April 2009 Archive
Thursday, April 30, 2009 
What is it about Scottish Banks?
Scotsman: Clydesdale vows to continue high-level mortgage lending
"The firm said that only customers who receive a one-on-one interview will be given the deal. Factors taken into account include type of employment, length of time in their current job and credit history." What? WTF? They mean that banks gave mortgages without these obvious checks in the past hence implementing the bleeding obvious makes Clydesdale fit for 90%+ LTV loans? Later: "He also admitted that the number of balances in arrears by more than three months has nearly doubled in a year, to 0.71 per cent." So it's time for a bit more aggressive lending!
UK properties are undervalued - according to property developer
Telegraph: Taylor Wimpey boss questions valuations as debt deal is struck
The boss of Britain's biggest house builder, Taylor Wimpey, says he is "concerned and frustrated" by the valuation of homes in the UK, warning that it is costing the company sales as cautious lenders put pressure on valuers.
'BTL king' rubbing his hands in glee
Ajay Ahuja: 80% LTV mortgage on its way
Roll up Roll up! Get ready for 1st July when a major lender is releasing the first 80% buy to let mortgage. They are busy recruiting to cater for the enormous demand that will occur once released. This will mean only 25% BMV (below market value) needed for a no money down deal, and only 30% BMV to get a cashback deal! I reckon we could see an 85% buy to let by October 2009. Then I have to say it will be happy days and the term PROPERTY MILLIONAIRE will start appearing in all the property press adverts again! Ajay
Prices down by almost a quarter in real terms
UK Bubble: UK house prices down 23 percent in real terms
The Nationwide House Price Index, which was published today, adjusted for inflation.
Main lenders pull the plug
BBC: Chrysler 'to file for bankruptcy'
Chrysler is to enter bankruptcy protection after failing to persuade its main lenders to write off its debts, a White House official has said. President Barack Obama is now due to make a statement later on the future of the struggling US carmaker.
Latest idea to kickstart stalled housing schemes & mitigate against market downturn"
Mortgagesolutions: HCA launches a private rented sector initiative
The Homes and Communities Agency (HCA) has launched an expression of interest process for a new initiative, which could potentially attract significant investment into the housing market by encouraging institutions to fund new homes specifically for private rent. The objective of the HCA’s Private Rented Sector Initiative (PRSI) is to create an opportunity for investors – like pension funds – to enter the private rented sector on a large scale for the first time...................
Is this the nail in the coffin for crazy London house prices?
Bloomberg: London’s ‘Twin Pillars of Doom’ May Spark Hedge Fund Exodus
After helping to move 23 hedge funds to Switzerland from London in the past two years, David Butler describes the flow as a “steady trickle.” Now he’s bracing for a flood. “Call it the twin pillars of doom,” said Butler, a founding partner at hedge fund consultancy Kinetic Partners LLP in London. “Put together the U.K. tax changes and what the ogres in France and Germany have created and you will see a mass migration.” Butler said inquiries about relocations have gone up “by a factor of 10” since Britain pledged a new 50 percent rate for top earners on April 22
What a difference a week makes
Daily Express: So Much for Green Shoots:House Prices in Fresh Fall
Wasn't this the paper that just a week ago gave over the front page again to a "PRICES RISING" type headline. When will they realise that "a blip" is just that at not proof the market is rising? I am sure I can't be the only one totally fed up with having read over and over that the market is bottoming when any intelligent person must realise it is not going to bottom for a long long time. It is to be hoped that the average UK citizen is more intelligent than the current average UK property buyer!
But I'm told the bottom is near, yea right!
Mailonline: Average house price falls to £151,000 with no end in sight to property slump
Prices will keep falling for a few years yet.
Fairly obvious really
The Telegraph: BTL Double Whammey for Amateur Landlords
Apparently its difficult finding people to rent city centre flats at the moment and for some reason they're not selling either
Could you Buy A home At 1980s Prices?
The Economic Voice: Could you Buy A home At 1980s Prices?
This is an idea I have been mulling around with that could work and is worth a think about. It may need tweeking but the bare bones of the idea are here............ I think some of you could be very interested.
After this morning's Nationwide results
Land Registry: House prices -0.4% MoM, -16.2% YoY
House prices fell 0.4% in March, taking the annual rate of falls to 16.2%. In London, prices actually rose by 0.6%, the first monthly rise since March 2008. The North-East, South-West and Wales also rose on the month. Meanwhile Yorkshire, the East, and the West Midlands were hardest hit, falling up to 2%.
Trade imbalances as the primary source of ecomomic crisis
Postcards from Cape Town: Roubini: Navigating towards Bretton Woods II
Imablances between consumer - producer nations as leading to this crisis and whether the imabalances will be resolved or repeated.
UK House Prices Far From a Bottom
The Market Oracle: The UK House Price /Gold Ratio: Bricks vs. Bars
Top to bottom in the 1970s, house prices measured in gold lost four-fifths of their value all told..." BEWARE THE CLAMOR to call the bottom in house prices. Because with a tired predictability, the UK experience of seeing "green shoots" in every new survey says the global bust starting barely two years ago has a long way to run yet.
Perhaps a little Underpinning......
Guardian: City bankers on course for £7bn in bonuses
City bankers are to reap nearly £7bn in bonuses this spring even though the government has been forced to pump tens of billions into the banks to prevent them collapsing. Someone has cleaned the looking glass.......so much clearer now
Quite a few
Times: Skilled migrant jobs to be cut by a third
Skilled migrant numbers to be cut. The number was originally 800,000, now 530,000. This does seem quite a lot considering there are only 20 million workers, 10 million public and 10 million private. There are obviously no plans in place to cut the public sector.
Should they have called it Mayan Flu
Telegraph: Investors can learn a lesson or two from Swine Flu
Previous flu pandemics have adopted the name of their country of origin but here too mistakes are made – the Spanish flu of 1918-1919 apparently started in Scotland. Fortunately memories are short and, even if this outbreak comes to be known as Mexican flu, the tourists will be back soon enough.
Still a long way to go....
BBC News: UK house prices 'down 0.4% in April'
'House prices in the UK fell by 0.4% in April reversing some of the rise seen in March, according to the Nationwide. The building society's figures show that the pace of decline in house prices slowed, but the typical home still cost 15% less than a year ago.'
-0.4% Nationwide April Index
Nationwide: House prices fall slightly in April
Commenting on the figures Fionnuala Earley, Nationwide's Chief Economist, said: “The price of a typical house fell by 0.4% in April. This reverses some of the rise seen in March, but is in line with our expectations, given the current economic conditions. April’s decline leaves the average price of a typical house at £151,861, down 15% from 12 months ago. The 3-month on 3-month rate of change, generally a smoother indicator of the short-term trend in prices, improved to -3.1% in April from -4.1% in March."
Europe! Halp us Europe!
Times: Celtic Tiger ready to pounce on treaty as recession bites
Ireland, the former 'Celtic Tiger', is gripped by the worst recession of any developed country. The projections are startling - unemployment to hit 17% this year, GDP to fall by 12% by 2010 (worst in the developed world,) house prices to fall a third from their 2007 peak, government budget deficit to hit four times the EU limit, despite an emergency budget earlier this month slashing spending and hiking taxes. The consequences of Ireland’s dependence on the property boom have been laid clear. It's the worst performance by an industrialized nation since the Great Depression. Ireland halted EU expansion last year by voting No on the Lisbon Treaty. The perceived value of the ECB's support has helped changed minds
House prices now have even further to fall to reach 3.5x earnings
Telegraph: UK wages collapse at fastest rate in 60 years
Average weekly earnings fell 5.8pc compared with the same month last year. The private sector took the full force of the fall in weekly earnings, down sharply by 7.7pc; while average weekly earnings in the public sector actually rose by 3.2pc. "We certainly haven't seen anything like this in the last 60 years, and probably not in peacetime since the 1930s," said Michael Saunders, chief UK economist at Citigroup. According to the ONS data, it is only the second month of falls during the current downturn, after weekly wages fell 1.9pc in January compared with a year earlier. The falls partly reflect moves by some private sector employees to freeze wages and even cut pay as they struggle to keep jobs and stay afloat during the recession.
Wednesday, April 29, 2009
Americans stop moving around
US Census: Residential Mover Rate in U.S. is Lowest Since Census Bureau Began Tracking in 1948
The U.S. Census Bureau announced [last week] that the national mover rate declined from 13.2pc in 2007 to 11.9pc in 2008 — the lowest rate since the bureau began tracking these data in 1948. In 2008, 35.2 million people 1 year and older changed residences in the U.S. within the past year, representing a decrease from 38.7 million in 2007 and the smallest number of residents to move since 1962. “Even though the number of people who changed residence in 2008 dropped by 3.5 million from the previous year, millions of Americans continue to move,” said Tom Mesenbourg, acting director of the U.S. Census Bureau. Principal cities within metropolitan areas experienced a net loss of 2 million movers, while the suburbs had a net gain of 2.2 million movers.
Ok so it's not as bad as Lithuania, but we're talking about the world's largest economy!
FT: US economy shrinks 6.1% in Q1 2009
US gross domestic product declined by an annualised rate of 6.1pc in the first quarter, after declining by 6.3pc during the fourth quarter of last year. The decline was worse than the 4.7pc that economists expected. The US economy has not contracted for three consecutive quarters since 1975 and the last six months have been the weakest period in 51 years. Imports plunged by 34.1pc while exports fell by 30pc as trade dried up. It was the biggest quarterly decline in exports since 1969. Unemployment, at 8.5pc, sits at a 25-year high. On the bright side, car and retail sales have broadly stabilised; and consumers spending actually rose at an annual rate of 2.2pc. However business investment sank by a sickening 38pc (annual rate), the steepest since records began in 1952.
Post subprime Wall street!
Telegraph: Michael Douglas returns to a post sub-prime Wall Street
A sequel to Stone's 1987 original has long been on the cards, but the meltdown of the world's financial markets has given the scriptwriters a wealth of material.
More on Irelands economic collapse.
The Times: Ireland's decline worst since Great Depression
"Economic output will shrink by 9.2 per cent this year and unemployment will spiral to 17 per cent next year, the Economic and Social Research Unit said in its gloomiest ever quarterly report. "
Baltic economy not only collapsing, but rate of collapse still increasing
BBC News: Lithuania's economy shrinks 12%
I remember spending many hours reading about property investment in the new EU emerging markets. Subscribed to the websites and read the books, but felt I missed the boat by the time I was in a position to get involved. Friends told me stories of flats in regal builings in Vilnius going for £8k. Looks like the Baltics are going to be a horror story even before the rest of the EU. Bulgaria is another market I'm watching with interest....
The Lighter Side of Reposession
Mail: Father returns home to find house boarded up after 'incompetent' bailiffs repossess wrong property
A semi-retired father-of-two returned home to find 'incompetent' court bailiffs had repossessed his house by mistake. Ian Parrott, 62, discovered his locks had been changed, the letterbox boarded up, and a repossession order hanging in his window. The notice said his detached home in Eynesbury, Cambridgeshire, had been repossessed and that he had seven days to reclaim his belongings.
More comedy (this time North of the Border)
FT: Student property flagged as sound investment
Investing in student property remains a "sound" investment despite the current environment of falling house prices and rental income. According to one of Scotland’s letting agents, parents with children set to attend university could save thousands of pounds in rent payments and provide themselves with an investment opportunity by purchasing a property for their children during their studies. Braemore Property Management, says many students rely on their parents to help cover their rent payments, but it suggests that it can be more cost effective for parents to purchase a property for their children to live in.
Mid-week at the Comedy Club - Cluttons "top of the bill"
Mortgagestrategy: Property shortage driving quick sales, says Cluttons
A shortage of properties on the market in Central London is driving quick sales and some price stabilisation, reports estate agency Cluttons. Cluttons says that many would-be sellers have put off marketing their properties as they are worried about receiving a lower than expected valuation...............................
Are US House Prices likely to go back up soon?
Times: US economy shrinks faster than forecast - 6.1% in first quarter
The US economy contracted at a sharper-than-expected rate between January and March, revealing that the world's largest economy is still mired in deep recession.
House prices : Still Falling
Citywire: Signs of Life: Eight graphs to help you spot the market bottom
(1) The Baltic Dry Shipping Index: A key measure of the health of world trade (2) Vix Index: A measure of volatility in equity markets (3) Gold & Copper prices: Copper has traditionally proved more accurate than gold in measuring turning points in global industrial demand (4)Treasury Inflation-Protected Securities: A key indicator of investors' desire to hedge against inflation (5) Banking shares in the UK and US: These shares have proven the key thermomotor of investor confidence (6) S&P 500: The world's most followed equity market (7) Halifax Property Seasonally-Adjusted Index: House prices still remain one of the biggest drivers of consumer confidence (8) US Investment Grade Bonds: History suggests these bonds rally on average two months ahead of equity prices
A small tax on investment, a large tax on gambling
Counterpunch: A Financial Transaction Tax
A tax that would hurt financial shenanigans without hurting the real economy. Shame that Wall Street/Congress won't pass it.
Real interest rates
Zopa: Zopa Home page
I've said before that Zopa, by the way it works will better reflect market interest rates. Still not involved myself in any way, but interesting to note the 8.8% average return over th last year.
Petition for Brown to resign rises up the rankings
Number10.gov.uk: Petition for the prime minister to resign
Yes, I know it's a bit of fun but the petition for the Brown to resign has risen from 5th place earlier this morning to 2nd place as of lunch time today. How long before it is pulled?
More pent up supply
Telegraph: Buy to let: Double whammy for amateur landlords as flat rents fall
LuckyOne found this on the forum. It comprehensively destroys the myth of pent up demand or rising rental prices.
As US house prices continue to fall the outlook for the world economy is grim, says Patrick Collinso
Guardian: A Florida condo for less than the price of a new car
Interesting because some Real Estate pundits were calling a bottom in this 'epicenter' of the property downturn earlier this year. This article suggests that optimism might be misplaced.
Should they get a Bonus?
Reuters: Citi seeks permission to pay bonuses: report
Citigroup Inc has asked the U.S. Treasury for permission to pay special bonuses and is looking for ways to free an energy-trading unit from government restrictions, the Wall Street Journal reported on its website on Tuesday. Citigroup executives are describing these as retention bonuses, but the bank is still considering several options of how to structure any bonuses, the paper said.
Only less than ten lots sold
REDC: No Title
No article, No news, nothing at all, why they did not published the results of the auction? I tell you why, on more than 200 lots less than 10 have been sold and the prices were very good (till to 50% off)
Any excuse!!!
Las vegas sun: Sued by Fontainebleau, banks could cite ‘act of God’ as defense for refusing funds
Legal experts say the banks attempting to back out of their commitment to finance the Fontainebleau Las Vegas might defend their decision by arguing the economic downturn that has created doubts about the project’s future is an act of God.
BBC finally admits that renting makes more sense than buying right now
BBC 'News': Is renting the new buying?
A little off-topic. For many sold-to-rent ex-homeowners, renting does make an awful lot more sense, but you won't hear the BBC saying so.
For the bulls
Market Oracle: The Great U.S. Housing Market Depression, America Stop Thinking about Homes as Investments
They’re taking billions of dollars of your national wealth and transferring the loot to their Wall Street friends on the promise they can make things all better — the way they used to be. America, it’s time to wake up and smell the coffee. The glory days of the housing bubble aren’t returning. You can wear a faded rose and pine for days gone by all you want, but your life will be much easier and stress-free if you can get the real estate monkey off your back. The world has changed, and the days of flipping houses like rows of hamburgers are probably not coming back for a decade … maybe longer.
Tuesday, April 28, 2009
Repossession writs down under
Sydney Morning Herald: Thousands living on borrowed time
No escape from the downturn....
So then the green shoots were just ... media 'astroturfing'?
Daily Mail: Why early signs don't mean the housing market is back on the up
It now seems that the green shoots were a complete fiction, created by the media while carefully turning a blind eye to the actual numbers.
Asha Bangalore tells it like it is!
BBC: US house prices continue to fall
The [Case Schiller Index] index is now 30.7% down from its peak in mid-2006, with average home prices now at similar levels to where they were in the third quarter of 2003, S&P said. For the second consecutive month, prices in Phoenix showed the largest annual falls (35.2%), followed by Las Vegas (31.7%) and San Francisco (31%). "It confirms information we've seen from that home prices are probably stabilising at low levels," commented Asha Bangalore, economist at Northern Trust in Chicago.
Speculators exit
BBC: Dubai property prices 'fall 41%'
Property prices in Dubai plunged 41% during the first three months of this year, a report has calculated. The decline is from the last quarter of 2008, said global real estate consultancy Colliers International. It is just the latest indication of the extent to which Dubai's property boom of recent years has come to an end in the face of the worldwide recession. Colliers said prices had fallen as global finance has dried up and job opportunities in Dubai have declined.
Dubai property prices fall 41% in last 3 months!
BBC News: Dubai property prices 'fall 41%'
Property prices in Dubai plunged 41% during the first three months of this year, a report has calculated. The decline is from the last quarter of 2008, said global real estate consultancy Colliers International.
