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B B C Newsnight Scotland 03.07.08


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#46 sinclair

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Posted 04 July 2008 - 01:08 PM

Just to say very well done FP - you gave a very convincing argument as to why Scotland isn't immune to the crash - I know journalists on The Scotsman who still won't hear of this!
The other pair were like rabbits in the headlights - giving very woolly answers.
Very impressed with Gordon Brewers' handling of the debate too.
Well done!

Edited by sinclair, 04 July 2008 - 01:10 PM.


#47 Killer Bunny

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Posted 04 July 2008 - 01:33 PM

I am sure FP will keep it sane and low key. ;)

If there are ever any 'impartial' economists spouting sh1te, I'll get stuck in. VIs are to be expected and the viewers take with large salt pinches. But not the 'impartial' ones.

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#48 zceb90

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Posted 04 July 2008 - 01:44 PM

Newsnight Scotland 03.07.08 Lasts c 20 minutes

In the past Newsnight Scotland has only been avail on iplayer for 24hrs; it's also blocked outside UK. As I can receive prog on Freeview I watched last night.

V good point re leverage on bank loans i.e. $400bn bad debts = $4 trillion less to lend. I'm not even sure it will end there as a combination of falling house prices and recession will bring lots more mortgages 'under water' in both US and UK in turn leading to further bad debts.

US and UK are in further trouble re trade balances. US oil imports currently cost $700bn pa and recent report estimated UK energy imports during 5 year period 2008 - 2013 at $500bn. I doubt either country can maintain currency outflows on this scale for long and even if they could interest rates would have to rise to attract foreign currency. Outflows of currency on this scale combined with rising interest rates means recession.

The alternative, of course, is for currency outflows to be minimised in which case requisite energy imports simply won't show up. That in turn means recession. Either way I don't see how the housing market in both US and UK can avoid falls in the order of 40% as FP referred to...and it may well go lower than that.

Edited by zceb90, 04 July 2008 - 01:45 PM.

Chris

#49 ccc

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Posted 04 July 2008 - 01:55 PM

If there are ever any 'impartial' economists spouting sh1te, I'll get stuck in. VIs are to be expected and the viewers take with large salt pinches. But not the 'impartial' ones.


Indeed. When I heard the others anounced last night I though great we have an economist who clearly must know the score. Very wrong.

What really annoys me about Scotland is the constant referel to the fact Scotland has 'traditionally' had no boom and bust or peaks and troughs like England - So therefore we won't have the same bust that England is having. (This impartial 'expert' was spouting this last night)

That would make sense except we have just had a massive boom in Scotland !!!

For years they have been telling everyone that 'Scotland property market is booming', 'Edinburgh is now the 5th most expensive place to live in the UK', 'Irvine is the property hotspot for entire UK in 2006' etc...

Now they are trying to tell us that this boom never actually happened - so no need to worry about a bust !! It is ridiculous. !!

Many have this notion that Scotland is in some way still 'affordable'. There seems to be this viewpoint that everyone in England has to pay Chelsea, 500k, prices for small one bed flats. The reality is that many places in Scotland (Glasgow, Edinburgh, Aberdeen, Ayrshire) are some of the most overvalued in the entire UK. Many places in England are far mroe affordable than many parts of Scotland.

This Scottish delusion must end !!

PS - I am from Edinburgh so I hear this drivel all the time. Cracks are finally showing through however.... ;)

Edited by ccc, 04 July 2008 - 01:57 PM.

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#50 shindigger

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Posted 04 July 2008 - 01:57 PM

In the past Newsnight Scotland has only been avail on iplayer for 24hrs; it's also blocked outside UK. As I can receive prog on Freeview I watched last night.

V good point re leverage on bank loans i.e. $400bn bad debts = $4 trillion less to lend. I'm not even sure it will end there as a combination of falling house prices and recession will bring lots more mortgages 'under water' in both US and UK in turn leading to further bad debts.

US and UK are in further trouble re trade balances. US oil imports currently cost $700bn pa and recent report estimated UK energy imports during 5 year period 2008 - 2013 at $500bn. I doubt either country can maintain currency outflows on this scale for long and even if they could interest rates would have to rise to attract foreign currency. Outflows of currency on this scale combined with rising interest rates means recession.

