Friday 13 May 2016

Nobody move or house prices and share prices get it!

Today's scaremongering from the FT, via MBK (as usual):

A vote by the UK to leave the European Union risked triggering “sharp drops in equity and house prices, the head of the International Monetary Fund has warned in a damning assessment of the effects of Brexit.

Christine Lagarde, IMF chief, warned the consequences of Brexit ranged from “pretty bad to very, very bad”, precipitating a protracted period of heightened uncertainty, financial market volatility and a hit to economy.


Appealing to the Home-Owner-Ists is always a good strategy, but actually those are the two least important variables in the economy, they are just a measurement of other much more fundamental things, they are a symptom and not a cause. So output, profits and employment matter - share prices do not.

Moreover, they are just transfers of wealth, if house or share prices fall, tomorrow's purchasers benefit by in £££ the same amount that today's owners have lost on paper.

4 comments:

Steven_L said...

Moreover, they are just transfers of wealth, if house or share prices fall, tomorrow's purchasers benefit by in £££ the same amount that today's owners have lost on paper.

I first saw their true colours in 2007 during the northern rock run, when faux libertarian the Rt Hon John Redwood announced on his 'blog his belief the government needed to act to support asset prices.

DBC Reed said...

A bad move from the former synchronised swimmer. If falling house prices were a promise not a threat,I would vote Brexit straight off. That and the restoration of Resale Price Maintenance is all it would take. So no chance, then.

paulc156 said...

Actually, a pretty impressive riposte to the IMF weighing in on Brexit came from Ambrose Evans Pritchard in the Torygraph.
http://www.telegraph.co.uk/business/2016/05/13/imf-meddling-on-brexit-is-scandalous-skulduggery/

James Higham said...

Just hope the public are also seeing all this for what it is.