Bloomberg: S&P Lowers or May Cut $534 Billion of Subprime Debt

``If you're holding a AAA piece and it's now downgraded to AA, you might have to write it down, even if you're holding it for an investment,'' . ``The longer it goes on and the higher the credit rating of the instrument downgraded, the wider the pain.''

seattlepi.nwsource: S&P mulls $500B in mortgage downgrade

The massive downgrade would threaten a broad swath of the world's finance industry, S&P said, ranging from Wall Street's trading desks to regional banks to local credit unions. &P acknowledged the potential for these downgrades to ripple throughout the world of banking and finance. Banks have already posted $90 billion in losses on these types of mortgage investments, and S&P expects losses to reach $265 billion.

FT: UK housing activity slows

"The turmoil in credit markets appeared to have spread to UK households on Wednesday with activity in the housing market gumming up in December and lenders approving fewer mortgages than at any time since the mid-1990s."

BBC Archive: Panorama Home Truths

A program broadcast in 1995 examining the last housing slump.

Bloomberg: Fed Lowers rate to 3%

Well done Ben - biggest drop, cumulative, since 1990 - DON'T PANIC MR MANNERING!!!!!!!!!!!!!!!!!!!!!!!!!

FT: Fed cuts rates by 50 basis points

The Federal Reserve on Wednesday cut interest rates by a further 50 basis points to 3 per cent, in an aggressive move to try to keep the US out of recession. The 50 point reduction, hot on the heels of the unscheduled 75 basis point cut last week, takes the total reduction over the past eight days to 125 basis points. It reflects concern that a negative feedback loop between the financial system and the economy could be spreading from housing to other sectors.

New Zealand Herald: New houses down as rate rises bite

New house approvals are down downunder as rates bite. Do the house builders know something we don't or will the reduction in supply help sustain prices.

Telegraph: Ministers snoop on 16m house sales

The Government has gone ahead with a deal with Rightmove, an online property search firm, to give HM Customs and Revenue [HMRC] staff access to its records of transactions. The records contain details about individual properties, including their sale price as well as any internal features and modifications that may add to their value. The Conservatives say the contract is proof ministers are planning to press ahead with changes to council tax bands despite Labour promising last year to postpone a sweeping revaluation.

FT Alphaville: Rights issue ahead for Barclays and RBS says Citi

Just thought this would be of interest while on the subject of rights issues...... Dont suppose the Citi boys are too upset!

moneysavingexpert.com webpage: House Prices Poll Result. Massive 30% sentiment swing toward house prices dropping

Voters predicting a fall: 59% of people predicted a fall (30%). Does sentiment matter? Yes, when people think prices will drop they act differently, they’re far less willing to pay higher prices, and thus there’s the potential for a self-fulfilling prophecy

Moneyweek: Four signs that gold has further to rise

Hold top in? Not according to this. Fed rate cut coming today? According to this, yes.

Gordian: Can we claim tax relief on buy-to-let?

"Q My husband and I have recently taken out two mortgages to buy a second home for buy-to-let. As the property cost £270,000, we have a buy-to-let mortgage of £200,000 and a normal mortgage of £70,000 against our own home. Can we claim the tax relief on mortgage interest for both mortgages against the rental income? A yes, you should be able to claim tax relief on the interest on both mortgages. If the mortgage interest is more than the rental income, the calculation will create a business loss, which you can use to reduce the taxable profits of your buy-to-let property in future tax years"

The Telegraph: Hedge funds: The new global super powers

But if someone has a facility for complex analysis, wouldn't the world be a better place if they deployed their talents on solving climate change or using the new science of genomics to find cures for fatal illnesses?

Kitco: The "Real" Gold Price

An example will be useful to illustrate this loss of purchasing power. Let’s assume that a recipient received $850 per month from the US government in January 1980. Using the US government’s CPI, that recipient is today receiving $2,310. However, if the US government had not made any changes to the way it calculates CPI, the recipient would today be receiving $6,255. This difference can be seen in the following chart, which presents the January $850 gold price adjusted for inflation using both CPI’s.

FT: Mortgage approvals fall to 12-year low

Mortgage approvals fell for a seventh month in December to the lowest level since the 1990s, Bank of England data showed, signalling that the UK housing market has already slowed more sharply than during the 2005 downturn.“The prospect of a repeat of the 2005 soft landing in the housing market is fading fast,” said Vicky Redwood at Capital Economics, adding “there is growing evidence that despite the recent fall in interbank lending rates, the damage of the credit crunch has already been done”.

BBC News: Mortgage approvals drop further

The number of new mortgages approved for home buying fell for the seventh consecutive month in December, the Bank of England has said. It said 73,000 mortgages were approved for home buyers last month, down from a revised figure of 81,000 in November.

Guardian: FBI investigates sub-prime crisis

Fourteen companies, including some of the world's largest banks, are being investigated over possible accounting fraud, improperly securing loans and insider trading during the sub-prime mortgage scandal.

Reuters: Mortgage approvals fall to record low in Dec

LONDON (Reuters) - Mortgage approvals fell for the seventh month running in December to the lowest since current records began in 1999, official data showed on Wednesday, the strongest sign yet that the housing market is slowing sharply.

MoneyWeek: London property: where have all the buyers gone?

If the property boom isn't over, why can't interior designer Kelly Hoppen sell her much-hyped Battersea flat? Merryn Somerset Webb looks at why it's case of can't buy, won't buy amongst London's wealthy.

YouWalkAway: Just walk away from your debts

Are you stressed out about your mortgage payments? Do you have little or no equity in your home? Is your home sinking under the waves of the real estate crash? What if you could live payment free for up to 8 months or more and then walk away without owing a penny? The lender will not be able to chase you for any deficiency or loss once they foreclose. [N.B. this would not be the case in the UK] Let us help you. Unshackle yourself from a losing investment and use our proven method to just walk away.

Financial Times: City bon viveurs quick to book £1,000 meals

no comment

BBC: King reappointed as Bank governor

Does this mean he will dig his heals in and do the "right" thing for the long term?

PressNewswire: UK Buy-To-Let Summit - Emergency Meeting Called Buy-to-Let Property Experts Gather in London to Assess the Impact of the UK Property Market Downturn

"An emergency meeting has been called for UK buy-to-let property experts, entrepreneurs and investors. The conference takes place at an hotel near Heathrow London on the 15th & 16th March 2008. The UK Buy-to-Let Summit organised by eConfex Ltd consists of a 2-day weekend event which will look at solutions & opportunities for the new reality of buy-to-let investment in the light of the UK property market downturn & possible recession" I am planning to storm the venue with laughing gas, attendands will need it

BBC "News": Secret bank rescues to be allowed

Chancellor Alistair Darling is to give new powers to the Bank of England to mount secret rescue operations for banks requiring emergency funds.

Youtube - World in Action: World in Action Part One

Brilliant programme.. there is also a part two & part three. This is the recession in the early 80's, combine this with an 1989-1992 style house price crash and you really can imagine how serious things will become in the next couple of years.

Bloomberg: Fed May Cut Rate to 3%, Hold Out Prospect of Further Reductions

The Federal Reserve may lower interest rates for the second time in nine days and indicate a readiness to go further if the economy deteriorates.

Daily Mail: More than 1m people could lose homes in credit crunch, warns City watchdog

"More than one million families are in danger of losing their home over the next 18 months, Britain's financial regulator warned yesterday."

Moneyweek: Credit Default Swaps: how to spot the riskiest banks

Some useful information to help assess the risk of possibly not seeing your savings again...

ft: UBS hit by further $4bn write-down

UBS, one of the biggest casualties of the US subprime crisis, on Wednesday revealed a further $4bn in write downs on its portfolio of troubled mortgage-related securities.

Financial Times: Bigger deposits squeeze house buyers

A first-time buyer couple who were both in the bottom 25% of earnings, bringing in £26,595 a year after tax, would now have to save the equivalent of 104% of their joint annual take-home pay, or £27,729, in order to afford the deposit, fees and stamp duty they would have to pay to buy a typical home. That 104% today compares with just 23% in the easier market of 1996. The increasing difficulty is mostly due to lenders asking for bigger deposits. RICS said the average loan-to-value ratio offered to first-time buyers fell to 85 per cent in the fourth quarter compared with 86.5 per cent a year earlier.

Financial Times: A better strategy to deal with mortgage fallout

"Fear of risks with UK mortgage-backed securities may to some extent be fuelled by an inappropriate extrapolation from securities backed by US subprime mortgages." (In other words, he thinks the UK isn't as bad as the USA.) --- "If that is the case, there is a form of market failure." (He thinks the markets aren't working. I think they're behaving very rationally, all things considered!) --- "A new government agency, not the Bank of England, could either buy or lend against the collateral of mortgage-backed securities." (Just to tide things over until the markets get back to normal, however long that might take. In the meantime can we please all carry on making shedloads of profit at the taxpayers expense?)

Politics.co.uk: Euro leaders unveil global economy blueprint

You can just smell the BS as Brown, Sarkozy, Merkel and Prodi sign a bit of paper setting out three guiding principles for addressing "turbulence" in financial markets. Darling then has the cheek to pronounce; "Because we have got very low debt levels and because we have historically low interest rates we can then support the general economic policy and take the right action."

Rightmove: Rightmove.co.uk

Interesting graph from rightmove showing an apparent up-swing in the average monthly asking prices for January when in fact all their data shows a decline in the last three months. mmm. does appear somewhat misleading! ....or is it me??

AUSTRALIAN: Economic shock hits China

HE rampant Chinese economy that Kevin Rudd and Wayne Swan are confident will help insulate Australia from the worst of the global financial meltdown is starting to falter, with Chinese leaders warning of a "most difficult" year ahead. As US President George W. Bush used his last State of the Union address to urge bipartisan support for measures to stop the world's biggest economy slipping into recession, China blamed an uncertain outlook on the financial turmoil emanating from the stressed US housing market. Severe winter storms - - are exacerbating shortages and fuelling inflation, with blackouts in half the country. The weather is contributing to economic concerns in China, where shares on Monday suffered their fourth biggest fall in 10 years

CNN Money: Retired at 40

Todd and Julie have done well - only 44 and 40 and they have substantial wealth and have retired. But they still have a mortgage! $173k costing $18k a year - over 10% (this does include property taxes and it may include repayments). They have $230k in stocks so they could redeem the mortgage if they wanted. Would you borrow money on your house to invest in the stock market at the present time? Admittedly in the US there is no CGT and mortgage interest is tax deductible, so it may, arguably be a wise course of action. The financial planners consulted at the end of the article certainly think so, but surprisingly they use an 8% expected return on investments in their analysis. (or do they? according to my calculator, $380 at 8% for 12 years is $956k not $1.3M!)

Primelocation: The best report on the London housing market

December: the most surprising element of the prime property market in 2007 has been the speed with which market sentiment changed, from the record price growth and property values achieved in the height of the summer, to the struggling and increasingly cautious market currently being experienced not just in London but across the country. Meanwhile, the prime country sales market has seen the largest fall in prices recorded since the Index began back in January 2004. The drop of 1.3% in average prices since November comes on the back of three successive months of falling prices

Times: Retail sales slow as big ticket items plunge

Howard Archer, Chief UK and European economist at Global Insight, said: "Retail sales were particularly soft in January in the durable goods sector, which suggests that the housing market slowdown is having a significant dampening impact. "(This indicates) steady interest rate cuts by the Bank of England through 2008 and the first half of 2009. Specifically, we expect interest rates to be cut to 4.50% by the end of 2008 and to 4.00% in the first half of 2009," he said. Yeah sure. Folks lets sell pounds (the currency has already lost 14% on its trade w'd currency basket since February)

Times: House prices fall for first time in 30 months

"Nicholas Leeming, director at propertyfinder.com, said: "With unemployment so low and incomes still rising, we are seeing very few forced sellers. Instead, you get a stalemate between house buyers and sellers and transactions dry up. Sellers refuse to compromise on price and buyers refuse to commit while they fear higher mortgage payments" That is all nice mr. lemming, but buyers are more afraid of plunging house prices nowadays

Financial Services Authority: FSA publishes its 2008 Financial Risk Outlook

The Financial Services Authority (FSA) today published its Financial Risk Outlook (FRO) warning firms and consumers of the risks inherent in a significantly less benign economic environment. Its central scenario identifies the following five priority risks: (1) Existing business models of some financial institutions are under strain as a result of adverse market conditions;

Allsop: Residential Auction Property Investment Data

data from Allsops auctions to cheer you up

BBC.co.uk: FSA paints grim picture for 2008

High levels of borrowing could land "a significant minority" of people in trouble in 2008, the Financial Services Authority (FSA) has warned. Its Financial Risk Outlook also said that adverse market conditions were putting the business models of some financial institutions under strain. The FSA expects that tighter economic conditions will increase the amount of financial crime being uncovered. It is also worried that people may lose confidence in financial regulators. Too late they already have!

cnn: Mortgage Meltdown

this list is worth a look

round town news: AVOIDING POTENTIAL THREATS TO YOUR PROPERTY AND WELFARE

A friend of mine recently bought a property outside barcelona, and within months a developer, bought a plot of land next to his house, stole a stretch of his land under some archaic Spanish law, in order to build an access road, under which ran the utilities cables and pipes. He now has to pay for access to his house! A property owner decides to resell his house and offers you a wonderful deal on the property, stating the reason for the quick sale is because they are returning to the UK to take care of a sick relative. What they didn't tell you is that they know that in a few months time, there will be a rubbish dump setting up shop next door. You purchase the property and get hit with a nice surprise waking up to the sound of lorries driving past you every morning and dumping rubbish.

Land Registry: House price index for Dec 2007 - Released 29th Jan 08

The December data shows a monthly price change of -0.4 per cent and an annual increase of 6.7 per cent. This month’s average house price is £184,469. This month’s data provides evidence of a downward trend in house prices. Although the annual growth rate remains positive, this month’s price fall is a clear indication of a weakening market. This month is the first time since the minor slowdown in 2005 that average prices for England and Wales have experienced negative monthly change.

Bloomberg: Goldman and Morgan Stanley Get Subprime Requests

"Goldman Sachs Group Inc. and Morgan Stanley, the two biggest securities firms, said they are responding to requests from regulators for information related to subprime-mortgage securities."

Firstrung: House prices fall by 0.4% as sales volumes crash by 21% - year on year - Land Registry

The December data shows a monthly price change of -0.4 per cent and an annual increase of 6.7 per cent. This month's average house price is £184,469. This month's data provides evidence of a downward trend in house prices. Although the annual growth rate remains positive, this month's price fall is a clear indication of a weakening market. This month is the first time since the minor slowdown in 2005 that average prices for England and Wales have experienced negative monthly change. This month's 0.6 per cent rise in London prices is greater than the average for the country as a whole.

Sky: Banking Giant Reveals Sub-Prime Hit

Alliance & Leicester has tried to reassure investors worried about its liquidity in the wake of the Northern Rock crisis. The bank says it has strengthened its funding position to the end of the year, despite a greater-than-expected £185m hit due to the credit crunch. The group has around £23.4bn in retail deposits and £8bn in deposits from commercial customers.

Land Registry: BBC News

Not before time

MoneyWeek: How Spain's banks could be the Northern Rock of Europe

Spain's economy is in the same or worse trouble than the US and the UK. However, unknown to most Europeans, Spain's banking system is being propped up by the European taxpayer, like Northern Rock in the UK.

Guardian: A&L reveals further £130m credit crunch hit

Alliance & Leicester has revealed its losses from the credit crunch are much worse than earlier estimates and its chief executive David Bennett is currently off work ill. HA HA HA HA HA

Telegraph: Repossessed homes flood auctions

No problems here ... just your usual auction figures for a stable thriving housing market.

gata: ECB aid to Spanish banks say it matches Rock rescue Traders say the Spanish authorities are quietly turning a blind

Spanish corporate debt is now 112pc of GDP. The current account deficit is 10pc of GDP. These are both flashing red warning signs

caporal.info: The IMF has warned that this gap in the architecture of of the single currency could prove serious in a crisis

Spanish corporate debt is now 112pc of GDP. The current account deficit is 10pc of GDP. These are both flashing red warning signs

The Market Oracle: UK Housing Bear Market Confirmed

UK house prices slumped in the quarter to December 07, with London leading the way as momentum gathers towards the 2 year forecast for an average decline of 15% by August 2009. The mortgage banking sector has only just beginning to feel the impact of the housing slump as the number of foreclosures (repossessions) is expected to surge to a record busting 80,000 for 2008 from 40,000 last year. Northern Rock was the first to go bust, other banks will follow. But in the meantime watch out for other mortgage lenders, especially those exposed to the buy to let sector such as Paragon to be pushed towards bankruptcy, down 90% from its highs. Includes some nice graphs!

mail: Price of average house 'will fall by £18,500 this year' - that's £50 a day

House prices will fall by up to a tenth this year, according to one of Britain's most powerful fund managers. Neil Woodford, of Invesco, said they are simply too high and the average home will drop £18,500 by New Year's Eve, or £50 a day. The fall may be much worse in some parts of the country, warned the 47-year-old investment guru, with the biggest losers the owners of new-build flats aimed at buy-to-let investors which he fears are "almost unsellable."

FT.com: US bond insurer rescue takes shape

Efforts to shore up US bond insurers gathered pace on Monday as New York state regulators appointed investment bankers to advise on a rescue plan that could provide back-up credit lines for the troubled guarantors. The efforts are being spearheaded by Eric Dinallo, the New York state insurance superintendent, who is being privately supported by the New York Federal Reserve Bank and other regulators, people familiar with the regulators said.

FT.com: Moody’s warns over Icelandic banks

Imagine the effect on the Yen Carry Trade Iceland’s triple A rating from Moody’s Investors Service, the highest the credit rating agency offers, is “at a crossroads” because of the perceived fragility of the country’s banks.
Moody’s said, in a report published on Monday, the growth in the banks’ foreign currency liabilities might “stretch the authorities’ ability to manage a crisis”.

TELEGRAPH UK: The data appear to confirm suspicions that the EU authorities have carried out a covert rescue of the Spanish mortgage banking system.

Spanish banks are issuing mortgage securities and asset-backed bonds on a massive scale to park at the European Central Bank, Reliance on the ECB window appears to have kept the mortgage sector afloat despite the sharp slowdown in the Spanish property market and the de facto closure of the capital markets for this type of business, allowing Spain to avoid the sort of mishap suffered by Northern Rock in Britain and Countrywide in the US. It may equal the taxpayer rescue of Northern Rock in Britain, and possibly exceed it in proportion to the overall size of Spain's economy.

The Times: Auctions of repossessed homes soar

The number of repossessed homes being sold at auction has doubled since last year, a leading auctioneer said yesterday. Allsop, the UK’s biggest property auction house, said that nearly 40 per cent of the properties going under the hammer at auction next month were repossessed by banks or building societies. Last February, just 20 per cent of properties auctioned were repossessed.

Firstrung: Households spend £456 a week without mortgage costs - ONS

That's quite a lot to spend net, but why is mortgage and or rent excluded? Household spending was highest in the transport category at £62 a week. This included £23.40 on purchase of vehicles, £28.60 on the operation of personal transport (such as petrol, diesel, repairs and servicing) and £10.00 on transport services such as rail, tube and bus fares. The second highest category of spending was recreation and culture at £58 a week. This includes TVs, computers, newspapers, books, leisure activities and package holidays. On average, £13.20 a week was spent on package holidays abroad, compared to £0.90 a week on package holidays in the UK. Housing (excluding mortgage costs), fuel and power placed third at £48.

dow jones: "Rumors were that they could write off $2 billion," said Todd Lee, managing director of the Greater China group at Global Insight.

The U.S. subprime crisis may be able to help accomplish what China's central bankers have yet to do -- rein in China's banking industry and its fast-pitched economic growth and inflation. Adding to recent reports of a big subprime write-down at Beijing-based Bank of China Ltd. (601988.SH), a Chinese senior economist on Tuesday said he expected rising nonperforming assets at China's biggest lenders, fueled by their subprime exposure and tighter domestic credit.

the scotsman: Fortis has been under pressure to make a statement on its exposure after weekend reports suggested it may have to write off up to £1.5bn from its sub-prime portfolio.

FORTIS, the Belgian bank that was part of the successful RBS-led consortium that bought ABN Amro last year, said today that losses stemming from the US sub-prime crisis could be around £750 million. And that means that its profits for 2007 could come in at around £2.23 billion, rather than previous forecasts for £2.97bn. The world's biggest banks have already said they are facing total combine losses from the sub-prime sector – which focuses on lending to people with poor credit histories of unreliable income – of more than £100bn.

FT.com: Eastern Europe to feel credit squeeze

The turmoil in financial markets is turning into a nerve-racking test for the economies of central and eastern Europe and the former Soviet Union. Economists have said the fast-growing region faces a slowdown following the financial shockwaves reverberating around the globe.

Yahoo - AP: Stocks Rise on Rate Cut Hopes

A jittery Wall Street advanced Monday, fighting to reverse Friday's sharp losses as investors took a dismal new home sales report as a sign that the Federal Reserve will lower rates this week.

Breitbart.com: US mortgage crisis creates ghost town

The streets are empty. Trash rustles down the road past rusted barbecues, abandoned furniture, sagging homes and gardens turned to weed. This is Shaker Heights, a suburb of Cleveland and a town ravaged by the subprime mortgage crisis roiling the United States. Faded "for sale" signs sit in front of deserted houses. The residents are gone, either in search of new jobs after the factories shut down, or in shame after being evicted for missing their mortgage payments. A red, white and blue American flag flies over windows and doors which have been boarded up to keep the drug dealers away. Thieves have stripped many homes of the plumbing, the doors, the windows, the aluminum siding.

BBC NEWS: US home sales fall at record pace

Sales of new US homes fell at a record pace in 2007, figures from the US Commerce Department have shown. The number of new homes sold sarimnk 26.4% to 774,000, which beat the previous record fall of 23.1% set in 1980.

Moneymarketing: Paragon shareholders vote in favour of rights issue

Paragon has confirmed that its shareholders have voted unanimously in favour of its proposed rights issue at its Extraordinary General Meeting today. The buy-to-let specialist lender had announced to the stock market in November that it would have to do an emergency rights issue as a result of funding problems caused by the credit crunch. It has since revealed that it will not be accepting any new lending from February 28 as its warehouse loan facility is not being renewed.

MoneyWeek: Self-cert mortgages: a warning from the last crash

Self-certification and subprime mortgages are hardly new phenomena. In the early 90s, the easy availability of loans and extravagant valuations led to bankruptcy and huge losses for lending banks. And it will again.

moneymarketing.co.uk: Close Investments suspends property dealing

Close Investments Property chief investment officer Peter Roscrow says: "We continue to believe in the long term future performance of Closepip which has performed better than the vast majority of competitor open ended property funds over the last one, three, and six months, one and three years.” Open Ended???