"UK housing market will limp along at best during the remainder of 2009"
Citywire: Housebuilders overvalued, warns broker
The UK's housebuilding sector faces significant headwinds in coming months and companies have risen to unrealistic values, Panmure Gordon warned today. The broker, which took the decision to cut its overall view on the sector from neutral to negative, instigating a 'trading sell' on housebuilders, said recent gains had taken prices across the sector too high, given that the housing market remain depressed and the economy was weak.
Shoe-throwing, banker-ishtyle
Reuters: Fortis shareholders revolt at meeting
The Chairman of Fortis Bank halted Tuesday's crucial shareholder meeting temporarily after angry investors called for his resignation. Fortis was rescued by the governments of Belgium, Holland and Luxembourg in September 2008. Shareholders were upset about a proposed sale of the firm's Belgian assets to French bank BNP Paribas. Shareholders grew angry, shouting "resignation" and throwing shoes and coins at the chairman
Petition for Brown to resign reaches the telegraph
Telegraph: Gordon Brown should resign -- No 10 petition makes the top five
The petition on Number10.gov.uk for Brown to resign has reached no 5. At last look it needs just another 5000 more signatures to reach No 1. Though it's probably pointless, the fact that it is being reported in quite a few areas of the media will no doubt generate significantly more signatures. My bet is that as soon as Brown gets wind of it on his return from another bashing in Poland the poll will be rapidly removed.
Looks like 60% falls then
Financial News Org: Housing Market Takes a Tumble
For weeks I have been reading 40% 40% 40% . CEBR 40% falls if approvals didn't double, now confirmation there is not enough money for approvals to double and if they did money would run out by the end of the summer . Moodys downgraded on "the assumption now is 40% falls" but they stress tested for 60%. The article about the BOE official warning Darling not to stop the property crash stated property down 21% from peak is still 40% overvalued. And now this article today: "It now appears that an overall decline of close to 37% from their peak in 2007 is inevitable, with 2009 being the worst year," NOT TOO MANY GREEN SHOOT THERE THEN. But what does this article mean when it says: "Currently the average costs of a home in the UK is around £55000"?
But the student will not learn
Telegraph: Gordon Brown receives a lecture from Polish Prime Minister
He said: "The Polish government at a time of financial crisis has behaved with full responsibility in terms of its public finances and the budget deficit. "After a few months, our government made the assumption that the method to deal with the financial crisis was not to increase expenditure but (to ensure) the availability of public finances." He added that Poland's success was down to "efficient supervision of banks and sticking to the rules."
The Armstrong high has past
Market Oracle: Mexican Swine Flu Hits Stock Markets
It’s just what we need now - a flu-pandemic scare in the midst of the biggest financial crisis since the Great Depression. Risk appetite was bubbling up a little late last week. The fall-out from the US bank stress test was seen to be confined to some of the regional banks and the economic data continued to show some “bottoming”. Ford’s share price jumped sharply on better-than-expected earnings and US home-builders rallied to their highest level since October.
No reluctance for bailed out lenders to lend Tax payers money (In Ireland !)
Times: Rescued UK banks sell cheap home loans to Irish
Banks controlled by British taxpayers are offering mortgages to first-time buyers in the Irish Republic at half the rate that they are available in the UK. Halifax, part of the Lloyds Banking Group, is charging 2.74 per cent for a two-year fixed-rate deal to first-time buyers in Dublin. A five-year fixed-rate deal would cost borrowers in its home town of Edinburgh 6.14 per cent.Royal Bank of Scotland (RBS) is charging 2.95 per cent for a new mortgage in Ireland; in the UK, it charges 5.99 per cent for a similar product.
A proud nation of shoppers
Retuers: Retail sales far stronger than expected
LONDON (Reuters) - Retail sales unexpectedly jumped at their sharpest rate in more than a year in April but the figures may have been distorted by the timing of Easter, a survey showed on Tuesday.
How many signatures would make this a referendum on Brown?
Guardian: Downing Street website hosts petition calling for Gordon Brown to resign
http://petitions.number10.gov.uk/please-go/ Off piste I know - apologies. But for every one of you that has posted negative comments about Brown - here's your chance to put your money where your mouths are. This petition has slipped past the No 10 censors and is only 6,000 signatures from being the top petition on the No 10 website. Only 200 signatures guarantees a responce from No 10 'for serious subjects'. Would be amusing to be in the room with Brown when his media advisors first have the balls to tell him about this petition! What option would Brown have if millions of people vote him out via his own website?! He'd face protests in the streets if he didn't take it seriously!
Just checking you no longer writing those dodgy mortgages
Bloomberg: FSA’s Light Touch Turns to Iron Fist as More Bankers Questioned
The regulator, criticized by lawmakers for not doing enough to prevent the financial crisis, has broken with its past approach, promising more intrusive regulation and warning that people “should be frightened” of the FSA. “The FSA is becoming nastier,” said Sara George, a former FSA prosecutor who is now a regulatory lawyer at Allen & Overy LLP. Better late than never I guess.
HIPs are now being favoured
HIP-Consultant.co.uk: Home Information Packs receive approval from industry professionals
The media has been reporting about HIPs pretty negatively. Is the tide turning towards the view of the Home Information Pack?
Don't believe Rightmove data
Investors Chronicle: Housing - Over confidence
Further explanation as to why asking prices remain too high.
Replacing greed with hard work - what a shame
The first Post: No Job, No Home, No Future
Debt-ridden, overtaxed, disinherited and unable to afford a home, today's graduates face a a life of hardship
More Brown shoots
Metro: Weeds among property market's green shoots
"Mortgage approvals have fallen for the first time in four months, dampening talk of a property market recovery. They slumped by seven per cent in March to 26,097, according to the British Bankers' Association. All measures of mortgage lending were slightly weaker during the month than in February. 'This drop in mortgage approvals shows how fragile the "green shoots" of recovery in the housing market are,' said Seema Shah, property economist at Capital Economics. 'Rising unemployment and expectations of further house price falls will continue to weigh heavily on mortgage demand,' she added. It is the first negative data on the housing market in recent weeks, following a run of positive indications that the slump may have bottomed out." OK, Spring Offensive over, back to business!
The Next Round
Guardian: Citigroup and Bank of America 'must raise billions in extra capital'
Leaked preliminary results of US government stress tests on banks suggest the financial crisis is far from over. Citigroup and Bank of America have both been told that they must raise billions of dollars of extra capital, according to a report that suggests the financial crisis is far from over
Missing the gloating?
FT: House price smugness remains a distant memory
Dinner party chat about house prices now seems very mid-noughties but has been picking up again given signals that an end to the slump could be in sight. House values may no longer be a vetoed topic but those looking for the green shoots should keep digging. It is too early to say spring has begun for house prices. Affordability might be improving, but increasing unemployment and the straitjacket of mortgage availability seems destined to put pressure on prices in 2009. During the five years of the 1990s crash, prices rose in almost a third of the months during innumerable false dawns and brief rallies. Similarly, home owners should be wary of seeing a sustained recovery in the recent data.
Housing in California is affordable IF you have 20% deposit and record low interest rates
Carpe Diem (blog): Housing Affordability in California Reaches Record High
"43% of California households can afford to purchase the median priced home with a 20% down payment and financing at the national effective average mortgage rate." ----- [But nobody has 20% down payment; interest rates aren't guaranteed to stay low forever; and you need a secure job too. There's nothing cheap about a 1% mortgage if your salary is falling by 10% a year. Also massive regional variations - 65% affordability in the suburban sprawl, but only 17% affordable in San Francisco which more closely resembles London.]
From across the pond: how low can they go?
Calculated Risk (blog): Another House "Deal of the Week"
Here is the price history for the featured 1,442-square-foot home: July 1997: $60,000 August 2006: $330,545 January 2009: $96,000 This isn't an outlier; this is pretty much the neighborhood average. Homes similar to this 1,442-square-foot, single-family house have been selling left and right in the $100,000 to $120,000 range in this area. Dropping into five figures isn't uncommon. How much is the mortgage payment on a $96K home? Probably just over $500 per month for principal, interest, tax, and insurance. ------ [The number of transactions seems to be picking up in California now that prices have fallen to affordable levels. I wish the UK would hurry up and crash properly too!]
Fewer homeowners in America
Calculated Risk (blog): Homeownership rate back to 2000 levels
The homeownership rate is back to the level of Q2 2000. So much for the homeownership gains of the last 8+ years. Gone. It is almost like the Bush presidency never happened. Well, except for that Iraq thing. And $5 trillion in debt. But other than that, clean slate. The homeowner vacancy rate is (more-or-less) the highest it has ever been; the rental vacancy rate is also the highest on record. People are selling second homes, moving in with family members, cutting back all round. ---- Remember, the UK is behind the US so all this is yet to come for us!
Monday, April 27, 2009
4 Billion to be spent on public sector consultants despite Labour's efficiency drive
Telegraph: Government spending £4bn on consultants, say Tories
It's easy to regard the public sector as a gravy train. It could well be that Labour think that if they employ enough in the public sector it will increase their chances at the next election. The latest claim is that they promised an efficiency drive but are to spend 4 Billion on public sector management consultants over the next four years.
How has it come to this?
BBC News: Unemployed couple live in garage
This is a short video of a couple who have been repossessed from their home in Kent (looks like Swanley from the bin bags), and now live in a privately rented garage. It doesn't go into the circumstances of their repossession, other than that they were both made unemployed, but highlights an extreme case of its consequences. Why can't we just have a nice, regulated, stable housing market that brings neither booms nor busts, savings us from such misery and insecurity and just let us get on with our lives.
Well, here's another nice mess you've gotten me into
Mortgagestrategy: Politicians in row over HomeBuy sales figures
Housing minister Margaret Beckett has denied the Opposition's claims that no properties have been sold through the government's HomeBuy Direct scheme. The scheme was announced last September as part of a £1bn housing package and offered first-time buyers earning less than £60,000 a chance to get on the housing ladder via shared equity home ownership. It offers buyers a loan of up to 30% of the purchase price, which is interest-free after the first five years. Beckett now claims this is not the case, saying that although there are no solid figures she has met "at least one couple" that has participated in the scheme.
Check your Provider won't break their Promise before Housebuying!
BBC: Nationwide axes Mortgage Promise
The UK's biggest building society, the Nationwide, has abandoned a promise to peg its variable rate mortgages to the Bank rate. Existing customers on the Nationwide's variable rate home loan, called BMR, are guaranteed to pay no more than 2% above the Bank rate, currently at 0.5%. But new customers will have no such guarantee when their fixed-rate deal ends and they shift to a variable rate.
Check you can Meet your Outgoings before Housebuying!
Independent: Two-thirds facing a pay cut or freeze
More than two-thirds of British companies plan to cut or freeze their workers' salaries this year, the British Chambers of Commerce said yesterday, as it warned that private sector employers face a desperate battle to survive the recession.
Check your Job is Safe before Housebuying!
Independent: Retailers collapse at a rate of seven each day
Seven retailers collapsed on every single working day, on average, during the first quarter of the year, the accountant PricewaterhouseCoopers said yesterday, revealing figures that lay bare the impact of the worst recession for at least 35 years. PWC said 705 retailers fell into insolvency between January and March, a 60 per cent increase on the same quarter last year.
Did anyone see the sunday times? 22,000 applicants for 130 jobs at Aldi!!! Depression levels
Daily Mail: The binman job advert that attracted 238 applications
Unemployed workers are applying in droves for even the most menial positions amid astonishing levels of competition in the job market.
Hope For Housing Market As Price Falls Slow
Daily Express: HOPE FOR HOUSING MARKET AS PRICE FALLS SLOW
"House prices fell at their slowest rate for more than a year during April as potential buyers returned to the market, figures showed today."
No model outliers - just lots of liars
Q and A Podcasts: Q and A with Janet Tavakoli
An insider names names and shows that fraud, not mispricing of risk by those dazzled by their own models, caused the crisis, which continues because the bad guys are still in power and are bailing themselves out. Do read past the personal stuff in the middle of the interview because after that she she continues in the same vein. Things are certainly not improving under Obama, so maybe in 2012 we'll have the release of Bush Crime Family III.
Darling's wishful thinking is bad news for gilts
MoneyWeek: Darling's wishful thinking is bad news for gilts
"The more the Government is seen to be messing around at the edges and shying away from getting to grips with the debt, the less keen investors will be to support its spending. That would push up gilt yields, and hit prices. The same would happen if the Government prefers to inflate its way out of debt, rather than cut spending and raise taxes – another very possible scenario."
Fannae fakes housing recovery
Bloomberg: Fannie Mae Creates Housing Mirage With Bum Loans
Faced with growing numbers of homeowners unable to make mortgage payments, Fannie decided to fund loans to borrowers that were instant losers. The point was to buy time. Even though those loans resulted in a $453 million loss, they helped keep troubled homeowners from defaulting. That meant Fannie for now didn’t have to make good on loan guarantees that may have cost it as much as $2.4 billion.
No crisis in housing, just market correction
Forbes: The Housing Crisis Isn't A Crisis
His research has revealed three distinct types of housing markets--and only one of the three shows real signs of distress. Even then, that distress is only in a limited number of areas.
Halifax Q1 09 Regional Breakdown
Halifax: Halifax Q1 09 Figures
They seem to have given up expressly stating what the quarterly falls are (London -4.9%, -24.9% from peak, on my calculations). We can only speculate as to why (hint - Government majority shareholding).
'No' 'more' 'Green Shoots'
BBC: UK mortgage lending 'falls back'
Mortgage lending by the UK's major banks fell for the first time in four months in March, striking a blow to talk of housing market recovery. The number of mortgages approved for house purchases fell to 26,097 in March, down 6.8% from February and 25% lower than a year earlier.
Recesion and house prices...
Bloomberg: Bootle Says U.K. Faces 1930s-Style Collapse as Home Prices Drop
The U.K.’s recession will last through the end of next year as house prices drop in an economic slump increasingly resembling that of the 1930s, former Treasury adviser Roger Bootle said. Gross domestic product will drop 1 percent in 2010 after shrinking 4 percent this year, Bootle, an economic adviser at Deloitte & Touche LLP, predicted today. U.K. house prices dropped for a 19th month in April, Hometrack Ltd. said in a separate report.
Pointless survey of the week
FT: Hometrack: House price plunge slows as rising demand boosts sales
House prices fell at the lowest monthly rate for a year in April, fuelling hopes among housing experts that a bottom is being reached in the market. Prices fell by 0.3% month on month, according to the national housing market survey from Hometrack, taking prices down by 10.1% year on year. Hometrack said this would add to optimism among estate agents on the back of increased levels of market activity and sales during the first three months of 2009.
Interesting Graph
Paul Maunders Blog: Unemployment versus House Prices 1975-2008
A blogger I've never heard of has compiled a graph showing unemployment rates against inflation adjusted house prices from 1975 to 2008. Extrapolating this graph looks dicey but the trend is obvious and remarkably consistent. Admittedly, there is much scope for questioning the criteria used for this graph over such a long period of time.
"Subtle" EA persuasion in action....
The Times: What does the future hold for house prices? Ask the artists
This is incredible! "Subtle" EA persuasion in action.... What begins as a cultural article about Damien Hirst and the birth of the Young British Artists slowly mutates into a housing market ramping article !!! And then at the end, you find out who the article was written by....
Sunday, April 26, 2009
Gordon Brown hears some truth told
BBC News: Daniel Hannan gets angry
A blistering speech attacking Gordon Brown by Daniel Hannan, a little known Conservative MEP, has become a global internet hit. Watch it here.
Want to Buy this Worthy Enterprise?
Times: Northern Rock to be Sold by End of Year
NORTHERN ROCK is to be sold off by the end of the year under a fast-track government plan to start clawing back some of the hundreds of billions of pounds of taxpayers’ money ploughed into the banking sector. Advisers at Credit Suisse have started to draw up the sale plan, which is linked to moves to split the nationalised bank in two.
Spanish unemployment hits 17.4!
New york times: Reuters
Spanish unemployment startlingly hits depression levels with house price down as much as 50% all fuelled by a property and construction boom itself fuelled by easy credit.....SOUND FAMILIAR?
Rosie Millard drops £100k
Rightmove: Thornhill Square
Those with Property-bee will see that Rosie Millard has just dropped the asking price on her pad in Thornhill Square by £100k, from £1.495m to £1.395m. No property crash in Islington? Chasing the market down too slowly, don't you think?
Japanese pension fund sells government bonds
Telegraph: The capital well is running dry and some economies will wither
Japanese pension fund becomes a seller of Japanese government bonds. I think this places pressure on the UK issuance in the future as the J. bond yield must go up to counter falling demand. The article points out that the UK is in a global market as a weak financial player, and international competition amongst governments to find buyers for gov. debt. Or yields will go up, and borrowing costs will rise. Perhaps the UK budget was really the point of no return as we are locked into excessive debt issuance with rising servicing costs. New Labours plan to compensate for a fall in the velocity of money by attempting to increase the quantity precludes any recovery. Hold onto your hats if you love low house prices (and unemployment boo..).
Krusty has lost the plot
BBC IPLAYER: Newsnight Friday 24th
Thought this is worth posting. 20 mins in we have Kirsty Alsop uttering garbled rubbish about how we need to be ashamed of our past excesses and embrace austerity. Seems a bit rich to me!
