After last night's debate and the aftermath it looks like we are all starting to get our heads around the task in hand.
Cleggster seems to have lost his way and so Cameron who does carry the weight of the world on his shoulders came out on top.
The reality according to Mervyn King is that the swingeing cuts needed to get the economy back on course will mean that whoever gets in next will not be voted in again for a lifetime. We just don't seem to be able to get our heads around this. Perhaps it is because the numbers are too great and that when you quote in the trillions for debt we lesser mortals just cannot get our heads around what that means.The Institute for Fiscal Studies warned on Tuesday that all three parties had been hiding from voters the full details of their plans to cut the deficit. It said that the scale of cuts following the election could be the deepest since comparable records began just after World War Two.
What does that mean for us?
The economics that we just can't get our heads around is the housing one. For some reason the rise in price of houses is not a factor that is reported as part of inflation figures. So, for the past few years we have been 'told' that we have low inflation, low in comparative interest rates, high growth and as Brown put it " No return to Boom and Bust" because he had the model right. WRONG: we have had the biggest boom and bust for a century. Anyone that votes for Brown and insists that Tories would have run the country into the ground as labour has is misinformed and midguided on tory policies. The general view is that it is still 'cool' to vote labour and that to vote tory is somehow siding with the rich people. Of course they all get things wrong, of course most people don't sign up to all the policies but as a reasoned human being (and plenty of what Clegg and Brown say they stand for absolutely tick my box) but the grave reality now is this. Lib Dems can't get in so do you vote for more of teh same (Labour has been having a go for 13 years and not got it right) or give the other side a go. It is really as simple as that. What I have found interesting in letting my feelings and opinions about politics out is that far from Tories being the bigotted ones it is in fact labour supporters who refuse to discuss, when challenged cannot back up their arguments and then retreat with a 'well they are all as bad as each other so I don't care'. It's amazing. This is probably the biggest election of our lifetime and still people aren't turned on to it.
Back to housing. The BBC this morning showed pictures of vast numbers of empty houses in Ireland built in the boom years and never occupied. We now pay for the cost of these as they no doubt have bankrupt owners. The housing bubble seems to have recovered and we are only 10% down on the peak 2007 levels. People say this is OK and people are buying again. What do I think? Wrong! Back in 2007 the country did not mention the high risks we were taking. Even when Lehman's collapsed no-one wanted to talk about disaster because it would then become self fulfilling. The same is now true of the housing market.Let's not talk about it. Let's hope the intelligent estate agents are right.Well I think we should get real.It's all a bubble and apart from a few people who bought at the wrong time with too little cash then prices are held up by false paper money that just needs wiping out.
Long term trends are now easy to find so you can work this out from raw data held on government websites. The trends show that house prices are still overvalued by 20% to their long term average. This is an average and in fact there is a case that perhaps they have to double dip another 30% before they recover to 20% below where they are now. Yes a lot of people will feel some pain. But what pain is that? Is that the pain of a nation in debt to the tune of having to make a plan to save £34,000,000,000 (£34 thousand million) a year just to halve the deficit we have. Of course it is so just get ready for the ride. Alternatively put that off so that when it comes it is even more painful. Gordon wants to carry on spending and so we will feel the pain later, and of course, much like going to the doctor, the longer you leave it the worse it gets. Gordon borrows £1 in every £4 he spends right now. That will stop either with a different government or when our creditors (or in the case of Greece the IMF) refuse to give us any more money. Black outs, food riots, civil unrest, no thanks.
