howard mcsweeney1- Location: Dover
- Registered: 12 Mar 2008
- Posts: 62,352
#1
The situation can only get worse with Government cutting funding year on year and in the case of Somerset the most vulnerable people get hit the most.
https://www.bbc.co.uk/news/uk-england-somerset-45402806Keith Sansum1
- Location: london
- Registered: 25 Aug 2010
- Posts: 23,948
#2
It appears councils are looking in other directions my understanding is Ddc has borrowed £200million (usual budget around £14MILLION ) That's bold but quite concerning if correct
Councils don't have the best backgrounds on properties
And this is a big increase
Hope this doesn't become a disaster that we end up paying for
It appears councils across the country are doing this
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howard mcsweeney1- Location: Dover
- Registered: 12 Mar 2008
- Posts: 62,352
#3
You'll start Bob off now Keith!!
Captain Haddock
- Location: Marlinspike Hall
- Registered: 8 Oct 2012
- Posts: 8,397
#4
The letter the EKM chose not to publish today:-
Sir,
I hope that fellow District Councillors read the excellent and informative article in last week's Mercury about 'Casino Councils'.
HofC briefing paper 08142 on 'Local Government commercial property investments' also makes sobering reading, outlining just some of the strategic risks involved as yet more councils drink the latest 'can't possibly go wrong' snake-oil.
As the FT wrote last year, the driving force behind this hedge fund-style activity is the same one that pushed local governments in Japan to buy property in the 1980s bubble, the need to plug gaps in their budgets after years of funding cuts from central government.
In Japan a rapid acceleration of asset prices as well as an uncontrolled money supply and credit expansion created a property bubble, which bursting, resulted in a huge accumulation of non-performing asset loans, causing difficulties for many financial institutions and the decline of the entire economy for over a decade.
In the US, such speculation has led to bankruptcy — most notably at Orange County in California, which was forced to declare itself bankrupt in 1994 after losing $1.6bn on derivatives trading.
To quote Lord Oakeshott, chairman of Olim Property, investment manager of £650m of commercial property for pension funds, charities and investment trusts “English councils punting on property is an accident waiting to happen.There are real echoes here of Northern Rock, where many punters were lent all the purchase price of a property, and the Icelandic bank scandals, where councils played a market they didn’t understand for short-term income gain.”
It's not as if we haven't been this way before locally. Long term residents will remember DDC's 'investment' in an Icelandic Bank back in 2008. That time it was only £1 million of our own money at risk, this time it's up to £200 million, and it's all borrowed money because, if you believe the narrative, we can borrow money at an incredibly cheap rate and such will be the return on commercial property over the next twenty years or so, no-one can see how this can possibly go wrong!
(Remember, 20 years ago there was no Amazon UK and no-one could foresee a successful High Street in the country without a Woolworths, Dixons, Mothercare etc - things change.)
Of course DDC will be hiring 'expert advice' to advise us on our investments, presumably even more expert than the highly paid advisors who convinced banks worldwide that securitisation and credit default swaps were a way of making sub-prime lending more secure (rather than less as it turned out!) leading to the largest worldwide recession since the 1930s.
I honestly hope it all turns out well, though I am yet to talk to a councillor who would invest his own pension fund this way, the 'cunning plan' having full support by all councillors of every political persuasion. Except one.
Not only did I vote against the scheme but have insisted that my vote against is part of the official record. Don't say I didn't warn you.
"The world is still a weird place, despite my efforts to make clear and perfect sense of it".
Dr. Hunter S Thompson
Brian Dixon
- Location: Dover
- Registered: 23 Sep 2008
- Posts: 23,940
#5
talking of cuts, they haven't cut the grass up Aycliffe for 4 weeks, looks like a jungle at the moment.
howard mcsweeney1- Location: Dover
- Registered: 12 Mar 2008
- Posts: 62,352
#6
More big cuts to come again next April but where will KCC wield the axe?
https://www.bbc.co.uk/news/education-45573921Jan Higgins
- Location: Dover
- Registered: 5 Jul 2010
- Posts: 13,931
#7
howard mcsweeney1 wrote:More big cuts to come again next April but where will KCC wield the axe?
Anywhere except their own pockets so expenses will be safe as will any jollies, better known as fact finding missions.
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I try to be neutral and polite but it is hard and getting even more difficult at times.
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