Coppola Comment

I haven't written a post for a while. I wanted everyone to read the post I wrote in November about my niece Annie's suicide . Writing new posts drops older ones down the list, and I didn't want her memorial post to disappear off the radar until after her funeral. Annie's funeral was last Tuesday, 18th December, the day after her 29th birthday. Now, it is time to write again. But not yet to move on from the issues that Annie's death highlights. This post is about the link between mental ill health and homelessness. Particularly, "street" homelessness, or in common parlance, "sleeping rough". Homelessness and rough sleeping have risen hugely in recent years. Government statistics show that between 2010-15, estimates of the number of those sleeping rough rose by 102%. This is partly due to changes in methodology to correct suspected under-reporting of the problem. But the Government admits that there is a real and considerable increase in th...

This thread on Twitter has attracted a lot of attention. It goes some way towards explaining why older people are generally in favour of Brexit, and why Theresa May's "strong and stable" mantra particularly appeals to the baby boomer generation. For those who aren't on Twitter, I've paraphrased part of the thread here. I have been thinking about the "strong and stable" mantra, in the context of my mum, who thinks Theresa May is great. Mum is a product of post war Social democracy (born 1947). She got 6 good O levels despite failing the 11+, and went into the civil service. She got into a mess due to creating me with my irresponsible dad, but then met my stepfather, whom she is still with. In material terms, since the early 80s my mum and my stepfather have had no money worries. They've had stability from their 40s to their 70s. And they also had stability in their earlier lives through full employment, the NHS, workplace/union rights, public ...

How effective is monetary policy? Highly effective, according to the Governor of the Bank of England. In a speech earlier this week, Mark Carney robustly defended the Bank of England's record: "Simulations using the Bank’s main forecasting model suggest that the Bank’s monetary policy measures raised the level of GDP by around 8% relative to trend and lowered unemployment by 4 percentage points at their peak. Without this action, real wages would have been 8% lower, or around £2,000 per worker per year, and 1.5 million more people would have been out of work." Well, lots of us might agree that monetary policy did help to offset the damaging effects of bank and household deleveraging in the aftermath of the worst financial crisis since the 1930s. Carney suggested that monetary policy also dampened the effect of premature fiscal consolidation when everyone panicked about government deficits in the wake of the Greek crisis: Fiscal policy quickly came under sev...

From Joe Sarling's blog comes this a lovely chart showing housing affordability by cohort since 1955: As can be seen, the current generation of young people - Generation Y - faces paying a far higher proportion of their incomes in mortgages or rent than any previous cohort. This does not, of course, take into account the considerable price difference between London and everywhere else: if London were excluded, I suspect their position would not look quite so dire. Nonetheless, this chart is distinctly worrying. Such a high proportion of income spent on housing costs is not remotely sustainable. But that is not what interested me about this chart. What is far more interesting is who really benefited from the increase in house prices since 1960. Contrary to popular opinion, it's not the baby boomers. It's the cohorts immediately before and immediately after them - Generation X, and (above all) the inter-war generation. Yes, those poor old people who grew up in the Dep...

At the end of my previous post , I posed the question: why did Latvia experience the deepest recession in the world in 2008-9? The first puzzle is that Latvia's banks were in no worse shape than anyone else's and better than some. Among small countries, Iceland, Ireland and (in 2013) Cyprus all experienced bigger banking collapses relative to the size of their economies than Latvia. Larger countries did too, notably Germany and the UK, both of which suffered widespread damage across their large and arguably over-developed banking sectors. In the US, the big banks were bailed out, but literally thousands of small ones failed. To be sure, Latvia did not escape unscathed: its second biggest bank, Parex, failed and was nationalised, and three other banks needed liquidity support. But that's really not sufficient to cause a recession of such magnitude. The 1995 crisis was much larger, but did not have anything like so great an economic effect. The chart below shows Latvia...

There have been calls for interest rate rises to discourage risky new lending. But the Resolution Foundation shows that it is the stock of existing debt that is the real problem. Household debt still stands at over 90% of GDP, and many of these households already have difficulty paying their mortgages: there is a real risk that raising interest rates would make their debts unaffordable, forcing them into default and the economy into recession. The Resolution Foundation has important recommendations for policy makers to reduce the risks of interest rate rises. But they don't go quite far enough.... Find out more here . (Pieria)

At the  HACT House Party  last week, I ran a workshop in which we examined the UK housing market in the context of a game of  Monopoly . The famous board game Monopoly is a land and property speculation game, in which the object eventually is to own all property and bankrupt all competitors. It is simple, and old-fashioned – prices by modern standards are simply unbelievable. But it conveys some important messages regarding our attitude to property. In this picture, the Monopoly board is set up in rather an odd way.  To find out why, read on here .....

Markets are a gullible lot. In my latest Forbes post I explain how they have been comprehensively outflanked by a very clever Bank of England governor:  In his  speech at the Mansion House  last week, Mark Carney appeared to indicate that interest rates might rise sooner in the UK than markets have been expecting. Predictably, media and market hawks seized upon this as indication that rates will rise towards the end of 2014. Sterling rose, gilt yields rose and the yield curve steepened. This was, of course, exactly what Carney wanted.... Read on here .   (picture: Carney speaking at the Mansion House dinner. Courtesy of the Wall Street Journal)

This post on VoxEU purports to show that there is no house price bubble in the UK, and perhaps more importantly, that there was no house price bubble in the run up to the 2007 crash. This may come as something of a surprise to those who are used to looking at charts like this: This chart shows the rise in average UK house prices since 1973 (source: Nationwide) . There is clearly a steep rise in prices from 1995 to the crash in Q4 2007, which dwarfs the previous housing boom and bust in 1987-8. Many people would regard such a dramatic rise and fall as evidence of a bubble. But the VoxEU authors don't think it is. And they base their argument on a unique feature* of the UK housing market - the existence of very long-term leases as well as freeholds. Typically, in the UK housing market, houses are freehold and apartments leasehold, though this is not universally the case. A lease is a right to use a property for a period of time. In effect, it is a time-limited, pre-paid ...