Economy question

[WATFORD zero]

I'm not sure the tax system encourages divorce or that any couple looks at the tax system and thinks 'oh, that makes it worth divorcing let's do it'.

Not sure why you've highlighted that part. I believe the whole sentence deserves repeating

Tax Credits and working tax credits - a complex waste of money that encouraged divorce, separation and single parent families which in turn created a shortage of housing and house inflation, buy to let and increased rents which again made the housing situation worse which encouraged the banks to lend more which created a bigger boom which turned to bust and austerity which caused more hardship divorce and separation which results in more benefits and on and on and on.

The single most stupid sentence i have seen/heard this election. It appears the whole credit crunch was due to tax credits

 

[sahel]

You say austerity. I would say slowly, very slowly, getting your house in order. Its hardly austerity lol. Look at Greece, Ireland and others. They have faced austerity. We continue to bloat ourselves with expectations and services we cant afford.

Who says we cant afford them? When interest rates are low and expected to continue to be low is it sensible for people to take out a large mortgage?. Of course it is or has been because the asset they buy (house) goes up in value by more than the cost of borrowing. Similarly for a country - if it borrows to invest at low interest rates it gets a larger return in the future. There is a lot said about not wanting to leave the next generation with high borrowing. What rubbish! Do we want instead to leave them with a run down health service, poor roads, poor education. too little housing etc. I don't think so.

 

[Westdene Seagull]

When interest rates are low and expected to continue to be low is it sensible for people to take out a large mortgage?. Of course it is or has been because the asset they buy (house) goes up in value by more than the cost of borrowing.

Please don't become an IFA !! The growth in the value of their asset will not help them pay the larger payments when interest rates go up, Unless of course your suggesting they then sell ? Which of course will mean them having to take a larger mortgage just to stand still as the market will have increased.

 

[cunning fergus]

I'm not defending New labour but in 2008 when the WORLD economy crashed and created austerity across the globe New labour were only carrying on from where Maggie and Major left off They didn't change or curb anything that was being done when they took over in 97 they just complicated the tax and benefits system even more whilst trusting the city and big business to finance and privatise it further.

If you take the issues that are important, the economy, Europe, the banks, the NHS pensions funds and unemployment in most cases the tories started the rot in the back end of the last century when they sold off the utilities, destroyed social values and family life and made it socially acceptable to be long term unemployed because they destroyed jobs and services. If New labour was anything other than a load of left wing tories they would have reversed and recreated a lot what was destroyed before 97 but all they did was to create new benefits and complicate household finance and taxation further.

And the same things are going to happen again because there isn't one party out there that is going to do anything but change the branding of the deckchairs of the titanic

By referring to a WORLD economic crash you are defending New Labour. The cause was not global there is no doubt the effects were, albeit this is largely because of the implications of what happens when the U.S. falls into recession.

It was not a global phenomenon that financial institutions leant out more money that they should, and not least to people that they shouldn't have (sub prime). The U.S. and the UK were at the very forefront of this economic death spiral, both countries leveraging growth from their housing markets.

Both countries governments gave free rein to their financial institutions, so that Banks like Northern Rock offered 125% mortgages and Bradford and Bingley had 60% of their mortgage book self certified, both catastrophic policies that were decided on in the UK.

When the crunch came as it inevitably would, as oppose to some "people" who though they had abolished the cycle of boom and bust Banks were left holding debts with no source of liquidity, and then they were effectively bust.

Balls and Miliband were at the epicentre of the UK's financial strategy when Brown was in power, they would have supported the knighthood of people like Fred Goodwin.........they should be pariahs, it's an insult to the sane electorate that they stand for PM and Chancellor.

They have apologised for their record of failing to regulate the banks, however the global financial crisis is a lie, and as Joseph Geoebals stated........

“If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.”

Wake up.

 

[drew]

What figures have you got for that, and have you got a link?

It's not quite true as national debt in 2010 was £760b and it is now expected to be £1.36t in 2015 (but near as damn it).

http://www.ukpublicspending.co.uk/uk_national_debt_chart.html

 

[drew]

By referring to a WORLD economic crash you are defending New Labour. The cause was not global there is no doubt the effects were, albeit this is largely because of the implications of what happens when the U.S. falls into recession.

It was not a global phenomenon that financial institutions leant out more money that they should, and not least to people that they shouldn't have (sub prime). The U.S. and the UK were at the very forefront of this economic death spiral, both countries leveraging growth from their housing markets.

Both countries governments gave free rein to their financial institutions, so that Banks like Northern Rock offered 125% mortgages and Bradford and Bingley had 60% of their mortgage book self certified, both catastrophic policies that were decided on in the UK.

When the crunch came as it inevitably would, as oppose to some "people" who though they had abolished the cycle of boom and bust Banks were left holding debts with no source of liquidity, and then they were effectively bust.

Balls and Miliband were at the epicentre of the UK's financial strategy when Brown was in power, they would have supported the knighthood of people like Fred Goodwin.........they should be pariahs, it's an insult to the sane electorate that they stand for PM and Chancellor.

