Bankers, Governments, Rings and Things!

Here’s the analogy:
Sports car driving and running the economy are very similar.

The only two active levers needed to get round a corner quickly in a sports car are the steering and the throttle!

In the UK housing market, supplying extra finance is like pressing the throttle down while cornering a sports car - fast.

Too much throttle and you’ll spin the car round in the middle of the corner, (oversteer).  With that, the housing market will crash in this analogy.
Not enough however, and you’ll fail to keep the car’s rear end hanging out, meaning you’ll shoot over the outer edge of the corner, (under steer).  Again, the housing market will crash in this analogy.

In other words, knowing how things have turned out, with prices far exceeding the average person’s ability to pay and also seeing things in retrospect, bankers and the government are probably a ring. If so, whatever cosy arrangement there may be should have been broken up long ago.  The question to be asked is; which of the two factions in the supposed ring ought to be responsible enough to break up such a cosy arrangement?

If neither, then democracy itself must make a move itself - or it’ll be doomed!

[Prices: are a function of the speed going around the corner.]

[Sales throughput: is the lap time. For more information on how to improve this please see later posts.]

Posted by: Peter Hendry, Consultant in Housing Valuation

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