The alternative, of course, is for currency outflows to be minimised in which case requisite energy imports simply won't show up. That in turn means recession. Either way I don't see how the housing market in both US and UK can avoid falls in the order of 40% as FP referred to...and it may well go lower than that.



Energy costs could mean 5-6 people to a 3 bed house easliy. Ergo we have enough houses/ flats.
Ergo, speaking as a 42 year old, i dont think i'll see house prices return to 07 levels in my lifetime.
Our whole way of life is about to fundamentally shift. Theres practically a whole generation who have got in to work expecting their humdrum existences to be brightened, temporarily, by the unearned, unsaved, gotten gains of mewing.(Holidays, plasmas etc) The psychological impact of this new reality could very damaging for thousands of people.
When in truth, they should be counting themselves lucky to even have a job.
Expect another 50 Bridgends coming to a town near you.
If you want a cheaper house, vote Labour in 2015.

#51 Even Keel

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Posted 04 July 2008 - 02:16 PM

Enjoyed FP's performance last night, though at times he did seem to be banging on a bit about global crisis rather than pointing out the particulars in Scotland this time. Looking at the latest CML Scotland information factsheet (http://www.cml.org.u...08.pdf?ref=4838), you can see pretty clearly when the Scots stopped being canny with their money and started blowing the same bubble as everyone else.

Looking at the graphs on the factsheet, you can see that the Scottish housing market was a picture of good health up until 2002. House price inflation was at a sustainable 5% or less. Ever increasing numbers of first time buyers were able to afford a property, and the average first time buyer's salary was increasing at a rate similar to house prices, keeping income multiples for loans steady at a very creditworthy 2.5x multiple.

Historically, it was the Scottish banks reluctance to lend at high multiples which kept the housing market steadier here than in the rest of the UK but that all changed in 2002. The huge expansion of RBS and HBOS in search of a quick profit, and the dangerously low interest rates of 2002 and 2003 kicked off the increase in income multiples. The emergence of the property "investors", mostly tart it up and sell it on developers or BTL, forced prices up at rates even higher than the rest of the UK, pricing many FTB's out of the market (down from 50,000 buyers in 2002 to 35,000 in 2007). While the overall picture in Scotland may be slightly healthier than the rest of the UK, this is certainly not a repeat of the 1990s when we pretty much avoided the crash, so bang goes that "it's different in Scotland" argument.

When it goes to the old supply and demand chestnut, the Scottish market (and Glasgow in particualr) illustrates pretty nicely how that works. Everyone seems to bang on about how a shortage in supply of housing will keep prices up. FP made the point that there is always going to be a shortage of the houses people would like to live in, since everyone wants a lovely 5 bed house in ample gardens. It's what people can afford to buy that really counts, and unfortunately there's also a pretty large shortage of that too. The one thing there isn't a shortage of are buildings (not necessarily nice ones) to put a roof over your head, there is a huge amount of sub standard housing stock in poor areas lying empty.

Looking at Scotland, the large increase in FTB's in the years up to 2002 prompted the government and councils to look for ways to increase the stock of "affordable" housing to let these buyers move from rental or living with family to ownership. The cheapest way to do this was to give permission for the development of a whole load of one and two bedroom city flats, either on brownfield sites, or replacing the social housing tower blocks of the 1960's. Developers were given cheap land and the permission to build high density, and sometimes rather suspect quality homes (do a search on Kingston Quay if you want a fine example). However, instead of providing the cheap flats for owner occupiers the politicians had hoped for, the investors riding the easy credit BTL boom snapped up all the newbuild at prices well beyond the reach of first time buyers. New build developers raked in the profits like never before, selling at huge margins. Investors grinned at the 10-15% capital growth while their 5% rental return easily covered the mortgage. People like me just drove past and wondered who on earth was actually going to live in these thousands of fancy and expensive new flats, occasionally wondering where all the people from the worst of the 1960's tower blocks that had just been demolished had moved to.

Looking at the supply and demand situation, there is still a huge demand for properties which can be bought for a deposit of 5%+ and a 2.5x salary mortgage (the way I bought my first flat). The credit crunch has evaporated the demand for properties at silly multiples. Increasing interest rates and no prospect of capital gains are scaring off the investors. The prices of properties will have to come down until the demand at those prices matches the supply of properties actually on the market. I have no idea what prices the supply and demand will actually meet at and house sales pick up again. We have certainly moved on from the time when income multiples were a sufficient guide to whether or not the market was overheated. The boom in buy to let means that investment returns on property are now probably just as important an indicator of where the prices are eventiually going.