They have apologised for their record of failing to regulate the banks, however the global financial crisis is a lie, and as Joseph Geoebals stated........

“If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.”

Wake up.

Surely the issue was not the UK market but the sub prime market in the US! The problem transferred across the Atlantic due to UK institutions purchasing toxic debt from the US institutions, probably with fully understanding the implications. I would be interested to see statistics to show how many of those 125% mortgages that were offered in the UK have actually ended up in repossessions.

You are right that the crisis wasn't caused by anything global but the repercussions of what happened certainly had a global effect hence it is referred to as a global crisis. As for holding up Balls and Miliband as pariahs then surely you do the same to the Tories who were for less regulation and probably have a history of sucking up to the finance industry more than anyone bearing in mind it was under the Tories that deregulation started.

 

[beorhthelm]

I'm not sure the tax system encourages divorce or that any couple looks at the tax system and thinks 'oh, that makes it worth divorcing let's do it'.

it benefits those not in formal cohabiting arrangments. for example i know a couple with children that claim as if they are single, so each get tax credits and housing benefits. all legal because they have seperate homes, even though they live togther for about 5 years. if not married already, and earning under about 30k, the system certainly makes it profitable to remain "single".

 

[drew]

it benefits those not in formal cohabiting arrangments. for example i know a couple with children that claim as if they are single, so each get tax credits and housing benefits. all legal because they have seperate homes, even though they live togther for about 5 years. if not married already, and earning under about 30k, the system certainly makes it profitable to remain "single".

That may well be the case but the other poster was claiming the tax system actually encouraged divorce. In the case you highlight, if they are cohabiting then they should receive benefits on that basis. Are you suggesting that the total of the benefits they receive is more than if they were charged as cohabiting? If so then perhaps you should do society and the economy a favour and let the relevant authority know!!

 

[beorhthelm]

... Are you suggesting that the total of the benefits they receive is more than if they were charged as cohabiting?

yes. as they both have seperate residences its very above board. on housing benefit too, to add insult. i looked at it myself: if i move out and crashed with a friend (so no rent) my other half could claim a bunch of benefits while i carry on paying the mortgage. and i wouldnt have to pay 5k travel... i must say financially very tempting. the system is very open to being gamed, but some would rather not believe that happens, so we dont address the problems and leave more money for those genuinly in need.

 

[Triggaaar]

It's not quite true as national debt in 2010 was £760b and it is now expected to be £1.36t in 2015 (but near as damn it).

Yeah I know. So it's not more than double is it, it's less than double.

 

[Triggaaar]

Who says we cant afford them? When interest rates are low and expected to continue to be low is it sensible for people to take out a large mortgage?. Of course it is or has been because the asset they buy (house) goes up in value by more than the cost of borrowing.

Wow that's a bad example. We all need a home to live in, so you can either own the home and have a mortgage, or pay rent and never own the home. And once you have you mortgage, you then slowly pay it off. The UK don't need the debt in order to live in a home, but yes it's good to have some if we can invest it well. But we already have a massive mortgage, and it's not sensible to let it grow forever.

If we really can invest it and make a lot of money, then there's a case for borrowing more, but that's not what we're doing is it, we were spending ever increasing and unsustainable amounts on public services and benefits, not investing it in money making schemes. So no, it's not like having a mortgage.

 

[beorhthelm]

Yeah I know. So it's not more than double is it, it's less than double.

i see a debt vs deficit confusion creeping in...

in 2010 the deficit was 130bn and the debt 760bn. the target was to cut the deficit completely to 0, so over the life of the parliament the debt would still increase but at a slower rate and from that point onwards the debt reduce. due to a whole load of economics (generally based on best case scenarios) Osborne missed the target, and we end up with deficit cut to about 85bn, and the debt now upto 1,300bn.

if we didnt cut any further, at the end of the next parliament the debt will stand at approx 1,700bn. probably a bit less as we'd expect (hope?) the tax receipts to increse as the economic cycle continues upward, albeit slowly. this is all cash terms, not calculating as % of GDP, which nicko31 wanted to play with but is a marginal difference with the current growth.

so in summary, deficit has halved, debt has doubled.

 

[Herr Tubthumper]

i see a debt vs deficit confusion creeping in...

in 2010 the deficit was 130bn and the debt 760bn. the target was to cut the deficit completely to 0, so over the life of the parliament the debt would still increase but at a slower rate and from that point onwards the debt reduce. due to a whole load of economics (generally based on best case scenarios) Osborne missed the target, and we end up with deficit cut to about 85bn, and the debt now upto 1,300bn.

if we didnt cut any further, at the end of the next parliament the debt will stand at approx 1,700bn. probably a bit less as we'd expect (hope?) the tax receipts to increse as the economic cycle continues upward, albeit slowly. this is all cash terms, not calculating as % of GDP, which nicko31 wanted to play with but is a marginal difference with the current growth.

Jesus. When you see it written down it really rams home how bad things have got over the past 5 years.