IMF suggests housing crash is on the cards for the UK
The Guardian: IMF Forecast LONG Housing Slump
The IMF were sneered at a couple of years ago when they said that Britain's Housing was overvalued by 40%. This was when mainstream commentators were suggesting that housing would be FLAT for a year. It was also before there was any hint of worldwide recession and the words, Banking, Lehmans and the City were expressed in reverent tones. They now have an equally negative prognosis of the UK market and say that the crash has a long way to go. They point out that in the USA the crash started earlier, is accelerating and that the USA didn't have the bubble we did. In the last month we have had the worst ever monthly decline from the land registry -2% (actual sale prices), the worst GDP figures in 30 years -1.9%, the worst budget deficit in history and now the IMF's prognosis. Buyers beware!
Saturday, April 25, 2009
Missing you already!
The Times: We’re fleeing high-tax Britain, say City tycoons
Hugh Osmond, the pubs to insurance entrepreneur, is considering a move to Switzerland. Peter Hargreaves, the £10m-a-year co-founder of Hargreaves Lansdown, the financial adviser, is looking to move to the Isle of Man or Monaco. They are likely to be followed by others. Osmond said: “A lot of people will be off. I think it’s highly unlikely that I will continue to have the UK as my country of residence. It’s just as easy to work from any close location — Switzerland or wherever.” Hargreaves said: “I won’t pay, I’ll leave.”
Holiday Home Crash
The Times: Holiday Home...
Totally misleading title but good news for FTB and others priced out of the market in tourist areas. We should see UK holiday homes flooding the market very soon.
Is it time to get back into property?
Times: No
The housing market has certainly seen a significant improvement in sentiment since the beginning of this year. “Now is the time to start buying — because most of the falls in price have happened,” says Yolande Barnes of Savills. Those who hang on, waiting for further falls, may be disappointed, she believes. In a year, getting hold of stock is going to be an issue. Estate Agent David Horrowman says "If you are a first-time buyer, I would say buy now. I reckon prices will start to go up again.Increased longevity means we need more household units and the collapse of housebuilding for the last two years must lead to pent-up demand" “I am quite optimistic that we are not far off the bottom of the market, and there are significant gains out there for those in a position to embrace the risks."
FT's John Authers says US house prices are recovering
FT.com: Green Shoots in Housing
Interesting video from John Authers at the FT, suggesting that the "snap back" in US house prices in the last two months is due to the banks' self-imposed moratorium on foreclosures. But they were only waiting for Obama's housing plan - soon it will be Crash Phase Two...
Debt virus hits the US 'prime' market
Counterpunch: A housing crash update
Numbers of 'prime' borrowers at least 60 days behind on mortgages owned or guaranteed by Fannie and Freddie doubled between October '08 and January '09, when it reached nearly 750,000. Obama's mortgage Modification Program can't keep up with the size of the problem. 'Cramdown' legislation (which would allow judges to mark down the mortgage principal to current market value) is likely to fail because powerful bondholders are against it. Foreclosures. already under-reported because banks re keeping most foreclosed properties off the market, will carry on rising. MW likens the situation to that of Sisyphus, rolling his boulder up the hill only to see it roll back down when the effort became too much. Sisy tried lots of tricks to avoid this punishment but the gods got him in the end.
Battling the worst financial crisis since the 1930s, the government has committed more than $11 tril
Forbes: Fed says gov't ready to save stress-tested banks
The Federal Reserve on Friday said the government is prepared to rescue any of the banks that underwent "stress tests" and were deemed vulnerable if the recession worsened sharply. The Fed, in outlining the tests' methodology, said the 19 companies that hold one-half of the loans in the U.S. banking system won't be allowed to fail - even if they fared poorly on the stress tests. The Fed reinforced its view that major financial firms are "too big to fail," and the government must do whatever is necessary to save them, said former Fed examiner Mark Williams.
BBC content contradicts its title
BBC: Tunbridge Wells bucks downturn
The BBC have studios in this town. The film shows the shops that have closed down and sees an estate agent talking her book and then a lady that indicates people are losing their jobs like anywhere else. I moved here because its nice and my previous life inside the M25 led me to believe that you need to be mad to live in the UK; I now think you need to be a millionaire to live in the UK. About 40% of people are bankers or insurance brokers, 10% are seriously minted and most think their town would be just dandy in a nuclear holocaust. But homes are coming on at reduced prices and there are fire sales of conversions, land and Porsche Cayennes. Many shops and EAs have shut. My letting agent went bust a year ago and I lost my home when Ms Landlady got in £trouble. Recession proof? Righto.
I hate to be the bearer of bad news - LOL!!
Wallet Pop: House prices to fall 50%
OK, this is an obscure source but the basic point is valid. Who do you trust most to predict future property price trends? An estate agent or a fund manager who deals in property derivatives?
The Children's Budget
The Age of Stupidity: Blog
We are in the midst of the worst recession any living person would have experienced. Looking back at history when events like this happen, economies take years or a decade or more to recover from these credit excesses. The growth projections given yesterday were lies. Not even Mr Darling believed them. The idea that the economy will grow at the end of the year, and be in the thick of a new boom within a couple of years is nonsense. The economy will continue its decline for this year and the next. If there is any recovery after - which this author does not believe - it will be weak at best.
More surplus property on the market
Telegraph: Budget 2009: Blow for second homes
Holiday homeowners will no longer be able to write off “trading” losses from second homes against their tax bill, while capital allowances and capital gains benefits will also go. The only way to get around these tax changes is to sell the holiday home. “This could result in a rush to try to sell qualifying properties before 5 April 2010 and the resulting surplus of properties for sale could delay any recovery in the housing market in seaside towns around the UK,” said Richard Mannion, tax partner at Smith & Williamson.
Prudence
Times Online: If no buyers are found for government gilts, out debt interest could bankrupt us
It threatens to become the worst case of indigestion yet seen — and one that even a limitless supply of Alka-Seltzer would fail to cure.
Friday, April 24, 2009
Looks like high earners won't be splashing the cash now Gordon's budget has slapped up the tax
FT.com: Higher taxes set to hit house prices
Estate agents are warning that the higher taxes introduced in this week’s Budget could increase the pressure on house prices, as buyers at the top end of the market decide to live elsewhere. Many buyers of multi- million pound properties earn enough to be hit by the higher rate of income tax from next year. Agents said this extra levy could lead to fewer people living and working in London and could reduce demand for properties in the prime market.
Its easy, stop trying to sell at 2007 prices.
Guardian Unlimited: How to sell your home in troubled times
It's the traditional house-hunting season, and hopes harboured by owners and sellers of a recovery in the market are high, fuelled by figures this week showing that asking prices have increased for a third month. Rightmove said the typical asking price rose by 1.8%, or almost £4,000, this month, adding this may mean "we have finally reached a price floor, and confidence is starting to return". Mortgage lending is also showing signs of recovery. But estate agents say it remains a buyer's market and those who can get a mortgage are not prepared to pay premium prices. Therefore it is vital to get the marketing right. So which tactics work best if you want to sell at the best price?
Iceland's lessons in bankruptcy for Britain
MoneyWeek: Iceland's lessons in bankruptcy for Britain
The shocking state of Britain's finances means an IMF bailout is still a distinct possibility. So what can we learn from Iceland, a country now living under an IMF recovery plan?
Petition calling for Gordon Brown to resign
10 Downing Street: We the undersigned petition the Prime Minister to resign
Come on everyone. Do your bit for your country. Maybe if the whole country signs it... OK, so there's no chance of him actually quitting. Come the election they'll probably have to physically drag him, kicking and screaming, from number 10. But at least this might wipe the smug grin off his fat face for a few minutes. :o)
Does this explain the latest move up in gold?
FT: China reveals huge rise in gold reserves
China revealed on Friday that it built up its gold reserves by three quarters since 2003, making it the world’s fifth largest holder of bullion. Treasuries look out below.
Social decline and the rise of vermin in our towns and cities.
Bloomberg: Rats Feed Off U.K. Recession as Trash Mounts, Buildings Empty
April 24 (Bloomberg) -- For British rats, the worst of times has turned out to be the best of times. The vermin more associated with the Dickensian era than modern Britain are thriving, with shuttered shops and half-built housing sites to live in, rotting piles of uncollected garbage for dinner and fewer exterminators sent out to kill them.
NAEA "nothing has been done that will radically change the direction in which the market is headed"
Mortgagestrategy: "Botched Budget" may slow buyer interest, says NAEA
The National Association of Estate Agents says chancellor Alistair Darling’s “botched Budget” has failed to capitalise on a boost in buyer interest. The latest NAEA market report shows that the number of prospective buyers registering with estate agents grew by more than 12% between February and March. Applicant numbers went from 240 per agent in February to 268 in March.
UK GDP Contracts by the Most in 30 Years: Q1 -1.9%; YoY -4.1%
ONS: UK output decreases by 1.9%
Gross Domestic Product (GDP) contracted by 1.9 per cent in the first quarter of 2009, compared with a decrease of 1.6 per cent in the fourth quarter. The increased rate of decline in output was due to weaker services and production output. Construction output decreased by 2.4 per cent, compared with a decrease of 4.9 per cent in the previous quarter. Total production output weakened further in the first quarter, decreasing by 5.5 per cent, compared with a fall of 4.5 per cent in the previous quarter. Manufacturing output made the largest contribution to the slow down, falling by 6.2 per cent compared with a 4.9 per cent decrease in the previous quarter.
Going down!
TimesOnline: UK sinks deeper into recession as GDP falls 1.9%
Great Bear Food
The Housing Market Can't Recover During Economic Devastation
Write About Property: Budget 2009: No Magic Wand for UK Housing Market Recovery
As expected the reactions to Alistair Darling's 2009 UK budget were numerous and varied from within the property and housing industries. Almost -- if not -- all the major bodies and representatives had urged something of the chancellor to breathe life back into the housing market, some have even said that solving the housing crisis will breathe life back into the economy as a whole. I have come up with a name for this: industrial-economic blinkers; the art of looking at the economic situation with blinkers so that you only see your own industry in front of you. The UK economy is in the worst shape of the industrialised world. Our budget deficit is now expected to reach over 12%, compared with 8.9% in the US, 6.2% in France and 3.2% in China. We will be paying for the Chancellor's massiv
Grab Yourself a Bargain.....
REDC: UNITED KINGDOM - Online Only Auction Bid NOW
Is this what we've been waiting for, or is there better yet to come?
For US read UK, more hope for us bears
NY Times: For Housing Crisis, the End Probably Isn’t Near
The author states: "I’ll confess that this bearish picture isn’t exactly what I had hoped to find. A year ago, as part of a move from New York to Washington, my wife and I bought our first house. We did so fully expecting prices to continue falling.... We preferred buying before the bottom of the market instead of renting and having to move again in a year or two... Still, when I wrote about that decision last spring, I argued that anyone who didn’t have to move probably should not buy yet. Prices still had a way to fall. They don’t have as far to fall today, but the great real estate crash is not over, either. So if you are part of the 30 percent of American households who rent and you’re trying to decide when to buy, relax. The market is still coming your way."
The legacy of Gordon Brown.....
Telegraph: Budget 2009: Britain's debt will not be under control until 2032
''”Debt freedom day”, when the national debt returns to sustainable levels, will not be reached until 2032 - another 23 years away, the respected Institute for Fiscal Studies said. Families could soon find themselves paying at least another £1,400 a year in tax as part of the Government’s attempts to bring public debt back under control, the IFS predicted.''
Leave property alone its on the way down
Lovemoney: Why we should let house prices fall
Echoeing Paul Fisher, the BOE official's sentiment when he warned Darling not to stop prices falling, that article said that even with 21% falls the market was still 40% overvalued.
Australia’s authorities seem to be so intent on intoning the mantra that Australia-is-in-better-sha
Businessspectator.: IMF forecasts and an admission from the Finance Minister that we are heading for government debt greater than $200 billion raises an obvious question: what on earth is the cash rate doing at 3 per cent?
As a result the Australian dollar will fall. At 70 US cents it looks fundamentally overvalued. International investors will not buy Australian government debt at a yield of 4.7 per cent and an exchange rate of 70c/70¥, when debt levels are at the point where a negative rating watch is likely, if not an actual downgrading.
Silly Moos
Guardian: Sub-Prime Lender Cattles halts dealing
May we never see their like again. Good riddance.
Thursday, April 23, 2009
Fears of Reykjavik-on-Thames are back again
Telegraph: Gilts continue to slide as Budget 2009 sparks UK sovereign rating fears
Prices for government debt, or gilts, slumped for a third day after Alistair Darling admitted that the Treasury will be forced to borrow a record amount this year to plug the gaping hole in its finances. Bond investors knew that the Government would be forced to borrow more but were still stunned by the Chancellor's Budget admission that it will need to tap them for £220bn this year. That figure dwarfs the previous record of £146bn set last year and is more than the £180bn that was expected. "The main anxiety in the market is that this might not be the worst of it," said a bond investor. Ten-year gilt yields rose to 3.51pc at market close as fears have risen that investors may start to sell because they believe the UK economy is likely to deteriorate further.
It's a knockout!
The Economist: It still looks too early for a housing rebound
More of the Truth.
I thought we'd seen the end of articles like these
Times: How to get your first mortgage
If you are unable to obtain a mortgage on your own income, the obvious solution is to turn to the Bank of Mum and Dad, to help out with the deposit or to act as guarantors. If they are prepared to be guarantors, their income will be taken into account when deciding how much you can borrow. If your parents cannot help, you could buy with friends. “Some lenders will take the incomes of up to four friends into account when deciding how big a mortgage to give you.
Your "high quality mortgage book" at work
Telegraph: North Rock problem loans at double industry average
Problem loans on Northern Rock's mortgage book have almost doubled in just six months as the poor quality of the bank's lending continues to unwind. In March, 3.67% of its customers were in arrears by 3 months or more, up from 2.92% in December and 1.88% in September. In contrast, the industry average is 1.87%. The nationalized lender has warned there is worse to come, and that it will be "substantially loss-making" in 2009. One in three of NR's customers are in negative equity, many of them after taking out the infamous 125% "Together" mortgages. NR plans to increase its lending by £14billion over the next two years.
The American government should give everyone a load of cash to trade in cars older than 6 months.
Telegraph: GM eyes factory closures as Chapter 11 looms
The troubled car manufacturer, which is struggling to stay afloat under $62bn (£42.5bn) of debt following a slump in car sales, is set to announced today(FRI) that work at the bulk of its American plants will cease over the summer in order to attempt to reduce some of its growing backlog of finished but unsold cars.
Round 2 may not be too far away.
Telegraph: Germany's slump risks 'explosive' mood as second banking crisis looms
A clutch of political and labour leaders in Germany have raised the spectre of civil unrest after the country's leading institutes forecast a 6pc contraction of gross domestic product this year, a slump reminiscent of 1931 and bad enough to drive unemployment to 4.7m by 2010. Michael Sommer, leader of the DGB trade union federation, called the latest wave of sackings a "declaration of war" against Germany's workers. "Social unrest can no longer be ruled out," he said.
This is the largest number of businesses that Dun & Bradstreet has ever downgraded in a six month pe
Australian: 130,000 businesses now at 'higher risk' of distress
Nearly 130,000 Australian businesses are at higher risk of financial distress over the next 12 months, with a record number of risk profile downgrades, according to credit reporting agency Dun & Bradstreet.
Newcastle City Council seeks Northern Rock commercial BTL loan (LOL)
BBC: Council buys Northern Rock Tower
Newcastle City Council is to spend more than £20m to buy Northern Rock's empty "glass tower". The structure in Gosforth was completed last November and was to have been the bank's new headquarters. But when the bank got into difficulties and was subsequently nationalised, it put the structure up for sale. The council said it planned to let the 120,000 sq ft building to environmental support firm Eaga, where its 2,500 staff will move. The council is to borrow the estimated £22m to buy the building, which it said was a "sound commercial investment."
DETROIT — The Treasury Department is preparing a Chapter 11 bankruptcy filing for Chrysler that coul
Nytimes: U.S. Is Said to Prepare Filing for Chrysler Bankruptcy
Moreover, Fiat of Italy would complete its alliance with Chrysler while the company is under bankruptcy protection.
Central plank of the economy, Weafer said (he could be talking about a certain man we all know lol)
Yahoo: Russian economy contracts, central bank drops rates
Deputy Economy Minister Andrei Klepach said that a six percent contraction in GDP forecast by the International Monetary Fund for 2009 was "rather realistic."
Longer dole queues will push down house prices
MoneyWeek: Longer dole queues are bad news for house prices
"As prices drop, more 'loose holders' - like buy-to-let landlords who are desperate to service their bank borrowings – are driven into unloading their investments at fire-sale prices. It all adds up to a vicious downward value spiral."
Budding Economics & Finance Journalists - Try Your Hand.
The Economist / CFO Europe: Marjorie Deane internship
** Quick - due 24th April ** Applications are invited for the 2009 Marjorie Deane internship. This award, financed by the Marjorie Deane Foundation, is designed to provide work experience for a promising journalist or would-be journalist, who will spend three months of the summer at The Economist, writing about economics and finance. Applicants may also be considered, if they wish, for an internship of similar duration at CFO Europe, a sister publication of The Economist. Applicants should send a letter introducing themselves, with an original article of no more than 500 words that they think would be suitable for publication in this section of The Economist. Applications should be sent by e-mail to deaneintern@economist.com or posted to The Economist, 25 St James’s Street, London SW1A 1HG
Sensible comment
BBC: Cable Questions Budget Figures
The Liberal Democrats' treasury spokesman, Vince Cable, does not accept the Chancellor's prediction that the economy will rebound strongly. If only this guy could win "Strictly Come Dancing" the public might listen to him!
