Butinthewakeofabubblepopping,youoftenhearanotherphrase,whichmaywellqualifyasthesecond-mostexpensivefourwordsintheEnglishlanguage。

Andwerehearingitmoreandmorefromthepropertypundits,politiciansandCityhotshotswhostandtolosemostfromtheloomingrecession。

Itsthatwhineylittlemantra,somethingmustbedone!

Propertypunditsarecallingforgovernmentintervention

Wehavetodosomethingtosavethepropertymarket。

Orsoeveryonewhomakesmoneyfromthepropertymarketissaying。

DavidRitchie,chiefexecutiveofhousebuilderBovis,wasamongthelatesttocallforgovernmentinterventionthisweek。

Peopleneedtobeabletoaccessfinancetobuypropertyandanythingwecandotoassistpeoplegettingonthehousingladdermustbegood。

TheGovernmentagreesitseems,evenifitcantquiteworkoutaplanyet。

Afterall,nothingscreamsgetridofthisbunchofincompetents!

toaBritishvoterlouderthancollapsinghouseprices。

Theresthevaguerumoursaboutstampduty,whichnoonehasstampedonyet,sotheymustbegettingreadytoannouncesomething。

AndTheTimesreportsthismorningthattheGovernmentisalsoconsideringhelpingcouncilstobuyrepossessedandunsoldproperties。

Itseemsthatsomethingisbeingdone。

Butletsrewindamoment。

LetsjustexaminethatstatementfromtheBovisboss,particularlythesecondhalf。

Anythingwecandotoassistpeoplegettingonthehousingladdermustbegood。

Heresanidea。

Whydontyougiveawayyourhomesforfree,MrRitchie?

Theyrenotsellinganyway。

Thatwouldgetpeopleontothehousingladder。

Andthatmustbegood,right?

Oh,wait,Iforgot–thatwouldcostyoumoney。

Infact,itwouldbankruptyou。

Whyshouldyoubeexpectedtosubsidisehousingfortherestofthenationatyourownexpense?

Taxpayersshouldnthavetopropupthehousingmarket

Itsaridiculousnotion,ofcourse。

Andyet,whenitstaxpayersmoneythatsmeanttofundotherpeoplespropertypurchases,itsapparentlyjustfine。

Well,Imataxpayer,andIdontthinkitsfineatall。

Letmeexplainwhy。

TheGovernmenttakesmoneyfromyourpocketandmineintheformoftax。

Thejustificationforthisisthatitspendsthatmoneyonpublicgoods,thingsthatcantbeprovidedmoreefficientlybytheprivatesector。

Youcanarguethepointonwhatthesethingsare,butwegenerallyaccept(inthiscountryatleast)thatthisincludesthearmy,thepolice,universalhealthcare,andsomeformofwelfaresafetynet。

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Idontseeanythingonthatlistaboutproppingupthehousingmarket。

Acutinstampdutyissimplytakingmoneyfrompeoplewhodontintendtobuyahouse,andgivingittothosewhodo。

Thatscompletelyunfair。

IftheGovernmentcanaffordtocuttaxesatall,thenitshouldbegivingusallsomeofourmoneyback。

Howtomaketherecessionlesspainful–cuttaxes

Andthistakesustothebiggerpoint。

Ifwewanttogetoutofthisrecessioninonepiece,whatreallyneedstobedone?

Interestratecutswontwork。

TheyhaventworkedintheUS,theydidntworkinJapan。

Thatsbecauseasanation,wereuptooureyeballsindebt。

Bankscantaffordtolendmoney;wecantaffordtoborrowit。

Allofusneedtopayoffourdebtsandbuildupoursavings。

Soitdoesntmatterhowcheapmoneygets,wevesnappedoutofspendingmodeandstrappedonourtinhats。

Sothequickestrouteoutofrecessionistohelppeoplepaydowndebtandbuilduptheirsavings。

Inflationisonewaytoreducethevalueofdebt,butitgenerallycomeswithaheftypricetag–currencycollapseandeconomicmeltdown。

Higherinterestratesmighthelpbuildupsavings,buttheydalsomakedebtmoreexpensivetoservice。

Howcanwehelppeoplesavemorewithoutfuellinginflationormakingourdebtburdenevenworse?

Simple。

Cuttaxes。

Ifyoucuttaxes,youalmostautomaticallyincreaseproductivity,becauseyoutakemoneyfromawasteful,inefficientorganisation–thegovernment–andreallocateittosomeonewhoactuallygivesadamnabouthoweffectivelyitsspent–theindividual。

Andratherthansquanderthemoneyonproperty(astheGovernmentisproposing),individualswoulduseitsensibly,savingit,orusingittopaydowndebt。

Thisisntamagicbullet。

Itwontstoptherecession–nothingcan。

Theloomingbustisnatureswayoftellingusthatwespenttoomuchmoneyonunproductivegarbageduringthegoodtimes。

Lookatitthisway。

Ifwedtakenallthemoneywespentasanationonpropertyinthepasttenyears,andhadpumpeditinto–letssay–ourenergyinfrastructure,thenmaybewedhavelowergasbills,andanice,productiveindustryprovidinghighlypaid,specialistjobsthatwouldbetoughtooutsource。

Instead,allwevegotisbigdebts,anunwantedpileofjerry-builtbuy-to-letflatswhicharealreadyturningintoslums,thousandsofunemployedestateagents,andanationalenergycrisis。

Itsdepressing,yes。

Butwhatwecandonowisputanendtotherotandthewaste。

Thequickerthosesavingsbuildup,thefasterbalancesheetsarerepairedandthequickerwecangetoutofthisdownturn。

Willthishappen?

Idoubtit。

TheGovernmentstillbelievesthegreatlie,thatyoucanspendyourselfrich。

Itstillbelievesthatsomethingmustbedone。

Bettergetreadyforalong,drawn-out,painfulrecession。

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CitigroupisAmericasbiggestbank。

Butwithover380,000employees,itbecametoobigtomanage。

Inthelastyear,itwrotedownover$55bninbaddebts。

Sowhatcouldthefutureholdforthisbankingbehemoth?

Whyyoushouldkeepacoolheadoncommodities

Commoditypricesareslippingbackfromthehighsofearlierthisyear。

Itislikelytobeashort-termcorrection,buttherecouldbesomegreatbuysoutthere。

Justbecarefulanddontbiteoffmorethanyoucanchew。

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