The Anti-Austerity Crowd

Permabear · 20-05-2014 02:10AM

This post has been deleted.

KyussBishop · 20-05-2014 02:19AM

You haven't presented any evidence that the availability of credit does not contribute to house price increases, I have provided evidence that it does - I don't claim it's the only contributor either.

Either way, excessive credit issuance by banks, is an inherently harmful thing, we had huge private debt to GDP levels that should have made it obvious something was wrong - which is itself a justification for restricting credit issuance.

Permabear · 20-05-2014 02:34AM

This post has been deleted.

KyussBishop · 20-05-2014 02:42AM

Yes, restricting credit issuance would "replace democracy and freedom with [] paternalism and state authoritarianism", that's not at all hysterical.

Translation: "That disagrees with my 'Free' Market™ ideology, so I'll throw some hysterical/hyperbolic labels at it"

It's so disingenuous, you can see he's trying to create a platform for flinging crap and taking potshots, rather than debating.

Permabear · 20-05-2014 02:45AM

This post has been deleted.

KyussBishop · 20-05-2014 02:46AM

If government grants private banks the great privilege in the first place, of being able to create credit/money out of nothing, government can place whatever demands on them that are desired.

If you're unhappy with that, then the banks can operate as 100% reserve banks, without any money creating powers, and can be as reckless as they like.

That sounds fair, right?

Permabear · 20-05-2014 02:48AM

This post has been deleted.

KyussBishop · 20-05-2014 02:49AM

Oh I agree with you there - it's up to all of us to get wise and hold government to account, to be honest, and to push for the necessary reforms - and that's not going to happen anytime this decade I'd say.

KyussBishop · 20-05-2014 02:49AM

I was referring to the subset who bid up house prices as 'idiots'; it wasn't altogether serious.

Permabear · 20-05-2014 02:53AM

This post has been deleted.

Permabear · 20-05-2014 02:54AM

This post has been deleted.

Permabear · 20-05-2014 02:56AM

This post has been deleted.

KyussBishop · 20-05-2014 03:02AM

I know, yes - and I expect them to abuse their power in government, for the profit of themselves and all the well connected folk in banking/finance/development/etc., who will profit from this new boom - just like the last one; it's my judgement that it is probably deliberate and corrupt.

Hell that's what I've been trying to draw peoples attention to all through the thread - people should be aware of how government is (probably deliberately) perpetuating this, and should be actively against it - instead, people seem to be largely unaware of it.

People should be aware, that the potential consequences of the new bubble, could compound the damage of the last one - and should put pressure on government to stop, and to actually become informed/smart enough as a population, to recognize when government is pushing a bubble, and to punish governments for it instead of rewarding them.

That's probably the only way it's going to change - I don't believe in throwing the baby (government) out with the bathwater (corruption and bad government policies), as I think without government it would be even more damaging/corrupt.

KyussBishop · 20-05-2014 03:12AM

When the price of a house is bid-up in an area, appraisers tend to revalue the houses higher in the area, affecting other buyers.

This doesn't lead to a property bubble all on its own, I didn't say it does - but when you mix this with cheap credit, it's kind of inevitable that this is going to increase competitive bidding on houses (again affecting other buyers each time), leading to the price of houses, extending in line with the increased availability of cheap credit.

KyussBishop · 20-05-2014 03:14AM

Well I'll present this to you again:

You kind of dodged that yourself too - if the banks want money creating powers (a massive privilege granted by the state), they can follow the states rules, or they can feck off and become 100% reserve banks, and take whatever risks they like

It's funny really, how you try to reframe imposing responsibility on banks, as attacking borrowers liberties.

Permabear · 20-05-2014 06:32AM

This post has been deleted.

Permabear · 20-05-2014 06:41AM

This post has been deleted.

Convexity · 20-05-2014 07:04AM

Banks don't have " money creating powers". They have the ability to lend which they've given themself just like a shop has thr ability to sell milk which it gives itself.

Let companies charge what they want for their products, if a bank goes bust due to wreckless lending let them fail, don'bail them out . Banks will then need to be prudent to attract depositors.

Permabear · 20-05-2014 07:05AM

This post has been deleted.

Merrion · 20-05-2014 09:01AM

Banks don't have " money creating powers".

Actually the issuance of mortgages (or any other legally enforceable debt) creates new money in the economy - so banks are "creating money".

Here's how it works.

