support were what they were really after, they would build more homes to offset the shortage. >the fact the banks also like it is incidental. You misspelled 'central'.
- notahacker 12y ago
  Home ownership obviously does solve the housing shortage for the homeowner, since (i) they have a home and (ii) the ensuing rise in the cost of housing is their capital gain; far in excess of any mortgage interest they pay in most parts of the UK. Hence home ownership being desirable for renters with stable employment. Which was my point, rather than the straw man you chose to truncate my sentence to attack. Help to Buy is tiny in the scheme of banks' balance sheets, huge in the scheme of the household finances of those wishing to join the majority of Britons in owning their own home.

learnstats2 12y ago

Ordinary people are pushing to own their own homes; not only for financial reasons. Rental agreements in the UK greatly favour landlords and typically don't allow you to own a cat or paint your own walls. Renters have limited security of tenure in a sense which can be very apparent: even if you meet all the conditions of rental, you can be kicked out of your own home when the landlord decides their interests lie elsewhere.

m-i-l 12y ago
> you can be kicked out of your own home Tenants do not own the property - the landlord does (or the bank that provides the landlord's mortgage).
- learnstats2 12y ago
  I use 'home' here in the sense of a dwelling, a residence: a place where someone lives. You seem to be saying that tenants don't have a right to call somewhere home, which is exactly my point.
  - m-i-l 12y ago
    No I'm not - when I say "tenants do not own the property" I'm referring to the definition of "own" rather than "home". Of course tenants have a right to call somewhere home, but owning and renting are different things with their own set of advantages/disadvantages and obligations. For example, if you bought a book from a shop you would expect to be able to do what you want with it (e.g. paint all over it and keep it indefinitely), but if you borrowed a book from a library you would be expected to return it in reasonable condition within a finite period of time.