Krusty denies the "eat my hat" comment
BBC: BBC radio 5 Live
Simon talks to Paddy Ashdown about his autobiography A Fortunate Life, and Kirstie Allsopp about her new Channel 4 series Kirstie's Home Made Home.
Have a look at the picture in the article
BBC 'News': Borrowers 'flock' to Northern Rock
Does the picture look familiar? Well according to our esteemed and trusted state media, this shows people queuing up to take out Northern Rock mortgages, not as some might recognize, people withdrawing all of their savings from the failed institution. In other news, customers more than 3 months in arrears on Northern Rock's loan books have risen 26% and over a third of its customers are in nequity. Oh dear.
Weighing up the policy of encouraging home ownership
The Economist: Home ownership: Shelter, or burden?
The social benefits of home ownership look more modest than they did and the economic costs much higher.
The screw is still turning...
Thisismoney.co.uk: Further setback for building societies
The Bank of England has turned up the heat on a raft of building societies following damaging credit rating downgrades last week. As many as seven societies could be asked to put more cash into an emergency Bank scheme designed to make it easier for lenders to raise money.
Why the budget will cost us all a fortune
MoneyWeek: Why the budget will cost us all a fortune
"...when reality finally hits home, Mr Darling will have to admit that his hopes for a storming 'recovery' in 2011 were just as flawed as all his other forecasts. And that to return the budget to any sort of balance, we'll face higher long-term interest rates, as well as raised taxes – and not just his new 50% top rate for higher earners – for many years to come. Regardless of who's in power…"
Ramping of new build development sales
Evening Standard: Flats snapped up as agents use 'sensible pricing' policy
According the the highly impartial Savills, these flats on Hornsey Road (N7) were sensibly priced. Amazingly they claim that 70% of purchases were funded by parents who consider property a safer investment than a deposit account.
Where now house prices?
The Economic Voice: Where now house prices?
The biggest asset bubble of recent time, the housing boom, has been one of the major drivers in the recent boom. It has provided the economy with not just the cash, but also a very positive sentiment as house prices kept their seeming unstoppable upward trend.
Has anyone told Gordon & Alistair!!!
Reuters: Northern Rock says lending arrears up
Nationalised bank Northern Rock reported a sharp rise in lending arrears in the first three months of 2009, blaming continued difficult conditions in the mortgage and housing markets. Northern Rock said on Thursday accounts more than three months in arrears accounted for 3.67 percent of its loan book at the end of March, up from 2.92 percent three months earlier.
Do we need a National Government/Coalition to sort this out
You Tube: Baldwin appeals for support for the National Government
"The further back I look, the further forward I can see." Winston Churchill
The US housing market, the perceived root cause of the credit crunch
Cnbc: US Housing Could Fall Another 30%
The US housing market, the perceived root cause of the credit crunch, could take another hit as Commerzbank estimates US house prices to fall another 30%. Markus Wallner from Commerzbank discusses the report's forecasts.
A sovereign downgrade now looms
The Telegraph: The lesson from Budget 2009 is that our politicians are blind to Britain's financial risks
This is government profligacy on a quite simply unprecedented scale – a disgraceful, morally repugnant raid on our children and grandchildren. Yet it’s highly likely that even these blood-curdling borrowing forecasts will turn out to be under-estimates.
Wednesday, April 22, 2009
Dany Boy says he saw it coming
RTTNews: BoE's Blanchflower: Nonsense to Believe Crisis Could Not Have Been Foreseen
Couple of days old - found this in a Google search on Blanchflower: Bank of England policymaker David Blanchflower said it is "crass nonsense" to say that the magnitude of the financial crisis was unpredictable before the fall of Lehman.
Bye! Don't forget to write!
The Times: Darling accused of prompting British brain drain with tax increase on high earners
Alex Henderson, tax partner at PricewaterhouseCoopers, said today's tax hike could see the City's high-earners flee to lower tax locations such as Ireland and Switzerland. "Unfortunately, the Chancellor seems to have ignored the knowledge economy entirely," Mr Henderson told The Times. "This has got to reduce the UK's attractiveness as a place to do the kind of business that requires highly-skilled and correspondingly highly-paid individuals, whether that is people choosing to go overseas or - the hidden cost - people who never come here at all.
A refreshing change
This is money: Don't stop housing crash, Bank man warns
"A top Bank of England official today warned the Government against trying to prevent the housing crash. In a controversial call, markets director Paul Fisher said it would be 'dangerous' for policymakers to try to stem the relentless slump in the value of property. He argued it is also 'sensible' for families to be forced to save up for bigger deposits, rather than returning to the days of near-100% mortgages."
Gallows Humour?
SKY: Budget 2009: Darling's £700bn Debt Hike
I hear a new phrase " you can grow your way out of a recession, not cut your way out". Nicely said, but who is going to lend us £700bn? Look out for articles on black holes tomorrow, and of course recovery in the Guardian and the BBC.
Spend less on your people and more on us bankers
Reuters: IMF urges Spain to curb spending, defend banks
Spain should be wary of extra fiscal stimulus measures and must prepare contingency plans for bank bailouts to head of possible systemic risk, the International Monetary Fund said on Wednesday. In a report following a regular review of Spain, the IMF said Spain had to present plans to cut a ballooning budget deficit and needed to launch reforms in labour and economic markets to raise economic competitiveness.
Wake me up in a few years when it's recovering
Times Online: UK slump will not end in 2010, says IMF
To all those who were thinking they can see a light, it's a train coming!
Budget - serious costs hidden in small print
Taxpayers' Alliance: Brown Bombshell bigger than debts from the Napoleonic Wars, First World War and Second World War combined
*Darling's borrowing plans will run up more debt than World War I, World War II and the Napoleonic Wars combined - in today's money. *The green jobs proposals could result in a net loss of 480,000 jobs across the economy as a whole. *The Car Scrappage scheme could cost up to £14 billion - and only £2 billion would go on British cars. *The Chancellor's growth forecasts are "wildly optimistic" - Ruth Lea, leading economist and TPA board member.
Cat among pigeons
BBC News: Tax blow for holiday-home owners
Thousands of UK holiday-home owners face losing a range of tax benefits under changes announced in the Budget.
House Prices Still Crashing in USA, 2 Yrs Ahead of UK
NY Times: For Housing Crisis, the End Probably Isn't Near
The US housing market is two years ahead of the UK and still crusing at crash speed. Even though house prices there are only 5% overvalued by the usual measures, there is still a glut of property on the market and prices are still falling. This journalist bought as an FTB in 2008 to avoid having to having to move again while renting but now finds that house prices are still crashing 1 year on, despite reports of a recovery. .
But the Green shoots !
Yahoo: Jobless figure climbs to 2.1m
Business groups and unions now expect the wider measure of unemployment to reach at least 3 million next year because of the effects of the recession.
Hmmm make of this what you will! I have my own theory
Cnn: Freddie Mac CFO found dead
The acting chief financial officer of mortgage finance giant Freddie Mac, David Kellermann, was found dead Wednesday morning, police said.
Comedy Club stalwart - "housing market is the engine of the UK economy"
Mortgagestrategy: BUDGET 2009: Budget is a water pistol to put out a fire says NAEA
The National Association of Estate Agents has damned the chancellor Alistair Darling's second Budget report as "water pistol to put out a fire". The extension of the Stamp Duty holiday for properties up to £175bn the NAEA says is "disappointing" and adds that now was the perfect opportunity for the chancellor to get rid of the tax. Peter Bolton King, chief executive of the NAEA, says: "In this difficult economic time, Mr Darling could have seized the opportunity to encourage first time buyers to the market and to send a signal of confidence that may have reverberated around the economy.
290,000 Jobs to go in City ?
Here is the City News: 290,000 Jobs Likely To Go In London Before End Of 2011
I think the figure is actually 29,000 ? No "green shoots" in the UKs property price engine forecast then.
Gordon Brown - the dance of the comedian
Crown blog: Gordon Brown - the dance of the comedian
Dance video mash up http://thecrownblogspot.blogspot.com/2009/04/gordon-brown-dance-of-comedian.html starring Gordon Brown
Where to put your cash safely?
Global Finance: THE WORLD’S SAFEST BANKS MID-2009
50 institutions with the highest ratings from the leading credit ratings agencies Standard & Poor's, Moody's and Fitch. Looks like Nationwide and HSBC make the top 50.
50 per cent tax rate for Britain's rich
The Telegraph: 50 per cent tax rate for higher earners in Budget 2009
A new 50 per cent top rate of income tax has been announced in the Budget by Alistair Darling, the Chancellor.
CDS: which do you want to hear first the good news or the bad news?
Bloomberg: Credit Swaps Market Cut to $38 Trillion, ISDA Says
CDS market was behind a lot of the risk taking that fueled the hp bubble. When it came to the risks to the CDS market itself there was the arguement that "most contracts balanced each other out". Since the crunch it seems players have been tearing up balancing contracts. The good news is that 38% have been torn up. The bad news is that it was only 38%, which means that most presumably most don't balance each other out. So this still leaves $38 Trillion financial weapons of mass destruction targeting the world's economy, I mean the world's tax payers.
Housing boost expected from Budget
The Telegraph: Budget 2009: boost for housing expected
The Government is expected to unveil a £1 billion package to help boost the housing market and beleaguered construction sector in the Budget.
How low could stock markets go?
MoneyWeek: How low could stock markets go?
Predicting market moves is always difficult. But we can learn a great deal about today's market crash by studying that of 1929, writes Dominic Frisby. And judging by what happened back then, things are going to get even uglier for equities.
The first quarter of 2009 has seen one of the biggest ever changes in the take up of fixed rates
Citywire: Cautious homebuyers switch to fixes
Homebuyers are more astute than most people give them credit for. Borrowers realise that massive government borrowing and ‘quantitative easing’ – otherwise known as printing money – will lead to inflation and higher interest rates and large numbers are switching to fixed rate home loans.
UK House Prices: What Goes Up (too fast) Must Come Down
Write About Property: Gloucester Property Market Hit Hard by UK Housing Market Crash
Gloucester property prices had fallen by around 16% up till February, according to Land Registry data, an equal percentage to the average for England in Wales. Property in Gloucester, like almost everywhere else, grew massively from 2004 onwards. The growth between Feb 2004 and Feb 2005 alone was over 10%, from £153,434 to £170,231.That growth has all but been reversed. The average price of a house in Gloucester is now £166,867, and that is based on the Land Registry figures taken us up to February, the price is likely to be lower again when the Land Registry releases its figures for March.
Of the top nineteen (19) banks in the nation, sixteen (16) are already technically insolvent
Bloomberg: Bank Regulators Clash Over U.S. Stress-Tests Endgame
The U.S. Treasury and financial regulators are clashing with each other over how to disclose results from the stress tests of 19 U.S. banks, with some officials concerned at potential damage to weaker institutions. With a May 4 deadline approaching, there is no set plan for how much information to release, how to categorize the results or who should make the announcements, people familiar with the matter said.
Fla. county declares state of emergency over skyrocketing foreclosures, unemployment
Abc News: Fla. County Declares Emergency Over Economy
A South Florida county that rode high through the housing boom earlier this decade, then crashed hard when the foreclosure crisis struck, declared a state of economic emergency on Tuesday.
Spring Bounce
BBC: House sales 'jumped 40% in March'
"Even when the figures are adjusted for seasonal trends, they still show a rise from 54,000 to 61,000, a jump of 13%. " Why isn't 13% in your headline then Mr BBC.
So, no recovery for a few years then!
Mail online: Budget wake-up call for Darling:
Labour was rocked last night by a devastating warning that the banking crisis will cost every person in Britain £3,000. So that's nice then, 3,000 quid for every man, woman, child and baby, thanks darling!
The nation’s jobless rate, already a painful 15.5 percent, could soon reach 20 percent, a troubling
Nytimes: Spain’s Falling Prices Fuel Deflation Fears in Europe
VALENCIA, Spain — Faced with plunging orders, merchants across this recession-wracked country are starting to do something that many of them have never done: cut retail prices.
John Nash would be proud.
Daily Mail: Look where the morals of Monopoly have got us
This innocent-looking board game has probably had a corrosive influence on western morals, writes Rowan Pelling. "I wonder if Joanne and Darren Jones, found guilty this week of snaffling over £60,000 from a faulty cash machine, ever played Monopoly when they were young? For all the modern angst about violent computer games, this innocent-looking board game has probably had a more corrosive influence on western morals. For starters, Monopoly brazenly encourages players to plunder their savings and put every last penny into property. And just look where that's got us all: the Joneses were symbolic of our crazy age, owning three properties yet up to their gills in credit-card debt."
Tuesday, April 21, 2009
Don't try and stop the housing crash, Bank of England official warns Darling
Daily Mail: Don't try and stop the housing crash, Bank of England official warns Darling
A top Bank of England official today warned the Government against trying to prevent the housing crash. In a controversial call, Markets Director Paul Fisher said it would be ‘dangerous’ for policymakers to try to stem the relentless slump in the value of property.
Reality of the slow descent
Firstrung: House sellers continue to waste estate agents' time with totally unrealistic asking prices
The final selling price of a UK property is still circa 17% down, year on year, but that isn't stopping sellers continuing to waste estate agents time by asking totally unrealistic prices for property according to Miles Shipside of Rightmove... Starting from a very high price Rightmove are witnessing vendors desperately reducing prices by up to 2% a week until they find a level at which a willing buyer (armed with funds) is prepared to make a commitment. Those that do sell quickly are typically having to price at 25% off peak 2007 prices.
April Fool: No recovery, we're sinking into depression
Finance Markets: Welcome to the New Depression
The green shots are being fabricated by bail out packages, and we remain headed into a new depression to rival the 1930's.
"Germany is in the most severe recession since the second World War,"
Cnbc: Germany in 'Severe Recession': Economist
Jorg Kramer from Commerzbank said. "I personally expect the German economy to shrink by 6-7%." He sees the country's economy continuing to shrink until the third quarter, then to stabilize
Rumble of thunder...
Bloomberg: Fannie, Freddie Defaults Rise as Borrowers Cite Lower Income
Fannie Mae and Freddie Mac mortgage delinquencies among the most creditworthy homeowners rose 50 percent in a month as borrowers said drops in income or too much debt caused them to fall behind, according to data from federal regulators. The number of so-called prime borrowers at least 60 days behind on mortgages owned or guaranteed by the companies rose to 743,686 in January, from 497,131 in December, and is almost double the total for October, the Federal Housing Finance Agency said in a report to Congress today.
DJIA and the Dow Jones Transportation index, shows a bearish pattern,
Cnbc: Nicole Elliott from Mizuho Corporate Bank said. She sees the index falling below the March low of 666,
The S&P 500 index chart, like all the European indexes, the DJIA and the Dow Jones Transportation index, shows a bearish pattern, Nicole Elliott from Mizuho Corporate Bank said. She sees the index falling below the March low of 666, and suffering staggered declines for the next 2 years.
Helicopters
NY Times: It May Be Time for the Fed to Go Negative
Professor of economics at Harvard says we need negative interest rates and has cunning plan to prevent money hoarding. Fits the trend of destroying every bit of capital left in the US.
Boris' people paint a fairly grim economic outlook
GLA: London’s Economic Outlook: Spring 2009
GLA Economics’ fourteenth London forecasti suggests that: • London’s Gross Value Added (GVA) growth rate should fall to –2.7 per cent in 2009. Growth should remain negative in 2010 before rising to 1.7 per cent in 2011. • London is likely to see contractions in employment in 2009, 2010 and 2011. • London household spending will probably fall in 2009 and 2010 before growing slowly in 2011. London household income will probably fall in 2009 before growing slowly in 2010 and 2011.
AIG's Bailout Man Knows Best
Bloomberg: Geithner Says Most U.S. Banks Have Enough Capital
reasury Secretary Timothy Geithner told a congressional panel that the “vast majority” of U.S. banks have more capital than needed. He also said there are signs of thawing in credit markets and some indication that confidence is beginning to return. “Indicators on interbank lending, corporate issuance and credit spreads generally suggest improvements in confidence in the stability of the system and some thawing in credit markets,” Geithner said in prepared testimony to the committee overseeing the Troubled Asset Relief Program. Earlier today, Geithner said the program has enough money for bank rescues even under “conservative” estimates.
Why you are the best person to manage your own money
MoneyWeek: Why you are the best person to manage your own money
"Just because the economy's not collapsing quite as rapidly as it was, doesn't mean that everything is now just fine. And with the earnings reporting season pretty much upon us, investors are starting to get nervous about just how difficult companies will reveal things are getting."
"One year ago, the IMF estimated that total losses from the credit crunch would be $1 trillion"
BBC News: Meltdown losses of '$4 trillion'
The International Monetary Fund (IMF) has warned that potential losses from the credit crunch could reach $4 trillion (£2.75tn) and damage the financial system for years to come.