BBC: House costs up as food bills drop

UK households spend more of their budget on housing and less on food comapred to 50 years ago, according to the Office for National Statistics. Spending on food and non-alcoholic drink fell from a third of the average weekly budget to 15%. Meanwhile mortgage interest payments or rent accounted for 19% of spending in 2006, up from 9% in 1957. UK households spent on average £572 per month on all housing-related costs in 2006, out of an average monthly spend of £1824. The ONS figures are used to calculate the RPI.

Times: Property prices: the Vital Statistics with the Bricks Chicks

I liked the part "7.5% is Halifax average mortgage rate, and with this rate forget house price appreciation" MAU HAHHAH HAAHAH

Telegraph: MPC's Blanchflower calls for urgent rate cuts

Wish this guy would just go back to academia......''Professor David Blanchflower, the only member of the Bank of England's Monetary Policy Committee to vote in favour of a cut in interest rates this month, has hit out at the majority decision to hold rates saying that "worrying about inflation at this time seems like fiddling while Rome burns." ZZZZzzzzzzzzz

Firstrung: Newcastle Building Society reveals a very bleak outlook for pensioners

New research from Newcastle Building Society Equity Release Service has unveiled the true high cost of being a pensioner. In 2008, Newcastle Equity Release Service predicts that real inflation for pensioners will be up to 7% - more than double the estimated national inflation rate. The main areas responsible for this hike are fuel and food, which, according to the weightings of the Government's pensioner's price index, account for over one-third (14% and 22% respectively) of all pensioners' expenditure.

FT: IMF head in shock fiscal warning

“This is the first time in 25 years that the IMF managing director has called for an increase in fiscal deficits and I regard this as a recognition of the gravity of the situation that we face,”

FT: Investors shift bets to oil slide

"Investors are shifting their bets towards oil prices weakening in the near future as the slowdown in US economic activity damps energy demand growth, traders in London and New York said." If true this will have a big effect on inflation and gold prices.

Times: Bicks Chicks

"Some indicies are showing rises in property prices, others are showing falls - but what's the true picture? This week the Bricks Chicks go behind the headline figures to find out what's really happening in the property market"

BBC News: House prices 'to fall 5.5% then rise again', as top economist warns of recession

''A top economist warned today that the UK risked falling into a full-blown recession as it entered its weakest period of growth for more than 15 years. Roger Bootle, adviser to accountants Deloitte, said he expected the UK economy to grow by 2 per cent this year and 1.7 per cent the next, the lowest two-year growth rate since 1992.''

Citywire: Woodford predicts 10% housing market correction

UK housing is considerably more exposed to a sharp pricing correction than most analysts have estimated Invesco Perpetual’s Neil Woodford has warned.

Nationwide [pdf]: Flashback to the madness

Commenting on the figures Alex Bannister, Nationwide's Group Economist, said: House price growth remained steady at 1.7% in January. Given that house prices rose at a more modest pace a year ago the annual rate of inflation rose to 26.5%. With the current trend in growth very stable, we would expect the annual inflation rate to remain around 25% for the next couple of months. The average house price is now £117,905. [Jan 2003]

MoneyWeek: Why the credit bust will be far worse than the tech bust

Those who claim a recession would be the perfect antidote to our overspending ways should remember a couple of things. Firstly, that recessions are miserable. And secondly, that this one's going to be much, much worse than the 'mini-recession' that followed the tech crash

Times: Home economics: house prices and stock market turmoil

"Confidence has certainly been dented, but demand for housing still exists. The move towards more realistic pricing is under way, and may well take a further 12 to 18 months; all-important will be what happens to interest rates and the economy as a whole. Although it provides useful support for prices in the short term, low turnover could have adverse consequences for the market if it persists. For many, the thought of being stuck in their home for the next 20 years could be a call to action. Richard Donnell is director of research at Hometrack" a better, more honest article than any of the garbage by davidsmith "David Smith returns next week" NOOOOOOO!!!!

Firstrung: UK house prices fall again as average time to sell house reaches seven year high - Hometrack

House prices in England and Wales rose at the slowest annual pace since mid 2006 as the average time it takes to sell a property reached a seven year high, a survey showed on Monday...

Market Oracle: Fed Duped by Rogue Trader and the Destruction of Bond Insurers

Article by John Mauldin (www.frontlinethoughts.com) who thinks the Rogue Trader explanation is not right. The Fed was not worried about the stock market itself. The stock market was responding to a monoline downgrade. Instead the Fed knows how serious the credit crunch is, a $45 trillion Credit Default Swap market is at stake. If more monolines and other bond insurers get downgraded things go over a cliff. Dropping IR 1.25% on Wednesday would have been too much, so they are doing it in two steps. Expect another big rate cut on Wednesday.

New York Times: Countrywide CEO to give up $37.5 million in payments

NEW YORK (Reuters) - Countrywide Financial Corp CEO Angelo Mozilo said on Monday that he would give up $37.5 million in severance pay and other fees he stood to gain from the mortgage lender's sale to Bank of America Corp , amid criticism over his role in the U.S. mortgage meltdown.

TELEGRAPH UK: Yet it is going to be a very difficult balancing act. If it turns out that the system is even more fragile than it currently looks then the Bank may be compelled to cut rates more vigorously. A certain amount of conservatism, caution and circumspection is

Who said high finance was boring? Last week, as markets gyrated and the US central bank unexpectedly cut interest rates, the new obsession for the markets, the media and ordinary people alike was whether we are heading for recession. Well, are we or aren't we, and if so, what can be done about it? Too much attention is paid to the R-word. In this country, by common agreement among economists (a rare thing) a recession means two consecutive quarters of falling output (i.e. negative economic growth). Quite why it is two quarters and not three, or indeed one, I am not sure. On this definition, the UK had a recession in 1990-92 and 1979-81. But since the war, in most developed countries, recessions have been rare.

The Times: London house price fall of 6.8% in past month stokes economy fears

House prices in London have fallen by an average of £28,000 in the past month, as the capital sets the pace of an accelerating property downturn, a leading survey reports today.

times: That will add insult to injury: the subprime collapse has already triggered bumper write-downs of some $130 billion.

There's nothing like global financial chaos for enriching the vocabulary. Few realized what sub-prime really meant until a U.S. mortgage market went pop last year. These days it's a byword for bad news everywhere. And who knew those collateralized debt obligations could be such a smack in the chops? But it's time for a new word. One that's no less mean or mysterious. Try the new bad term on the street: monolines.

Times: Great news! House prices are down

It is clear now that the housing market has peaked and has begun to fall over the past few months. But, rather than fearing price falls as the beginning of the housing market's equivalent of foot and mouth disease, they should be welcomed. A sharp correction is needed. This will hit owners who have bought in the past couple of years - who could face negative equity - but it may be a necessary cost.

Guardian: UK house prices up 2.3% year on year

Housing market research company Hometrack said house prices in January rose 2.3 percent on a year ago, down from 3 percent in December and the weakest rate since June 2006. On the month, prices fell 0.3 percent, the fourth consecutive monthly fall. The average time to sell a home rose to 8.5 weeks - the highest since the survey began in 2001.

FT: Expect the Eurozone to show some resistance

Credit generation in the eurozone has remained extremely buoyant. The financial crisis has had no discernible effect on actual credit flows. The eurozone banking sector is not only healthy, but continues to supply the economy with ample funds. The eurozone is in many important aspects different from the US and the UK. There has been no fall in house prices. There is no subprime crisis. There are no monoline insurers. There is no pandemic of overstretched borrowers. While there are clearly some distressed banks, the European banking sector is still robust, the odd rogue trader notwithstanding. The eurozone is also in a fiscally strong position to confront a downturn.

The Guardian: UK rate cut vital to avoid slump, says MPC member

The British economy risks following the US into a slowdown unless interest rates are cut sharply in the next few months, one of the Bank of England's monetary policy committee members warns today. In an interview with the Guardian, Professor David Blanchflower said the Bank needed to learn from the US federal reserve and take pre-emptive action to prevent growth from stalling.

dow jones: Financial News: Banks Have Billions In Exposure To Monolines

The top five U.S. broker-dealer banks have a combined $23 billion (EUR15.7 billion) in uncollateralised exposures to AAA counterparties, part of which is with monoline bond insurers that have been weakened by the sub-prime mortgage crisis. Monolines insure $2.3 trillion of debt, including structured credit and municipal bonds, according to research by Swiss bank UBS. Merrill Lynch & Co. Inc. (MER) is the only bank to have reported losses in relation to its exposures to monolines, and Bernstein expects more if the outlook for monolines deteriorates further. The U.S. bank wrote down $3.1 billion of the assets in the fourth quarter last year after monoline ACA, to which it had an exposure, had its credit rating downgraded to junk status.

Barclays PLC: BARCLAYS PLC OCTOBER YEAR TO DATE TRADING PERFORMANCE

So that's ok then

At 31st October 2007, Barclays Capital’s high grade exposure net of hedges and subordination was £3.8bn (30th June 2007: £5.8bn) after charges and write downs net of hedges in the third quarter of £0.3bn and a further £0.4bn in October 2007.At 31st October 2007, Barclays Capital’s mezzanine exposure net of hedges and subordination was £1.2bn (30th June 2007: £1.6bn) after charges and write downs net of hedges in the third quarter of £0.1bn and a further £0.3bn in October 2007
Other US Sub Prime Exposure BarCap provided secured financing lines to third-party mortgage originators in advance of securitisations, and also purchased pools of mortgages ("whole loans") for Barclays Capital’s own account in anticipation of its own securitisations

Independent: Only three sustainable homes built in UK so far

Gordon Brown's dream of "eco-towns" with tens of thousands of homes powered by wind and solar power has failed to grip the public's imagination. Officials have confirmed that only three low-carbon homes are being built in the UK. The Prime Minister made the plan for 100,000 sustainable homes a key element of his pitch for the Labour Party leadership last summer. But individuals have failed to match the Government's enthusiasm for cutting household emissions.

BBC: Britain 'facing energy shortfall'

More poor planning by the government. Britain is likely to face a shortfall in electricity generation within five to seven years. The number of nuclear and coal plants coming out of service over the period makes shortages likely. Demand overtakes supply somewhere between 2012 and 2015, creating a serious 'generation gap'. In the extreme case, shortages could materialise around the time of the London Olympics in 2012 - Cool that should get Northern Crock off the front pages! One expert who dismissed the report said "For black-outs to occur, pretty much everything would have to go wrong," err isn't that something this government is good at! He then went on to say perhaps this is a 'wake up call, err and to the FTB who cannot afford the house let alone the heating!

Agence France Presse: SocGen chief Bouton seen fighting for his future

ENA is the Ecole Nationale d'Administration: part of the French Grande Ecole system. The entire finance industry has expressed astonishment that one lower ranking trader could inflict such damage without being spotted. Bouton has been forced to deny putting losses from other bad deals on Kerviel's account. "What happened at Societe Generale is certainly not a disaster that resulted from our strategy. It is more like an accidental fire which destroys a large factory at an industrial plant," Bouton told Le Figaro newspaper. Bouton, 57, who like most of the French elite passed through the National School of Administration, or ENA, describes himself as a "decision-making machine." From a modest background, like many of the brilliant students who go through ENA.....................

MarketWatch: Fortis to write off billions in subprime losses - report

Belgian-Dutch bank insurer Fortis will write off between EUR1 billion and EUR2 billion from its subprime portfolio, Belgian newspaper Der Standaard reported Saturday, citing a well-informed source. The bank's share price dropped 10.9% Friday at EUR13.21 in Amsterdam, on market rumors it might be considering a profit warning and a rights issue. Fortis said Friday it was not aware why the shares moved so heavily.

Telegraph: How to be a FTB: Case studies

Elaine Shanks, 25: She has bought a luxury2-bed flat for £245,000. "I've bought off-plan, so I only had to put down the deposit." Louisa Smith, 28: "I knew I just couldn't afford to buy, but my parents suggested I went for part-ownership and they helped me with a deposit of £50,000," she says. She was paying about £400 in rent per month, with bills on top, but is now paying about £800 in mortgage and rent. For this she gets a 50% stake in a £250,000 1-bed flat. Camilla and Lucy Thornton: "Our grandfather left us each a small legacy which would not have been enough for a deposit for one of us. But by combining them it was enough." Their flat cost £325,000. "We will be living on baked beans for a while - no going out for us!"

Firstrung: 24% of Brits who hope to retire by 62 have no pension provision

Research from Baring Asset Management (Barings) reveals that on average, Brits expect to be retired by the time they are 62. However, the research found that of those adults yet to retire 24% (9.03 million adults) have made no pension provision at all. The findings highlight the fact that millions of Brits are failing to seriously plan for their retirement...

Firstrung: Firstrung, first time buyers, the week in focus

Two issues dominated housing news over the past week; house prices and mortgage approvals. Rightmove published their latest survey in which they concluded that prices have fallen once again, albeit by a modest 0.8%. London house prices appear to be in freefall mode currently according to Halifax. However, according to RM prices are up in London, by as much as 5.5% in a single month in certain areas. This is obvious evidence of attempted panic selling...

Telegraph: Financial crisis could cost London 20,000 jobs

"As many as 20,000 City jobs are likely to be wiped out by the financial crisis, according to one of the first comprehensive forecasts of the toll on London's economy."

Hiday.net: Bulgaria Resale Property Market

One reason for offloading foreign property, particularly amongst UK and Irish investors, is the state of the British and Irish economies. Interest rates are beginning to bite and people with second homes abroad are starting to feel the pinch.

Guardian: This reckless greed of the few harms the future of the many

The current financial markets' freedom embeds short-termism, guarantees lower investment, works against business building and innovation, generates booms and busts, inflates house prices, creates system-wide risk and excessively rewards those who work in them.

Guardian: Pity the poor estate agents, caricatures of boosterish greed

And now all us seem to be heading towards the edge - of a cliff, according to some forecasts, or of a downwards slope, according to others. The certainty is that the long boom is over. The consequences may be mixed - people feel less rich, houses become more affordable - but for estate agents a collapse in house prices is unalloyed bad news.

Guardian: Discount plan giving leg-up to buyers will fight blight

A scheme offering buyers a 25 per cent discount on a Victorian terraced house almost sounds too good to be true.Anyone who cannot otherwise afford their own home is eligible for the scheme, called Own Place, which is currently operating in parts of the north west. The offer comes with strings attached, but they are conditions that the scheme's operator, the Riverside Housing Association, hopes will help to revitalise city streets blighted by boarded-up properties, buy-to-let landlords and short-term tenants. In return for the discount, worth tens of thousands of pounds, buyers must agree to live in the properties for at least five years, or else pay the 25 per cent discount back to Riverside.

10 Downing Street: The Big Issues

This web site sets out the governments "big issues". Quote: "This is where to find in-depth coverage of the main policy areas currently being addressed by Gordon Brown and the Government". Interestingly the economy is not mentioned! Where has Gordon been the last 6 months?

Reuters: As safe as houses? Dutch history suggests not

The Herengracht index is a unique index drawn up by Piet Eichholtz, a real estate professor at Maastricht University using records of Dutch house prices over 350 years. It has been cited by Yale economist Robert Shiller for its reflection of the inexorable logic that bubbles always burst. "There are long periods where prices go up and prices go down. But over the centuries there is no uptrend or downtrend," said Eichholtz. "The index teaches that the house market is volatile and in real terms doesn't go up or down structurally." Eichholtz says home-owners have short memories when it comes to big price falls: "When there is volatility every so often people are very myopic and tend to forget. A price fall of 30 to 40 percent is rather common and cannot be ruled out for the US and UK.

FT.com: Propinvest in €1.9bn deal for Santander HQ

Santander has sold its headquarters near Madrid to Propinvest, the British real estate investor, for €1.9bn ($2.8bn, £1.4bn). The Spanish bank has sold the 1.5m sq m complex in Boadilla del Monte as part of a wider sell-off of its Spanish real estate assets. This is the last asset to be sold from a huge portfolio of commercial property which was brought to the market last summer. In a statement to the Spanish stock exchange on Friday, the bank said that it made a €605m profit from the sale of the complex and a €1.7bn profit on the sale of the entire portfolio.

Youtube.com: Southern California Shanty Town / Tent City

"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered."

Telegraph: Pointing fingers at the plutocrats

"There is collusion between most politicians, bankers and investors to avoid asking the big question: has the freedom of investment banks, private-equity firms and hedge funds to buy and sell what they like, when they like, gone too far? That would be to threaten the return to full throttle, whenever it comes, of the most successful machine in the history of the world for expanding the clone army of the super-rich."

FT: Traders believe debt markets will get worse

Corporate debt wont be a good thing to be holding in a recession. Hedge funds taking their positions to profit from this. "So far, most of the rout in the debt markets has been linked to the US subprime mortgage debacle. Increasingly, however, many hedge funds are betting there is far worse to come for the corporate debt market as well."

Independent: The credit crunch is starting to bite

The crisis in the credit markets has finally begun to take a true grip on consumers over the past month – as the cost of borrowing has risen, credit has got harder to come by, and – this week – stock markets have started to plummet as well. While many commentators have been doom-mongering ever since Northern Rock first ran into trouble in September 2007, the reality was not so bad for most consumers at first.

Reuters: Landesbanks' subprime exposure 80 bln eur

"Four German state banks have a combined exposure of almost 80 billion euros ($117.2 billion) to risky assets and the state bank of Bavaria, BayernLB, could need an over 2 billion euro write-down, FOCUS magazine reported".

Telegraph: Abbey tightens its lending criteria

Abbey has effectively shut the door on first-time buyers by lifting interest rates on mortgages that require no deposit by 1.15 percentage points to 7.99 per cent – almost 2.5 percentage points higher than base rate which stands at 5.5 per cent. The rates have been imposed on tracker mortgages at 100 per cent loan-to-value (LTV) for new borrowers, but would-be buyers looking for the security of a fixed rate deal also face paying steep rates, even though they have remained unchanged.

Daily Telegraph: US slides into dangerous 1930s 'liquidity trap'

The United States is sliding towards a dangerous 1930s-style "liquidity trap" that cannot easily be stopped by drastic cuts in interest rates, Nobel economist Joseph Stiglitz has warned.

FT: Rising mortgage costs boost lettings sector

There's some odd data in this FT article - allegedly 21 percent total return on BTL property in 2007 which is supposedly 3 times the return in 2006. However, supposedly rents rose by 19% over the year, and 8% in Q4 - all according to Paragon who now can't convince anyone to give them more money to lend to landlords. Perhaps only they can make it up... The main thrust of the article is that since renting is cheaper than a mortgage by one third there is more demand for renting - lots of STR?? Also the government seems determined to ensure that citizens buy property rather than rent it. The logic for this is unclear - it would make more sense to sell property to foreigners en masse before prices crash further so they suffer the losses. Two houses on Bishops Avenue is a start...

Von Mises Institute: Don't Blame Subprime Lenders

Why would a businessperson choose to lend and borrow in an artificial boom once they've seen several business cycles? Because, even though business investors know that the bust will come, writes Jim Bradley, it makes no sense to refuse funds while other businesses are using the new funds to compete. And why doesn't the population at large just refuse to participate? Because Congress has established high transaction costs (capital gains taxes) and legal tender laws that prevent common citizens from the use of alternative assets to replace government money. As a result, expanding businesses get to use cheap socialized financing. That financing gains its value from diluting existing money. But the real negatives occur not in the booms and busts, but their additive result over time.

Hiday.net: Europe - The Demise Of the Buy To Let Market

They say that when the USA sneezes the UK catches a cold! With the demise of the subprime market in America not only is the UK starting to feel the effects of a chill but many parts of Europe are as well. Now that the Buy to Let market in the UK is beginning to feel the effects of the credit crunch many are now selling up fast.

Telegraph: Online tax system 'too risky' for the famous

Listening to Radio 4 today one expert said that HMRC had added a extra digit to the tax code of MP's so that their returns could be screened out and sent to a special department. This is why they cannot file on line i.e it is nothing to do with security. This sounds like one rule for us and one for them. Why can't HRMC use the same department that mucks up out tax returns, to also muck up the MP's tax returns? Or is the truth more serious i.e. one tax rule for us and another more lax tax for the MP's. Is this why they enter parliment broke and then leave rich? This stinks!

Motley Fool: The Last Housing Crash, Part 2

In the first part of this article, I looked at how the last property crash panned out across the UK and in six of its twelve regions. For the record, here's how the average price fell over the entire nation:

Four Winds: Small Bank Failure is First of 2008

Regulators closed the first bank of 2008 late Friday, shutting $58 million-asset Douglass National Bank in Kansas City, Mo. Douglass, which had a glut of bad loans and less than $1.5 million of Tier 1 capital, was also the first nationally chartered bank to fail since Guaranty National Bank of Tallahassee failed in March 2004 with $74 million in assets. The bank, a subsidiary of Douglass Bancorp Inc., announced plans in August to sell to $821 million-asset First Guaranty Bancshares Inc. in Hammond, La., but that deal collapsed in October. The prospective buyer claimed Douglass shareholders balked at the $2.5 million offering price.

thisismoney: 2008 OUTLOOK: Where next for house prices?

" ... possible long, drawn out downturn ... "

BBC: FSA 'failed over Northern Rock'

More on the Rock story critisiscm of the FSA and the BOE.

Yahoo/sky: Northern Rock Plans Criticised By Treasury Committee

Nothern Rock on the agenda in front of the select commitee today. They are calling for a "A special resolution regime for failing banks - to ensure they can be either rescued or allowed to fail in an orderly fashion" Why should the UK taxpayer subsidise a PLC? Banks go bust on a regular basis in the US!

thisismoney: Will buy-to-let owners get 10% tax break?

The government has excluded BTL from the latest changes to CGT. However, they still have the government review on BTL to look forward to!!!!!!!!!!!

Daily Reckoning: The UK Economy: It's Not All Doom and Gloom

Six reasons why it is not all doom and gloom. Good food for thought - enjoy!

Spectator: The high cost of energy

Rising fuel prices are behind a trebling in the number of homes disconnected. What lies behind these rises? 50% is due to taxes imposed by the Treasury. The sad link between green measures and public impoverishment looks set to continue. The government bungled the green tax programme. They claimed the tax would be targeted at big business but the manner in which these costs have been imposed means that they are reaching the public. When a massive cost comes out of nowhere (as these did in 2007), companies will always seek to raise prices. This could have been avoided by talking to business leaders, followed by a slow roll-out of taxes and compensatory measures. When thousands of people are dying because they can't afford heating, a little more thought could have gone a long way

Spectator: Not so good

Nothing new but a good, if depressing, summary of the economy and the government lack of competence to deal with the problems.

Economist: Nothing to smile about

Nothing new but a good summary. In short we are in a mess with no way out. Gordon has failed. The return of boom and bust!

Economist: Hocking the Rock

Nothing new but a good summary of Nothern Crock. And if you were wondering Nothern Crock borrowed another 2.2billion from us (sorry tax payer) last week!

