UK House Prices -The next bubble waiting to burst ??
Aleman - Wed, 14 Dec 05 :
Sorry - couldn't resist linking this to a post I made earlier today on another thread about British businesses being sold off. His easy pickings had far reaching consequences:
Frankito - 14 Dec'05 - 10:57 - 15038 of 15076
JonC - 13 Dec'05 - 19:43 - 15008 of 15019
> Not to mention Gordon Brownhole robbing £5b per year from the pension funds > to waste on public sector bureaucracy.
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What annoys me is when people claim that Gordon Brown has stolen £5bn pa from pension schemes. This is just not true! It was estimated that in 1997 the proceeds from his tax would be £5bn, but since then the economy has grown by 4% pa (real + inflation) so each year he takes 4% more. That means this year he's stolen £6.8bn.
But more than that, the £5bn he took in 1997, invested would have earned (conservatively) 5% pa. Compound that £5bn at 5% pa over the last 8 years and it comes to £7bn, and thanks to the magic of compound interest the loss of assets to pension funds is accelerating year on year. If the current tax arrangements continue until I retire in 15 years time, £350bn will have been denied to the UK's pension funds.
Oh good - a bit of wall to bang my head against. Our chavcellor is selling off the best of British, not that he would admit it. Milk the pension system so that they're all in deficit and introduce regulations so that assets must more accurately match liabilities, i.e. funds covering younger people have to buy 50 year government bonds yielding less than 1% above inflation instead of high yield stocks often favoured by pension funds in the past that might yield 3-4% above inflation as well as growth. Result - up to 6% p.a. reduction in pension fund growth, pension funds close, government gets to borrow for its overspending at very cheap rates, and mature British businesses suffer from low ratings as funds switch and all get sold to Icelandic entrepreneurs. The chancellor will blame the results on weaknesses of capitalism rather than his own weaknesses in understanding it. He has sold comfortable retirements down the river for current spending, and British businesses become foreign owned and so are more likely to move jobs to where production is cheapest, reducing investment in the UK. And then there's the effect on the housing market....