Lets say I walk into BOI and borrow 10k to buy a new server for my business. I sign a legally binding contract to repay that 10k over 5 years at a fixed rate of interest. This contract then becomes an asset in the bank balance sheet (assets being things you have or things you will be paid, liabilities being the reverse) and the bank puts 10k in my account which means that the net effect of the loan on the banks balance sheet is zero but 10k just entered the (probably Korean) economy.

Merrion · 20-05-2014 09:12AM

(For the economists this magically created money is termed "Broad money", and it massively dwarfs government issued money in the economy. I don't have Ireland figures as it is quite difficult to separate Ireland's portion of the European economy but in the UK the ratio of broad money to government money is 95%-5%)

Merrion · 20-05-2014 09:23AM

So the reverse of this ability of banks to create money is the ability of others to destroy it. If I decide it is too risky to buy the server in today's economy and thus cancel my loan, the bank loses the 10k asset but also the 10k liability so they are OK. (They would even charge me a penalty to cover their costs.) However 10k disappears from the economy causing it to contract.

In my opinion, it is this change in sentiment in borrowers rather than lenders that causes recessions.

Ray Palmer · 20-05-2014 09:26AM

I think talking about economic theory misses some massive points about the anti-austerity crowd and the supporters. They are not talking about using any of these methods. Go look at the people before profit website and you will see what they are suggesting. It is about increasing tax on the high earners, businesses and financial transactions.

If people want to talk about alternatives they should really stick to that on another thread probably in the economics forum. There is no party suggesting the methods that seem to have been suggested here. Unless of course they are hiding it because their supporters wouldn't understand it, which I could well believe.

If that is the case then the proponents are loosing support people would give in favour of support from hardliners and the angry. Then what will happen is they will lose the support as they don't do as they said.

Politics of how to bring any changes in are as important as anything else. Let's not forget decentralisation apparently would save the country a fortune. The electronic voting machines failure was more to do with political resistance than anything else. They did work and I would admit there was a flaw with them but not a fatal flaw it was political opposition that was the problem.

Same problem with any change to the tax collection system. You need the employees and the other political parties to agree while letting the public understand. If you don't do that it doesn't matter it will never happen.

Merrion · 20-05-2014 09:40AM

Fair enough - but the original post asked:
" I don't get it. Could somebody explain? I've never heard of an alternative solution (that actually makes sense and would work better). "

The purpose of the electorate is to tell the politicians what to think, not the other way around :-) - if we ask them (in sufficient number) for any particular change they will do it.

20-05-2014 09:48AM

Not this absolute absolute nonsense again.

The banks don't create money and the government don't grant them any privileges.

Why are you the only person pushing this incorrect view and don't quote the UK central bank because it does not support your view, you are twisting what they say, adding a bit of salt and then making totally incorrect statements to support your own agenda.

Ray Palmer · 20-05-2014 09:53AM

In this country? You are talking about an idea that doesn't happen really anywhere. Here it is less so as we are restrained by hardliner supporters.

I had a representative call to my door and as I was telling him I wasn't interested he proceeded to ask me did I know there was a European election going on too. There is no political party that represents me and knee jerk reaction politics.

Merrion · 20-05-2014 10:07AM

It is true that we absolutely will not get any meaningful change as things stand. This is a shame as with the government owning the majority of the banking systems and people looking for a bit of hope now would be a good time to make this change - but we* will have to wait for the next recession I guess.

*(They happen every 30 years so we have time to prepare - although we shall be 30 years older and therefore on the other side of the wealth transfer and will vote against it)

BBJBIG · 20-05-2014 01:38PM

D'Oirish people need to grow some Balls :-

http://www.irishtimes.com/news/politics/ballyhea-protests-on-bank-debt-show-collective-self-respect-1.1801718

KyussBishop · 20-05-2014 02:26PM

I didn't say it sets a price floor, I said it bids up prices for houses in the whole area.

Homes do not sell like commodities, 'sitting on the shelf' until the price comes down. In high-demand areas like cities, their price will get bid up, the more people are incentivized to overextend on credit - i.e. to stake a greater and greater portion of their future working years payment, into buying a house.

What it is, is you being kind of obtuse in your interpretation, for rhetorical effect, more than anything else.

It's simple: The more people are capable of overextending on credit (and there will always be a few reckless ones, who stake a significant portion of their uncertain future earnings to secure a mortgage), the more house prices will get bid up, which can over time lead to a property bubble.

pO1Neil · 20-05-2014 02:31PM

I agree with the angry mob. More taxes on the rich & less on the working/poorer classes.

The Anti-Austerity Crowd

Comments