FT: UK company pension schemes in £15bn reversal

Yet again the money purchase pension schemes, that so many of us depend upon, are heading for trouble. Still rest assured Gordon pension is safe!! Or is it? Should we not start demanding that MP pensions be changed from the inflation proofed, final salary scheme, to a money purchase scheme? This would then make the MP behave in a sensible manner. Of course we will also have to limit their pay rise to CPI (not RPI) and limit their expense claims to say 10,000 quid/annum! Oh and Gordon I have not forgotten that to date you have stolen 100billion quid from the pension funds!

CNN Money: Wall Street's money machine breaks down

By the end of June, Merrill held $41 billion in subprime CDO and subprime mortgage bonds. Since the average deal is between $1 billion and $1.5 billion, and the AAA debt is around 80% of each deal, Merrill must have been buying nearly all the top-rated debt from dozens of CDOs. The question is why Merrill would purchase bonds its customers were rejecting. Merrill hasn't given a detailed explanation of how it came to own such a large volume of subprime bonds. At first, Merrill made money on the bonds because it was able to benefit from the "carry trade" - borrowing money at low rates and using it to buy CDO bonds paying higher rates. Also, Merrill execs apparently believed that the credit market turmoil would ease and the bonds would once again be easy to sell.

FT: UK defence plan hits finance snag

The turmoil in credit markets has dealt a big blow to the UK government’s defence procurement programme, putting in jeopardy plans to help fund a new fleet of Airbus tankers for the Royal Air Force with a bond issue. At a time when our armed forces are risking their lives fighting wars in Iraq and Afganistan with shoddy equipment and poor housing our government runs out of money. What a mess! Soon they will be paying the armed forces with food and clothing vouchers rather than money.

FT: UK lenders steer away from 100% mortgages

Norwich and Peterborough has now reduced its maximum loan-to-value from 100 per cent to 90 per cent. Matthew Bullock, chief executive, said: “Anyone out there with a 100 per cent offering will get all the worst propositions coming to them – you’ll get all the rubbish. People will say ‘they’re still in the market, let’s go to them’. They wouldn’t get through our filters, but we’d still have to process them.”

Telegraph: Banks 'face a further $300bn sub-prime hit'

"While governments, central banks and regulators scramble to address the aftermath of the sub-prime fallout, several other crises are mounting." Tumbling property prices - especially in the UK and Spain - a weakening dollar, a possible collapse in commodity prices, and a fall in Chinese and Indian stocks will "disrupt" the global economy, the report claimed. Banks are already coming off one of the worst trading periods in memory, with shares across the industry plummeting 40pc in the past six months. Oliver Wyman has estimated that financial services companies have already taken a $300bn hit on their sub-prime exposure.

Reuters: Gold, platinum hit record.

"Gold and platinum soared to historic highs on Friday amid a power crisis that shut South African mines, firm oil prices and expectations of more U.S. rate cuts. Gold hit a high of $923.40 an ounce, spot platinum hit a lifetime high of $1,697 an ounce". ," Ross Norman, managing director at TheBullionDesk.com, said."We hold with our view that gold will hit a high of $1,250 this year,"

Reuters: Goldman Sachs says to cut workforce

LONDON (Reuters) - U.S. investment bank Goldman Sachs (GS.N: Quote, Profile, Research) plans to sack about 5 percent of its global workforce in coming months after its annual staff evaluation, a company spokesman said on Friday. Goldman Sachs employs about 30,500 people worldwide, meaning the cuts would represent about 1,500 employees.

LaRouchePub: The Bond Insurance Crisis, or, My Fig Leaf is Falling

First it was the subprime crisis, then it was the SIVs, and now it is the bond insurers that are the problem, according to the financial press. The line is that if the bond insurers fail, the ratings on the bonds they insure will be reduced, forcing pension funds and other institutions to sell their holdings, causing a crash in the market for the municipal bonds, CDOs and other paper insured by these companies. That's a scary scenario, designed to make you feel that if we don't bail out the bond insurers, the whole system will collapse. There's good news and bad news here. The good news is that the scenario presented above is not really true, but the bad news is that the situation is actually much worse.

The Economist: It's rough out there

The financial storm that blew up in America's subprime mortgage market last year has become a hurricane. The ill wind from reckless property lending blasted first the market in asset-backed securities, then banks' balance sheets and, most recently, stockmarkets.

Times Online: Mortgage bond insurers 'need $200bn boost'

America's biggest mortgage bond insurers collectively need a $200 billion (£101 billion) capital injection if they are to maintain their key AAA credit ratings, a figure that dwarfs a plan by New York regulators to put together a capital infusion of up to $15 billion, a leading ratings expert said yesterday. The failure to maintain their AAA ratings will lead to a further round of multibillion-dollar writedowns among the Wall Street banks and other large owners of the bonds,

BBC: Rogue trader scandal broadens out

''Analysts are trying to assess whether the trader's actions contributed to the stock market turmoil and the Fed decision to cut interest rates.'' Let's reverse the 0.75 rate cut then???

Investment Rarities: The Wisdom of Ludwig Von Mises

The boom produces impoverishment. But still more disastrous are its moral ravages. It makes people despondent and dispirited. The more optimistic they were under the illusory prosperity of the boom, the greater is their despair and their feeling of frustration. The individual is always ready to ascribe his good luck to his own efficiency and to take it as a well-deserved reward for his talent, application, and probity. But reverses of fortune he always charges to other people, and most of all to the absurdity of social and political institutions. He does not blame the authorities for having fostered the boom. He reviles them for the inevitable collapse. In the opinion of the public, more inflation and more credit expansion are the only remedy against the evils which inflation and credit

thisislondon: 2million Britons have two homes BUT property crash might put many in jeopardy

More than two million people own a second home in Britain, official figures revealed for the first time yesterday. They show 5 per cent of the adult population have a family home and at least one other property. The figures, compiled by the Office for National Statistics, show the extraordinary wealth which is tied up in housing. But experts said they also highlight the risks homeowners face if there is a property crash.

Mortgagestrategy: First-time buyers face soaring mortgage costs

Average mortgage costs to income for first-time buyers are now higher than levels at the 1990s housing boom peak, says the Building Socieites Association. First-time buyers were devoting nearly 35% of their income to mortgage costs by the third quarter of 2007, compared with the previous high of nearly 34% in 1990, the UK Housing Review indicates.

CNN: Stimulus plan also sparks housing market

The measures would make mortgages easier to get and reduce borrowing costs -- especially in hard-hit, high-cost housing markets.

Mortgagestrategy: Total returns for B2L tripled in 2007

Total annual returns for buy-to-let investors tripled in 2007 to £34,000, research out from Paragon reveals. In percentage terms, Paragon says investors would have seen a 21% total annual return in 2007. This compares to just 7% in 2006 or £11,000. The buy-to-let specialist says continued demand for rental accomodation has also spurred strong rental growth in the new year.

Times: Brown gives gloomy forecast for world economy

Brown: "There is also a danger, I think, with bad news still to come, of being over optimistic ... and overemphasising the silver lining at the expense of some of the clouds." Wonder if the Estate Agents are STILL thinking all is wonderful?

NY Times: A Fear That the Cure Could Be Poison

One day after the Fed slashed its benchmark interest rate to head off a possible recession, a small minority of economists warned on Wednesday that the central bank was in danger of invoking the same remedies that it did after the bubble in dot-com stocks burst seven years ago.

NY Times: Seeing Signs of ‘Systemic Failure

“This is not a normal crisis,” George Soros, the hedge fund pioneer turned philosopher, said today to a group of reporters he had invited to lunch at the World Economic Forum. “It is the end of an era.”

Field report: Must be seen to be busy ?

Allegedly Conxstons minis were spotted out in force this morning driving around North London aimlessly. Also this morning a "Let" sign went up outside a pals flat, and he hasn't even signed a renewal ! When he complained to the posh EA manager she admitted the director wants signs up to show activity. Desperate ?

Spectator: Modern-day Monopoly

"Few provincial towns these days are considered so inconsequential that they have not spawned a special edition of the Monopoly board, featuring their own street names. But there is one version of the game you won’t find in the shops: the ‘Gordon Brown’s Britain’ edition. This is a game in which, unlike the original, you can borrow money — lots and lots of it. Until, that is, property prices collapse and you’re left in a credit crunch."

Guardian Unlimited: Worse to come for economy, warns Brown

"There is also a danger, with bad news still to come, of being over-optimistic about what we can achieve and over-emphasising the silver lining at the expense of the clouds."

Times: Banks 'face a further $300bn sub-prime hit'

"While governments, central banks and regulators scramble to address the aftermath of the sub-prime fallout, several other crises are mounting." Tumbling property prices - especially in the UK and Spain - a weakening dollar, a possible collapse in commodity prices, and a fall in Chinese and Indian stocks will "disrupt" the global economy, the report claimed. Add to this the earleir blog on massive mortgage lending contractions ... Land Registry figures for the next few months ought to be good reading.

MoneyWeek: Rogue trading: a very stupid explanation of the crash

According to some sections of the press, we can all stop worrying about the state of the financial markets now. We've found the culprit: Societe Generale's rogue trader, Jerome Kerviel. Except it's not that simple at all - and rather than reassure investors, the story flags up yet another reason to worry.

Yahoo: Pay deals hit 15-year high

As PM Gordon states we have no inflation.... I am sure he must have his toes and fingers crossed when saying stuff like that on TV

IFAonline: Construction downturn scuppers Brown’s housing plans

Gordon Brown’s ambitious house building plans are unlikely to be achieved because of a downturn in the construction industry, according to the Royal Institute of Chartered Surveyors (RICS). Falling demand for housing, coupled with the credit crunch, have caused construction firms to reduce their workloads, meaning supply issues are likely to continue supporting high house prices in the UK.

Property Week: Caroline Flint to replace Cooper as housing minister

"Caroline Flint will take over from Yvette Cooper as housing minister after a cabinet reshuffle following Peter Hain’s resignation today. Work and pensions secretary Hain quit the cabinet today after his Labour deputy campaign donations were referred to the police. He said he wanted the time to devote to ‘clearing his name’." Is it too much to hope that there will ever be any, even passably, competent person who will take an active part in managing this,or any other country/economy.

Reuters: Energy regulator slams npower for customer cut offs

Energy supplier npower has cut off more customers than any other company over the last few years and should do more to help those with payment problems, energy regulator Ofgem said on Friday, sparking protest from the German-owned company. Npower was the first major household energy supplier to announce double-digit price increases for its retail power and gas customers at the start of January.

FT: Ways to fix the world’s financial system - By Gordon Brown ??

Not posted for any intellectual value, no need to read.

US Radio Interview: Credit Bubble Collapse (Robert Prechter)

Bob Pretcher talks about the credit bubble and deflation - 2nd part of a 5 parter. Credit Deflation explained in the US - are we next? Does Bears ___ in the woods.

Market Oracle: Gold Stocks - The Next Stock Market Sector to Crash?

Gold stocks could struggle at the same time as gold price goes up. Worth thinking about. Apologies to those not interested in alternative investments who see this as off topic!

Business Week: How Real Was the Prosperity?

"We're just beginning to figure out how much of the nation's recent growth was the result of a credit-induced frenzy. Here are some guideposts" The US is ahead of us in this realisation, but we are catching up quick.

bloomberg: China is starting to gain control of its turbocharged economy, just as a U.S. slowdown raises the risks of doing so.

A narrowing trade surplus and declining money-supply growth are among the first signs that the world's fourth-largest economy is pulling back from its fastest expansion in 13 years. The government has raised interest rates six times in a year, restricted credit, frozen some prices and let the currency appreciate to damp growth and inflation. The risk is that, with months of effort to cool off China finally taking hold when the U.S. is already flirting with recession, both main engines driving the global economy may power down at the same time. ``As foreign demand deteriorates, China may overdo its tightening of policy and cause a sharp economic slowdown ``If the central bank raised interest rates too much, it would damp domestic demand and increase the danger of economic downturn.''

AUSTRALIAN: to write off a quarter of the nearly $US8 billion ($9.3 billion) it holds in securities backed by sub-prime mortgages.

BANK of China appears increasingly likely to report a large write-down on its investments in US mortgage securities, illustrating the broadening reach of the global financial downturn - and how one of China's biggest lenders was less astute at avoiding the problem than it initially thought.

Daily Mail (Hate): 2 million Britons have two homes BUT property crash might put many in jeopardy

Plus some strange / crap forecast by Capital Economics, namely "But the most pessimistic forecast, from Capital Economics, expects a fall of 5 per cent this year followed by an 8 per cent fall in 2009." WTF "most pessimistic" ??? ONLY a fall of 5 % ??? WTF are they joking that it will ONLY be 5 % this year! More like 15 to 25 %!

The Times: Mortgage approvals hit by credit crunch

The number of mortgages granted to new home buyers plunged to a record low last month as banks struggled with the credit crunch and potential buyers hesitated in the face of higher mortgage rates.

Bloomberg: Forbes Says U.S. Dollar Policy Amounts to `Zimbabwe Economics'

The U.S. prefers a ``weak'' dollar because it helps the nation's exporters, Forbes said. ``That's Zimbabwe economics.''

bbc news: Deal reached on US economic plan

House of Representatives Speaker Nancy Pelosi said Congress would act on the deal "at the earliest date, so those rebate cheques will be in the mail".Some 117 million US homes will receive a rebate of up to $600 for individuals and up to $1,200 for married couples.Washington is moving fast to try to avoid the US falling into a recession. Good grief, now they're posting out greenbacks to everyone to prevent the collapse.

Manchester Evening News: Jitters shatter £12m dream

A £12m development scheme in Manchester's "up-and-coming" Northern Quarter has fallen victim to the credit crunch. All the apartments, priced at between £140,000 and £180,000, were sold in advance of work starting on the site, and buy-to-let investors handed over deposits totalling more than £500,000. A question mark hangs over the future of the investors' deposits. They are likely to be repaid only if a buyer is found for the site. "It would be wrong to believe that CLH will be the last, or largest, property-related casualty of 2008."

Times: Tracker mortgages rising despite hopes for rate cuts

banks are raising the cost of borrowing on popular tracker mortgages, penalising homeowners who are taking out the loans in the hope of base rate cuts (AHH HA HH, they take trackers because "rates can only go down" I@IOTS listened to the impartial advice of the local EA). Britannia Building Society, the UK’s second biggest building society, will today increase rates on its two-year discounted tracker mortgage by 0.15%Abbey, AL and Nationwide have raised rates in recent days. AL raised tracker rate from 5.74% to 5.94% per cent yesterday, Abbey increased rate on tracker for 100% loans from 6.84% to a massive 7.99%. SUBPRIME, SUBPRIME HERE WE COME!!

Brighton Argus: Millions of pounds to tumble from Sussex house prices

I thought it was worth reposting this. I live in the Brighton area and there was a notable lack of paper copies of the Argus this evening. Might Brighton's estate agents have been buying them up by the barrow load in a last ditch effort to save their gold plated lifestyles?

Times: We must name our price

"Governments are going to have to bail out the banks; in return they must change their ways" "Either they will have to accept a long period of financial paralysis, leading inevitably to a deep global recession and maybe even a Japanese-style decade of depression or they will have to step in with a Plan B, involving public sector intervention of some kind that overrules the judgement of market forces."

Herald: Average Aberdeen house price now over £200k

The average house price in Aberdeen in the fourth quarter of last year fell by 4% to £199,589. Overall, however, the average price rose by 26% to £202,479 over the year. The latest research by Aberdeen City Council shows that 8,594 properties were sold through in 2007, 3342 more than the previous year. Whoooopp! In 1997 the price/earnings ratio for Aberdeen was 3.72 and is now 7.83. The corresponding rises for Scotland are 3.38 to 6.12 and for the UK 3.58 to 9.19 (so sustainable!!). The average price of a detached house in Aberdeen's west end over last year was £675,450. Sure, sure... bbbanngggggg!!!

LudlowThompson: Increase in first time buyers

So blatantly misleading that it is actually laughable. "Increase in FTBs from 10.1% in Nov to 13% in Dec" Ah right, so MORE FTBs in the market? Don't think so - suspect that the the rapidly-decreasing number of FTB is being overtaken by the even-more-rapidly-decreasing number of FTB. NAEA President, Stewart Lilly says: “We hope this positive trend will continue into 2008..." Massive c*ck. Unsurprisingly can't seem to find a link to the actual survey on NAEA website too easily...

MoneyWeek: Mortgage approvals at record low

In December the number of new mortgage approvals fell to their lowest level since records began. Will the Bank of England respond with a rate cut? And, even if it does, will it make any difference?

Mortgagestrategy: Buy multi-lets at auction now, say Property Show pundits

Simon Zutshi, founder of the Property Investors Network, says: “With the current market conditions, 2008 is a fantastic time to buy property. The market is expected to bounce back and long term seasoned investors can look forward to excellent returns and strong capital growth. 'All that is needed is a well thought through personal strategy, as well as strong negotiation skills.” Zutshi adds that multi-let properties present the most profitable returns for investors as these types of properties are currently experiencing high demand.

guardian: Meet Robert Tchenguiz: he's lost £560m and counting. But he says the yacht is safe

Rumours that heavy paper losses had forced him to sell his Monaco-moored yacht were laughed off last weekend. He told one newspaper: "So I've lost a lot of money but I'm not in trouble as people keep saying. It's just a case of taking the rough with the smooth, that's all." Like the name of the article suggests - "Keep counting" - I wonder how soon he'll tire of the rough?

CNN Money: Housing prices to free fall in 2008

The worst housing financial crisis in decades is only going to get worse, a Merrill Lynch report said Wednesday. The investment bank forecasted a 15 percent drop in housing prices in 2008 and a further 10 percent drop in 2009, with even more depreciation likely in 2010.

Hiday.net: Ferry Cross The Mersey

As the UK property crisis begins to worsen some areas will be hit harder than others. One such place has to be Liverpool, where there are a glut of city centre apartments that are still on the market for ridiculous prices, still waiting to be sold. Estate agents in the city of Liverpool have been accusing certain sections of the media of 'scare mongering'. However there objections are falling on deaf ears and quite rightly so!

FT Alphaville: And the equity derivatives house of the year is…

Yes, you guessed it: Société Générale. Awarded just this month by Risk magazine, SocGen bagged the gong for equity derivatives house of the year. "We managed the existing book very well because we decided some time before the crisis to be long volatility and be less sensitive to correlation, so the losses were minimal. We suffered on our statistical arbitrage trading activity, but that was just for one month, and minimal compared to some hedge funds or other banks. Overall, our trading activities will be approximately flat compared to last year, which is a good performance," remarks Christophe Mianne.

FT Alphaville: Sep 2007: French Bank hit by "rogue trader"

Crédit Agricole/Calyon hit by rogue traders It seemed the world was overdue for a rogue trader saga and Crédit Agricole has stepped in, announcing Tuesday evening it will suffer a €250m ($348m) hit to Q3 profits at Calyon, its investment banking unit, after rogue traders in its New York office built up a massive unauthorised credit position.”In the context of a more turbulent trading environment in September, contrary to July and August, Calyon’s third-quarter net result is likely to come in significantly below that of the same period in 2007 but nonetheless remain in profit,” the statement said. Calyon’s first-half net income was €997m, up 8 per cent from a year earlier, the bank said at the end of August, reports the FT. The news came after Tuesday’s markets close.

Firstrung: UK December mortgage approvals fall to a record low - BBA

The slowdown in the UK housing market appeared to accelerate in December, with the number of mortgages approved for house purchase falling to the lowest since records began. In its monthly analysis of the mortgage market, the British Bankers' Association said the number of mortgage approvals for house purchases was 42,088, compared to 43,944 in November. This is an all-time record low, and well below the previous six month average of 53,781.

MoneyWeek: Why banks can’t afford to save the bond insurers

"Arty types often like to sneer at those involved in the financial sector, dismissing them as dull grey ‘suits’. But recent events have shown that, when they put their minds to it, the ‘suits’ can be far more creative than the media studies students of this world. Just look at all the creative financing that’s been going on. “I know, let’s take 100 junk-rated subprime mortgages, bake them into a cake, keep the worst bits for ourselves, then chop the rest into 80 AAA-rated slices and sell them!” That idea took some imagination."

FT: SocGen uncovers €5bn fraud

The Dog ate my homework. It was a rogue trader, that's it. It wasn't my signature on those trades.
Europe’s battered banking sector was dealt a fresh blow after Société Générale, France’s second-largest listed bank, said it had uncovered a fraud by a single trader, forcing it into an emergency €5.5bn share issue. Daniel Bouton, SG’s long-standing chief executive and chairman, had an offer to resign turned down by the bank’s board

Rpbert Peston Blog: Oct 2007: Humiliation of UBS

Anyone with a functional cerebral cortex working in the debt markets has been onto the Euro sham for at least 15 months. ClubMed banks (French, Italian, Spanish, Greek and Portuguese) are in this CDO nigthmare to the hilt. They will make British and American banks look like paragons of virtue.

cnn: Recession 2008: How bad it can get

Many economists are predicting a short, shallow recession. But there's also a significant risk of a more serious economic decline.

Argus - Local Brighton paper: Crash

The **** is hitting the fan.

Scottish financial services 'in recession': The Scotsman

PLUNGING stock markets and credit crunch effects have hit Scotland's financial services sector hard. And some economists warn that the sector is now formally in recession. The sector output fell by 3.4 per cent in the third quarter of last year according to Scottish Government statistics.

Spectator.: Dogged resistance from Brown over Northern Rock

I bit off track but it is a light hearted read in these depressing times. Some good sound bites llike "Brown is like a used car salesman – “he’s gone from Prudence to Del Boy without even touching the ground" and “It’s a sub-prime deal from a sub-Prime minister”.

Telegraph: EC shows UK yellow card over budget deficit

Oh dear, it looks like the Government has borrowed to much money and people are getting concerned!! The Brussels watchdog said the Government had stretched fiscal policy to the limits and would soon have to "constrain expenditure" to avoid falling foul of the EU's Stability and Growth Pact, a polite way of saying it may have to slash spending during an economic downturn - making matters worse.

FT: Banks pressed to bail-out bond insurers

US banks are under pressure from New York state’s insurance regulator to provide $15bn to support struggling bond insurers. Concern that rating agency downgrades of the insurers could force a fresh round of writedowns by banks, The banks still feel stung after a failed bail-out plan backed by the US Treasury under which they would have bought assets from SIVs. Some expressed scepticism that Mr Dinallo would be able to persuade banks to provide the funds. Concerns about the future of MBIA and Ambac grew last week when Fitch Ratings downgraded Ambac from triple-A to double-A. The business model of both companies depends on a top-level credit rating. The Fed, Treasury and SEC have set up at a group to examine risks to the financial system might arise from problems at the bond insurers

BBC: Council tax 'set to rise by 4%

I suspect that this will be first tax rise of many. Council taxes will now rise by 5%. Have a look at how your council spends your money. You will probably find that a massive amount (30%) will be spent on their inflation proofed index linked council pensions. Next increase is fuel tax - this also goes up in April. It's a booming economy - booming taxes, booming food prices, booming fuel prices - more economic miracles from Gordon!