Just when you thought it was safe to go back in the water . . .
BBC: Meltdown losses of '$4 trillion'
The International Monetary Fund (IMF) has warned that potential losses from the credit crunch could reach $4 trillion (£2.75tn) and damage the financial system for years to come. It says that even if urgent action is taken to clean up the banking system, the process will be "slow and painful", delaying economic recovery. It says that banks may need $1.7 trillion in additional capital. But it warns that political support for further bank bail-outs is waning. One year ago, the IMF estimated that total losses from the credit crunch would be $1 trillion, which has been exceeded, showing how rapidly the financial meltdown has escalated.
Board 'em and Hoard 'em
Counterpunch: The housing bust comes roaring back, worse than ever
Only 30% of foreclosed properties in the US are put on sale. There are 600,000 properties that have been repossessed but not put on the market. Banks are probably servicing these mortgages to conceal the extent of their losses. This means that an even larger segment of the banking business is insolvent and there'd be carnage if these distressed properties ever flooded onto the market
More useless measures.Role up your interest payments? Financial suicide!
BBC News: Mortgage support scheme underway
A scheme to keep some mortgage borrowers in their homes if they fall on hard times has begun. The Homeowners Mortgage Support Scheme (HMSS) will allow borrowers to defer up to 70% of mortgage interest payments if they lose some of their income. The plan is one of several initiatives that have been launched recently by the government to stop repossessions.
It's different in Scotland. Negative equity is an English problem!
BBC News: Suburb 'plushest area of country'
An upmarket suburb of Aberdeen has been named as Scotland's most expensive postcode, in an annual property survey. The study by house prices website Zoopla suggested Milltimber, which has the postcode AB13, had an average house price of £422,760.
Common sense for a change
Yahoo Finance: Of Course Banks Aren't Lending...And There's Nothing Wrong With That
The government's goal since the beginning of this crisis has been to get banks lending again. They have failed fortunately.
Mortgage Fraud: The Truth Slowly Seeps Out
Huffington Post: The Two Documents Everyone Should Read to Better Understand the Crisis
William K. Black (fraud expert, former regulator during Savings and Loan crisis) writes in the Huffington Post about mortgage fraud. By 2004, the FBI was warning of extensive mortgage fraud going on in the banks but they were ignored. Lenders completed bypassed basic regulations and checks to originate as many liar loans as they could in order to make astronomical profits. Black outlines why the current crisis has its origins in this fraud and demands an inquiry.
Life at the sharp end of the downturn...
BBC News: Homeless struggle in Atlantic City
BBC correspondent Matthew Price continues his journey across the US to assess whether there are any signs of economic recovery. Today he reports from Atlantic City, New Jersey, where life appears to be getting harder by the week
Housing Tax cuts to remain
BBC News: Stamp duty cut 'to be extended'
Chancellor Alistair Darling is set to extend the stamp duty "holiday" on homes costing up to £175,000 by three months, to the end of the year.
Inflation? Nothing to see here, move along now.
BBC News: Inflation measure turns negative Tomatoes being weighed
Annual inflation measured by the Retail Prices Index (RPI) went negative in March for the first time since 1960, to -0.4%, down from zero in February.
The Truth About Raised Asking Prices and Just How Wrong the Rightmove Index Is
Write About Property: UK House Prices & Rightmove: Bumping Along the Bottom? I Think Not
The Rightmove index has once again showed a rise in asking prices, but this time, because it is the third such monthly rise, they are viewing it with more optimism than the last. The fact that agent's are pushing up asking prices to attract sellers is a side-note in the latest release.
Interesting views on Banks earnings and the recent accounting cons.
Bloomberg - Video: Whitney Expects Banks to Return to `Negative Earnings’
Video. Basically the recent profits reported by the major US banks are a one-off and going forward, earnings potential looks dire.
Progressive taxation shocker !
Telegraph: Britain's middle classes 'face stealth tax'
Utter idiocy, by and large, but does contain one of our favourite subjects, the mythical average wage: £24,292, according to these muppets. £80k-90k average house price here we come then..
NIMBY's destroy society over concern about house prices
Telegraph: New homes to be part funded by Government
"Although the plan will be welcomed by the construction industry it may alarm existing homeowners and estate agents amid fears that boosting the housing supply may hinder any recovery in house prices. It may also lead to concerns that thousands of homes will be quickly constructed across the south east on green-belt land." Let's all screw the young to pay for our retirement. If I can persuade the Mrs, we're taking our 5 degrees and 15 years of highly demanded work experience to somewhere else, where this NIMBY attitude is viewed as purile.
THE OECD has warned that the rollback of the Howard government's Work Choices industrial relations l
Australian: Labor risk to youth jobs says OECD as PM Kevin Rudd calls recession 'inevitable build-up of a large pool of youth at risk of becoming long-term unemployed,"
THE OECD has warned that the rollback of the Howard government's Work Choices industrial relations laws may result in higher youth unemployment, as Kevin Rudd conceded for the first time that recession in Australia was inevitable.
You love it
Daily Express: HOUSE PRICES ARE UP AGAIN
HOPES of a recovery in the housing market have been sparked by a report from Rightmove showing asking prices on the increase for the third month running. Signs that a spring revival might be on the way have tempted people putting their homes on the market to boost their prices by £3,996 – the largest rise for 14 months and the third consecutive monthly increase.
A series of positive reports have prompted economists to say that record low interest rates and lower prices are finally tempting buyers back into the market. RICS says the number of new buyer enquiries has risen for five consecutive months, while the Council of Mortgage Lenders says the number of new mortgage approvals rose by 4% in February. 
Aww, they'll miss us. Seems a bit early though!
FT: What we will miss about the prophets of doom
For two years now, we have collectively gorged on tales of tears and deeds of downfall. If the bulls really are back and the economic and financial misery is about to end, here are 16 reasons why we will miss the gloomy times. 3. The prophets of doom have had a field day. Yet we feel strangely comfortable with the Cassandras. We have enjoyed being told that the light at the end of the tunnel signals an approaching train. Now we will have to get re-acquainted with the optimists – a much more dangerous and unsettling bunch of people. 9. Dinner party talk of house price rises will return. People will no longer be ashamed of being estate agents. Sons and daughters will again want to go into investment banking rather than eco-farming.
NuLabour makes history
Telegraph: Markets braced for historic £200bn deficit
The pound slid after it emerged that Alistair Darling will this week unveil Budget plans which will consign Britain to a deficit dwarfing anything faced in peacetime. With economists raising the prospect of £200bn deficit and a gilt strike in the coming years, sterling fell by 2.66 cents against the dollar to $1.4539, wiping out much of the ground made against the US currency in recent weeks. The plunge came as it emerged that tomorrow the Chancellor will be forced to slash his economic forecasts and raise his borrowing forecast well into the future.
Monday, April 20, 2009
Anticipates huge cuts in service provision
Telegraph: Too much stimulus could spell disaster for Dr Darling’s ailing patient
"At some point someone is going to have to confess that the NHS can only deal with items such as A&E, pregnancy and cancer." Keeping on a medical theme," the economy is like a patient in the emergency room who has suffered a heart attack. He has just been given the largest dose of adrenalin and the largest shock from the defibrillator in medical history. If there aren't a few flutters from the heart after that, be very afraid. To take the analogy further, this patient had previously appeared fit but only because he had been taking steroids.." If the media keep coming out with stuff like this everybody will know this -is- the UK economy, not some unfortunate global event taking a strong man down.
Interesting summary by Vince Cable
Guardian: Vincent Cable's slideshow of economic doom
Suggests the policy makers don't know whether to fight the deflation of the richest 20%, or the 5% inflation for everybody else. Umemployment to stay high for 2 parliamentary terms, 32% drop in housing over the next three years, UK credit rating worries, long term budget deficit, rising repossessions etc. Surprisingly, there was no mention of the beautiful weather we have had recently.
Green Shoots. My Ar*se
REUTERS: GLOBAL MARKETS-Global stocks tumble on BofA results, oil slumps
Wall St slides on bank jitters, earnings outlook caution * US dollar rallies broadly as equities worldwide tumble * Government debt shines on banking worries flare up * Oil drops over 8 pct on economic outlook, dollar rise (Recasts; updates U.S. markets; changes dateline, previous
CH 4 Mon 20th 8pm
Channel 4 Dispatches: Crash - How the Banks Went Bust
Just before he became Prime Minister in 2007, chancellor Gordon Brown congratulated the city on their ingenuity and creativity during his tenure: 'An era that history will record as the beginning of a new golden age for the city of London'. He couldn't have been more wrong. Now, thanks to the financial crash, Britain is facing economic catastrophe. The debts the UK is incurring will take generations to pay off. But how did the economy get from boom to bust? In this two-part special, economist and author Will Hutton gives the definitive insider's account of what went wrong.
Great news for Mr Brown, money with no strings.
Bloomberg: IMF Lending Exceeding $55 Billion Prompts Bondholders’ Anxiety
April 20 (Bloomberg) -- The International Monetary Fund may be so conscious of having handed out bad advice to needy countries in the past that it isn’t offering them enough guidance now. The Washington-based lender is combating the worst financial turmoil in its 64-year history with more than $55 billion in loans for nations from Pakistan to Serbia. As the fund prepares to lend even more, it is retreating from its practice -- carried out with adverse effects a decade ago in Asia -- of demanding that governments overhaul their economic systems in return for aid.
Latest Halifax residential property review
FT: Housing at its most affordable for almost seven years
Falling house prices and shrinking mortgage rates mean home affordability has improved significantly since mid-2007, according to a new Halifax review. According to the Halifax, house prices across the UK fell by an average of 16 per cent in 2008 and are expected to decline again in 2009, making it easier for borrowers to get on the property ladder. At the same time, the proportion of disposable earnings devoted to mortgage payments, a key affordability measure, has also fallen significantly over the past 18 months. Across the nation, typical mortgage payments for a new borrower have fallen from a peak of 48 per cent of average disposable earnings in the third quarter of 2007, to 31 per cent in Q1 2009.
Prices on the slide at the top end of the market
FT: House prices slump £5m in Britain's most expensive street
According to the latest Property Rich List compiled by the house prices website Zoopla.co.uk, London is still home to over one thousand streets where average home values remain over the £1m mark. All three of the most expensive areas in Britain are in the capital and all boast average homes values of over £1 million despite the market downturn. Homes average about £1.3m in Kensington, and £1.1m in Chelsea and Knightsbridge. No other areas of the country managed to achieve average home values over £1m, and the values in these three areas are all down on last year, with average property prices having fallen almost £250,000.
Inflation in goods which typically fall 10% a year
The Times: Electrical goods increase in price
Recent purchasers of MacMinis might be pleased to know that there was a 25% price increase. Whether or not this is a one-off effect due to sterling devaluation through artificially low interest rates, or the emergence of a general inflationary spiral remains to be seen. Rising unemployment and high inflation, the heady mix only possible under Labour governments. But against the losses of UK housing stock? The new gold will be white goods and cars older than 9 years.
But our financial institutions are in better shape....
Turner Radio Network: LEAKED! Bank Stress Test Reults !
lending has decreased by 23% since TARP.. and some other nuggets.
Why your company pension might not be so safe
MoneyWeek: Why your company pension might not be so safe
"UK company pension funds are now in the red to the tune of over £240bn - the biggest shortfall ever recorded. And here's the irony. It's partly due to QE – quantitative easing, the Bank of England's cash printing press, which is supposed to be bailing Britain out."
On Yer Bike Son
Motley Fool: Why Halfords Isn't Woolworths
Although I can see the points in the post I don't think that over priced bikes, £10 car bulbs and the most expensive accessories area I have ever seen is really going to cut it in the long term. With the internet prices being about 40% the only fool in a recession would be the ones going to Halfords to buy their goods
Inflation and gold.
Telegraph: Gold price could hit $1,500
The aggressive monetary policy of central banks around the world is playing havoc with the structure of the bullion market, creating a chronic shortage of gold that may soon push the metal to fresh records above $1,500 an ounce.
No.
BBC: Is the housing market about to recover?
"Prices will weaken further over the next three or six months," says Simon Rubinsohn of Rics. A few experts are happy to be more specific. • Ray Boulger - "a fall of 5% this calendar year." Ed Stansfield - "down 20% this year and 10% next year." Jonathan Davis - "a 40% drop from September 2007 to the end of 2010 or 2011."
Things will get a lot worse before they get better
Yahoo/ITN: 'Recession will end in spring 2010'
Recovery will be "slow and fragile", the CBI business group said. The Ernst & Young ITEM club said a tough road lies ahead as unemployment passes the 3 million mark. ITEM's chief economic adviser Peter Spencer said: "We face another 12-18 months of serious grief". The CBI business group now expects the economy to have shrunk by 1.8pc in the first three months of the year - and contract by 3.9pc over 2009 as a whole; with growth of just 0.1pc in 2010. Unemployment will peak at 3.25 million early next year.
Rightmove: +1.8% MoM, -7.3% YoY
Telegraph: Sellers raise prices by almost £4,000 in April
Home sellers raised their asking prices by almost £4,000 on average in April compared to the previous month, according to Rightmove. The 1.8% rise brings the average asking price to £222,077, in the latest sign that confidence may be returning to the housing market. This was the third month in a row that asking prices have risen. "It looks like we are now bumping along the bottom of the trough," said Miles Shipside, commercial director of Rightmove
Sunday, April 19, 2009
Moar bailouts plz, KTHXBYE
Times: Building societies in Bank of England talks after downgrade
Crunch negotiations are due to take place this week between the Bank of England and a group of building societies in an attempt to prop up their levels of mortgage lending. The societies - including the Chelsea and the Skipton - were hit last week by credit ratings downgrades, affecting their participation in the BoE's £185 billion Special Liquidity Scheme. The downgrades are based on the scenario of house prices falling 40%, thus affecting the value of assets put up by the building societies as collateral for funding from the liquidity scheme. Societies may be forced to either put up additional collateral or hand back the Treasury bills unless a deal can be reached with the BoE.
Darling wants to use our taxes for mortgages
Guardian: Chancellor's £50bn home loans boost
At a time when public finances are in an absolutely wretched state, the government is proposing to commit £50,000,000,000 of public taxes to try to boost the mortgage market. Darling appears to be trying to wrest the title of the UK's Worst Ever Chancellor away from Gordon Brown and the government is showing its contempt for savers. This must be one of the worst ideas NuLabour have ever come up with :(
Location, Location, Location - Phil Spencer liquidated
Daily Mirror: Location, Location, Location star Phil Spencer's company owed £500k
TV property expert Phil Spencer's failed company owed more than £500,000 when it went bust. The full extent of the Location, Location, Location star's financial turmoil was revealed in administrators' documents signed by him and seen by the Mirror. His firm, Garrington Home Finders, owed creditors £576,052 when it folded in February.
We're almost out of the wood! Green shoots will grow into great big oaks! Phew!
BBC News: Economy 'no longer in free fall'
The economy is no longer in free fall and a recovery next spring is likely, a renowned economic think tank has said. Stabilising markets and the easing of credit conditions may well mean that the worst of the recession is over, The Ernst & Young Item Club said.
House prices will continue to fall.
Independent: When will the housing market hit bottom?
A lot of noise is emanating from the housing market, with insiders detecting the first of those much-vaunted "green shoots of recovery" but there is still cause for concern, says Julian Knight, nearly everywhere you look the housing market figures aren't just bad – they are cataclysmic. Jonathan Davis, a certified financial planner and commentator on the housing market, who has consistently called the size of falls in the housing market correctly since 2007, says first-time buyer numbers are at an extraordinarily low ebb.
Debunking the Optimism Surrounding RICS Comments
Write About Property: Response to More Falsely Optimistic Reports on UK House Prices
In an article in the Coventry Telegraph, Harvey Williams Coventry and Warwickshire regional spokesman for the Royal Institution of Chartered Surveyors, has slated the recent government figures on the UK housing market, which showed a 12.3% year on year decline for the three months from the beginning of December to the end of February this year. I have put his comments in bold, and mine in plain text.
Dvaid orr has NO credability , 25% increase!
House price: David orr says HP will increase 25%
David Orr should be sacked. Anyone who thinks HP will increase 25% is laughable ans has zero credability
A scoundrel unmasked...
Telegraph: How Gordon Brown became 'The Gordfather'
'In Brown's world, power is more important than performance. Until the "bust", Brown relied upon spending billions and distorting statistics to retain power. In pursuit of a fundamentally flawed economic policy, he trumpeted disingenuous statements about his "golden rule" of balancing the budget to conceal Britain's growing debts and the inevitable recession. Over the past months, that trusted ruse was exposed, confirming Britain's unprecedented financial plight. '
Buy to Let Debate
Citywire: The Citywire Debate: Should we encourage buy-to-let?
In the first of a series of debates, our writers Lorna Bourke and Tony Bonsignore go head to head over whether we should encourage buy-to-let. Add your own comments in our blog, there is a link at the bottom of the article. YES, says Lorna Bourke NO, says Tony Bonsignore..............
