money money money

Money - its one of the the 3 things which makes the world go round - love, power and money.

Money can buy power but not love however in this modern civilization in which we live money is becoming the more demoninant motor whcih mkaes the earth go round. (not in a scinetific sense )

However the Bank of England voted today to raise intrest rates yet again (numbering the 7th raise since september I believe ) up to 5.5% (a raise of 1/4%) This is brilliant news for everyone who has money stashed away in bank accounts building up more and more intrest (myself not included) but crushing news for the majority of economic active poeple in this country who have a morgage and are trying to pay it off. A quarter of a % raise roughly averages out on the averag house price of £100,000 - £120,000 to be about an extra £20 per month extra repayment which for some families is managebale. However with all the recent raises totalled we are looking at an extra £80 repayment on morgages; which is driving osme families to loose homes, posessions and drive them into debt.

So why is this happening - the Bank of England is franticlly trying to increase the intrest rates to keep control over inflation (although inflation is rising if intrest rates did not raise it would soar bringing choas to the economy and signifcantly cut consumer spendin)

However intrest rates are rising which effects house prices, which are included in the calcuating of inflation and so the circle continues. Intrest rates increase, so does inflation.

Another factor that is causing high intrest rates is the shameful state of credit people in this country have, borrowing high amounts (due to previosuly lower intrest rates) and are trying to pay them back.

However one of the main contributers is housing, by ther being a shortage of houses this brings in the principle of supply and demand. With high demand (which there is in this country due to high land value, immigration, divorces, and more independant people and wide spread families ) and low supply comes high prices as products are consideed a rariety - for eample there is only one Mona Liza, which becuase of its uniqueness costs a fortune, if there was hundreds o Mona Liza's the cost would be signifcantly lower as they are more accessible. And this is what Britian is facing today.

So ultimatly to help ease the crisis ( not solve it completly) would be to build more housing, quickly. However we do not need semi detached or detached 4 bed homes whcih cost a fortune as they would not ease the situation fast enough. The easiest solution is tower blocks ( single bedroom, 2 bedrooms tower blocks) howeve these can not be some similar to those designed by Barrot or other companies which are high class and expensive. These need to be asthetically pleasing however not enough to be costly. Tower blocks also make most and est use of land. Some counties have introudced staggered payments and different payment options to first time buys or to people buying homes in tower blocks which are slightly more expensive however they are more affordable to first time buyers through various schemes.

But if we do not counter balance this rapid increase in intrest and inflation we will eventually see a crash in the house market where poeple refuse to pay the prices and so demand wil fall ( making the supply high and costs low ) As a economic expert said
"I would not selling my house for 50p as in the housing market it would mean I could upgrade to Buckingham palace for about a tenner)