 

[beorhthelm]

Jesus. When you see it written down it really rams home how bad things have got over the past 5 years.

i know. and thats with cuts. if we'd targeted reducing the deficit by, say half, and missing that target, we'd be looking at larger debt. long time paying that down.

 

[cunning fergus]

Surely the issue was not the UK market but the sub prime market in the US! The problem transferred across the Atlantic due to UK institutions purchasing toxic debt from the US institutions, probably with fully understanding the implications. I would be interested to see statistics to show how many of those 125% mortgages that were offered in the UK have actually ended up in repossessions.

You are right that the crisis wasn't caused by anything global but the repercussions of what happened certainly had a global effect hence it is referred to as a global crisis. As for holding up Balls and Miliband as pariahs then surely you do the same to the Tories who were for less regulation and probably have a history of sucking up to the finance industry more than anyone bearing in mind it was under the Tories that deregulation started.

Are you mad?

The UK housing market was overheating for years, and instead of cooling it down, the Labour Party in charge allowed the financial institutions to put more fuel into it by allowing more people to borrow more money more easily.

100 to 125% mortgages, borrowing up to10x salary, buy-to-let mortgages, interest only arrangements, we could go on. This all looked great on paper, so long as the assets the money was leant against continued to grow, repayments continued, and even allowing for some attrition, insurance on non payment was available through default swaps.

This was all UK centric, HBOS had 20% of the entire UK mortgage book, an imbecile could have realised that an institution with such a weighting was hopelessly exposed to a market shock which was being predicted.......but no one did anything. Not the boards of the banks, not the regulators, not the politicians

In fact they did nothing when RBS paid £49 bn for ABN AMRO in 2009 when all the signs were that the banking sector was in crisis.

As it was proved, the FSA waved it through without checking RBS own due diligence..............then what happened?

The U.S. Was the same, if not worse, and the institutions were globally connected, however not every country in the world had housing markets like the UK and US...........Ireland and Spain did, anyone else?

 

[Triggaaar]

i see a debt vs deficit confusion creeping in...

I don't think that was his confusion, he just got the maths wrong:

George O has put on more than debt in this parliament than he actually inherited.

Jesus. When you see it written down it really rams home how bad things have got over the past 5 years.

It doesn't surprise me that the debt figures are news to you. It was this ever increasing debt that the tories inherited.

 

[PILTDOWN MAN]

Jesus. When you see it written down it really rams home how bad things have got over the past 5 years.

Thank Christ the left were not in spending even more.

 

[drew]

Are you mad?

The UK housing market was overheating for years, and instead of cooling it down, the Labour Party in charge allowed the financial institutions to put more fuel into it by allowing more people to borrow more money more easily.

100 to 125% mortgages, borrowing up to10x salary, buy-to-let mortgages, interest only arrangements, we could go on. This all looked great on paper, so long as the assets the money was leant against continued to grow, repayments continued, and even allowing for some attrition, insurance on non payment was available through default swaps.

This was all UK centric, HBOS had 20% of the entire UK mortgage book, an imbecile could have realised that an institution with such a weighting was hopelessly exposed to a market shock which was being predicted.......but no one did anything. Not the boards of the banks, not the regulators, not the politicians

In fact they did nothing when RBS paid £49 bn for ABN AMRO in 2009 when all the signs were that the banking sector was in crisis.

As it was proved, the FSA waved it through without checking RBS own due diligence..............then what happened?

The U.S. Was the same, if not worse, and the institutions were globally connected, however not every country in the world had housing markets like the UK and US...........Ireland and Spain did, anyone else?

I'm not saying what they did was in any way sensible but like I said, how many mortgages were 125% and how many of those actually went into arrears and were repossessed. Between 1992 and 1997 there were and average of 10,386,000 outstanding mortgages each year and over that period there were just over 300,000 repossessions and over the 6 year period from 2008 there were an average of 11,368,000 O/S mortgages and over that period there were only 227,500 repossessions.

https://www.gov.uk/government/statistical-data-sets/live-tables-on-repossession-activity

As for blaming the labour party, yes it happened on their watch and nothing will change that however can you provide links to what the Tory party were proposing or warning of at the time. Let's not forget that Osborne was shadow chancellor during this time so I presume that he was shouting from the roof tops about the impending financial disaster!

Finally, you seem quite dismissive of the situation in the states!

 

[Chicken Runner61]

I'm not sure the tax system encourages divorce or that any couple looks at the tax system and thinks 'oh, that makes it worth divorcing let's do it'.

A lot of people think they did

http://news.bbc.co.uk/1/hi/business/7921123.stm

 

[Hampster Gull]

E

Who says we cant afford them? When interest rates are low and expected to continue to be low is it sensible for people to take out a large mortgage?. Of course it is or has been because the asset they buy (house) goes up in value by more than the cost of borrowing. Similarly for a country - if it borrows to invest at low interest rates it gets a larger return in the future. There is a lot said about not wanting to leave the next generation with high borrowing. What rubbish! Do we want instead to leave them with a run down health service, poor roads, poor education. too little housing etc. I don't think so.

you may be right