Trollslayer said:
There was a bit about this on the local news (Bristol) and a couple of squatters were students with nice clean clothes who decided they shouldn't have to pay for accomodation.
Not down and outs but the 'entitled'.
I have read a bit more on this subject and it throws up some interesting things. What we might be seeing here is a version of what happened in the great depression. Back then farmers and manufacturers took big loans to buy capital equipment. They became over capitalised and couldn't pay back the loans which started the banks going bust.
What we have is a similar situation. Property is now over valued but interest rates remain low, no one is buying and the market has stagnated. as the recession has bitten it has left both commercial properties empty ( these are the ones that get occupied mostly ) and residential properties that belong to investors who no longer have the finance or confidence to put on the market at this time. Further there is a lot of local authority mixed property about.
These squatters are actually low paid, tax paying workers, but as wages have fallen, inflation has driven up the cost of essentials and the housing market prices have remained static. This means they are unable to afford accommodation but wish to live independently.
This is an interesting situation because it suggests that this recession is simply a recession of illusion. In other words the country was in a serious state before the housing bubble burst, but the bubble disguised it. If that is true, then we are simply buying time with QE in a sense it's simply a delay fuse for something far worse. Instead of a sudden crash the country is on a sort of sedative which creates the illusion of all being fairly stable if a bit flat. The result will be the slow march of a greater and greater number of low paid being unable to pay for homes or high rental which is why the Government have realised they are going to have serious problems without low cost housing.
But it's catch 22 because we don't have the tax receipts to fund Government spending except by constantly inflating the money supply to cover the loan, but that looks like we have reached the bottom of the barrel because public spending isn't moving, prices are still moving upwards but public spending isn't catching them. Most people have few savings and had been depending on credit, that means the recovery cannot be driven by consumer spending, that is finished. What's more increasing taxes or increasing the money supply will now only make prices more expensive and shift buyers onto cheaper goods and foods which will reduce choice as manufacturers of these products have to withdraw luxury and high brand lines or reduce costs by downsizing the workforce.
Ultimately we cannot close the deficit gap either. I think Cameron spent the money because he knows the game is up and is hoping for a miracle. It's like a company that looks good from the outside but is really bankrupt because of serious negative cash-flow. Eventually they begin to default and this is what is going to happen with the UK economy. We will default and the real situation exposed.
I think it's high time we let the economy adjust and let interest rates rise by withdrawing all the QE and that would drop house prices. Those owning investment properties would see the collapse and be forced to sell quickly to avoid the bottom swing of the price curve. It would force many to default, those that have only had houses for less than 10 years should be allowed to default with no penalty and their paid up money returned to them.. This would mean they could get back on the housing ladder at a later time when prices had stabilised. Rental properties would also have to fall in line and become more competitive to cope with the downward fall of house prices.
If we don't act, then we will be in a gradually worsening situation like a big whale rolling over onto its belly. Eventually it is unsustainable. It's likely that taking QE out of the system would also kill the stock market and mean that those with money would no longer have a safe haven. It's risky, but they may decide to go back to good, old fashioned private financing of innovation as they once did in the 19th. I think it might be a sign of an economic change like the change from agriculture to industrial. Maybe we need to start serious investment in life sciences and other innovations and invest money into educating people to move into those industries. We must have other services that we haven't explored fully that could have private investment. The banks can still play a part in it.