Tgraph: 'What Mortgage' publisher warns on profits

"Charterhouse Communications said its advertising revenue has squeezed since last summer's credit crunch triggered a sharp downturn in mortgage lending, with lenders pulling sub-prime products off the market and tightening their lending criteria"

Times: Citigroup cuts London jobs on UK recession fears

Sure we must not be happy that a few thousand people lose their jobs, but let me tell you City salaries have ballooned in the past five years for otherwise mediocre skills and qualifications (e.g. the "experts" that have wrecked the global financial services). Easy money - seemingly never ending - fueled the borrowing of 10x more money and propped the London housing bubble. As always, markets are set at the margins. 8k people who lose their jobs make 100k people feel less "secure" about their job prospects. And high rents and house prices evaporate. Kiss the London house market goodbye!

Bloomberg: U.S. Stocks Rise, Erasing Decline, as Financial Companies Gain

Another Bail Out!!!

The Daily Mash: Global Economy Now Run By F**knuts!

A satirical look at the recent Fed rate cut.

BBC: Review of private rental market

The government has the great ability to screw everything they touch. I have great hopes they do irreparable damage to these leaches! With the tremendous "growth in negative profit" both from rental and capital appreciation, it only takes an announcement like this to push thousands of these leaches to sell in a hurry. Plus Inland Revenue will crack down on the sector as well. BTL armageddon in April as CGT changes?

LANDLORD : House Price Crash? What crash?!

Forecasts of doom and gloom in the property market have not been in short supply of late, both for the residential and buy-to-let sectors. This week has been no exception, but such views are far from universally held...

MoneyWeek: What the US rate cuts mean for gold

The Fed showed yet again yesterday that it is prepared to sacrifice the dollar and inflate its way out of the current mess. That means gold should now resume its flight towards $1000.

FT: Sore bottoms in store for UK banks (especially HBOS)

UK banks don't have enough reserves if write-off levels go up to 1992-1993 levels. Scary plot shown. Run for cover when hpc starts in earnest.

Telegraph: Citigroup bonuses 'flat', even as job cuts loom

Citigroup will hand out more than $11bn (£5.6bn) in pay and bonuses to its investment bankers today, roughly the same as last year, despite a collapse in fortunes at America's largest bank. About 100,000 staff around the world will share in the bonus pool, which makes up the bulk of the markets and banking division's $11.6bn of compensation and benefits. It comes as the industry braces itself for more job cuts, with rumours that Citi itself is planning to announce 10,000 redundancies in March - on top of the 21,400 axed in the past 12 months. Citi insiders said the "overall bonus pool will be pretty flat but there will be a greater divergence … the stars will be kept and a strong message will be sent to those who haven't pulled their weight".

CNN Money: McLean: Bond insurance problems (Video)

McLean: Bond insurance problems 2:49
Fortune's Bethany McLean says there could be another credit crunch on the horizon, this time affecting bond insurers. Explained beautifully

BBC: Nationwide puts up mortgage rates

The UK's biggest building society is the latest lender to hike rates despite no movement from the Bank of England. "We shouldn't expect to see trackers becoming much cheaper in the near future until this uncertainty has worked its way through the market."

Bloomberg: Bernanke to Cut Rates Further, Faster to Buoy Growth

"Federal Reserve Chairman Ben S. Bernanke has decided inflation concerns have faded enough to let him cut interest rates further and faster to keep the U.S. from tipping world economies into recession". " Futures trading suggests the Fed may follow up with a cut of as much as another half-point Jan. 30, bringing the decrease to 1.25 percentage points in eight days".

BBC News: FTSE 100 @ 1:55PM

I think that people, generally, are beginning to realise we are in a real, real mess!

Guardian: Government to review private rental sector

What a great news! The government wants to regulate the private rental sector! with landlords already not covering cost of capital I can see quite a rush for the exit. MWAUUU AHAHAH HA HA HHAHAHAHHAHA HAAHAHHAH HAHAH AHHAH

Merrill Lynch: The Growing Global Credit Pandemic

Merrill Lynch: Many investors still believe that the credit crisis is purely a “US subprime problem”. Nothing could be farther from the truth, in our opinion. There appears to be a growing global credit pandemic. Central banks only control the price of credit, and not the availability of credit. Watching central banks’ base interest rates is, of course, important. Watching credit availability is more important. I will paste an FT view by George Soros in comments.

Mortgage Introducer: Connells reports sinking approvals

Whole Short Article: Connells Survey & Valuation's December data saw mortgage approvals plunge by 43 per cent when compared to the previous year. This is a 21 per cent slump on November's data and on top of a 0.6 per cent easing of December's house prices to bring the average home's value to £215,417.

Firstrung: First time buyers could be turned down for mortgages due to student loans

The online mortgage company mform.co.uk warns that changes to credit checks carried out by mortgage lenders will mean that more first time buyers will be turned down for loans. Later this year, information relating to student loans will be incorporated into people's credit files. This means that missed payments to the student loan company will show up as a black mark on credit ratings. The average age of a first-time buyer is 29, and many of them will have student debts.

Financial Times: King fails to soothe lenders

Turning loans into bonds and selling them to raise funds has become a linchpin of the UK mortgage industry, but since August banks have found it almost impossible to sell any such retail mortgage-backed securities because of the crisis in the money markets. -There is a risk, if house prices fall, of a vicious cycle developing with declining collateral values leading lenders to tighten credit further, some economists say. -“The only thing that really stops that is if the Bank of England steps in – but the Bank will say they don’t set rates to keep mortgage lenders happy,” said Alan Castle at Lehman Brothers.

MoneyWeek: Prepare for negative equity and repossessions

2008 is going to be a very bad year for the housing market. First-time buyers will find it harder than ever to get on the ladder, but it's the homeowners perched precariously on its lowest rungs who should worry most.

Independent: The Big Question: What can we learn from previous stock market panics?

Some measured analysis of past financial crises and the implications today. Much needed in our febrile atmosphere at the moment.

BBC: Bank votes 8-1 for hold in rates

Any guesses who voted for a cut?

Financial Times: The worst market crisis in 60 years

The current financial crisis was precipitated by a bubble in the US housing market. In some ways it resembles other crises that have occurred since the end of the second world war at intervals ranging from four to 10 years. However, there is a profound difference: the current crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency. The periodic crises were part of a larger boom-bust process. The current crisis is the culmination of a super-boom that has lasted for more than 60 years.

Times: My hands are tied, says Bank Governor Mervyn King, as he braces UK for downturn

In a grim assessment of the economy, Mervyn King says that the UK could endure a "possibly quite sharp" slowdown this year. “In 2008 it is likely that a less buoyant housing market will go hand in hand with slower growth of consumer spending. In the short run, that will slow economic activity, possibly quite sharply.”

Times UK: Fed Establishes Another Baleful Landmark

Gerard Baker in the Times talking something vaguely approaching sense for once. His judgement is that even if the Fed cut had more justified reasons than a panicked reaction to a stockmarket drop, it is still going to be hard for Bernanke to retain credibility now: "Mr Bernanke is going to have a hard time dispelling the notion that he did not engineer the Fed’s biggest interest-rate cut in a generation primarily in response to a swoon in equity markets"

MoneyNews: Nationwide mortgage rates 'raised for some products'

Certain mortgages provided by Nationwide will have higher rates from January 23rd, the building society has announced. For example, a two-year tracker with a £599 fee which used to have a 5.58 per cent rate is now on offer at a rate of 5.68 per cent. Meanwhile, a lifetime tracker with no fee will be provided at a 5.89 per cent rate, having previously had a 5.74 per cent rate. What did StuarzLaw say?

Times: Commercial property fund investors face continued slide in asset prices

"Hundreds of thousands of retail investors locked into commercial property funds are set for six months of further pain as prices of shops and offices continue to slide, but the market is expected to start to bottom out in the second half of this year." Greeeeeeed is gooooood!

Times: Property market reels as gloom descends on commercial and residential sectors

YEEEEEEEEEEEESSS!! Britain's property market was dealt a double blow yesterday as the prices of shops, offices and warehouses suffered their fastest monthly fall for 21 years and Taylor Wimpey, the country's largest housebuilder, said that the spring housing market would be late and subdued

Will the cure be worse than the disease?: Fortun/CNNMoney

"Politicians are scrambling to offer a stimulus package, and Fed Chairman Ben Bernanke is slashing interest rates. But they may be paving the way for a bigger calamity down the road."

Telegraph: Fed's panic rate cut ups pressure on BoE

"Mr King hinted that rates were set to fall, saying that, at their current level of 5.5 per cent, borrowing costs were stifling consumer spending. Experts are forecasting a cut of 0.5 percentage points. A homeowner with a 25-year £200,000 repayment mortgage would be around £60 a month better off."

Sky News: Spend Less, Save More Warns Bank Boss

The head of the Bank of England has warned that the next year will pose the greatest economic challenge to the UK for a decade, after another day of turmoil on the international markets. Mervyn King said UK economic growth could slow "quite sharply" in the near term. Any hopes of a similar emergency move in Britain were quickly ruled out by the Bank of England, which said it had no plans to bring forward next month's meeting of the Monetary Policy Committee, which sets UK interest rates.

Independent: Nationwide becomes the latest lender to raise mortgage rates

The cost of borrowing money is continuing to rise this month, despite a cut in the Bank of England base rate at the start of December and a sharp reduction in Libor, the rate at which banks lend to each other, over the past few weeks. Yesterday, Nationwide, the UK's largest building society and fourth-largest mortgage provider, became the latest lender to announce price rises across its tracker mortgage range. It will increase rates for new borrowers by up to 0.15 percentage points as of tomorrow.

CNN Money: Bayou funds co-founder gets 51 months

Bayou funds co-founder James Marquez was sentenced to 51 months in prison for a scheme that deliberately misinformed investors. The co-founder of several of Bayou Management LLC's hedge funds was sentenced to more than four years in prison Tuesday for a scheme to defraud investors. U.S. District Judge Colleen McMahon in Manhattan sentenced James G. Marquez, 59 to 51 months in prison, to be followed by two years of supervised release. He also was ordered to pay nearly $6.26 million in restitution. "I made the terrible choice to take the easy way out when things started going wrong at Bayou," Marquez said. "My actions and inactions directly injured investors of Bayou."

BBC: The City: Is the Party Over?

Greg Wood reports on the effect of the credit crunch on the City. From the trading floors of Canary Wharf to the private equity Houses of the West End, he hears tales of fear, greed and the most serious convulsion to hit the City in a generation as bonuses are cancelled and jobs cut. Is the party over for one of Britain's major industries, and is the rest of the nation going to have to pick up the bill?

Assetzzz: Sustainable Growth for House Prices Most Likely Outcome for 2008

"It is difficult to see anything other than another successful year ahead for UK buy-to-let investors in 2008, as reducing numbers of homebuyers drives up rental demand and the Bank of England cuts mortgage rates. When interest rates do inevitably fall, property investors will benefit from a significant reduction in borrowing costs and can expect excellent returns on investment. The current climate poses an excellent opportunity for first time buyers who should strike while the iron is hot."

MSN Money: UK Recession A Certainty

No debate The UK is definitely heading for a recession. In fact, even if the US had the healthiest economy on the planet, the UK would still be recession-bound. Our consumers are in more debt than their American counterparts. Our houses are more over-valued. We are even more dependent on a small niche area of the economy - the City of London - than Americans are. So we have even further to fall. Cripes! Methinks we are going to see alot more of this type of article in the coming months!

Citywire: Fed's emergency cut forced by housing market correction

In a statement the Fed said: 'While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. 'Moreover, incoming information indicates a deepening of the housing correction as well as some softening of the Labour market.'The announcement was followed swiftly by a statement from US Treasury Secretary Hank Paulson who echoed the Fed's words.

Citywire: House prices will continue to fall, surveyors say

House sales will continue falling, depressing the market and contributing to a decline in property prices, according to the Royal Institution of Chartered Surveyors.The first snapshot of UK mortgage lending in December is due to be published by the British Bankers Association (BBA) on Thursday. It is hard to believe that the numbers in the BBA report will paint anything other than a fairly gloomy picture,’ says RICS in a weekly report.

Bloomberg: Bank of Canada Lowers IR, Signals Further Cuts

The Bank of Canada lowered its main interest rate a quarter point, the second reduction in as many months, and signaled it will act again to shield the economy from the threat of a recession in the U.S. The decision is the last for Bank of Canada Governor David Dodge, 64, who is retiring at the end of the month. Mark Carney, a 42-year-old former Goldman Sachs Group Inc. investment banker, takes over on Feb. 1.

New York Times: Feeling Misled on Home Price, Buyers Sue Agent

CARLSBAD, Calif. — Marty Ummel feels she paid too much for her house. So do millions of other people who bought at the peak of the housing boom. What makes Ms. Ummel different is that she is suing her agent, saying it was all his fault. Ms. Ummel claims that the agent hid the information that similar homes in the neighborhood were selling for less because he feared she would back out and he would lose his $30,000 commission. Real estate lawyers and brokers say the case, which goes to trial in North County Superior Court on Monday, is likely to be the first of many in which regretful or resentful buyers seek redress from the agents who found them a home and arranged its purchase.

Economist: Baby boom and bust

For three decades baby-boomers have helped push prices up: they settled down, then bought bigger houses and second homes. But as the first of them celebrate their 65th birthdays in 2011, this will change. The old sell more homes than they buy, and the ratio of old to working-age people is expected to grow by 67% over the next two decades.

Will the younger generation be able to buy all the homes on the market?

Salt Lake Tribune: Mortgage crisis spills over into credit cards

No but it is all ok, really!

The luster on all those silver, gold and platinum credit cards is getting tarnished. For the past few years, banks that issue credit cards have aggressively wooed affluent customers with lavish perks and fat credit lines. Now, that high-end strategy is coming back to bite the banks. There are growing signs that some of those consumers are having a hard time paying their bills. It is the latest in a series of woes for U.S. financial institutions, which are struggling to contain a series of credit-related problems after years of strong profits. Banks have lost billions of dollars from soured home loans and mortgage-related investments. And defaults on commercial and industrial loans could rise later this year if the economy weakens further.

Philly.com: Awaiting recession, wallets tighten

Affluent shoppers have joined low- and middle-income consumers in pulling back, so corporate results have suffered everywhere - for example, upscale jeweler Tiffany & Co., high-end department store Saks Inc. and low-priced chains such as Sears and Kmart stores. Also, more people are having trouble paying their bills. AT&T said recently it was disconnecting more phones because of delinquent customers. American Express Co., whose customers are generally affluent, said it expected slower spending and more missed payments on credit cards throughout 2008. Anecdotal reports suggest consumers are paring where they can - putting off a teeth-whitening, perhaps, or trying to wring a few thousand more miles out of an old car before trying to replace it.

Guardian: ABS card segment seen averting subprime chaos

ABS transactions offer various layers of protection against default. Losses are allocated from the lowest-rated tranches on up. The excess spread is the first line of defense, followed by any additional forms of credit enhancements that may be added. If losses exceed those, bottom "BBB" tranches would begin to incur losses before traveling up the spectrum to AAAs. Consumer payment behavior in the credit card segment also has been different from other consumer asset types. "A lot of credit card companies are reporting that they have borrowers who stay current on their credit cards even though they are seriously delinquent on their mortgage," said Braggs. "Consumers realized they needed their credit."

seekingalpha.com: Fed Rate Cut: Victory or Defeat?

"This is a powerful adrenaline injection for the markets. But one knows that with this kind of drug you usually need to increase the dosage... The Fed has taken timely action." LBBW analyst Jens-Oliver Niklasch "I hope I'm wrong, but I think the rally will be short-lived... I think we could be looking in the FTSE testing 5,000 within the next couple of weeks, and as far as the Dow is concerned you're probably looking sub 11,000... I'm shocked that they thought that they needed to do it and I'm surprised that they haven't explained it better." Neil Parker, RBS

Wikipedia: Enron: The Smartest Guys in the Room

and replace California with global... Enron: The Smartest Guys in the Room is a 2005 documentary film based on the best-selling 2003 book of the same name by Fortune reporters Bethany McLean and Peter Elkind, a study of one of the largest business scandals in American history. The film examines the collapse of the Enron Corporation, which resulted in criminal trials for several of the company's top executives; it also shows the involvement of the Enron traders in the California electricity crisis. As an analysis of corruption in corporations the film gives a realistic look at corporate culture and the inherent problems within. The movie presents two mechanisms for motivating a vastly immoral and profit-driven corporate culture; namely the vitality curve and the Milgram experiment.

MoneyWeek: Why the Fed's panicky rate cut won't save the US economy

Don’t panic. It’s the number one rule in a crisis. But it seems that the people who run the global economy didn’t read that particular rule book...

FT: EU blames market turmoil on US policy

“The main reason [for the turbulence] is the risk of a recession in the US. It’s not about a global recession. It’s about a recession in the US, because big imbalances have built up over the years in the US economy – a big current account deficit, a big fiscal deficit and a lack of savings,” said Joaquín Almunia, the European Union’s monetary affairs commissioner. Mr Almunia contrasted imbalances in the US economy with what he described as Europe’s “solid, sound fundamentals”. “We have a positive current account position. We have a level of savings that is the level required to finance our investments. We have improved our fiscal positions a lot. Moreover, we haven’t got subprime mortgages in our financial systems,” Mr Almunia said.

Bloomberg: Bush Open to Larger Economic Stimulus Package

The Bush administration today left the door open for a larger stimulus package than the $150 billion plan the president already has announced to avert a recession. ``I've not heard anybody suggesting larger than 1 percent, but that doesn't mean, behind closed doors in their negotiating discussions, they aren't bringing that up,'' White House press secretary Dana Perino said.

MoneyWeek: Share prices plummet – but are they cheap enough to buy yet?

The truth is, yesterday’s seas of red could be put down to one thing. Investors across the world have finally woken up to reality. The Federal Reserve can’t save us from a global recession…

moneysavingexpert.: Poll: Will house prices crash?

Opinion is majority bearish, with 75% voting for no change and below (to 20% drop) in 08. It's not really a question of will anymore, more how much.

Hiday.net: Buying Property In China

There is further evidence pointing towards the possibility of a global property crash - China has been achieving spectacular economic growth in the last ten years and is an excellent country for those interested in property development. There are numerous opportunities available to the discerning investor. However individual property investment can be a risky venture if you have not done your homework properly. However individual property investment can be a risky venture if you have not done your homework properly. The Chinese government fearing a property bubble is trying to curb foreign investment which at present accounts for nearly 50% of all new property development projects in the major cities.

BBC: Fed cuts interest rates to 3.5%

The Federal Reserve has cut US interest rates to 3.5%, a shock three-quarters of a percentage point reduction

BBC: Fed cuts interest rates to 3.5%

Panic?

BBC "News": Morrisons enjoys bumper Christmas

MEMORANDUM: All Staff
From: Director General
Subject: Today's agendas

Christmas retail figures better than expected - ignore and favour gloomy outlook in stock market for prominent positions.

Note to business editors: Next rate cut decision is in two weeks

Yahoo News: Russia bombers to test-fire missiles in Atlantic

MOSCOW (Reuters) - Russia on Tuesday sent two long-range bombers to the Bay of Biscay, off the French and Spanish Atlantic coasts, to test-fire missiles in what it billed as its biggest navy exercise in the area since Soviet times. British and Norwegian Tornado and F-16 jets were escorting the Russian 'Blackjack' bombers, Interfax reported, quoting the Russian Air Force. However, the French Defence Ministry spokesman said his country had been informed about the Russian exercises. Firing missiles off the coastline of two members of the NATO military alliance is the latest in a series of Kremlin moves flexing Moscow's military muscle on the world stage.

BBC: Millions 'spend more than income'

Five million people, or one in 10 adults, spend more than they earn on a monthly basis, according to financial comparison website Uswitch. The website said a further fifth of adults have no spare money left at the end of the month. Half of those living beyond their means rely on overdrafts and credit cards to plug the gap, it said. The findings come amidst widespread concerns that higher debts may push more people into insolvency this year.

daily mail: Hopes of global rate cut sparks FTSE revival after early morning slump

The stock market suffered wild fluctuations in early morning trading today, dipping 200 points on opening and recovering as investors snapped up bargain shares. The sudden drop in shares sparked rumours this morning that global central banks, including the Bank of England, could be considering co-ordinated emergency rate cuts.

The Corporation: Q&A: Stock market falls

Global stock markets are into their second day of hefty falls. On Monday, European markets suffered their most severe falls since the attacks of 11 September 2001. Why have they suddenly been falling so sharply and can anything stop them?

Youtube: House PRice Crash

I'm surprised this hasn't been submitted before given the car reg at the end - apologies if it has, but well worth a second watch!

Independent: Public borrowing smashes forecasts to hit record high

Whilst re-run after re-run of statements about the stability of the UK economic miracle are being delivered by Gordon Brown and senior members of his cabinet the question must be asked, "why has public borrowing soared to record levels if the economy has been and is still in such great shape?" According to the Office for National Statistics (ONS) net public sector borrowing hit an all-time record in December of £7.8bn Trevor Williams, the chief economist at Lloyds TSB corporate markets highlighted the concern with the figures stating that, "The numbers mean that fiscal policy is no longer an effective tool to deal with a weaker economy and we are only left with monetary policy and the Bank of England."

Timesonline: Browns Black Wednesday

Sometimes an article is written that clearly puts the feelings of any educated, non-corrupt person out in the open. This is one of those articles. How could Brown have been so blind and how can we reward parasitic gamblers, like the Hedge-funds who bought into a failed company and now look to be getting a big pay-off thanks to the British tax payer - who will see none of the money ever again. The BBC keep going on about 24Bln GBP, but we all know it is 55Bln and growing. Government debt is huge and about to get a lot bigger. Brown has bankrupted the country and rewarded the parasites and their ilk who created this mess in the first place. Turn out the lights when you leave.

The Independent: Shoeless

As The Independent rep-orted last week, Dolcis, which normally processes its payroll at the end of each month, paid its employees up to 19 January, before yesterday's announcement, suggesting administration was imminent. The com-pany ran into trouble after the departure of its backer EPIC, the private equity company, which sold its stake to management around the new year.

MSN Money: House prices continue to drop

'Annual house price inflation has fallen to its lowest rate for two years after the cost of property fell for the third month in a row.' When oh when will they start saying house price DEFLATION!!?? Thereby fully admitting the truth.

Elliott Wave Intrn (Sorry!): Should You Invest in Bonds?

Chart AMBAC might be of interest.

Telegraph: Asian shares tumble as market rout deepens

Watching breakfast news this morning and seeing various markets and then behold Ed Balls: "The UK economy is robust, inflation low, economy is in good shape". Looks like BBC couldn't get a current treasury spokesperson on so they got a former treasury man in there. Since he is now in education, perhaps he ought to drop propoaganda from the syllabus. We've spent out money earnt in the last 10 years, credit and bankruptcies are soaring, banks are at bursting point, there are more walking dead than Michael Jacksons Thriller vid, the RICS see a tough year, mortgage lending is drastically down in the last months of 2007. Clearly Gordon and the Brown Noses are recruiting all the ministers they can to comfort us into thinking the UK is immune from all this and recent gloom is just a dream.