Just a few thoughts there in my first post here. Mostly I'm just a curious observer, happy in the flat I'm in. I have a 2.3x salary mortgage tracking at 0.75 above base rate for the life of the mortgage (I'm so glad i took that deal three years ago instead of a cheaper fixed rate :) ), and won't be in negative equity until the market falls by about 45% so I guess I'm sitting pretty.

#52 Jadoube

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Posted 04 July 2008 - 03:38 PM

Many have this notion that Scotland is in some way still 'affordable'. There seems to be this viewpoint that everyone in England has to pay Chelsea, 500k, prices for small one bed flats. The reality is that many places in Scotland (Glasgow, Edinburgh, Aberdeen, Ayrshire) are some of the most overvalued in the entire UK. Many places in England are far mroe affordable than many parts of Scotland.


Perhaps because

1) there's been a recent boom
2) we don't get much useful Scottish news down south.

Initially my wife thought we'd have no problem moving 'home' (we've been away for 30+ years) but she quickly understood after an evening going through a couple of web sites and adjusted her sights accordingly.

If where we live and where we hope to move both go back to 1998 prices I think we'll have a few more options. On the other hand if Scotland lags...

Edited by Jadoube, 04 July 2008 - 03:38 PM.

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#53 swhiteley

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Posted 04 July 2008 - 04:52 PM

Both the Newsnight Scotland and BBC Breakfast programmes can now be viewed online or downloaded directly from the HPC server: Newsnight Scotland, BBC Breakfast

#54 markinspain

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Posted 04 July 2008 - 06:23 PM

Both the Newsnight Scotland and BBC Breakfast programmes can now be viewed online or downloaded directly from the HPC server: Newsnight Scotland, BBC Breakfast


Many Thanks. Another stirling performance from FP.
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#55 Mancghirl

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Posted 04 July 2008 - 09:03 PM

Excellent stuff, FP. Respecting your work.

I *heart* Gordon Brewer, he has a default setting of 'completely incredulous' and is perfect for Newsnight.

His interview with Cathy Jamieson during the election campaign last year is tres amusant.....

Bubbles burst. Ask Alex Ferguson.

#56 Timil

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Posted 05 July 2008 - 12:10 AM

FP I thought you read their horoscopes perfectly and they came across as fumbling for answers, whilst you were perceived as the expert.



It'll all end in Tears n' Snotters.

#57 crown

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Posted 05 July 2008 - 05:13 AM

Yes please I can't watch via BBC ipod as I am not in UK.


clip is way too big for me to upload to youtube.

Sorry

#58 gravity always wins

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Posted 05 July 2008 - 07:52 AM

"My forecasts have been very accurate since I started making them last year"
Naughty, naughty, FP ;)

Great performance, though.

Unless the Dow hit 15,000 last night even thats not true.

He does seem to get a lot of air time considering he never seems to get any predictions right.

Tell me FP when did you sell to rent again?

Just another member of the X factor generation absolutely cr*p but still think they are talented inspite of the overwelming evidence.
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#59 hotairmail

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Posted 05 July 2008 - 10:05 AM

Just be careful about the $400bn point FP. The banks have raised over $300 bn in additional capital thus far. However, continued losses will make it ever harder to raise additional capital - and more importantly, growth in lending will be constrained.

As the average LTV across all properties is 30% and the average ltv for new mortgaged home buyers is 80%, net lending has to continue growing in order for house prices to remain at their elevated level.

This is why we are actually witnessing positive net lending figures (yes - even more lending than before) even though we have significantly fewer transactions. House prices are falling because even at this stage the required growth in lending can't keep up.

By the way - a good show although I would have added that we will probably need to nationalise all the banks as well a bit down the road. And it might be an idea to press the reset switch and change the currency as well while we're at it.

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#60 MiCasaSuCasa

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Posted 07 July 2008 - 09:12 PM

The report at the beginning is an absolutely terrible piece of journalism....no facts whatsoever. "Scotland's different..blah blah", but no evidence to back it up.




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