Six of the best for stock markets
Investment Postcards: Investment Postcards from Cape Town: Words from the (investment) wise for the week that was (April 13 – 19, 2009)
Spring is in the air – at least in the Northern Hemisphere and on global bourses. Last week marked the sixth consecutive up-week for stock markets as investors’ risk appetite returned amid signs of global economies and the financial sector embarking on the road to recovery. Read more about this, together with some thought-provoking news items and quotes from market commentators during the past week, in the weekly “Words from the Wise” review: http://www.investmentpostcards.com/2009/04/19/words-from-the-investment-wise-for-the-week-that-was-april-13-%E2%80%93-19-2009/
Response to Optimistic Reports on the UK Housing Market
'write about property", Liam Bailey: Response to Optimistic Reports on the UK Housing Market
n an article in the Coventry Telegraph, Harvey Williams Coventry and Warwickshire regional spokesman for the Royal Institution of Chartered Surveyors, has slated the recent government figures on the UK housing market, which showed a 12.3% year on year decline for the three months from the beginning of December to the end of February this year. I have put his comments in bold, and mine in plain text.
'Steady' Eddie George dies at the age of 70
Times: The governor unafraid to speak his mind
During his initial five-year term, Eddie George saw the economy grow consistently every quarter. At a speech in 1999, he was able to boast that it had expanded every quarter for seven years. By the time he stepped down in 2003, after a decade in the post, he had presided over 40 consecutive quarters of GDP growth. However, he later admitted that the Bank had deliberately stoked the consumer boom that led to spiralling house prices and personal debt in order to stave off the onset of recession. “We knew that we were having to stimulate consumer spending,” he said. “We knew we had pushed it up to levels that couldn’t possibly be sustained into the medium and long term.” In the late 1990s George remarked that job losses in the north of England were helping to bring inflation under control
Saturday, April 18, 2009
Governments special liquidity scheme runs into new problems with downgraded building societies
Times: Bank of England holds crisis talks with seven building societies
Recent credit-rating downgrades of building societies last week threatens to breach the terms of the government’s Special Liquidity Scheme, the Chelsea has already breached the terms of the scheme and others namely the Yorkshire, Skipton, Coventry, Newcastle, Norwich & Peterborough and Principality are in danger of breaching the terms of the scheme annd may be forced to hand back cash to the Bank of England. The six have 30 days to negotiate a deal with the ratings agency Moody’s and the regulators.
Corruption stink
Times: Brian Cowen in legal tangle over his British investment property
Brian Cowen, the Irish prime minister, is facing legal action in the English courts over his ownership of a buy-to-let flat, which his freeholders say he is illegally sub-letting to Leeds University. The purchase of the student apartment block, which cost around £12.5 million, was financed through mortgages with Allied Irish Bank, whose share value plunged 98% last year because of bad property loans. The current market value of the flats is half the 2005 sale price.Last September, amid fears that the bank was about to go bust, Cowen stepped in with an emergency government loan. The freeholder of the apartment block alleges Cowen has breached covenants by subletting the flats to Leeds University without permission, and has not paid invoices for ground rent and management fees
Cheap credit depends on small state sector
WalesOnline: Welsh academic’s lesson from history suggest austerity will follow Darling
Comparison with post-war interest rate management to enable cheap credit. Suggests that low interest rates and low inflation must be credible over the medium term, otherwise investors will keep away from the markets. Between 1947 and 1949 such belief was lost and the pound lost a third of it's value (sound familiar) as yields on long term gilts rose to 3.6% away from the 2% target. For the current government to avoid a similar outcome then “the only way in which a cheap money policy can be maintained is through the achievement of a sufficiently large budgetary surplus”.
More desperation
Telegraph: Stamp duty cut to be extended to end of year
The freeze on stamp duty on properties up to £175,000 will be extended until the end of the year, Alistair Darling will announce in next week's Budget. Nearly 35,000 first time buyers are likely to benefit from the move which the Chancellor hopes will give the housing market time to recover. The threshold at which buyers must start to pay the duty was raised from £125,000 to £175,000 last September and was initially planned for one year. The extension would cost the Treasury around £100million and Mr Darling has been advised that keeping the new rate in place, rather than reverting to the old threshold in September, will continue to aid any tentative housing recovery. Some mortgage brokers have been calling on Mr Darling to temporarily scrap all stamp duty on residential property.
If only New Liebor understood GNH instead of GDP...
Centre for Bhutan Studies: Gross National Happiness Website
"Happiness is a subjectively felt public good. Happiness is a public good, as all human beings value it. Hence, the government of Bhutan takes the view that it cannot be left exclusively to private individual devices and strivings. If a government’s policy framework, and thus a nation’s macro-conditions, is adverse to happiness, happiness will fail as a collective goal. Any government concerned with happiness must create conducive conditions for happiness in which individual strivings can succeed. "
Advice from an expert gold seller
This is Money: Gordon Brown on house prices
This is a bit old and I'm surprised it wasn't posted on the blog earlier but it's good for a quick giggle. Gordon Brown says that "Supply has not kept up with demand for housing. Over time, as the housing market starts to recover, the sense that we need to build homes would grow. That must make you more optimistic about the housing market in the years to come."
The building societies may be too exposed
Telegraph: Building societies ignored warnings from Financial Services Authority on lending
Building societies ignored repeated warnings from the Financial Services Authority to clean up their books without any censure, the City watchdog revealed yesterday ... Seven of the top 15 mutuals increased their commercial property books by 15pc or more between 2006 and 2007, according to data from accountants KPMG. The news strengthens the case made by a FSA whistleblower, who told Liberal Democrat Treasury spokesman Vince Cable that societies "have become highly vulnerable due to lowered asset quality, increased reliance on wholesale funding liabilities, and under-capitalisation".
Affordability at 25 year high?
This is Money: Homes are cheap, if you have £50k deposit
Homes are now more affordable than the 25-year average, a new report says, but an average buyer would need a £50,000 deposit to take advantage .Halifax's Affordability Review report, released today, says typical mortgage payments for a new borrower have fallen from a peak of 48% of earnings in September 2007, to 31% in March 2009. However the figures are based on a buyer with a 30% deposit.
'Well he would say that, wouldn't he?'
Times: Recovery on the horizon for banks and the Budget
'Alistair Darling will tell Britain to invest in the recovery next week as he balances the worst economic figures since the Second World War with confidence about the upturn. The Chancellor’s cautiously upbeat message that the economy will bounce back to health next year, after similar remarks from President Obama, will come amid signs that the City is detecting the first signs of “green shoots”.'
Friday, April 17, 2009
Government hints at funding broadband for rural homes
Times: Mandelson hints at £1bn plan to supply rural homes with superfast broadband
Mandelson hints at £1bn plan to supply rural homes with superfast broadband, ministers are considering substantial cash investment to avoid a situation where only half the country is easily able to download film and television programmes. Mandelson added that government cannot be indifferent to wider national needs for a globally competitive economy", and believes that taxpayer-funded spending on high-speed internet could be sold as part of a wider job creation scheme. Sounds like a state subsidy to prop up ailing B.T. with more non-existant cash the borrowing (or printing) of which will eventually be sucked out of our pockets.
ITV1 8pm Fri 17th
Tonight with Trevor McDonald: Empty Home Syndrome
As the number of empty properties in the UK is predicted to top one million this year, Jonathan Maitland investigates why so many homes lie unused when this country faces an acute housing shortage and asks what is being done to tackle the problem.
Not earth shattering, but fairly bearish
The Times: The 10 places where asking price are falling the most
"RICS said that the number of new buyer inquiries rose for the fifth consecutive month in March and at the fastest pace since September 2003. The increase in demand led to a rise in sales, raising hopes for an end to falling house prices. However before you get too excited, bear in mind that transactions are still near historic low levels. Vendors are still being forced to cut asking prices before potential buyers will even consider a viewing... Here are the 10 towns or cities where asking prices fell most IN MARCH, according to property website Globrix."
Round 2 ding ding
Las vegas sun: Las Vegas braces for commercial foreclosures
A tsunami of commercial real estate foreclosures is on the horizon and is threatening banks and undermining developers who are already struggling with high vacancy rates.
A large dose of reality (no green shoots) for the housing market
FT: LTV rates hit two-year low as deposits soar
First-time buyers and remortgagers now need a 30 per cent deposit to easily secure a mortgage, as average loan-to-value (LTV) rates hit a two year low in March. Figures released by Moneyextra.com today (17 April) reveal that the actual number of mortgage loans available have also hit a two-year low. The Moneyextra.com mortgage index found that lending to first-time buyers with deposits of five per cent was now practically non-existent. Supply of borrowing for first timers with a 10 per cent deposit has also decreased 84 per cent compared to the same time last year.
Higher taxes lower revenue
Reuters: The toughest Budget ever
At some point taxation affects consumption, and when consumption drops the amount of revenue you receive with higher taxes becomes lower than you would receive with moderate taxation. The same is true for income tax, income taxes are ultimately covered by the purchase price, so to the consumer VAT and income tax both serve to raise prices and reduce consumption. Given the high level of taxation in the UK, I think the question should probably be asked, is the government already receiving peak revenue from the economy? Is it actually possible to raise more revenue from the UK without a) the disaster of reducing revenue and b) damaging the economy in the process. If not, then we are in bigger trouble than we thought.
Planning the next housing bubble....haven't these idiots learnt anything?
Times: Bank's Barker backs 'risky' 100% mortgages
A member of the Bank of England's rate-setting committee said that mortgages which leave buyers with an immediate risk of negative equity should not be banned and that bank demands for big deposits from homeowners may have been "overdone."
If you repeat the message often enough...
Times: Signs point to economy turning corner, says BoE's Miles
Hopes were raised of an early economic recovery yesterday when David Miles, an incoming member of the Monetary Policy Committee (MPC) of the Bank of England, said there were signs that the worst of the British recession was over.
Economic and social myths of house ownership
Economist: Building castles of sand
A pair of articles that analyses the costs and benefits of ownership. A measured antidote to the nonsense served up in many of the newspapers.
Building Societies could be in trouble too
BBC News: Regulator accused of complacency
Heard this piece on Today this morning. It seems that building societies could have some of the same problems as the banks.
A Slow and Painful Decline
Home.co.uk: Market Prices Falling More Slowly
The UK housing market presents a mixed picture this month, consistent with sellers’ expectations of a spring bounce amidst desperate market conditions. Asking prices have held firm in 4 of the 9 English regions and Scotland. Greater London and the South East show small rises in asking prices for a second consecutive month. However, price-cutting is still prevalent and Time-on-Market indicators are still rising overall.
Green shoots? Or not quite yet...
BBC News: Are there any signs of recovery?
Views from a selection of economists on whether things are getting better already. Comfortingly, all but one are bearish. The ITEM club chap is talking boloney as usual. Unbelievable that someone can make a career out of spouting this rubbish: "we should be in recovery by the spring of next year...if a recovery does begin, the UK will be one of the best placed to take advantage of it, because of the fall in the value of Sterling". Gordon's Brown's lapdog?
Kate Barker defends her housing report
Spectator: Kate Barker responds to the Spectator Inquiry
What went wrong with the British housing market? Fraser Nelson interviews Kate Barker as part of The Spectator’s ongoing inquiry into the causes of the recession. Fraser concludes: She missed the elephant in the room: the problem of house prices wasn’t lack of supply, it was that there was that there was a asset bubble going on
Ratings agency pencils in 40% peak-to-trough house price falls
FT: Moody’s downgrades building societies
"Nine building societies, including Nationwide, have been downgraded by Moody’s amid concerns about their exposure to falling house prices and specialist mortgage loans. The ratings agency said it had made the downgrades after stress testing how mutuals would perform against a base case scenario of a 40 per cent fall in house prices from the peak of the boom. It also stress-tested a more extreme scenario based on a 60 per cent fall." Ah well, about five years too late, but hey...
You lot are so pessimistic...
The Times: FTB Bargains to be had
How to bag a bargain now that 'all but the most pessimistic' know that the market has bottomed out
Interesting blog showing data back to 60s
Ainsworld blog: Digging Deeper into House Prices - History
Personal blog that shows some interesting charts showing prices and income ratios all the way back to the mid-60s, and also includes a visual on what the futures markets expect over the next couple of years.
It's the unprecedented steps which are going to cause the 'greatest depression'
Telegraph: IMF warns over parallels to Great Depression
''The International Monetary Fund has warned of "worrisome parallels" between the current global crisis and the Great Depression, despite the unprecedented steps already taken by central banks and governments worldwide. This recession is likely to be "unusually long and severe, and the recovery sluggish," said the Fund, releasing two advance chapters from its World Economic Outlook. However, it warned there is a risk that it could spiral down into a full-blown slump unless further action is taken to stop "feedback effects" gathering force.''
Only 10% ? Do people really believe this stuff ?
BBC News website: Negative equity stops home moves
But it said two thirds of the 900,000 homes in negative equity had only a modest shortfall of less than 10%. That equated to an average of about £6,000 for first-time buyers in that situation, and £8,000 for the other home owners.
Thursday, April 16, 2009
The real story.....without Government embelishments...
Mail: More than a million homeowners are in negative equity - and another million 'are on the edge'
'More than one million homeowners are currently in negative equity because of the house price crash, official figures have revealed for the first time. Almost a million more are days away from being plunged into the same situation if prices continue to drop. '
Decent analysis of housing market
ROOF Magazine: Slide rule
This is a long one, but a decent analysis of the state of the property market. Conclusion is that the market most likely has a way to fall yet. There are a number of useful graphs and comparisons to previous crashes and on the whole it reads as a straightforward analysis of the current state of the market, which is a refreshing change from the yanking going on in the mainstream media at the moment.
Not sure that is true
Zoopla: Unsold houses are 'not unusual' and do not have 'stigma'
Not sure that I agree with this article. Having watched the same batch of houses on the market for the last year or so, on and off as they go under offer and fall through, change agents, lower prices slightly, personally I am sick and tired of them and even if they do slip down to a price that I would have paid in the past, I am bored and no longer likely to go and view them. They certainly seem stale and tired, and no longer of interest. Still everyone to their own method I guess.
Tip of the iceberg!
BBC News: Mortgage broker banned and fined
'Serious and blatant'
Copper Standard
Telegraph: A 'Copper Standard' for the world's currency system?
China's State Reserves Bureau (SRB) has instead been buying copper and other industrial metals over recent months on a scale that appears to go beyond the usual rebuilding of stocks for commercial reasons.
Nouvelle Vague
Yahoo Finance: Mall operator files for bankruptcy protection
The company had about $29.6 billion in assets and more than $27 billion in liabilities as of Dec. 31, according to documents filed with the U.S. Bankruptcy Court in the Southern District of New York A story worth following as a steer as to what will happen when commercial properties co's need to roll over debt over here. Will the state step in? If not its a fire sale and the problem is revisted on the banks.
More Property ramping publication
FT: House prices to start rising steadily as soon as October
Four million homeowners in the UK are playing a waiting game with the property market, watching for the best moment to trade up and cash in on cheaper home-ownership before prices start to rise. According to research from First Direct, these homeowners are now sitting on a savings pot of £20.2bn which is ready to be ploughed into the housing market when the time is right.The survey found that with the property market already showing small signs of recovery, the average Brit expects house prices to start rising steadily as soon as October 2010. One in six (15 per cent) of respondents said that house prices would return to steady growth by the end of 2009. However, a further 16 per cent expect to wait until after 2012 to see steadily rising prices again.
Rome all over again. Can we stop it?
Martin Armstrong on scribd.com: The Decline and Fall of Western Civilization
The Decline and Fall of Western Civilization because of debt and taxes AGAIN. Can We stop it?
Have you felt a backlash, personally?
The Grauniad: TV presenter and property guru Kirstie Allsopp on... the real causes of the housing crash
"No. People are so kind. If I had a pound for everyone who said, "You look so much younger and thinner in real life" ... Yes, thank you. I know you're being nice, and I'm going to take that as a compliment, but can you not say I look fatter and older when you see me on television?" She should get out more...
Carry on ramping
Express: Housing slump nears end
THE housing slump is coming to an end as record low interest rates, bargain prices and more readily available mortgages tempt buyers, experts believe.Economists say a hat-trick of measures are driving house price recovery. Repeated cuts by the Bank of England have seen the base rate drop to 0.5%, pushing mortgage rates to their lowest level in five-and-a-half years. Secondly, house prices have fallen by an average of 20% since their peak in 2007, making homes a lot more affordable. And, finally, there has been a gradual loosening of the purse strings by lenders. Stuart Law, chief executive of property investment company Assetz, said: “All indicators now suggest that we are closing in on the bottom for house prices." Have Your Say is unavailable for this story.
Keiner on GS new profitability
Bloomberg.com: Goldman Tarp Repayment is a Fairytale
Well spotted Becky - see what this economist thinks of the Goldman Sachs "recovery"
Property getting crushed although the markets seem to have their rose tinted glasses glued on!
Bloomberg: General Growth Filing Says Eurohypo AG Owed $2.6 Billion
Don't bother clicking on Link as this is the only text. General Growth Properties’s bankruptcy filing lists Eurohypo AG, a unit of Commerzbank AG, as its largest unsecured creditor, with claims totaling $2.6 billion under two loans. The Chapter 11 filing today in U.S. Bankruptcy Court in Manhattan lists debts to noteholders totalling about $4 billion.