BBC: A metaphor for the disaster unfolding

Watch this video carefully and imagine the commentaries from the so-called experts from the last 18 - 24 months.
The small meteorites landing from 16 seconds - 21 seconds make everything look as if it is going to be ok.
You can imagine PM Brown, Captain Darling, Bernanke, Paulson and the rest saying "You see it's ok, most of the city is still there......"
Watch it. It sends shivers down one's spine............

Times of India: Investors lose Rs 6.6 lakh crore

MUMBAI: On Monday, headline writers were left desperately searching for a word that would capture the mind-moggling fall of the sensex...Plunge, plummet, free fall...Everything that had worked earlier now seemed so tame. Even bloodbath, carnage or mayhem wasn’t bloody enough. Till Monday, the steepest fall in the history of the sensex had been 826 points. A fall of over 2,000 points in the space of five hours was like the forces of gravity going into devilish overdrive. There was some rearguard action in the closing minutes of trading, but the full day’s loss was still a record-battering 1,408 points.

Sydney Morning Herald: Another wipe-out: traders erase $43b from stocks

ALMOST $43 billion was wiped from the Australian sharemarket yesterday after panic selling caused the 11th consecutive day of losses, leaving the bourse teetering on the brink of a bear market. The longest sell-off in 26 years - and the strong prospect of more days of red ink to come - takes the market's losses since the start of this year to almost $200 billion, as fears of a recession in the US continue to cause havoc on global sharemarkets.

Arab News: World Stock Markets Crash

DUBAI/LONDON, 22 January 2008 — Global stock markets plunged yesterday, with Tokyo tumbling to its lowest level in more than two years as US President George W. Bush’s tax plan to revive the world’s largest economy disappointed investors. After heavy losses in Asian trade, it was the turn of the European markets to suffer, with the main bourses posting losses of between three and five percent by midday as investors headed for the exits, dealers said. They said that after high hopes that Bush would announce strong measures to prevent the US economy going into recession, the markets did not find enough to offset all the bad news coming through on the banks and the collapse of the US housing market.

Wall Street Journal: Springfield, Mass., Takes Aim at Merrill Over Subprime Losses

In November, officials in Springfield, Mass., got a rude surprise. One of their main investments had plunged in value by more than 90%.

The even bigger shock: This fund was stuffed with risky securities backed by subprime mortgages.

Doh!

Bloomberg: WestLB to Post EU1 Billion Loss, Will Raise Capital

A few billion Euro here, a few billion Euro there, pretty soon your currency is in the toilet. I will repeat: The Euro is a sham
When ClubMed comes clean, we'll be getting over 2 Euro to the Sterling.

---

Jan. 21 (Bloomberg) -- WestLB AG, the German state-owned bank reeling from subprime investments and bad trades, said it had a full-year loss of about 1 billion euros ($1.45 billion) and may set aside the same amount for further writedowns. The state of North Rhine-Westphalia and the Westphalia-Lippe and Rhineland savings banks associations, which own a majority of the Dusseldorf-based lender, will cover the loss and possible further writedowns of up to 1 billion euros, WestLB said today.

Guardian: 1m pay rent or mortgage with credit card

Rising housing costs forced more than a million householders to use a credit card to pay their mortgage or rent over the past 12 months, a poll for the housing charity Shelter reveals today.

Financial News: Default lines rumbling through construction business

It didn’t take long for the credit crunch to send tremors through the construction industry. Perini, the general contractor on the $3 billion Cosmopolitan Resort and Casino project now under construction in Las Vegas, said it received notice that the project’s developer had received a loan default notice from its lead lender on the project, Deutsche Bank. Ian Bruce Eichner, CEO of the development firm on the project, 3700 Associates, confirmed to the Associated Press that his company defaulted on a $760 million loan from Deutsche Bank after it failed to get refinancing on a construction loan by a Tuesday deadline.

CNBC: Why Stock Market's Selloff Is Likely to Continue

but....but.......but......a feel good article for us !! It is not likely to stop here :)

CNN: China's banks feel subprime heat

not sure if this has been posted bfore, but it is interesting the china appears to be about to take some heavy losses But the country's industry regulator warned in a report released Monday that they might face higher risks from fluctuating real estate prices and financial conditions.

Hiday.net: The German Property Market

Despite the downturn in the UK and USA economies there is still a long way to go before house prices start to reach affordable levels - especially for the growing army of wannabe first time buyers! However all is not lost there are still opportunities in countries within the European union that offer good work opportunities; a similiar standard of living and which also offer housing that is at at least one third of the price of property in the UK. One such place is Germany which is going through an economic revival at the moment.

Times: Half a million homeowners miss mortgage payments

"Cash-strapped borrowers are struggling to pay off their home loans" Ooooops! "Half a million cash-strapped homeowners have missed a monthly repayment on their mortgage in the past six months. Despite the Bank of England’s quarter point cut in interest rates in December, many homeowners are still struggling. Some mortgage rates have in fact increased since December’s cut. The average fixed-rate deal has risen from 7.30 to 7.31%". Folks, do you remember? just 18 months ago davidsmut and other pundits said we entered a 'new era' of never-rising interest rates, between 3 and 5% forever and ever and ever. MWAU HAHA HHAH HAAHA HAHA HAHAHHAH

CNN Money: Oct 19th 2007: Even 'safe' funds play with fire

Consumers view money market funds as conservative, but Fortune's Peter Eavis reports that some have dipped their toes in risky financial waters. A large Bank of America money market fund has over $600 million of exposure to Cheyne Finance, the structured investment vehicle (SIV) that recently defaulted on its obligations. As of Oct. 12, Bank of America's $67-billion Columbia Cash Reserves fund had approximately $640 million - or just under 1% of its assets - invested in Cheyne, according to Jon Goldstein, a Bank of America spokesman. "Up until now, Cheyne has been paying its maturities as they come due," Goldstein said. He added that Deloitte, the firm acting as receiver for Cheyne, said this week that it was pleased with the progress of efforts to refinance and shore up the troubled SIV

FT.com: Municipal borrowers bypass troubled insurers

Municipal borrowers in the US are increasingly issuing bonds without seeking guarantees from beleaguered insurers MBIA and Ambac, highlighting the risks of a collapse of their bond insurance business model unless confidence is restored. So far in January, US municipalities borrowed $8.6bn through new bonds guaranteed by insurers, according to Thomson Financial. This compares to over $31bn of new guaranteed bonds issued in January of 2007. About 30 per cent of the new bonds this month were guaranteed by FSA, a bond insurer with little exposure to subprime assets which have created losses for MBIA and Ambac and eaten into their capital base.

RMA Journal: A Practical Review and Test of Default Prediction Models

Did you predict the 37.3bn in defaults chaps? $5.3million per HOUR every HOUR for the last 300 days

The authors, members of Citigroup's Risk Architecture group, examine the benefits and limitations of two alternative classes of models for default risk assessment. The contingent claims analysis is a structural approach based on an option-theoretic view of a firm's equity and liabilities. But even CCA models often show poor power in predicting default events in precisely those cases where these models should hold strongest. By introducing additional credit information, hybrid models are able to overcome some of these limitations and increase model performance in the critical near-default region.

thisismoney.co.uk: FTSE 100 'to fall by more than 40%'

but.....immigrants.....but.....divorced couples...... but limited space.... but long term...... but but but...... Interesting article, my sort of doom and gloom !!

BBC: Global shares tumble on US fears

Many of the world's main stock indexes, including the UK FTSE 100, have posted their biggest falls since the terrorist attacks of 11 September, 2001.

Wikipedia: Hybrid Securities

It seems like these were a great idea during runups in the equity and debt markets. Whoopsie. "The new guidelines establish a "debt-equity continuum" and allow institutions to classify part of the hybrid security as equity and part as debt (in a shift from the previous policy, that counted the entire amount as debt). This change allowed companies to issue hybrid securities at a time of record low interest rates (and thus gain access to cheap capital) and then use the proceeds to repurchase equity shares (which have a very high cost of capital). Since only a fraction of the recapitalization would be listed as debt on the balance sheet, hybrids allowed companies to repurchase more shares than previously without negatively affecting their credit rating."

Wall Street Journal: The $3bn dollar PayDay

In today’s Journal Gregory Zuckerman brings us news of the biggest one-year salary ever paid on Wall Street — that of hedge-funder John Paulson, who made somewhere between $3 billion and $4 billion last year. That’s right, between $3 billion and $4 billion. In one year. John PaulsonTo put that in perspective, Mr. Paulson’s salary equals the incomes of 62,500 Americans earning the national median income of $48,000 a year. It also puts him instantly among the top 150 richest Americans, as measured by Forbes. Mr. Paulson made more in one year than The Donald has made in a lifetime. How’s that for Kicking Ass? Even better, Mr. Paulson probably doesn’t have to pay the typical income taxes on his loot - because his income is based in part on carried interest, or a cut of the trading gains

Office National Statistics: Slowdown in retail sales growth

What with Northern Crock and the stock market we might have missed this confirmation that the high street is in trouble. Sales by predominantly food stores rose by 2.4 per cent over the year, compared with no growth for predominantly non-food stores and 10.0 per cent growth for non-store retailing and repair. Sales by household goods stores fell by 2.1 per cent, the largest fall for this sector since March 2006 (-4.2 per cent). It will only get worse and the job losses will increase.

BBC News: Rock plan 'best meets objective'

The gov. will guarantee NR bonds and sell them. This still leaves the UK taxpayer underwriting any defaults. Biggest financial assistance to any company in history.

BBC: UK borrowing is worst in 10 years

''For the year to December, net borrowing reached £43.6bn, £11.4bn more than the year before and higher than the Treasury's 2008 spending targets. Economists now expect the government to miss its targets this year as slower economic growth brings in lower taxes.''

Slashdot: Collapsed UK Banks Attempts to Censor WikiLeaks

"Wikileaks has released a couple of hilarious legal demands over a confidential briefing memo entitled Project Wing — Northern Rock Executive Summary. Northern Rock Bank (UK) collapsed spectacularly late last year on the back of the sub-prime lending crisis and was re-floated by the Bank of England at a cost of over £24bn. The memo was used by the Financial Times, the Telegraph and others. It attracted a number of censorship injunctions, as reported by the Guardian, which only Wikileaks continues to withstand.

Tgraph: Falling pound may keep recession at bay

"In my professional life there have been three phases of gross delusion about the performance of our economy. The first was the Barber boom of the early 1970s; the second was the Lawson boom of the late 1980s; and the third is the Brown boom that we have just lived through. The extent of the macroeconomic imbalances now is just as great as it was then. The balance of payments gap, as a share of GDP, is as large, and the boom in real house prices has been bigger. Government borrowing has not surged - yet - but the signs are ominous" (we saw the first £25bn in emergency bonds announced today) "The end of illusion means the end of what I called, in the book published under that very name, "money for nothing"

Associated Press: Fire burns 14 buildings in Mass.; 1 hurt

Assuming the insurance firms have the money to pay out....

LAWRENCE, Mass. - A massive blaze that started in an empty downtown nightclub early Monday quickly spread through 14 buildings, including apartments and a home for the mentally disabled. One person was injured in the fire in Lawrence, about 30 miles north of Boston, Fire Chief Peter Takvorian said. The extent of the person's injuries was unknown. The fire spread from the nightclub, which was being renovated, through a hair salon and the other buildings. Officials say they rescued several people from the buildings, many of them three-story, wood-framed structures.

The Herald: My 7-Point Plan to End the Housing Crisis

Great article by Iain McWhirter in the Glasgow Herald outlining a common-sense plan that would go a long way towards ending the crazy housing boom without making the whole country suffer along with the ruined speculators: better credit regulation, an end to BTL tax breaks, a reform of planning regulations and ending right-to-buy. The only shame is that his plan makes so much sense, it will be ignored by any politician with any influence... as all sensible plans are.

Reuters: Gold falls as U.S. measures fail to spark buying

Dollar is going up and gold speculators are getting out. About time IMHO. I read somewhere that selling gold now is like cancelling your insurance when the fire starts. Let the speculators get out and leave gold to people like me who want to buy some insurance to this global meltdown.

CambridgeNews: Property prices in city fall 4.9%

According to property website Rightmove, the average cost of a house in Cambridge has fallen by 4.9 per cent this month. "A slow in the buy-to-let market and the introduction of Home Information Packs have had an effect, as have the sub-prime crisis in the US and the problems with Northern Rock over here." "There is no question that prices have fallen, but this is because they were too high previously." Here we go!

FT.Com: Shares tumble as sell-off accelerates

At one point on my screens at work this morning the FTSE 300 Ex-UK was showing down 6.2% - in one morning! Here comes the recession...... "The FTSE 100 slumped more than 300 points on Monday morning amid heightened gloom about the prospects for the global economy. Sentiment was undermined by some sharp falls on Asian markets overnight as investors were left underwhelmed by President Bush’s package of measures aimed at stimulating the US economy. Hong Kong’s Hang Seng index slumped 5.5 per cent and the Nikkei 225 in Japan closed down 3.9 per cent."

Times: Bargain hunters reignite UK housing market

The Times has turned into the real epicentre of misinformation on the UK housing market. With davidsmith, the Bricks Chicks and the space given to the estate agents so-called "economists" (the Fionnaullalaulla's, the Savills, the Hamptons) now the Times is competing with comics. “Some properties have had their prices dropped by 10 per cent or more and are now within reach, satisfying some of the pent-up demand from previous disenfranchised buyers.” The amount of time a property remains on the market came down slightly this month to 95 days, down from a peak of 98 days in December" Sure, sure, but Miles forgot to say that there are sellers taking properties out of the sale market and renting them out, thus depressing rents. I post more links in the comments.

Firstrung: Mortgage lending crashes by 25% (£30bl) in one month - CML

2007 as a whole proved to be the strongest ever year for gross mortgage lending, according to the Council of Mortgage Lenders. It reached an estimated £362 billion, up 5% from £345 billion in 2006, and above the CML's forecast in October 2007 of £360 billion. However, December gross lending declined to an estimated £22.6 billion, its lowest monthly figure since May 2005, but this was not a surprise in current market conditions. It was down 25% from £29.9 billion in November and 21% from £28.6 billion in December 2006. A 6% seasonal fall might typically be expected between November and December.

Fortune 500: Business Article

But oh shucks, why listen to amy authority that actually speaks some sense? Best off listening to David Smith instead?

Firstrung: Mortgage payments missed by half a million customers in past six months - MoneyExpert.com

Close to half a million cash-strapped homeowners have missed a monthly repayment on their mortgage in the past six months, according to MoneyExpert.com research. One in 25 can't pay, but the recent base rate drop will ease the pain, says MoneyExpert.com. The independent financial comparison service says some 463,000 people have failed to meet a mortgage payment deadline since July 2007, representing around four per cent of the 11.8 million outstanding mortgages.

Building Societies Association: 2007 - BUILDING SOCIETIES SMASH SAVINGS RECORD

“Gross lending by building societies was almost flat year on year, at £52.1 billion in 007, compared to £52.8 billion in 2006. However, net lending by building societies was down by 20.7% to £12.6 billion in 2007, largely because of higher interest rtes in the mortgage market as a whole"

RightMove: January 2008 House Prices Report

Look at page 5.
There have been real (i.e. accounting for inflation of 4%) price drops year on year for everywhere but London.
Year on year price changes are:
North 0.8%, North West -0.2%, East Midlands 0.4%, East Anglia -0.5%, South East 3.9%, South West 2.4%, Wales -3.9%, West Midland 0.2%
London 11.9%.
And they try to blame the monthly 0.8% fall on HIPS (p.2) . But they didn't blame the rise on HIPS last month!

FT: Northern Rock in Crisis

Upside? Will be interesting to see what the yields will be on this.

Independent: House prices fall for third consecutive month but agents see signs of recovery

''House prices are continuing to fall, although the new year has seen a moderation in the rate of decline, according to the latest data from the online estate agency Rightmove. Having recorded a sharp decline of 3.2 per cent in values in December, partly caused by a glut of properties rushed on to the market to beat the Home Improvement Pack (HIP) dead-line, UK real estate values declined by an average of only 0.8 per cent in January, the group said. The annual rate of increase now stands at 3.4 per cent, its lowest since December 2005.''

BBC: Market Data

FTSE in free fall this morning....now 5762.8

Economist: Finding default: What isn't known about bad debts

What happened in the subprime market was an “unknown unknown”. There were several layers of middlemen between investors and house-buyers, most of whom had an incentive to overstate either house prices or a borrower's ability to repay. Worries about other parts of the debt market remain. In recent years struggling consumers have been able to consolidate their credit-card debts into their mortgage loans; that option is no longer open. Will that affect default rates? And car companies have relied on cheap financing rates to maintain sales. Has that led to a decline in lending standards?

Firstrung: Guess who's back? Not first time buyers that's for sure...

It's been quite a while since any economic market commentators mentioned the 'boiled frog syndrome'. With EDF announcing a spectacular hike in energy prices today, approx 14.5% on gas prices alone, the average mortgage costing over £1500 more than this time last year, car insurance and petrol prices up, mortgages coming off their teaser rates, council tax bill announcements for 2008 on the way... it may be worth reckoning up and noting that the great British consumer has to find close on 2K extra net this year (vis a vis 2007) to effectively stand still. This is not withstanding the fact that the average food basket is now costing 6.5% more than this time last year...

BBC: Average house prices fall further

The BBC losers always find a silver lining for the market "Asking prices were down 0.8% in the five weeks to 12 January but the fall was less than the 3.2% slide seen between November and December" MWA U UAHAHH HAHAHAHAHHA

Daily Mail: House values plummeting by £120 every day

The asking price of a typical home has plunged more than £11,000 since October, research reveals today. Prices are dropping around £120 a day with experts warning that the year ahead looks bleak. The report by Rightmove reveals that prices have fallen for the third consecutive month. They have dropped by a total of nearly 5 per cent since October, including a 0.8 per cent decrease this month. It is a cruel blow for anybody who recently stretched themselves to the limit to buy a home.

News.com.au: Australian Homes, the World's Least Affordable

AUSTRALIAN homes are the least affordable in the world, with regional cities including Mandurah outside Perth and Queensland's Sunshine Coast emerging as among the most expensive. A survey of 227 cities published in the 2008 Demographia study of international housing affordability suggests the Rudd Government should not focus exclusively on Sydney, Melbourne and Brisbane. Perth, ranked 19th, is almost on a par with London, which is the 18th least affordable city.

BBC News Friday, 20 August, 2004: Oil stays below $50 a barrel mark

Fresh violence in Iraq triggered yet another oil price surge on Friday, before dealers starting taking profits. New York light crude rose as high as $49.40 after reports of a new attack on an Iraqi oil pipeline, but then slipped back to close at $47.86. However, with the situation in Iraq still uncertain, oil prices could still surge through past $50, dealers said. Despite slipping back, oil is still trading near its highest level in the 21-year history of crude oil futures on the New York Mercantile Exchange(Nymex).

Wikipedia: United States Housing Bubble

I wondered what really is going on and after looking for ages came across this from Wikipedia of all things, it mainly talks US as per the title but explains why the UK is affected, a worthwhile look through i hope you agree, it is up to date and current.

Wall Street Journal: Trader Made Billions on Subprime

John Paulson realised the housing market was going to go wrong so he bet against it. This article expalins how he did it. "Most people told us house prices never go down," He was lucky too "Mr. Paulson didn't turn bearish too early. Some close students of the housing market did just that, investing for a downturn years ago -- only to suffer such painful losses waiting for a collapse that they finally unwound their bearish bets." The key thing was he remained patient and determined. Housing remained strong, and the fund lost money. A concerned friend called, asking Mr. Paulson if he was going to cut his losses. No, "I'm adding" to the bet, he responded, according to the investor. "Someone from more of a trading background would have blown the trade out and cut his losses,

DavidSmith: Gordon Brown gets blame for budget ‘mess’

public finances are “in a mess” and will deteriorate further as the economy weakens. Treasury failed to take advantage of years of good growth to put our public finances on a sounder basis, so our ability to respond [to the slowdown] has been compromised. Sterling is a sitting duck at the moment, fundamentally overvalued and subject to speculative attack. Another risk is that policy-makers make more mistakes in responding to this situation. Our forecast assumes that we get the appropriate policy response. The worry is the MPC will fret about the inflationary impact of sterling and delay the necessary deep deep cuuuuuuut. davidsmith, give us a break!

MSN MoneyCentral: The next banking crisis on the way

Nah. The banks and other financials have more losses from the subprime-mortgage mess on their books that they haven't yet confessed. Worse, the mortgage debacle has spread to other types of debt, with banks and other financial companies reporting mounting losses in their credit card and auto loan portfolios. And worst of all, the next big leg of the crisis -- the one I think will mark the true bottom -- has just started. As the economy slows, the default rate is rising for corporate debt, especially for the high-risk, high-yield corporate debt called "junk" by many of us. That's opening a Pandora's box of potential write-downs that could dwarf the losses in the mortgage market.

Hiday.net: London's Burning

Sentiment seems to be the only thing left when one thinks of the property market in London. The days of frustrated first time buyers itching to get on the foot of the property ladder in London are finally over. Up to the beginning of last year buyers were prepared to pay over the odds to live close by to busy roads; ugly public buildings and the flight path of noisy airports. However there are still suprises! Just last week Toprak Mansion, in one of the least exclusive districts, went for a record breaking 50 million pounds.

Reuters: Virgin to sweeten Northern Rock deal

Virgin Group will try to win over shareholders with a sweetened bid for Northern Rock on the eve of a speech by the British Chancellor to Parliament about the struggling UK bank, an unsourced Sunday Times report said. A statement from the Treasury about Northern Rock is expected at 0700 GMT on Monday, a Treasury spokesman said.

BBC: Risk of a recession 'remains low'

"We have been living well beyond our means, lured by the offers of cheap no-questions-asked credit. The reversal in the credit markets in 2007 lead to a sharp fall in economic growth, but there is room for interest rates to be cut to cushion this" Each week brings more multi-billion dollar investments that are helping many of the financial institutions that have been seriously hit by debt write-offs" These investors are Chinese, not prize i@iots, sure enough wont invest at 1.95 dollars to the pound. "Peter Spencer, chief economic adviser to the ITEM club, said the government had left it too late to sort out deteriorating public finances which could make tax cuts to spur the economy tricky to implement" Public debt will go up. All risks on the downside: GBP is doomed.

