What can be done to prevent another bubble

[Supermanpolitician]

To prevent future bubbles:

1. Ban all profiteering, by monitoring every single transaction in the world.
2. Stop companies from developing new products. No new products means no speculative investments. No speculative investments means no speculative bubbles.
3. Strickly control poopulation movements on a "one out, one in" basis.
4. Only allow couples to have children if they agree to bring them up adhering to this doctrine.

The fact is that the bubbles have existed for hundreds of years. It is part of human nature to speculate.

[carlovian]

De Gaulle is correct.

The way to prevent property bubbles is to control lending.

The banking rules were 2.5 times the main salary and 1 time the second salary. In the mid to late 90's the banks changed their own lending rules to inflate the amount people could receive, thereby inflating house prices.

Control lending, Control prices !!!

[Supermanpolitician]

De Gaulle is correct.

The way to prevent property bubbles is to control lending.

The banking rules were 2.5 times the main salary and 1 time the second salary. In the mid to late 90's the banks changed their own lending rules to inflate the amount people could receive, thereby inflating house prices.

Control lending, Control prices !!!

But there were bubbles long before the banks went cuckoo with their lending rates.
Bubbles are part of the human condition.

[drbob1972]

But there were bubbles long before the banks went cuckoo with their lending rates.
Bubbles are part of the human condition.

true, there have been and baring major changes in humanity and society there will continue to be, however there is a roll for government to control elements that are controlable and not to just sit back and let it roll on and profit in the short term from it (the Zanu-FF model) but which has much longer term damage to the economy & society...

[Supermanpolitician]

true, there have been and baring major changes in humanity and society there will continue to be, however there is a roll for government to control elements that are controlable and not to just sit back and let it roll on and profit in the short term from it (the Zanu-FF model) but which has much longer term damage to the economy & society...

But control itself can lead to bubbles. If a control is too restricitive then it will restrict supply creating a demand bubble. If credit availability is too tight, it will hamper competition, and create monopolies.

Bets bet is to just ride the wave of despair.

[Defeated Romanticist]

Find a way to control the money supply other than interest rates. Otherwise by supressing a property bubble we will be instead subject to another type of bubble. Bubbles happen when the money supply is mismanaged. It was in this country.

[JollyRedGiant]

sorry guys - only one solution to this one - scrap capitalism and introduce genuine workers democracy and a socialist planned economy.

[Supermanpolitician]

sorry guys - only one solution to this one - scrap capitalism and introduce genuine workers democracy and a socialist planned economy.

Socialist Planned Economy? That JRG. Needed a laugh!

So what if a company wanted to invest in R&D. How would that be handled by a SPE?

[Question R24U]

Take planning away from local authorities. There is enough land rezoned for 460.000 houses that will never be built. That zoning should be subject to use it or lose it. Then and only then should local authorities levy a local property tax. Restrict credit to 3.5 times income unless the punter has demonstrated a stress tested saving habit in the year up to the mortgage is granted.

[Victor Meldrew]

It's all about the mortgage lending IMO. Control that and I think you will prevent future bubbles.

Makes you wonder what the government is trying to do with its "help" for FTB's just announced

That is the beginning and end of it. That said, we don't want a return to the days where you were not respectable enough to get a mortgage. and a 90% max would also be nice too. And the drop from 10% - 15% interest rates to the 3% interest rates we had in the early 00's skewed perceptions of what could be lent.

If there is a lesson to be learned from this debacle, it's that interest rates can't control inflation and regulate markets.