A prominent American risk analyst says optimism about economic recovery is delusional because the ec
Abc: Financial optimism 'delusional', analyst says
The warning comes as Americans turn to their leaders for reassurance that the chill of recession is giving way to the green shoots of recovery.
Normal ramping service resumes at The Times
Times Online: Property sales come to life as hopes rise for end to falling prices
RICS say new buyer inquiries rose for the fifth consecutive month in March and at the fastest pace since September 2003. CML say there was a 4% rise in the number of mortgages approved between January and February. So 4% represents salvation for the housing market?
Wednesday, April 15, 2009
This sucker's going down
Telegraph: US housing data puts Obama's hopes on hold
The number of US citizens losing their homes leapt by 44pc last month, as banks pursued delinquent borrowers after federal mortgage lenders Fannie Mae and Freddie Mac lifted temporary bans on foreclosures. A survey by Foreclosures.com found that 175,199 homes were repossessed by lenders in March. In spite of major banks promising to work with troubled mortgage holders to keep them in their homes, almost 370,000 families have lost their homes so far this year.
If it's so great why are you leaving?
Telegraph: Terraced house on market for £100m in London
The property, if it was sold for £100 million, would be the clearest sign that house price crash – the worst since at least the Second World War – might be over. The seller is a Lebanese private developer. It has more than 21,000 sq ft of living space and every conceivable luxury, but estate agents are baffled at the record asking price considering the collapse in the housing market. Charles McDowell, a property agent, said: "At the 'uber-prime' end of the market, with few exceptions, buyers expect a price adjustment. To ask £100 million for such a house and expect it to be paid is ridiculous." On the opposite side of Belgrave Square is a house for sale at £80 million; this one was bought by a Ukrainian philanthropist, when the London market was near its peak in February last year.
Massive increase in mortgage application rejections
The Telegraph: Mortgage rejections increase fourfold
Nearly 9pc of vetted mortgage applications are being rejected this year compared to just 2.3pc in 2007, according to moneysupermarket.com. The website said that all the applications were qualified against the lender's criteria prior to submission and on paper appeared to fit. However, lenders still found reasons to reject them. Louise Cuming, head of mortgages at moneysupermarket.com, said: "Lending criteria has become too strict – even vetted applications that we would expect to be accepted without a hitch are being rejected."
Futures show 18% falls expected over next 12 months
Tradition: Sharp Rise in Forward House Prices
Our indices still show future house price values below the current index level for a decade to come and with rising unemployment and poor mortgage availbility, it is still too soon to call the bottom of the physical housing market. But look… future house price expectations HAVE risen and maybe more importantly sentiment HAS moved. The City may be sending a signal that the over-pessimistic phase of the cycle has passed.
Floyd Norris of the New York Times noted that Goldman Sachs used a more prosaic trick having nothing
Huffingtonpost.com: On Goldman Sachs Ditching December Both banks have used odd accounting tricks designed to obscure the truth of their status to investors.
ournalist Jonathan Weil, who helped uncover the Enron scandal, pointed out that much of the increase in Wells Fargo's earnings came from a new accounting term called 'Level 3' gains and its application to Wells Fargo's mortgage servicing portfolio. "So what are Level 3 gains?" asks Weil. "Pretty much whatever companies want them to be."
Martin Armstrong: Looking Behind the Curtain: The "Real" Conspiracy
Gold-speculator.com: Looking Behind the Curtain: The "Real" Conspiracy
Martin Armstrong on Goldman Sachs Consipiracy, how Putin became president, and how he was put in jail with out any chance to defend himself.
A another view of the downgrades - with some response from the building societes
Guardian.co.uk: Building societies' financial ratings downgraded
Building societies holding the accounts of millions of British savers were savagely downgraded to near junk-bond status by ratings agency Moody's today. In a shock warning that the sector is heading for potentially massive losses from the housing market crash...
'Interest is strong in every region'
RICS: Key indicators show signs of improvement
More green shoots. Spring recovery. HPC cancelled. Or just a dead cat bounce?
There is No Floor on House Prices, Only End of Recession will stop the falling
Write About Property: UK House Prices will Fall for as Long as Unemployment Rises
Almost everyone seems to have developed the belief that a further 10% will be enough for the UK housing market to hit rock bottom. This will mean a 26.5% drop from peak if you go by the current Land-Registry index, and 30 - 35% if you go by some of the other indexes floating around. Several reports have recently either forecast and/or said that this recession will be/is equal to or worse than the great depression of the 1930s.
Ratings actions based on stress-testing a peak to trough decline in house prices of 40%
Citywire: Moody's downgrades top building societies
Ratings agency Moody's has slashed its credit ratings on a number of building societies after warning of further losses to come as people struggle to pay their mortgages. Moody's has downgraded a total of 16 building societies, including groups such as Abbey National, Alliance & Leicester and Nationwide, in anticipation of further pain to come in the UK housing market as a result of the global economic crisis. It has cut both its Bank Financial Strength Rating's (BFSR) on all the firms, as well as reducing some of its senior debt and deposit ratings.
Current Optimism Over UK Housing Market Built on Sand
Write About Property: Latest Reports on UK Property Market Overly Optimistic
Yesterday experts predicted that the UK property market would bottom and the recovery would begin all in the next few weeks. The press have been quick to pounce on his optimism, but in reality that is all it is. My worry is that their early optimism could be detrimental to the market and actually crush the very positive signs that have made them so optimistic.
Reverse VIs
Guardian: The people paid to talk down house prices
For years estate agents, banks and Kirstie and Phil have talked up property prices. Every time there's a smidgen of evidence that the property market might be cranking up again, there's a flood of press releases from the usual booster merchants, all desperate to spot and promote "green shoots." My personal favourite is Assetz, a big promoter of buy-to-let in Britain. Its MD Stuart Law stated in July 2007 that prices would rise 8% for the next five years, and salivated at the potential rental rises from FTBs being priced out. The arch property pusher's latest release is headlined "All signs point to imminent house price recovery" with "savvy cash buyers" leading the way. Now there is a new breed of public relations specialists talking the market down - property "rescue" schemes
One for S2R1
Moneyweek: Watch out this weekend
27 February 2007 is not a date that stands out. It is not indelibly imprinted on the minds of millions; it does not carry the pain or notoriety of 9-11; unlike 'Black Wednesday', it has not been nicknamed Nor, like 31 August 1997, The Day Diana Died, did it send a nation into mourning. Yet the repercussions of this day are, quite simply, enormous. They may be felt for decades, and possibly mark the beginning of the next Great Depression. For this was the day the greatest credit bubble in history peaked and popped. And one man predicted this turn as far back as the 1970s. He is Martin Armstrong. What's more, another one of his turn dates is coming this weekend …
House prices down 12% on last year as values plummet at record pace
Daily Mail: House prices down 12% on last year as values plummet at record pace
A counter to all the bullish articles we've seen recently.
Old article but valid
Marketwatch: Five reasons not to buy a home this year
Homes are more affordable, but don't rush -- prices won't skyrocket soon
UBS to cut nearly 9000 jobs
Market Watch: UBS faces $1.8 bln loss, will cut nearly 9,000 jobs
LONDON (MarketWatch) -- Shares in Switzerland's UBS fell nearly 9% Wednesday after the struggling bank said it lost nearly 2 billion Swiss francs ($1.8 billion) in the first three months of 2009 as it planned another round of cost cutting and nearly 9,000 job losses.
House Swap
Telegrapraph: Number of house swaps rise by more than 400 per cent in a year
The number of home owners who are resorting to swapping their properties as a means of selling them has jumped by more than 400 per cent in the past year, figures indicate. There are currently 973 properties listed for home swaps on free classifieds website VivaStreet.co.uk, compared to just 180 properties this time last year, an increase of 441 per cent. The website has also seen a significant rise in visitors viewing home swapping ads, with 21,231 views recorded. In March 2008, compared to 102,009 last month, an increase of 380 per cent.
HBOS offers lifeline for existing customers?
Telegraph: Halifax to rescue borrowers in negative equity with 120pc remortgages
One of Britain's biggest mortgage lenders is offering loans of as much as 120pc of the property value to existing customers coming to the end of their current deal. HBOS, which is part of Lloyds Banking Group, will consider offering a new mortgage to customers in negative equity whose existing deal, such as a fixed rate, is about to expire. Normally such borrowers would see the rate they pay revert to the lender's standard variable rate (SVR) and would be unable to remortgage if the new loan were greater than the current value of the property as a result of the decline in house prices.
Back to 6x earnings - what a relief for everyone
Telegraph: Economists hail first green shoots in housing market
Numbers rose from 23,400 loans in January to 24,300 loans in February, a 4 per cent increase. However, the lack of affordable mortgages remains "a barrier" to most first-time buyers who typically had to find a deposit of 25 per cent, a record amount, the CML explained. RICS said the number of properties being sold by estate agents rose from 9.6 properties during the three months to February to 9.7 properties during the three months to March.
RICS says house prices stabilizing
Reuters: House prices fall slowest since February '08
The Royal Institution of Chartered Surveyors' monthly property survey reported that its seasonally adjusted house price balance rose to -73.1 in March from -78.1 in February.
RICS - Housing Market Bottom?
The Market Oracle: UK Housing Market Bottoming?
The Royal Institute of Chartered Surveyors (RICS) is reporting that the average sales per surveyor increased for the first time since late 2007 as the number of sales ticked up to 9.7 from a low of 9.6 last month as record low interest rates of 0.5% have cut the mortgage servicing costs for homeowners coupled with the government running an unsustainable £160 billion per annum budget deficit.
Guess what the EAs are saying?
Guardian: View from the street - what estate agents are saying
"The market has more or less reached the bottom, so a lot of people are moving up the market if they have got good jobs and their mortgage is going down. HSBC have introduced their 90% mortgage- that will help, finding the 10% is ok, parents will help," "It is picking up, people would prefer to put their money in to property rather than a bank." "People who sold to rent 18 months ago are now coming back in to the market, the public realise this is a good time to buy a house. The most important thing is getting your hands on a mortgage, if you can do that then you can buy a house." "First-time buyers seem to be coming out again now. They are being helped with 10-20% deposits by their parents as they can see now is a good time to buy." "Prices have reduced as low as they are going to."
Just draw a line under it!
The Times: Lehman yields bonanza for the professionals
“This is without doubt the most complex and challenging insolvency the UK, and arguably the world, has ever seen. “In part how long it takes depends on how quickly ‘the Street' provides the data we need. But could it be longest ever? Yes, it could.
Tuesday, April 14, 2009
While the bank is returning the government's $10 billion, why not also return the $13 billion it got
Business Week: Goldman, Give It All Back
As we have seen in this financial crisis, some contracts can be broken. Maybe it was a smart move for the government to indirectly bail out AIG's trading partners to prevent a systemic financial collapse. But the government didn't have to make firms such as Goldman completely whole by paying face value for the CDOs that AIG had insured. If nothing else, maybe Goldman should now take the haircut it probably should have taken on those CDOs at the time of the AIG bailout. The bank could start by offering to give some of that $13 billion back, too.
Enslave yourself now
Daily Mail: Boost for first time buyers as HSBC launches cheaper loans
HSBC's shock decision to slash the price of home loans for buyers with just a 10pc deposit could breathe new life into the ailing property market. Until now, typical interest rates for buyers with small deposits had barely budged since last summer, despite the Bank of England base rate being slashed. HSBC's new deal, at 4.99%, is a full percentage point below its nearest competitor. But those who are turned away from the usually conservative lender will find the next best deal is much more expensive. Money Mail figures show that first-time buyers are expected to put down a whopping £30,238 deposit on average if they want to get a home loan.
Pension lifeboat may need to be bailed out
Guardian: £240bn final-salary pension deficit threatens to swamp lifeboat
The Pension Protection Fund has become a financial and political timebomb and the deficit is already "significantly greater than the quantitative easing package" and "on a par with the level of support being put together for the banking system". Well at least there is nothing safer than bricks'n'mortar; it's me pension innit!
A warning to the overly optimistic - we're nowhere near out of this mess yet......
The Times: Green shoots a mirage in economic desert
The yearning for the economy to “get well” this soon is wholly understandable. Yet to claim that recovery is already at hand is akin to arguing that the patient is out of danger when moved from intensive care to the “high-dependency unit”. The painful fact is that economies are far from out of danger.
Raising the bar on spin.
MarketWatch: Poland asks for $20.5 billion credit line from IMF
Dominique Strauss-Kahn, the IMF's managing director, welcomed Poland's announcement. "I am very pleased by this positive response from Poland to the invitation I extended to strongly performing economies to use this new instrument to bolster international confidence," he said in a statement.
Location lazarus
DAILY MAIL: Location location location
i fought tooth n nail......... whoooooaaaarr rise lazarus, your not dead yet.....
Banks expression of free speech
Telegraph.co.uk: Goldman Sachs hires lawers to shut down blogger's site.
Watch out all at House Price Crash.
First-time buyers need to find a record typical deposit of 25%
BBC: Mortgage lending 'rises slightly'
The number of mortgages handed out by lenders rose slightly in February but activity in the market remains weak, according to a lenders' group. Loans for house purchases in February in the UK rose to 24,300, up by 4% compared with January, the Council of Mortgage Lenders (CML) said. But the group warned that activity in the market remained at a "very low level historically".
The bankrupt bank, in the throes of paying off creditors, acquired uranium cake “under a matured com
Bloomberg.: Lehman Sitting on Bomb’s Worth of Uranium Cake as Prices Slump
“We plan on gradually selling this material over the next two years,” he said. “We are not dumping this on the market and have no fire-sale mentality.” Forced to Liquidate
Does anyone of this timelime mirror the 90's 2000's?? Comments please!!!
Hyperhistory: TIMELINES OF THE GREAT DEPRESSION
Over the decade, about 1,200 mergers will swallow up more than 6,000 previously independent companies; by 1929, only 200 corporations will control over half of all American industry.
The plight of the downsizers: Record number of middle classes desperate to sell homes
Mail: The harsh reality in UK housing ....
Record numbers of middle-class homeowners are trying desperately to sell and move to smaller properties. As a 'white-collar recession' begins to bite deeply, new figures show a sharp jump in families looking for a quick sale on houses worth £500,000 or more. Experts say the downturn is entering a new phase and even high earners face losing both their jobs and their homes.
'Portfolio' sounds more impressive than 'debt'
Homemove.co.uk: Landlords opt for distressed sales as refinancing tightens
Property Portfolio Rescue (PPR), which says it offers services to those “wishing to divest their residential property portfolios quickly and discreetly”, has reported a sharp rise in inquiries. The firm received 3,321 approaches in the first three months of 2009 (up from 1,949 in the first quarter of 2008) and attributes the rise to a surge in the number of buy-to-let landlords unable to refinance mortgage deals, plus an increase in middle-class homeowners contemplating distressed sales.
Expectations vs reality = Gridlock
Telegraph: Quarter of houses unsold after six months
More than a quarter of houses up for sale have been on the market for more than six months, research showed today. Around a third of flats and 26 per cent of houses have failed to sell during the past six months, while 10 per cent of flats and 7 per cent of houses have been on the market for more than a year, according to property website Globrix.com. The group said despite interest from potential buyers picking up during the past few weeks, falling house prices and the shortage of mortgages meant sales had remained static.
Telegraph and Lombard Street Research say all is well
Telegraph: Housing slump will end by Christmas, predict economists
"In a forecast that will reassure homeowners, Lombard Street Research (LSR) has declared that house prices are now affordable, and forecast that the worst of the property crisis is over. Its affordability index, produced in conjunction with The Daily Telegraph, shows that for the first time in five years house prices throughout the UK are better value than their long-term average." Time to buy? I'll just watch and wait, thanks!
Monday, April 13, 2009
Are Nationwide falseifying figure
Nationwide House price Index July 2007: Nationwide house price Index Jully 2007
Are the Nationwide falsifying their long term trend figures? If you scroll down in the press release from July 2007, you will notice they are reporting a long term trend of 2.7% a year. Since then we have had a fall of nearly 20% and they are now reporting a long term trend of 2.9% as featured on the right hand side of this website.
More repo's
The Independent: Surge in middle-class homeowners seeking help
The collapse in the housing market and the economic slowdown is increasingly taking its toll on middle-class homeowners, a company that specialises in buying properties from cash-strapped sellers said today.
Former estate agent sees her BTL flat trashed on facebook
Telegrath: Woman spots her rented flat being destroyed on Facebook
"I recognised it as my flat straight away and I couldn't believe what I was seeing - people jumping on the furniture, dancing on the kitchen table, holes in the walls and smashed TVs. It looked like a slum." 26 year old Miss Lorimer refused to name the lettings agency or the tenants for fear of "recrimination"
Remember this lady?
BBC: Property shock hits first time buyers
I first met Dawn Burden in August 2007, when filimg The Truth About Property, back when the credit crunch seemed confined to the financial industry. Back then she was a budding FTB who had camped out all summer, queuing to purchase a new build property. She is now in negative equity. She is also reaching the end of her 2-year fixed rate deal at 5.8%. You might think she would have lower monthly payments by going on to the lenders SVR. Far from it. Dawn borrowed at 95% and is now seen as high risk. Her interest rate would go up to more than 7%. She is already struggling to pay the mortgage, even with her sister's help. At 25, instead of having fun she has had to cut back on going out and buying clothes
No distressed sellers?!?!?!?