Building Societies Association: RECORD SAVINGS INFLOWS CONTINUE BUT BORROWERS NEED TO PLAN CAREFULLY

“Gross lending was £4.1 billion, compared to £4.6 billion in November last year. This cooling of activity since 2006 is likely to be a consequence of higher Bank Rates and a tightening of credit conditions more generally.” Mr. Coles also urged holders of fixed rate mortgages that will be ending in the new year to use the Christmas period to start thinking about their new mortgage. He said: “People coming off a fixed rate in the new year are potentially looking at a big increase in their mortgage repayments. As a consequence, it is important they begin to consider their options to help make their repayments as low as possible when their fixed rate period finishes.

New York Times: The Construction Site Called Saudi Arabia

“The Saudi economy was in idle mode for 20 years,” said John Sfakianakis, the chief economist at SABB, formerly known as the Saudi British Bank, who is based in Riyadh, the Saudi capital. “Today, the feeling here is, ‘We’ve won the lottery; let’s not waste it.’ ” The kingdom’s lofty economic goals would have been unthinkable without the surge in energy prices that has filled the coffers of oil producers. Oil prices have quadrupled since 2002 and reached $100 a barrel in New York this month.

Independent: Price declines recall the recession of the Nineties

House prices are falling at their fastest rate since the recession of the early 1990s, the Royal Institution of Chartered Surveyors (Rics) has warned. Confidence is ebbing, with the "house price balance" – the proportion of surveyors reporting increased house prices – falling to minus 49.1 in December from minus 40.6 in November and marking the biggest negative balance since November 1992.Meanwhile, fewer people are looking to buy a property, with 25 per cent more surveyors reporting a fall rather than a rise in enquiries.

Firstrung: Firstrung, first time buyers, the weeks' news in focus

Is there ever a 'good' news week for the mortgage and property 'industry'? Take that a stage further is there ever a 'good news week' for the first time buyer? The NAEA reported this past week that FTBs are making some kind of comeback; apparently FTB numbers recorded at estate agents are up from lows of 10% to mid 13%... However, is this enquiries only, or are FTBs piling into the housing market at the first signs of weakness, busily hoovering up bargains? We'll answer that for them, it's enquiries not purchases and their FTB records only relate to the new enquiries from potential clients with nothing to sell, who are not necessarily first time buyers.

Guardian Unlimited: Savers hit by new property fund plunge

The panic in commercial property funds is likely to intensify this week, as financial advisers are tipping Norwich Union to be the next asset manager to put a freeze on withdrawals by small savers. Founder John Duffield, who owns 12.5 per cent of the company, said he had personally lost £100m in the past six months. He added that he is gloomy about prospects for the stock market and thinks London and Wall Street could drop 10 per cent between now and June. 'We are not even all the way into the woods, let alone out of them,' he said.

davidsmith: Don’t bank on euro as the pound slides

Sure enough the Pound bubble will be a major driver in influencing political and monetary decision in 2008. Of course davidsmith got it totally wrong, but -as usual - reading this clown helps understand what will NOT happen. However, in a rare moment of lucidity he said something remotely sensible: "A change in interest-rate expectations and tough talk from the ECB does not add up to a 14% fall for sterling against the euro over the past year, equivalent to Harold Wilson’s “pound in your pocket” devaluation of 1967. So something else has been happening, and appears to be directly linked to the credit crisis" My, my, look at the brain on davidsmith!

Telegraph: Northern Rock buys up its own repossesions

Bank claims customers house, which is then put on auction. Bank bids at auction, thus inflates sale price. This sounds like "shill bidding", and is fraudulent. (e.g. e-bay fraud) "shill" - a person who poses as a customer in order to decoy others into participating, as at an auction, confidence game, etc.

Scotsman: Property addicts are facing a painful spell of cold turkey

George Bernard Shaw said property is to the middle classes what gambling is to the poor. Either can lead to addiction. One sign that any house price downturn will get uglier than we hoped is when property funds start to get into trouble. When the market turns, it is impossible to get your money out. The huge unknown is how buy-to-let landlords will behave as prices tumble. During previous recessions, second-property owners dumped at the first sign of trouble.

Sunday Times: Business Article

How things can come out of the woodwork....

Observer: Don't squeeze spending now, Treasury is urged

The Government wants to get their spending back on track, but the Item Club says they should be using fiscal measures to forestall the coming recession. Our neo-con liberal government is being urged by a bunch of capitalists to return to Keynesian economic management. The world turned up-side down.

Times: Pension plans derailed by the property slump

Plunging commercial property values have hit Scottish Equitable Pensions with some funds seeing 17% falls in commercial property values over the last 6 months. Scottish Equitable has now introduced a 12 month lock-in period for investors trying to move their money out.

While many people want lower property prices they must also recognise the potential impact on PensionSchemes.

Hiday.net: UK House Price Crash

Will house prices crash in 2008? This is the question that seems to be on every one's lips at the dinner table in almost every home in the UK. Despite certain mortgage lenders telling the public that there has been, on average, a steady 5% increase in house prices during the last year, most people have already started to realise that the uk property market is definitely in serious trouble - the demise of Northern Rock; interest rate rises; reductions in mortgage approvals and the rippling effect of the downturns in the US economy have all begun to take their toll.

FT.com: Tchenguiz’s magic touch begins to desert him

This happened to Donald Trump in the last real estate crash. At one stage he had to go see his bankers to discuss repayment. He passed a tramp on the way to the negotiation and realised that the tramp was $8bn better off than he. We are about to see a repeat of this, except Supersized

Timesonline: Property tycoons who owe billions

Property tycoons who owe billions Almost unnoticed, they have joined a select clutch of debt-backed private property entrepreneurs — ranging from the flamboyant Nick Leslau and high-living Tchenguiz brothers to the intensely private Leo Noe and publicity-shy Livingstone brothers — who have become super-wealthy over the past five years by taking advantage of low interest rates.

Guardian: 2 x maths teachers + 700 houses = 1 x £240m buy-to-let empire

If you think house prices are already outrageous, look away now. According to two former maths teachers from south London, who are Britain's buy-to-let king and queen, the property market will never crash. Husband and wife magnates Fergus and Judith Wilson have just signed a deal to buy their 700th house. If things go to plan, they will become the country's first buy-to-let billionaires. Every week they buy another house - and on one day alone spent £10m buying 40 properties off a distressed developer. In the early 1990s the Wilsons were marking maths homework and writing school reports at a Blackheath comprehensive. Today their property empire is worth £240m - almost all of it within commuting distance of the Eurostar terminal in Ashford, Kent. They put their personal wealth at £180m.

Bakersfield.com: Federal agents raid Crisp and Cole homes and businesses

FBI agents this morning searched Bakersfield entrepreneur David Crisp’s real estate office on Stockdale Highway and his Seven Oaks home, as well as the homes and offices of several of his business associates and family members, an agency spokesman confirmed. The searches of 13 businesses and residences were carried out in coordination with the IRS, the Bakersfield Police Department, the Kern County Sheriff’s office and the state Department of Real Estate. They follow state regulators’ release Tuesday of a 25-page report accusing Crisp, 28, and his former business partner, Carl Cole, 60, of deceiving lenders, falsifying information and paying employees to take out loans.

Wall Street Journal: Default Fears Unnerve Markets

The turmoil on Wall Street is beginning to rock a foundation of the financial system: the ability of institutions to make good on their many trades with one another. Today, a struggling bond insurer, ACA Financial Guaranty Corp., will ask its trading partners for more time as it scrambles to unwind more than $60 billion of insurance contracts it sold to financial firms but can't fully pay off, according to people familiar with the matter. The contracts were intended to protect Wall Street firms from losses on mortgage securities and other debt they own. The problem is that the insurer itself is teetering -- with repercussions across the financial world. Some of its trading partners, called counterparties, already are writing off billions of dollars because of its inability to pay.

Wall Street Journal: Las Vegas Default Highlights Commercial-Property Crunch

The credit crunch that roared through the residential real-estate market is starting to bite commercial projects, too. Yesterday, Ian Bruce Eichner, the developer of a twin-tower casino resort in the heart of Las Vegas, defaulted on a $760 million loan from Deutsche Bank AG after he failed to get refinancing. The default on the loan supporting the $3 billion Cosmopolitan Resort Casino is a signal of trouble for Mr. Eichner, who gained notice during an earlier real-estate downturn in the early 1990s when he lost several projects in New York City.

SF Chronicle: Mortgage Company Exec Jumps to Death

An executive of a collapsed subprime mortgage lender jumped to his death from a bridge Friday, shortly after his wife's body was found inside their New Jersey home, authorities said. The deaths of Walter Buczynski, 59, and his wife, Marci, 37 — the parents of two boys — were being investigated as a murder-suicide, according to the Burlington County Prosecutor's Office. Walter Buczynski was a vice president of Columbia, Md.-based Fieldstone Mortgage Co., a high-flying subprime mortgage lender that made $5.5 billion in mortgage loans and employed about 1,000 people as late as 2006. However, it has since filed for bankruptcy and now has fewer than 20 employees.

Times: House prices tumble

It will be interesting to read what davidsmith has to say on this. "HOUSE PRICES TUMBLE. House prices fell in the last three months of 2007 in what was the first quarterly fall in seven years. Average prices across the UK saw a 0.8% decrease, according to the latest Halifax house price index. The previous quarterly fall was in the second quarter of 2000, when prices fell by -0.1%. The largest falls were in Greater London where prices dropped 6.3%." WOOOOW, but no worries... "Sound economic fundamentals and lower interest rates will support house prices in 2008.” Yeah, sure

Barbican Consulting: Guide: What is basis point value, (BPV)?

Download the Basis Point Value Quick Guide as a PDF
BPV is a method that is used to measure interest rate risk. It is sometimes referred to as a delta or DV01. It is often used to measure the interest rate risk associated with swap trading books, bond trading portfolios and money market books. It is not new. It has been used for years. In many financial institutions it has been replaced or is used in conjunction with value at risk. BPV tells you how much money your positions will gain or lose for a 0.01% parallel movement in the yield curve. It therefore quantifies your interest rate risk for small changes in rates

eastern daily press: dipping house prices

so how much is sandringham worth now then?

Bakersfield: Crisp & Cole Real Estate, close family members and staffers have received default notices on more than $11 million in loans

A year ago, it was all about image: a Gulf Stream jet, bodyguards, a half million-dollar car, Armani suits. Now, 27-year-old David Crisp is floating in default notices. So are family members and employees, current and former. No other local real estate agency has been hit by such a rash of defaults on large loans in recent months, a Californian survey has found. "I will not put my head down," Crisp said Thursday. "I will not roll in the sand. There's not one day where you won't see me in the office working." Even as Crisp celebrated his latest coup -- apparently securing tentative loan approval to build a pair of 24-story towers at CSUB -- he, his family, his business partner and his current and former employees appear to be in financial trouble.

patrick.net: How the U.S. Could End Up with High Interest Rates

Another thoughtful article by Charles Hugh Smith. This one explains how the US could end up with sky-high interest rates. Food for thought...

Guardian: Sub-prime cracks spread to infrastructure

"Ambac is one of a number of so-called monoline insurers that have become the focus of economists' attention in recent weeks. These companies, many of which were set up in the 1970s when US municipal authorities raised funds for projects by issuing bonds, insure those bonds against default. Such insurance makes it cheaper for local governments to raise cash as the risk of default is reduced for investors." ... "If the monolines run into trouble," said one British fund manager yesterday, "it will make what we have seen so far look like a walk in the park."

Guardian: London suffers most as house prices fall

"London was hardest-hit by falling house prices in the final quarter of 2007, a new survey from the Halifax shows today, adding to the gloom in the housing market."

ThisIsBristol: 14% RISE - HOUSE PRICES KEEP ON SOARING

This was a front page spread in the widest selling regional paper. It is akin to turkeys voting for Christmas but it was difficult to miss this headline whilst walking past any news vendor today. It's going to be difficult for a crash to take hold when this type of pro-property propaganda is shoved in peoples faces and base rates are likely to be cut.

Bloomberg: Appraiser Exposes Toxic Debt Tie to Inflated Values

The Georgia case in which Perez testified hinged on 300 inflated appraisals, according to Assistant U.S. Attorney Barbara Nelan. Hill and companies he controlled bought 50 houses and 250 condominiums and made money by recruiting straw buyers to repurchase the properties at inflated prices.

Even before Perez pleaded guilty, he paid for bucking the system, said his lawyer, Page Pate.

``He liked the steady stream of business,'' said Pate. ``My client refused to inflate a few appraisals and they cut him off for a long time.''

Times: The Bricks Chicks

I am not sure who at the Times may have had the bad taste to put together such a show, but I can t find the words to describe it... just watch it, it is unbelievably tacky and biased, in short a disgrace: "surveyors figures show that the market is cooling, with properties taking longer to sell. But some estate agents are going against the trend and feel that the market could still edge ahead this year". Is there a way to post it on YouTube? Or on the main page of HPC? This clip has the potential to kill whatever left credibility of the Times Property section. I even suspect it is kind of an office joke that got posted by mistake.

RICS: 60% of EAs report house prices falling in Dec

After waiting for the media to lost interest, RICS have finally released the full December report on their website. 60% of those surveyed reported falling house prices - the worst result since Nov 1992. Be sure to read the quotes from the various EAs to see how panicked they are.

Firstrung: UK house prices start the inevitable retreat from unsustainable highs

A bit more meat on the bone now the full report is available, that fall in London is stellar IMHO and unprecedented. Also of interest is just how quickly N.Ireland found reverse gear proving just how speculative some of the 'demand' was and more importantly just how difficult and time consuming it is to extricate from a purchase when you are in fact the greater fool... UK house prices in 2007 Quarter 4 were 5.2% higher than in 2006 Quarter 4 with the average price of a home in the UK increasing by £9,821 over the year to £197,071. The annual increase of 5.2% made 2007 only the second year since 2001 when prices have risen by less than the long-term average of 8%... -

BBC: Rock nationalisation less likely

I laughed out loud when I heard this on the radio. The substance of the release is this: "Prime Minister Gordon Brown has backed a plan from bankers Goldman Sachs to convert the Bank of England's loans to Northern Rock into bonds for sale." I realise many of you will be rolling on the floor laughing already, but for the rest of us, the punchline is that this is exactly how the sub-prime mess came about - by "selling dodgy debt". The second level of irony is that half the credit crunch is the fact no one can sell this sort of debt any more. Coup-de-grace comes with yesterday's story that the first bond insurer has been downgraded, making it nigh-on impossible to shift this stuff, even for prime companies - and Northern Rock is a zombie bank.

Times: New Star plunges £110m amid property investors’ panic

"New Star’s value has fallen by more than 77 per cent in the past six months as fears increased over the climate in commercial property." Less than a year ago, do you remember the huge New Star adverts promising unbeateable returns from commercial property. You can trust brick and mortar!... yeah, sure, what can go wrong with brick and mortar?... you invest in solid, tangible assets... yeah, sure

Observer: ondon towers in doubt as office market dive

The speed of the downturn in the commercial property market in the last few months has been breathtaking. Only a year ago mayor Ken Livingstone said the Shard would be to London what the Empire State Building is to New York. But now many property experts question whether the tower, and dozens of other skyscraper projects on the drawing board, will join the skyline of Britain's cities.

Reuters: Bush wants $150 billion plan to lift economy

Bush's plan failed to reassure investors on Friday as world stock prices fell again, with U.S. stocks tumbling to close out the worst week for the benchmark S&P 500 index in 5 years on fears the White House effort will not be enough to avoid recession.

Independent: The week the economy turned nasty

It can only mean one thing......Recession! ''Retail sales plummet; gas and electricity prices soar, further eating into already squeezed disposable incomes; Citigroup and Merrill Lynch, two of the great symbols of American capitalism, forced to hand round the begging bowl among Asian and Middle Eastern sovereign wealth funds after massive write-downs on US sub-prime mortgage lending.''

The Independent: Spectre of negative equity haunts Britain

Last paragraph: Estate agents believe falling interest rates and strong employment will shore up the market. Andrew Weir, of Foxtons, said: "I don't think we will see house price falls. I just see no reason for it."

Firstrung: London house prices crash by 6.3% in final quarter of 2007 - Halifax

London has suffered a significant fall in house prices in the final quarter of 2007 a new survey from the Halifax shows today...Britain's largest mortgage lender states that Greater London led price falls in eight regions across the UK with a hefty drop of 6.3%. This was followed by the south east and east Midlands, which each saw a decrease of 2.3%.The news surely signals the end for, what appeared to be, an inexorable rise in house prices. London and the south-east have previously been the 'boom areas' at the forefront of Britain's previous year on year double digit house price growth. Inevitably higher interest rates and tighter lending have hit demand, however, this is especially evident from those working in the City.

theargus.co.uk: Letting agent's vanishing act leaves tenants in lurch

Customers have been left baffled after their estate agent shut up shop with no notice. Farrells, a sales and letting agent in Goldstone Villas, Hove, closed its doors earlier this week without explanation. There is no notice in the shop window or on the firm's website telling customers what has happened. advertisement Those in the industry appear to have little clue about the sudden closure either. ...

Bloomberg: Subprime Mortgage Derivatives Extend Drop on Moody's Reviews

Whoopsie!

``Liquidity has taken a hit as market participants wait for the dust to settle,'' Christopher Flanagan, an analyst at New York-based JPMorgan, wrote in a Feb. 20 report. CDOs buy loans, bonds and derivatives, and resell the cash flows in new bonds, some of which have higher credit ratings. Yield premiums on high-rated subprime mortgage bonds are little changed. An ABX index linked to credit swaps on AAA bonds has fallen 0.3 percent since its started trading on Jan. 19.``There's so much credit protection in those securities it just takes a very, very stressed environment to impact their credit profile,'' said Scott Kirby, a portfolio manager at Minneapolis-based Riversource Investments LLC, which manages about $100 billion in fixed-income assets. ``We're not there yet''.

Guardian: Real estate

A collapsing commercial property market is bad news for homeowners. Some buy-to-let housing investors had started buying small commercial premises in recent years, and may now be hit hard. Don't catch a falling knife says the old City adage. Tim Ames, of Cathedral Financial Management, began withdrawing clients from property 12-18 months ago. He said: "We wouldn't recommend an allocation to property for at least another six months."

Times: Fall in retail sales sparks fear of long-term slump

'This is the start rather of a sizeable retail slow-down, things are going to get worse, house prices are falling, equity is faltering and utility prices are rising, high street sales plunge 4.3%, the biggest fall in 13 years, consumer confidence is at a 12 year low'.

FT.com: East Europe warned on subprime fallout

The Swedes, Norwegians, Finns and Icelandics received a sound financial thrashing 17-20 years ago. Long enough for a new generation to forget everything. The rush to lend to the new economies, also will open up new opportunities to short their currencies. Perhaps a safer way is to trade on CDS widening, or better still a hedged position looking at the differentials between a large index and individual currencies, sectors. This is going to be BRUTAL

FT: Ambac left reeling as Fitch cuts triple-A rate

Fitch cuts Ambac AAA credit rating thereby reducing its ability to issue new buisness, this is the start of the next phase of the credit crunch.

CNN: Ambac fallout could hit municipal bonds

The importance of this cannot be overemphasised - see article from earlier about the importance of monolines.

HPC Blog: Flashback: The CDS that broke the Camel's Back

http://www.atimes.com/atimes/Global_Economy/JA15Dj01.html
The financial system fell under intense stress on Wednesday. The epicenter of the crisis was in the credit default swap, or CDS, market, and contagion fears were building quite a head of steam. The pricing for Countrywide Financial default protection (five-year CDS) surged a huge 469 basis points (bps)to a record 1,610 bps (it would cost US$16,100 annually for five years to insure $100,000 of Countrywide debt against default).

Countrywide:Today 1610, (01/2007) 30
Rescap: Today 3,746, 01/2007 - 95
MBIA : Today 849, (01/2007) - 87
Ambac: Today 841, (01/2007) - 70
Washington 611, (01/2007) - 54

CNBC: WestLB needs 2 bln eur in fresh capital, up from 700 mln

The Euro is a sham. It will strengthen against Sterling for a little while (perhaps 2 more quarters) and then will precipitously plummet as the truth about Spain, France, Germany, Italy, Greece and Portugal come out. We are seeing the mighty Germans in trouble. You know just how bad things must be for the Spanish and the Italians. And also the Swedish - they lent to the Baltics and Eastern Europe.

Mortgagestrategy: Paragon to cease new lending at end of February

Paragon Group has revealed it will have to cease new lending from February due to funding problems.In a statement to the London Stock Exchange, Paragon revealed its warehouse facility, which provides it with long-term funding, is unlikely to be renewed at the end of February. This means there will be very limited funding for new business beyond this date, other than for further advances on existing loans, although the lender will continue to complete existing mortgage offers until then.

BBC News: Bush calls for economy kick start

President George W Bush has called for a special package of measures worth billions of dollars to avoid a downturn in the world's biggest economy. Mr Bush said it had to include tax incentives for US business and direct tax relief for the American people. The package should total at least 1% of gross domestic product, or about $145bn (£74bn), the White House said. Too Little Too Late?

msn.com: The next banking crisis on the way

As the economy slows, the default rate is rising for corporate debt, especially for the high-risk, high-yield corporate debt called "junk" by many of us. That's opening a Pandora's box of potential write-downs that could dwarf the losses in the mortgage market..... ohhhh more bad news!!!!

Reuters: Moody's puts Derbyshire Building Society on review

AL, BB and Derbyshire under review

BBC: All aboard the monoline Titanic

"If the monolines lose their own triple A ratings, then the bonds they insure will – automatically – lose their premium ratings. Bloomberg estimates those losses would be $200bn." It's like having car insurance from an insurer that can't pay out. This is what Jim Cramer was ranting about on CNBC (see post here late last night).

CNN: Americans: Recession near - or already here

More than three out of four Americans believe that a recession has already started or will hit in '08. Half have cut their spending, which could make a slowdown worse. How will this hit the UK???

daily mail: Thousands use equity release to beat debt

A rising number of older people are using equity release to raise cash to pay off their debts rather than to provide themselves with a retirement nest-egg. Working it out: Home owners released more than £1.4bn from their property in 2007

Belfast Telegraph: Ulster house prices fall 5%

As predicted by anyone with an ounce of common sense, the quickest to rise is the quickest to fall - despite the fantasies of some here who clearly believed NI had transformed into Dubai or Monaco with added money trees, it looks like the chickens are coming home to roost. I can tell you that the greed, naiveity and smugness here as a result of the boom were a magnitude above anywhere else in the UK, including London. Perhaps we can get back to a normal life again.

New York Times: Sorting Out the New Housing Market

"The shape of the new American housing market — the post-bubble market — is starting to emerge. It is one that favors the young who never owned a house and the banks that have access to cheap deposits. It may be harshest on the two coasts, where both distress and a newfound lack of mobility may be on the increase."

Bloomberg: Sinking Sterling Is Catching Dollar's Disease

the air has begun to leak from one of the world's biggest financial bubbles: the pound sterling. Not only is the pound weakening, it's going the way of the dollar for many of the same reasons that have plagued the U.S. currency: a deflating housing bubble, a large trade deficit and the prospect of lower interest rates. Both the U.K. and U.S. also have financial industries reeling from the subprime-mortgage crisis and related credit crunch that augur the probability of large layoffs. All of these suggest sterling has further to fall.

Firstrung: Deputy Governor of the Bank of England appears to rule out major interest rate cuts

In a meeting with the London Chamber of Commerce and Industry, John Gieve - Deputy Governor of the Bank of England - discussed the recent financial market disruption, its impact on the UK economy, and the increase in immediate inflation pressures from energy and food...

MoneyWeek: Time to panic - the Fed is asking politicians for help

"...Bernanke has his hands on the reins of monetary policy. He can pump the economy full of credit, just like his predecessor Alan Greenspan always did, by cutting interest rates. Now under Mr Greenspan, this worked very nicely - but that‘s because there were still bubbles left to inflate. But now the biggest of them all, the credit bubble, has burst, and Mr Bernanke‘s little money machine just doesn’t seem to be doing the job anymore."

Firstrung: The housing market bubble had to burst at some point - Moneyextra

"It's now clear that the housing market has slammed on the brakes, the most optimistic outlook for house prices for 2008 would appear to be that they'll stand still but values are falling now and are likely to continue to do so - it's just a question of how far and how fast they'll fall." - Robin Amlôt, Senior Editor of Moneyextra.com

sky news: A Toilet Worth Spending A Penny On

Available: Vintage, cosy property in urban environment with good transport links. Excellent plumbing, despite a few leaks over the years. Snobs may dismiss it as bog standard, but if you are feeling flush, this Edinburgh real estate may be worth splashing out on. The former busman's toilet is up for sale and expected to fetch more than £30,000.

MoneyWeek: Credit squeeze will get worse in 2008

Financial institutions face plenty more write-offs on mortgage-related securities, and other parts of the credit market – student, car and credit-card loans – look vulnerable.

guardian: Merrill's Thain promises to scale back risk taking

The new boss of Merrill Lynch pledged to crack down on outlandish risks by traders today as the Wall Street brokerage plummeted to an $8.6bn (£4.35bn) year-end loss following a disastrous series of bets on sub-prime mortgages.

Market Oracle: Indians Selling Gold To Buy Stocks

Maybe $830 isn't a big enough correction. The weaks joining the party are waiting for a small correction too. Maybe it will be down in the low 700s. Techieman?

Guardian: Panic selling shuts £2bn fund

One of Britain's biggest property funds was forced to shut its doors to withdrawals yesterday after the slump in commercial prices triggered panic selling by small investors.

Market Oracle: US Stock Markets Dome Top Signals Tragic End of the Bull Market

The conclusion from all of this should be obvious - apart from some isolated pockets of strength you should be out of the broad stockmarket by now, and any remaining holdings should be sold, especially on any short-term rallies, which can also be shorted. A high weighting of funds should be deployed in commodities generally and especially in the Precious Metals sector. Things are likely to get really rough for the US economy in 2008, which promises to be the worst year for the US since The Great Depression.

BBC / Nationwide: Home prices fall for second month

0.5% (0.8% real) drop this month from the Nationwide.
This is the underlying trend. No more HIP effects.
Sellers can stomach this speed of fall. RPI at 4% adds a (real, i.e. inflation factored in) fall of 0.3% every month.

h-net: OVEREND & GURNEY, 1866; BARINGS, 1890

Contagion Effects of Three Late Nineteenth Century British Bank Failures Ashraf A. Mahate City UniversityB usinesSs chool,L ondon Britishb ankingd uringt he period1 860t o 1908 experiencead numbero f bankf ailures.F or exampleb, etween1 880a nd 1890t herew ere2 9 bankf ailures. The failureo f a bankn ot only affectst he depositorosf that bankb ut alsoo ther banks,t heir shareholdersth, e monetarys ystema nd generale conomics tability. The main reasonf or the latteri s the lossi n publicc onfidencien the banking systemw hichl eadst o a withdrawaol f fundsb y depositors.

BBC: Exit delay for property investors

A rush to withdraw money from its commercial property funds has forced Scottish Equitable to introduce delays of up to 12 months for its customers.

Times: Sir John Gieve makes case for rate cut as MPC faces inflation test

The Bank of England's Deputy Governor dampened hopes of aggressive cuts in interest rates to bolster the economy yesterday as he highlighted its increasingly acute dilemma over a likely “sharp rise” in inflation, even as growth falters.

Times: How to beat a property market slowdown

The market is cooling; mortgage lenders are getting meaner. But learn the rules and the slowdown could work to your advantage. Take out an interest-only mortgage for the first couple of years. Generational subsidy could be the answer: persuade your parents to lend you a deposit that can be returned to them when you sell. Selling prices are on average 6 per cent below asking prices. But don't upset the seller by offering too low. Remember that you are buying a home rather than trying to make a killing. Buyers looking at £1million-plus homes do not mess about; unless you are in a cash-rich position, you are not going anywhere. Buy quality: You don't want to be stuck with something that ends up being the next worst thing, rather than the next best thing. MWAU HAHHAH AHA HAHAH

Telegraph: US recession worries spark Wall Street plunge

As recession panic grips US, Bush announces hugh tax cuts to stimulate economy (as well as increased spending). Will Brown now do the sensible thing and cut taxes? I don't think I will hold my breath as fuel tax is still planned to go up in April!! I suspect though he will try to increase spending e.g. increasing MP pensions!! The U.K. is in one hell of a mess, high taxes, high debt and a falling pound! All good news for house price deflation!

cnbc: Half of Spain's real estate agencies folded due to building slowdown

Half of Spain's real estate agencies have folded in the past year due to a slowdown in the once-booming building sector, an industry association says. Of 80,000 that operated at the beginning of 2007, only around 40,000 have survived and some 100,000 employees lost their jobs, according to the Superior Council of Real Estate Agents, a nationwide grouping.

Executive Intelligence Review: A $3 Trillion Bankruptcy Will Now Start To Emerge

An experienced European banker told EIR this morning that "the problems of 2008 are of a completely different order of magnitude than those we saw in 2007." We have entered a period now, he explained, in which large banks and financial firms are opening their books to external auditors, after having announced losses for the fourth quarter of 2007 according to their own internal surveys. But these external audits are now finding different values than those previously announced. (Surprise, surprise!—ed.) Thus, said the banker, we might expect a whole series of aggravated balance sheets, including legal bankruptcies of banks and financial companies.

Telegraph: UK house prices may defy the doomsayers

House prices across the nation will defy the doomsayers this year and settle to an average growth of 3pc, according to latest research from CB Richard Ellis. They say homeowners are in for a slowdown, not a crash. The group has even predicted that London will outperform the market at 6pc. Jennet Siebrits says: "This is not a repeat of the 1990s crash, as housing equity and employment rates are at an all-time high and interest rates remain low." ------ YAWN. She's saying there won't be a crash because housing equity is high. In other words prices won't fall because prices are high. That's great logic, she should be an estate agent. Oh wait she already is. Also unemployment is a lagging indicator. The banks are already shedding staff, the London housing market will suffer as a result.

Tears on Wall Street: Asia Times

From the 4th paragraph "Since British house prices have only just begun to decline, and in London at least must have much further to fall than in any comparable region of the US, mortgage losses in the UK market are still hidden well below the surface, with only the tiniest fraction of the iceberg being visible. After all, even a 50% decline in top-end London house prices would still leave them excessive in terms of income levels - it must be remembered that Tokyo housing lost 70% of its value after 1990"

CNBC: Mad Money host Jim Cramer discusses doomed financials and the Fed

Latest bank results belong in the fiction section. They laughed their heads off selling this junk to Germans, Australians. No one prepared to tell the truth and the Federal government won't hold them to account. He is ranting again great entertainment!

seekingalpha.com: Give a Warm Welcome to the Currency ETFs

Seems like a great idea to hedge against a falling pound.

Telegraph: Some hope as property stocks go through roof

The stockmarket is a wonderfully perverse beast and the spectacular showing by the property sector showed it at its most unpredictable. This was the day, remember, on which Investment Property Databank, the industry bible, declared December the worst month for the sector since it began collecting figures more than 20 years ago.

AP - Yahoo: Stocks Extend Slide As Manufacturing Index Falls; Bond Insurers Fall Amid Fears of Losses

Stocks skidded lower Thursday after a regional Federal Reserve report showed a sharp decline in manufacturing activity and as investors grew concerned that downgrades of key bond insurers could trigger further trouble with souring debt.

Evening Standard: Darling's plan to pay off Rock investors

The Government is drawing up plans to compensate angry Northern Rock shareholders as nationalisation of the mortgage lender draws ever closer.

Reuters: Japan's subprime losses increased since Sept -FSA

Japanese banks' subprime valuation losses have expanded since the end of September, the head of the Financial Services Agency said on Thursday. FSA Commissioner Takafumi Sato made the comment at a regular briefing. The regulator has previously said Japanese banks' subprime exposure stood at around 1.2 trillion yen ($11.20 billion) as of the end of September.

Bloomberg: Subprime Losses Are Big, Exaggerated by Some: John M. Berry

In the comments section, I will deconstruct all this chaps points. @Drewster - if you don't like this or understand its relevance to Houses/Housing Markets - I don't care.

CNN: Business Article

Or sorry, should that be print some more dollars or sterling?

CNN MONEY: Bush: Stimulus plan needed

This reminds me of a comedy sketch of the guy who keeps trying to solve a problem but only serves to make it worse! What can they try to come up with now - free money to households to spend in the shops???

AP - Yahoo: Bush and Bernanke Back Package to Stimulate Weakening Economy

President Bush and Federal Reserve Chairman Ben Bernanke on Thursday embraced calls for an economic stimulus package to avert recession. Bernanke said such a plan should be quickly implemented and temporary so that it won't complicate longer-term fiscal challenges.

CNN Money: As home prices fall, rents flatten

Home prices dropped last year in most cities around the nation, and now rents are flattening out in many of the markets worst hit by the housing downturn. The median monthly rental bill rose just 0.5 percent in 2007. National rent increases had averaged between 2 and 3 percent annually the previous several years. Instead of selling at a loss, BTL investors are now renting them out. ------ San Francisco and New York are exceptions where "massive demand" more than offset increased supply. These cities compete in a "global market" and by world standards they're still relatively inexpensive for foreign currency-based consumers taking advantage of a weak dollar. ------ I guess that means London won't be falling either?

Reuters (columnist James Saft ): Recession risk as British bills come due

Many Britons have known only rising property values and low unemployment during their adult lives, and have spent as if this would go on forever.

Fox business: December Housing Starts Drop 14.2%, Building Permits Dip 8%

Remember folks, it can't happen here......

Property Week: Estate agent confidence 'at lowest since 90s', says RICS

In its UK housing market survey for December 2007, made available today, RICS reports that 61% of surveyors have reported a fall in prices over the last three months compared to 38% recording no change and 1% recording an increase. The figures indicate that the seasonally adjusted balance of surveyors reporting a rise in prices is -49.1% - the worst since November 1992.

BBC: Merrill Lynch posts $7.8bn loss

Merrill Lynch today blamed the problems in the US Mortgage market for the loss. Company chairman and chief exec John Thain called the performance, "clearly unacceptable". My guess is that he must have been on holiday during the period that the losses were generated.

Reuters: Wealth may be next in line in US home crisis

Covers borrowers with good credit rating that have over extended or Mew'd

MoneyWeek: Why estate agents are selling up

The managing director of a business broker told me that in the last three weeks he has been contacted by 17 estate agents, all looking to dispose of their businesses in a hurry. It is not, as the firm’s MD pointed out, a “ringing endorsement of the property market.” Estate agents don’t necessarily need house prices to keep rising to keep making good profits but they do need people to keep buying and selling houses. Whether they sell a house for £500,000 or £550,000 is neither here nor there to the average agent but whether they sell one of them or two houses is (that makes a difference of £10,000). Right now transactions are in free fall and likely to stay that way.

MoneyWeek: UK stocks are in a bear market - it's official

Amid all the gloom, with stock markets tanking around the world again yesterday, UK employment figures were supposed to be a rare ray of sunshine. But as we’ve already seen from America, employment is a lagging indicator – it only starts to turn down after everything else has gone wrong. And with the FTSE 250 now in bear territory, the FTSE 100 could soon follow...

Not Born Yesterday Web Site: INVESTING MONEY: THE TEN COMMANDMENTS

There are many things that can be said about money, one truth is: The more trust you put into it, the more valuable it becomes. If Money were a PERSON, what would he/she say about the way everyone (or any individual or group) is treating IT these days (and in the past)? Please post your answers and views.

Times online: Barratt order book falls in tough market

The housebuilder's forward order fell by 6% as buyers deferred purchases and lenders tightened criteria for mortgages. The faltering housing market has taken its toll on Barratt Developments, Britain's second biggest housebuilder, after its forward order book for new homes has fallen for the first time in almost four years. Barratt, which bought its competitor Wilson Bowden in a £2.2 billion deal last April, also reported a slight fall in its average selling price across private and social homes from £179,500 to £177,900, which reveals the extent to which the market for new homes has changed.

BBC News: Darling calls for market action

You have to laugh if it wasn't so serious. "Policy makers must act quickly to tackle the "enormous" problems faced by the world's financial markets, Chancellor Alistair Darling has said.... .... European central banks have acted to prevent global credit markets freezing by injecting liquidity." Now wasn't it this same "injecting liquidity" that got us into this sorry mess.

Times online: Government's court order plan will allow people in debt to keep their creditors at bay

The Ministry of Justice announces the biggest shake-up in personal insolvency laws for years, which will permit borrowers to take a "repayment holiday". Borrowers will be allowed to stop repaying debts by taking out a court order, under radical plans outlined yesterday by the Government. The proposals would mark the biggest shake-up of personal insolvency legislation in years and come at a sensitive time for the financial services industry, which is bracing for an increase in consumer bad debts.

The Guardian: Punch first to report smoke damage

Britain's biggest pub landlord, Punch Taverns, has seen a marked deterioration in trading in the traditionally busy Christmas period as the industry continues to suffer from the impact of the smoking ban and declining consumer confidence. then "We think there is still a lot of unsold beer left in pub cellars and it typically takes until the end of the month to get a proper fix. Tenants in trouble will sell the stocks they have before throwing in the keys."

The Telegraph: Gold may hit $1,000 in third qtr, Goldman says

Weren't they predictng $650 1 month ago. I think we will have some consolidation around the 830-850 mark.

The Telegraph: Japanese stock market plunge rattles Fukuda

The Nikkei index has dropped 11pc in barely two weeks, recording the worst start to the year since 1945.

Telegraph: Japanese stock market plunge rattles Fukuda

It seems like an orderly decline over last couple of months for both the DJIA & FTSE, yeah the Japanese market is plunging, but when the leader talks about possible intervention, then it just highlights how genetically modified markets are closer to home. Correct me if you believe differently, I have been watching gold as my barometer, and with the discussion of waves etc and the strengthening of gold on HPC, it is remarkable how well some contributors to HPC have been in forecasting the trends of gold.

Fool.co.uk: More Housing Horrors Across The Pond

"The US housing market slump is widening out. It seems that even New York is feeling the pinch as residential areas east of Manhattan are now suffering. [...] There are clear differences between our own [UK] housing market and the US or Canada. UK prices may well not crash. But once property values start to slide, the decline can last not just for months, but for years."

Telegraph: Obsessed with house prices? Me? Not any more

"My new year's resolution - never, in any circumstances, to worry what my house is worth. A disproportionate amount of my net worth is tied up in my property. Even if I can keep up with my mortgage repayments, a fall in house prices could have all kinds of other knock-on effects. Scary. Hence the resolution. I can't control what happens to house prices but I can, to an extent, control how much I let movements in house prices play on my mind. It is a head-in-the-sand strategy. But then why should ostriches always get a bad press?"

AP - Yahoo: Somber Fed Says Economy Has Lost Punch

The Fed's snapshot of business conditions showed a national economy losing momentum heading into the new year and a future riddled with uncertainty. The persistent housing slump and harder-to-get credit are making people and businesses ever more cautious, it said.

Reuters: House prices fall at fastest rate since '92

LONDON (Reuters) - House prices fell in December at their fastest rate since the recession of the early 1990s, a survey showed on Wednesday, raising fears the country's once buoyant housing market is heading for a sharp downturn. The Royal Institution of Chartered Surveyors' house price balance fell to -49.1 in December, its lowest since November 1992, from -40.6 in November. The consensus was for a more modest drop to -45.0 and the fall marked the fifth consecutive month of easing prices. Surveyor confidence in the sales and price outlook deteriorated markedly, the survey showed, with both measures reaching their lowest level since the questions were first included in the survey in 1998. ...

Citywire: Landlords see falling house prices as investment opportunity

Buy-to-let loans rose dramatically at the end of last year, accounting for a surprising 39.55% of all mortgages arranged through property consultants Hamptons in December 2007, compared with just 17.9% in December 2006. Meanwhile, borrowers taking out loans for house purchase declined sharply from 35.94% in December 2006 to just 13.18% in December of 2007.

Firstrung: 2008: Falling house prices probable...a house price crash unlikely - Lombard Street Research

Bad news on the residential property market is coming thick and fast, with real mortgage approvals down by a third since July and the prices balance of the RICS survey now at its lowest point since 1992. The fall in average house prices that was registered in Q4 last year looks set to intensify in coming months. But a peak to trough collapse in prices of 15-20% à la the early 1990s does not seem on the cards.

This is Money: Estate agents selling the moon

Does any one have info if this means we are in a galactical price crash then, originating from the universal credit crunch, are prices on the moon still stable or are they falling, I have a nice location on venus , its a real hot one!

trendirama: Why Domain Names are the Best Investment for the Future

It seems that as the younger generation are unable to get on the real property ladder they have been compensating their real world financial shortcomings by buying up digital land at a phenomenal pace - and for only £10 a shot - in the form of domain names. The twist being that much of this new internet land has started to come to fruition as incredibly valuable 'land' - hence diamonds.com going for $7million. This article probably shows how differently the younger generation think - especially with regard to the concept of owning 'land'. It's also amusing to see that even domain names are being jumped on by a buy-to-let frenzy - as good names are being secured - and then rented out on a monthly basis.

New York Times: New Troubles for Apartment Mogul in South

"A few years ago, Mr. Smuck, 59, began making a comeback. Outbidding other investors, his MBS Companies, based in the New Orleans suburb of Metairie, quickly amassed a portfolio of 65 garden apartment complexes throughout Texas with 17,000 units. But now, Mr. Smuck’s real estate empire is coming apart for the second time. Most of his $900 million in loans are delinquent, some are in foreclosure, and his management company filed for bankruptcy protection on Nov. 5."

Manchester Evening News: City's plague of rats

SWARMS of rats have infested alleyways in Manchester city centre and are gorging on restaurant waste. These shocking pictures, taken just before dawn, show large brown rats scurrying between piles of bin-bags, discarded cardboard boxes and restaurant litter. Pest controllers have seen a 100 per cent increase in call-outs for rat infestations in Manchester city centre in recent years, but council officers say Chinatown has the biggest problem.

BBC News: 'Plague is back', expert claims

The bubonic plague, which killed millions of people in medieval England, is making a return in the world, an ecology expert in Liverpool claims. Research by Professor Michael Begon at the University of Liverpool revealed the deadly disease, also known as the Black Death, has re-emerged. It has only killed 200 people since 1998, but Prof Begon said the threat is "growing" in Africa and the US.

BBC News: US inflation reaches 17-year high

Consumer prices rose by 4.1% for all of 2007, up sharply from a 2.5% increase in 2006, the US Labor Department said. The figures also showed consumer prices rose by 0.3% in December, down from November's increase of 0.8%. Energy prices jumped 17.4% in 2007, while food prices rose 4.9% - their biggest increase since 1990. UK inflation at 2% an all time low? Who's cooking the books? You can fool some of the people some of the time!!!

Safe Haven: The Fed's 20-Year Misguided Monetary Adventure

This guy puts a decent case for stagflation. I think his stagflation model could lead into a depression if assets fall so hard they drag down consumer prices.

Timesonline: Times

New figures suggest the housing downturn is gathering pace as unsold properties build up and surveyors' confidence falls

The Business: Inflation puts urgent rate cut in doubt

Inflation is above the Bank of England's target for the third month in a row, raising doubts that it will cut interest rates as fast as the market expects this year. The news helped the pound to rebound after its recent run of declines, with sterling rising 1½ cents to $1.9714 against the dollar, but failed to lift the FTSE 100 index which tumbled 190 points to 6025.6.

The Independent: Britain's land is still owned by an aristocratic elite

Who owns Britain? Most of us would instinctively reply: we do. The British people own the British Isles. This is a democracy, isn't it? But the facts tell a different story. When you look at a map of the British Isles, you are looking not at your home but at a land mass overwhelmingly owned by a tiny aristocratic elite. Extraordinary though it might seem, in the 21st century, 0.6 per cent of the British people own 69 per cent of the land on which we live - and they are mostly the same families who owned it in the 19th century.

Metro: House prices 'on the brink'

On the front of the London Metro this morning. I was loathed to "read" it, but at least the dummy hacks are turning their tune, as I'm guessing a lot of EAs & property development companies are pulling their ads, thereby reducing the vested interest angle.

FT: Some of my best friends are bankers

Martin Wolf of the FT writes "By paying huge bonuses on the basis of short-term performance in a system in which negative bonuses are impossible, banks create gigantic incentives to disguise risk-taking as value-creation. Yet individual institutions cannot change their systems of remuneration on their own, without losing talented staff to the competition. So regulators may have to step in. The idea of such official intervention is horrible, but the alternative of endlessly repeated crises is even worse. I understand that the bankers will not like this. Yet one thing is surely now quite clear: just as war is too important to be left to generals, banking is too important to be left to bankers, however much one may like them." I agree, banks played big part in our hp bubble.

Times: Japan poised to rescue Wall Street banks

"The three wealthiest Japanese finance houses are set to step into the worsening sub-prime carnage as the “silent investment partners” of Wall Street and Europe's stricken banking titans." The Yen at its highest level in years will help.

Times Online: Ten things you need to know about... adding value to your house

Affraid that your house may loose value in 2008? There are ways of boosting the value of your own home even through sluggish times, provided that you are careful and canny.

SilverSeek.com: Danger Zone

One for S2R1 and techieman, and anyone else interested in metals. Watch out for the concentrated shorts (who are these guys?!) - there could be blood on the carpet. Sorry if this seems a bit off the HPC topic, but all these things are related and there has been much talk of gold lately on the forum.

The Independent: The Real Cost of Living

Inflation 5% by spring , if not allready.......

FT: Brace yourselves

S&P announced it was adjusting its cumulative loss measure on 2006 subprime collateral to 19 per cent - up from 14 per cent: It will mean huge new downgrades on CDO tranches from the 2005 vintage through to 2007 - the majority of the market, in other words. We suspect this will push hundreds more CDOs through “events of default” and a significant number into liquidation - a likely repeat of the disastrous events in November and December, when CDOs went into meltdown and banks were forced to admit further humiliating writedowns.

Times Online: Rate cut in doubt as jobless falls to 32-year low

The data, which follow yesterday’s figures showing that consumer price inflation remains unchanged at 2.1 per cent, add to the case for the Bank of England's Monetary Policy Committee to keep interest rates on hold

Times: A short, sharp housing shock may be best

Suppose the gloomsters are right. Suppose house prices do fall significantly. Suppose there really does have to be a significant adjustment to bring residential property values back towards their normal relationship with wages. How do we as a nation best get there? A short, sharp shock might be the lesser of two evils. Just don't expect estate agents to agree.

BBC: House price fall 'at 1990s rates'

I know this article has been posted today from other sources but I quite liked the BBC headline, its a beauty! The 5th consecutive month of falls is also a cracker.

The Telegraph: Property returns plunge to IPD all-time low

"Property values, meanwhile, crashed 10pc in 2007, a fall not seen since the recessions of the early 1990s and before that the mid-1970s."

There is the 18-year HP cycle again.

Market watch: Gold falls first day in six as traders take profits

Gold is down to $882. If this turns out to be Elliott 4 then it could correct down to the low 800s. What we want here is a longish consolidation and for the 200 dma to catch up before wave 5 takes off and we fly through the $1000 mark.

MoneyWeek: Stocks still aren't cheap enough to be a bargain

It's been a bad start to the year for stockmarkets, with the troubled retail and property sectors leading the way. But now the bargain-hunters are appearing in droves. Should we be joining these seemingly clever people in the rush to buy discounted shares? Probably not...

Guardian: China property firm's woes spark fierce protests

the country's biggest real estate agency, said it had closed 1,000 of its 1,800 outlets since October because of a deteriorating market

bbc: Asian shares fall on US worries

Investors have been spooked by huge losses at Citigroup Asian stock markets have dropped sharply amid a growing conviction that the US - the region's key export market - is heading for a recession.

New Zealand Herald: Cheaper houses may be on the way as market tanks

For those frozen out of the housing market by high prices, data suggested cheaper houses may be on the way, economists said today. Real Estate Institute (REINZ) figures showed the median house price fell 2 per cent in December...

Telegraph: Is it any wonder people are fleeing London?

"Last year, nearly a quarter of a million people packed their bags and left the capital for good. This week alone in London, a medical student was stabbed to death in a Brixton fruit shop; a pupil who was expelled for allegedly having a knife took his school to the High Court; and a teenage girl underwent an unimaginable ordeal in an ordinary suburban street. What is going to happen to those of us left to live here if youths across the city continue running amok? London is a welcoming city, where home-grown and particularly international criminal networks are flourishing nicely. Somewhere in the city, a great termite's nest of law-breaking and corruption grows by the day." -- Seems like the flip side of international super-rich is the gangs of international criminals!

Guardian: Housing market closest to slump for 15 years, say chartered surveyors

House prices across the UK tumbled in December at the fastest pace in more than 15 years as tighter mortgage lending and higher interest rates pushed the property market closer to the biggest crash since the early 1990s, the Royal Institution of Chartered Surveyors says today.

The Times: House price falls as bad as 1990s

if your a housing bull that is. The feeble attempts at spin from the now quaking RICs mouthpiece is laughable.

Telegraph.co.uk: Property returns plunge to IPD all-time low

Returns in the UK property market plunged another 3.7pc in December, the largest monthly fall for the Investment Property Databank since records began in 1986.

BBC: German bank hit by sub-prime woes

First the US banks hit by sub prime writedowns then the UK and now a german bank. It looks like the credit crunch is spreading like a disease.

YahooBiz: British Pound Most Bullish Since November 2005

I am not a FXtrader so I can't verify these charts but this analysis says a bottom is forming for the falling pound. This is based on the COT Index (Commitment of Traders). "The COT index allows us to view the net position of each reporting class in relation to its own history, to ascertain if a particular group is aggressively positioned with a directional bias." Apparently this is indicating a turn for GBP sentiment.

The Daily Mash: NORTHERN ROCK NOW JUST TWO WORDS

NORTHERN Rock has now been reduced to its two constituent words, its directors told angry shareholders today.

FT.com: Insight: The fire threatens credit insurance

The notional value of CDS contracts globally is $45,000bn. That represents real underlying credits of about $5,000bn. The maximum rate of corporate defaults was about 3 per cent in the 1990s recession. However, corporate speculative grade bond defaults run as high as 10 per cent. A weighted default ratio of 5 per cent (3 per cent for investment grade and 10 per cent for sub-investment grade) would mean that credits with a par value of $250bn would default. Assuming an asset recovery ratio of 30 per cent, the hit would be $175bn.

45 trillion dollars!

LandlordExpert: “Now’s time to jump in - it’s a buyer’s market”

Interesting wording by BTL advisers

Google Finance: Pound vs Singapore Dollar

We are going to be seeing a lot of pain here. Think 2.45% inflation? What happens to inflation when we drop 30% of the GBP's value? Hint: It goes up at least 30%. Look at

• GBPEUR
• USDEUR
• GBPCHF
• USDCHF

bbc: bbc Stockmarkets

Not strictly related, but a good indication of the mess we are in.

FT.com: This is not merely a subprime crisis

This chap forgot to mention Municipal Bonds. When councils cannot collect revenues, they cannot keep up their bond payments. Worse still, many councils seem to have been receiving revenue streams from money market instruments tied to SIVs. As these have defaulted, places like Florida have found they cannot pay their bills. The crisis has stemmed from a complete disregard for the systemic effects of larger than expected levels of defaults and egregiously bad pricing of risk. Scenario analyses would have mitigated the worst effects and better still, have prevented people running blindly into such risk. I think that the next default risks are as follows;

MoneyWeek: The good times have come to an end

The past decade has been a golden one for the UK consumer. But the British public is not yet fully aware of how hard things are going to get. Overall, things are going to be tough for the Brits, whose lifestyle quality has already deteriorated for reasons unconnected with the economy – bossy but often incompetent bureaucrats, regulatory and red-tape mania, extensive social breakdown in many areas of major cities, poor public services and a bloated welfare system riddled with fraud.

Mortgagestrategy: London Scottish withdraws from secured loan market

London Scottish Mortgages has suspended its secured loan business until further notice. The lender wrote to brokers yesterday informing them that it will not accept cases submitted after January 15, 2008 and will instead focus on its first charge business. The move is yet more bad news for brokers in the secured loan market who have been struggling to place business with lenders.

MortgageStrategy: Northern Rock completely reliant on £25bn BoE loan

Northern Rock’s chairman has revealed the bank has become completely reliant on the Bank of England and the Treasury to continue to trade.

BBC: EDF Energy set to increase prices

EDF Energy has announced it is putting up its electricity prices by 7.9% and gas prices by 12.9% from Friday.

PropertyNews: House price promise provides reassurance for buyers

"Flying in the face of gloomy media speculation about interest rates and house prices, Redrow is making a spectacular promise to home buyers interested in the stylish one and two-bedroom apartments at Lindum Point in Bunker’s Hill, Lincoln: buy now and we will help you protect the price of your home for up to three years." "Perfect for a range of buyers including first timers, buy to let investors and the ‘lock up and leave’ brigade,"... what's the LockUpAndLeave brigade? desperate housebuilders MWAUU UAHH HAHA HAHHAHAH

ITV1 10:35pm: Sandbanks

Starting tonight a 3 part series focusing on one of the most heated of all British property hotspots. Meet the VI's who can sell a 3 bed house complete with damp problems for over 4 million pounds. However the economic tide has turned and is set to wash the bubble away, along with climate change which will sink this one time Dorset sand dune!

Guardian: Teachers threaten strike action over pay

First the police, now the teaches.....look forward to a summer of strikes! ''The National Union of Teachers is considering whether to follow through with an earlier threat of a one-day strike, following today's pay announcement. New trouble on the public sector pay front comes as the prime minister, Gordon Brown, has put his credibility on the line to restrict wage inflation, which has already provoked protest from police.''

Guardian: CREDIT WRAPUP 1-Citi writes off $18 bln, Merrill gets capital

"Citigroup wrote off a colossal $18.1 billion on Tuesday and secured new capital as Merrill Lynch, also seen heading for big losses ..."

Guardian: Borrowers stung by soaring rates

Average interest rates on personal loans have jumped to nearly 15%, or close to double the headline rates used by banks to entice borrowers...

Motley Fool: How often do house prices fall?

Very itneresting article. House prices have risen for 20 out of the last 24 years. Halifax HPI puts the long-run average at 7.9% since 1983, whereas the Nationwide has it at 8.7% a year since 1952.

Firstrung: Interest rate hold will ease pressure on sterling

The Bank of England has decided to leave interest rates unchanged at 5.5% offering some much needed respite for Sterling according to currency specialists HiFX...Chris Towner, Currency Strategist at HiFX explains:"Sterling has been under considerable pressure following the Northern Rock crisis and concerns surrounding the UK economy. Although the market is now pricing in the high probability of a cut when the MPC next meet in February, plus another cut in the second quarter of 2008, it must be noted that GBP has already been sold off quite aggressively in anticipation of rate cuts....

Firstrung: Individual Voluntary Arrangements (IVAs) up 67% in a month

Terry Balfour, director of IVA.com believes that hard pressed households, many of whom are still clearing their plastic debt from Christmas 2006, will eventually buckle under the onslaught of bills timed to arrive this week. "January is the cruellest month when it comes to bills, this explains why we are experiencing such a surge in queries for IVAs. And with similar reports filtering from the industry about the number of phone calls/emails about debt advice, we predict it will outstrip 2007's total of 110,000 insolvencies, when £1.3bn was written off in bad debts as a result of individual voluntary arrangements."

Bloomberg news: Taylor orders drop 19% as credit deters buyers.

Taylor warning of a slump in orders does no bode well.

MoneyWeek: Do houses prices really only ever go up? Ask the Government

Plenty of otherwise sensible people have bought overpriced property on the assumption that prices could only go up. Funnily enough, the Government based its financing of the Olympic site in Stratford on the same premise...

Primelocation: House price index

Most areas of the capital experience a fall in average asking prices. Average prices of prime London property for sale finish the year 13.0% higher than in December 2006, although significantly down on the yearonyear peak of 31.2% witnessed in the boomtime of June 2007. Prime country property for sale in the South is hit hardest, with month on month prices down 1.9% in the South East. Rental values of prime London rental property decline in December, down 0.1%, due to unprecedented unrented stock and weakening corporate demand. HURRAH!!!!!!!!!!!!!!!

bbc: Teachers given pay rise of 2.45%

Teachers in England and Wales will get pay rises above the 2% set by Prime Minister Gordon Brown. This is another slightly off topic, but relevant because the teachers have been conned into signing up for a deal over three years..

Reuters: Inflation steady in December

LONDON (Reuters) - Annual consumer price inflation held at 2.1 percent as expected in December, above the Bank of England's target for the third month running, official data showed on Tuesday. The Office for National Statistics said consumer prices rose 0.6 percent last month, the biggest monthly gain in a year, keeping the annual rate at 2.1 percent.

bbc: Stormy weather raises flood fears

Families and householders hit by last summer's flooding are bracing themselves for more severe weather. It beggars belief that someone would buy a house on a flood plane and expect sympathy, or even an insurance policy. I know this is a bit off topic, but relevant just because many property developers have been buying cheap "floodplane" land and not passing this information on to the buyers..

The Telegraph: ECB warns crashing dollar may stop Fed cuts

Rumours of an emergency rate cut over coming days by the US Federal Reserve have swept the global markets, setting off a fresh plunge in the dollar.
Gold surged to an all-time high of $914 an ounce in New York on bets that the authorities will flood the global system with further liquidity to stave off a mounting debt crisis.

The Telegraph: Food cost increase adds £750 to annual bill

Food prices are accelerating at their fastest rate since records began, fuelling a rise in the average family's shopping bill of £750 a year.

FT Acadametrics: FT House Price Index

Decembers report from Acadametrics shows just a 0.1% rise for December 2007. Dr Peter Williams: "As our national index summary indicates, the market has been slowing on a monthly and annual basis since August".

The Times: Revealed: £1 billion Olympics black hole

Britain faces a £1 billion black hole after the 2012 Olympics because of “ludicrous” property price projections backed by ministers, it emerged last night ... Ken Livingstone, the Mayor of London, and Tessa Jowell, the Olympics Minister, signed a memorandum of understanding last year stating that at least £1.8 billion would be raised in land sales after the Games. The LDA now fears that this figure, based on a 16 per cent per annum increase in land prices in Stratford, East London, over the next 15 to 20 years, is too optmistic.

Guardian: Lenders raise deposits on buying homes

Two of Britain's biggest mortgage lenders, Alliance & Leicester and Britannia building society, have doubled the minimum deposit demanded from first-time buyers in the latest sign that banks are anticipating a downturn in house prices. Borrowers will have to pay a minimum deposit of 10% on the price of a property compared with 5% before. A typical first-time buyer with a £7,500 deposit can now only afford a house worth £75,000, instead of one worth £150,000. Big lenders such as Halifax, Abbey and Nationwide to continue to offer 95% loans.

Telegraph: Is London losing its lustre?

Last year, London was in the middle of a full-throttle, moneyed, golden age. But suddenly the super-rich are showing signs of having had enough. The have-yachts are sailing away. London is beginning to lose its appeal. The Greek shipping families recently held a meeting to discuss re-locating to Cyprus. German fund managers are considering Geneva, as are various French entrepreneurs. American hedge fund managers want to cash in their real estate in Kensington and return to Connecticut where their children can have a pool in their backyard. "The weather is dire, the streets are dirty, the rubbish is rarely collected, the transport is dire." It will be back to the late 1970s when London was a dreary place with rising crime, terrible food and dowdily dressed women.

Times: Conservatives would not block bill to nationalise Northern Rock

The Conservatives have a brainwave, it's called letting the government get on with it and seeing what happens next.

A very good move, now it's your turn Captain Darling and Mr Brooon.

Property stocks rebound on Laxey hopes: FT

The activist investor company Laxey has announced plans to launch a £1 billion property fund, designed to take advantage of the sharp drop in the share prices of many listed property companies. Land Securities, the UK’s largest-quoted property company, is currently trading at well over 30 per cent below its Net Asset Value while British Land is nearly 50 per cent below. The company will take stakes of upto 20% in UK property companies, which it described as very cheap. Property stocks rebounded on the news.

Mail: Detached house prices plummet as property market enters slowdown

The price of detached homes has fallen by 2.4 per cent as the property market enters a slowdown. House prices fell by 0.8 per cent during November, while annual growth slowed to its lowest level for 12 months, Government figures showed today. Annual house price inflation dropped to 9.5 per cent during the month, its lowest level since November the previous year, according to the Department for Communities and Local Government. The monthly fall, which left the average home in the UK costing £218,330, was driven by a 2.4 per cent drop in the price of detached houses as well as a 0.9% fall in the cost of bungalows.

Reuters: Mortgage lenders cut maximum borrowing level

Eleven mortgage lenders have reduced the amount of money they will lend to home-buyers, as expectations of a property price slowdown grow.

Mortgagestrategy: Surveyors must not stall the market

Why downvaluations are happening is a mystery. I realise that the property market is generally flat with potentially falling values on the radar, but if valuers continue to give lower than anticipated valuations, the prophesy will become self-fulfilling. We are already in danger of talking the market into the doldrums but if valuers are starting a trend we could be in trouble soon. This may be a good time for lenders to exert a steadying influence on their surveying partners.

Mortgagestrategy: IVA.com sees 67% surge in enquiries

IVA.com has reported a 67% surge in enquiries for individual voluntary arrangements this January compared to December. The comparison site for IVAs says a lethal cocktail of credit card bills, utilities bills and the deadline for self-assessment tax payments makes January the hardest month for consumers.Terry Balfour, director of IVA.com, says: “January is the cruellest month when it comes to bills – as well as for many already feeling the pressure of higher mortgage repayments, along with the raft of outgoings needed purely to service their debts.

Bloomberg: Oil, Gold Show Inflation; TIPS Traders Say Forget It

Lots of people are wondering where to put money for wealth preservation. Government Inflation Bonds are no good either. "Just because oil trades above $100 a barrel, gold fetches more than $900 an ounce and U.S. consumer prices climb at the fastest rate in two years, now is not the time to buy U.S. government securities protected from inflation."

Business Report (South Africa): Repossessions escalate as debt skyrockets

Johannesburg - Auction warehouses are full of glittering 4x4s and expensive sedans, driving the message home to the previous owners the high price to be paid for over-indebtedness. Yes, South Africans love debt and hate saving. Household debt reached a record high of 77.4 percent of disposable income in the third quarter of last year, up from 49.8 percent in the fourth quarter of 2002.

ThisIsMoney: Is it too late to get into buy-to-let?

"I have £10,000 to invest and am thinking of buy-to-let, but warnings of a property crash are putting me off. Is it too late to invest in property?" what do you buy with 10k? A kennel? nooooo... of course 10k was enough to buy a two bed flat last year.... mmmm that demand has dried up now, I am afraid

FT: Not merely a subprime crisis; CDS and “global financial meltdown”

"If this had been a mere subprime crisis, it would now be over. But it is not, and nor will it be over soon. The reason is that several other pockets of the credit market are also vulnerable." Serial bubbles and manipulation means all forms of debt are now dangerous and primed to go bust. The longest run of economic growth here and elsewhere were built on debt, including corporate debt. CDS (credit default swaps) will be in trouble with an economic slowdown.

The Times: We’ll have to stop treating our homes as cashpoints

it’s not just speculators who are worried. It’s everyone. We have known nothing other than the phenomenon of using our home as a convenient cash cow. When we first bought property, in the early- to mid1990s, everything was at the bottom of the previous cycle. For the past decade, or longer, life has gone as follows: buy something. Watch it go up in value. Laugh. Remortgage and spend the cash on another property, or a roof extension, or school fees, or a holiday in Mauritius. Now all that has changed. But everything eventually bounces back, and if you don’t mind doing without an annual holiday in Barbados, what the property market does should only bother those who have to move house.

Times: Record inflation fails to dampen rate cut hopes

factory gate inflation reaching a 16-year high during December, fuelled by rising oil and food prices. but the Times says ... but the Bank of England is still expected to cut borrowing costs. Yeah yeah yeah, so you hope, Davidsmith!

BBC News: Food costs add to price pressures

Food inflation still increasing, and above expectations. Should the BOE even be thinking about cutting rates in Feb '08 ?

MarketWatch: Citigroup write-offs could reach $24 billion

LONDON (MarketWatch) -- Citigroup may write off up to $24 billion over subprime- and credit-related losses, putting as many as 20,000 jobs at risk, according to a published report on Monday.

BBC News: UK house price slowdown continues

As expected the market is following most expectations on this website... unexpected and boring I know, but for the record nonetheless... incidentally gold is at $915 and stock mrkets are wobbling.. remember to buy your gold sovereigns and stock-up on tinned provisions..

MoneyWeek: Britain's subprime problem is bigger than you think

There can't be many people who haven't heard about the US subprime mortgage crisis by now. But it's time to start focusing on what's coming next - faltering credit card companies and the UK's very own subprime surge.

Firstrung: UK house prices fall by 0.8% in a single month according to latest government figures

Note that the Communities and Local Government house price index figures released in this issue are based on completions during the month of November. Other recent indicators have been based on asking prices in December or prices based on mortgages approved during December. Therefore the Communities and Local Government figures are not directly comparable with these other indicators. - I reckon this is highly significant - CL

Yahoo: Gold prices reach record as nervous investors pile in

The price of gold has hit a record high above $900 an ounce. The uncertainty in the markets has led investors to pick the traditionally safe haven of gold. Turmoil in financial markets and expectations of sharp interest rate cuts in the US have helped raise gold's appeal.

Mail: Britain has to build 2 million new homes - just to cope with growing number of immigrants

Almost two million new homes will have to be built just to cope with the immigrant influx, peers will be told tomorrow. It means 263 houses must be constructed every day - for almost 20 years – the equivalent of five cities the size of Birmingham during the next 18 years. Four in 10 of all new homes will go to new migrants, a report by Migrationwatch UK claims.

stuff.co.nz: Property price slow down

Downwards tumble here in NZ is accelerating, prices down over 4% since they peaked in September/October, although in a VI trick your all familiar with this article focuses on the now meaningless annual rise figure. When the average house price falls from NZ$406,089 in Oct 2007 to $388,253 in December (after falling to $393200 in November) you just know that if it looks like a falling knife, and cuts like a falling knife, it is, in all probability, indeed a falling knife............... But NZ is different, shortage of housing, high immigration, blah blah blah..........

Independent: If the Fed is busy mobilising its economic weapons, why is the BoE holding back?

"As a policymaker, what should you do faced with an economy with a huge current account deficit, a currency that's under pressure, a housing market that's hit a brick wall, a banking system that's in crisis, a mortgage lender that might be on the verge of bankruptcy, and a budget deficit that's larger than it once was"?

The Times: Goodbye to all that: the worst is over for the global credit crunch

''Global stock markets have suffered their worst early-January trading since records began in the 1920s. Conventional wisdom is again overwhelmingly gloomy - about the global economy, the asset markets and even the sustainability of the global financial and trading systems. However, conditions are not nearly as bad as the headlines and market pundits suggest. In Britain, there seems to be almost no chance of economic and financial disasters comparable to those suffered from 1990 to 1992. ''

home.co.uk: House Prices Falter in Uncertain Market

It's official - asking prices are not falling they are retreating and are a bit uncertain of themselves!

The Times: News Article

Well, who would have thought it? Perhaps there won't be the crash everyone is anticipating?

Times Online: Darling fails with £12bn quick-fix asset sales

Desperate man and no-one wants to help him. No wonder Ed Balls never wanted the job

The Daily Telegraph: UK high street has echoes of 1990s recession

There are worrying similarities with the early 1990s recession - except that there has been an even bigger build-up of debt and an even bigger bubble in the housing market.

daily mail: Spanish dream home bulldozed

Heres the follow up on the english couple whose house was demolished in spain, para ir a tome el ayuntamiento!

BBC: Bank charges court test to open

Banks and their customers are awaiting the start of a High Court test case which could bring a fundamental change to UK High Street banking. The outcome may decide how much banks can charge millions of account holders who go overdrawn without permission. [Here is hoping that the banks actually lose this case!!!]

Facebook: Facebook Housing Market Crash Group

Even Facebook users are getting on the House Price Crash train!

Washington Post: It's Not 1929, but It's the Biggest Mess Since

It was Charles Mackay, the 19th-century Scottish journalist, who observed that men go mad in herds but only come to their senses one by one. We are only at the beginning of the financial world coming to its senses after the bursting of the biggest credit bubble the world has seen. Everyone seems to acknowledge now that there will be lots of mortgage foreclosures and that house prices will fall nationally for the first time since the Great Depression. Some l