Bloomberg: More Debt-Ridden British Homeowners Seek Exit, Company Says
More debt-saddled homeowners and landlords in the U.K. want to sell their properties, according to Property Portfolio Rescue, a company that buys property from distressed sellers. The number of people seeking to sell property through the company rose 70 percent to 3,321 in the first three months of 2009 compared with the period a year earlier, the company said in an e-mailed statement.
No matter what they are saying, It's still not all rosy
Nouriel Roubini's Global EconoMonitor: According to press reports the IMF may allegedly be increasing its estimate of global bank losses to $4 trillion, a figure consistent with estimates by a variety of independent bank analysts
The RGE Monitor has been suggesting for a while that "total loan losses by US based financial companies could peak at about $3.6 trillion. Essentially, it suggests that the United States' banking system if virtually bankrupt. The IMF is now also catching up and suggesting a figure $4 trillion. It now looks like the G20's $1 trillion injection will be a drop in the bucket. Hold onto your hats - it's not looking pretty at all.
I simply cannot believe that a 2.5% cut in VAT has had this effect.
BBC News: Cut in VAT 'boosts retail sales'
The government's much-criticised cut in VAT is working and has led to a big boost in consumer spending, according to a leading economics consultancy. The Centre for Economics and Business Research (CEBR) says that the cut, which took effect on 1 December 2008, has led to £2.1bn of extra sales.
The UK might not be such a
Happy days! we still make enough stuff to see us out of recession: Daily Telgraph
Roger Bootle is one of us! He is prominent in his views that House prices have much further to fall. However, he has different views on British manufacturing and the exchange rate and how we might come out of this recession. There is a view by many that 'because we don't make anything and sterling has been devalued we are doomed.' Not necessarily so! This is the best article I have read yet that articulates why, although we are heavily in the SH*!?, we are not alone and may actually benefit in the longer term.
Sunday, April 12, 2009
David Smith thinks we may overshoot
Times: A question of over-correction
Everybody agreed that house prices were overvalued before they began to fall more than 18 months ago [O RLY?]. The question was how they would work off that overvaluation: gradually or suddenly. The Nationwide building society suggests that, by the end of last year, the inflation-adjusted average house price was just £5,000 above the long-term trend . The further fall in prices during the early part of this year means that house prices are now back on trend. [the trendline having been dragged upwards over recent years by rampant HPI] Meanwhile Halifax says the house-price-to-earnings ratio has fallen to 4.34 - within 9% of the long-term average.
Expect Property Prices to Crash soon the link said
Cebr: Tax Revenue from Financial Service Sector down £28 billion
This article was not from today but did a search for CEBR on Yahoo and the Yahoo heading for this article was " Expect the housing market to crash soon". CEBR in February said they saw:" 25 per cent drop in prices from the coming level and a 40 per cent drop in total – with stagnation through 2010 and 2011 and prices still below 2003 in 2013. " Yet it was the CEBR report that gave rise to the new reports all headed "Prices are Rising". This article said govenment to lose: 9 billion in corporation tax revenue, £10 billion from less income tax and National Insurance contributions, £2 billion from stamp duty and £3 billion from withholding tax. Adding in all the other sources of revenue, the total tax take is forecast by cebrto drop from £67 billion to £39bn and be long lasting
More bail out nonsense
This is Money: Car scrapping £2,000 bounty gets green light
Motorists will be promised a £2,000 bounty for scrapping old cars in the Budget, ending months of debate between MPs and the motor industry, it has been claimed. A controversial 'scrappage' scheme will finally be announced by Chancellor Alistair Darling in the Budget later this month, in a move that will mirror a successful German scheme.
Times going to extraordinary lengths to smear banking industry collecting their debts
Times: Lloyds bank staff ‘puts frighteners’ on debtors
Perhaps Lloyds should put an undercover reporter on the Times newsdesk to root out property-market bias and uncover the many vested interests there ... ?
Bovey Homes
The News of the World: THE GRIM REPOS
CASH-STRAPPED Anthea Turner and husband Grant Bovey are preparing to profit from other people's misfortune-by snapping up repossessed homes. Their last property firm went bust just last December, leaving creditors £389,648 out of pocket. And Bovey has FOUR OTHER failed property companies to his name. But the undaunted pair-on Hell's Kitchen from tomorrow for a rumoured £100,000 fee-are gleefully rubbing their hands in anticipation after lodging official papers for new firm The Distressed Property Company Ltd.
Your six weeks are up Rosie
Housepricecrash.co.uk: Rosie Millard buys a house
"Now that I’ve got a £1m wreck on my hands, what’s the plan? Well, lying down in a darkened room, struggling to comprehend the notion that I have gone mad and, what’s more, have done so during a recession, was obviously the first thing to do. The second was sorting out the finances. Not easy. The rules of the auction room dictate that you have six weeks to finalise everything, or you lose your deposit." Sorry, this is not a normal news article but a little reminder for Rosie. I am waiting to see her next column with great interest ...
The debt party turns nasty
The Times: Lenders accused of dirty mortgage tricks
Halifax, Britain’s biggest lender, has been accused of undervaluing customers’ properties when they come to remortgage, forcing them on to more expensive deals. Brokers say borrowers may see as much as 40% wiped off the value of their homes, although prices have fallen by an average 21% from their August 2007 peak, according to Halifax’s own house-price index.
Saturday, April 11, 2009
Why would a strong bank do this?
BBC: Barclays' painful deal
Barclays says that it has sold iShares for £3bn. But it's not a sale in the sense that most of us would recognise. Because it has lent the buyer £2.1bn of the purchase price.
A study of why repossessions happen
Calculated Risk (blog): Fed Paper on Reducing Foreclosures
1. Income multiples don't matter so much - what matters more is income volatility. People with highly volatile incomes are more likely to default. People with stable incomes don't default. 2. Banks prefer forcing repossession instead of debt forgiveness, even if it means selling the house at auction and not getting much for it. This deters people from defaulting and prevents moral hazard. 3. Negative equity predicts behaviour. When homeowners lose their jobs, if they have positive equity they sell; if they have negative equity they default. "Loans on high income multiples were an enabler for speculation during the housing bubble, and this speculation pushed up house prices. The prevalence of loans on high income multiples was evidence of a bubble and a good predictor of a housing bust."
Taxpayer funded bribe to scrap old cars
Thisismoney: A £2,500 handout to scrap your old car
Sorry if this has been posted before, just saw something in a newpaper headline at the supermarket this morning. Carmakers have been lobbying the gov to adopt a scheme similar to that in Germany, where motorists are paid to scrap older cars, to stimulate the carmaking industry and save the planet by reducing emissions. And our gov -always ready to bail out their mates with taxpayer money - are actually thinking about it. Unbef**kinglievable, the utter waste....
Average weekly wages fall for first time since 2001
The guardian: BT cuts contractors' pay by up to 30% amid growing wage squeeze
Thousands of jobs have been cut in the construction and financial services industries, while those who still have jobs are likely to see pay frozen, or even reduced, in the coming months. Firms run under partnership, such as legal practices, have also seen salaries come down. Many cash-strapped firms have also cut back on contractors or stopped using them altogether to save money. BT has already made about 6,000 contractors redundant over the past few months as part of its plan to cut 10,000 staff. Those who remain with the business had until earlier this week to accept new terms, including lower rates of pay. Cuts are understood to have ranged from 10% to as much as 30%.
Interesting 'financial ecosystem' graphic
Zero Hedge: The Incredibly Shrinking Market Liquidity, Or The Upcoming Black Swan Of Black Swans
"Anyone who is doing anything sensible right now is either losing money or is out of the market entirely." These are the words of a quant trader, who is seeing something scary in the capital markets. Scary enough to merit a warning that we could be on the verge of another October 87, August 2007, or January 2008.
Yup, the editors who are not mortgaged to the hilt are holding the fort at The Times this weekend.
The Times: Don't be fooled by 'green shoots' in housing market
There is still some way to go before house prices stabilise and we are a very long way from a recovery. Facts, Mark Twain once observed, are stubborn things. But statistics, he noted, are more pliable. It is with this caution that we should observe the latest data on the housing market.
The Times' second bearish article in as many days.
The Times: Housebuyers may have to wait a year for better market conditions, say economists
Homeowners hoping for a revival in the housing market could have to wait at least another year, economists have warned, as rising unemployment, a squeeze on household finances and problems in the mortgage market continue to exert pressure on prices. Economists have cautioned that it is too early to say that the market, which has already fallen about 20 per cent, has turned a corner. Most are sticking to forecasts of a 25 to 35 per cent drop in prices from top to bottom. They think monthly mortgage approvals must double to 70,000-80,000 before prices can stabilise or start to rise.
Chocolate box cottages get crunchied
The Daily Telegraph: The Cottage Crunch
According to the article, prices of some of the UK's Prettiest Cottages are down massive amounts, despite all their charm and appeal. In place like Cornwall they have fallen 30% according to Knight Frank Residential Research. So if people can't sell their rural idylls, what on earth can they sell.
Battle lines drawn between R.I.C.S. and Estate Agents
The Times: Housebuyers may have to wait a year for better market conditions, say economists
More bear food - from the usual sources. And you can see why there's no love lost between the R.I.C.S. and the world of EA's with R.I.C.S.'s Jeremy Leaf telling how it really is: “Potential buyers continue to come through estate agency doors, but without mortgage finance, transaction levels are likely to remain close to all time lows." The R.I.C.S. is also pushing hard for regulation to the EA 'profession', provoking some strong anti-R.I.C.S. feeling on Estate Agent Today website. http://www.estateagenttoday.co.uk/News/Story/?storyid=1790&title=RICS_demands_Government_act_to_regulate_estate_agents&type=news_features
Friday, April 10, 2009
Glimmers of hope. Not.
MarketWatch: Budget deficit triples to $957 billion for year
The U.S. federal budget deficit rose to a record $956.8 billion in the first six months of the fiscal year after the government stepped up spending to cope with a recession that has depressed tax receipts, the Treasury Department reported Friday. Compared with a year earlier, corporate income tax receipts fell 90% to $3.4 billion.
Countering the ramping myths
Times: Is it time to buy property?
It's started again. People are talking about getting back into property.Nothing, it seems, can shake Britons confidence in bricks and mortar, even a near 20 per cent drop in house prices. But here are five myths about property that need to be challenged. Housing is not cheap. The recent falls have only sent prices back to 2004 levels, and even though affordability is improving it it still not back to the levels at the bottom of the last house price downturn. The average FTB house price to earnings ratio is 4.1, almost double the 2.1 it stood at in 1996. Japan, like Britain, is a crowded island. Japan's property bubble burst in the late 1980s and hasn't really recovered since. Inflation could return with a vengeance, meaning interest rates may jump again.
Bank makes profit
BBC News: Banks drive US stocks up sharply
US Bank shows record profts. "Part of the strong performance was due to the bank's acquisition of Wachovia, which was the fourth-largest US bank, after it almost collapsed last year." There's something very wrong about this....
£75bn today. How many £bn next?
Telegraph: Bank of England speeds up quantitative easing
The Bank of England is speeding up the pace of quantitative easing – accelerating the rate at which it is buying gilts in a sign that it may buy more than £75bn worth of government debt. The Bank's Monetary Policy Committee yesterday voted to leave interest rates on hold at 0.5pc and reaffirmed its commitment to spend £75bn of newly created money on bonds. The announcement caused gilt prices to rally as traders dismissed previous fears that the Bank's commitment towards quantitative easing would fall short of the original pledge of £75bn.
Transparency v Opacity
Bloomberg: Fed Said to Order Banks to Stay Mum on ‘Stress Test’ Results
April 10 (Bloomberg) -- The U.S. Federal Reserve has told Goldman Sachs Group Inc., Citigroup Inc. and other banks to keep mum on the results of “stress tests” that will gauge their ability to weather the recession, people familiar with the matter said.
Government spending not the answer.
Mail Online: How Ireland became an economic basket-case (...and the lessons for Britain)
Article on Ireland, who seem to be facing up already to what the UK must one day come to terms with. "As one Irish economic expert told me last night, pressing the spending button in an open economy like Britain or Ireland can never work. It only fuels more consumption and more imports." I think so too.
Commentary about US commercial & residential property
Mises blog: The Real Estate Bust Is Far From Over
"For those thinking that the real-estate bust is all over with — think again. The residential market has hit the ditch and continues to sink lower, but now the commercial property market is rolling over and will take many lenders down the drain with it ... A Vegas appraiser who lived through the 1980s Texas property meltdown echoes Miller's view, remembering that it took property owners in Texas back then years before they figured out that their property values weren't coming back any time soon."
How to win the next general election...
Times: Mortgage rates fall to five-and-a-half year low
'The interest rates on Britain's most popular mortgage deals have fallen to the lowest point in five-and-a-half years, revealing that the Bank of England's six successive interest rate cuts are making an impact on the housing market. '
May the ramping recommence
Times: After G20, reasons to be cheerful
At the first available opportunity, Old Noshbag Smith jumps back into his well worn groove. "However, the ratio of house prices to average earnings has now fallen to 4.34, says the Halifax, which is close to the long-run average of 4, and well down from its peak of 5.84 in summer 2007. This should add stability to the market. ".... Read my lips: High house prices not good for the majority !!
A more intelligent bullish outlook
Citywire: House prices may only have another 8% to fall
Ben Read, managing economist at the Centre for Economics and Business Research, says we may see house prices "likely to bottom out by the start of 2010." My question: is that nominal or inflation adjusted?
Express ramping? Who would've thunk it?
Daily Express: New hope on house prices
BRITAIN’S battered housing market is looking up as record low interest rates, bargain prices and more readily available mortgages tempt back buyers, experts said last night.
They predicted that the bottom of the market will be reached in the next few weeks and a recovery could be on the cards before the end of the year.
Stuart Law, CEO of Assetz, said: “All indicators now suggest that we are closing in on the bottom for house prices. Price falls, increasing buyer interest, historically low interest rates and early signs of increased lending are all beginning to have an effect. If things continue as they are, I expect to see monthly price rises across the board by the end of the summer.”
With your tax money
Sky News: Darling Urged To Spend £6bn On New Homes
Chancellor Alistair Darling is being urged to invest £6.35bn in new homes to give "immediate social and financial return" to the economy. Four leading organisations are calling for the Government to build 100,000 social houses in the next two years - creating 150,000 construction jobs.In a letter to Mr Darling, the group said: "Investment in housing in the coming Budget would save and create thousands of jobs and apprenticeships, maintain skills in the construction industry, and safeguard our ability to build the homes Britain needs over the long term."
Thursday, April 9, 2009
Deflation here and now
Mish via Market Oracle: Rampant Signs of Economic Deflation as Consumer Spending Contracts
Nice article reporting on art sales falling, empty seats at restuarants, boats too costly to keep littering coastlines, and shoppers looking for lower-cost own-brand products. Forget Peak Oil this is Peak Credit and Peak Earnings.
A true voice of reason speaks
FT: Ten principles for a Black Swan-proof world
I particularly like number 10. "...marginalising the economics and business school establishments, shutting down the “Nobel” in economics, banning leveraged buyouts, putting bankers where they belong, clawing back the bonuses of those who got us here,... "
One More For The Bears
Telegraph.co.uk: Roger Bootle on Housing
Roger Bootle, Telegraph columnist and economic adviser gives his view on the housing market. 4 1/2 minute video clip.
Interesting correlation between car market and housing market
BBC NEWS: New cars 'cheaper than used ones'
Slightly off-topic Replace Parkers with Haliwide, change cars to houses and it's the same VI spin.
Old timer who won in the world's longest bull market not doing so well in the bear market
BBC News: Buffett loses top credit rating
Has the old sage lost his touch? Not so long ago he was saying, "US equities have never been so cheap", or something along those lines, and buying in. But goes to show that even the best pundits can't keep getting it right forever.
From Celtic Tiger to Celtic Dodo
Moneymarketing: Fitch downgrades Irish banks
Fitch Ratings has downgraded both the Allied Irish Bank and the Bank of Ireland as it predicts further government bailouts. Fitch has today downgraded both banks’ Long-term Issuer Default Ratings to 'A-' from 'A' after yesterday's downgrade of the Long-term IDR of the Republic of Ireland from AAA to AA+. At the same time, Fitch has placed AIB's Individual Rating of 'D' and BoI's Individual Rating of 'C/D' on Rating Watch Negative. Fitch has also downgraded the banks' subordinated debt and hybrid instrument ratings.
What’ll happen to house prices? POLL
Money saving expert: What’ll happen to house prices?
can't believe so many think house prices will go up. Let's all vote and bring it back in line.
Downward trend continues
Mortgagestrategy: Average house price slumps to 2006 level
House prices in England and Wales fell by 0.9% in March, taking them back to March 2006 levels, shows the latest data from Acadametrics. This represents the thirteenth consecutive monthly price fall, with prices now 13.4% lower than a year ago. All ten regions in England and Wales are showing prices falling on an annual basis and the same is true on a monthly basis apart from Wales.
Interest Rates held at 0.5%
BBC: Bank keeps interest rates at 0.5%
The Bank of England has held UK interest rates on hold at 0.5%, in a widely expected move following a number of rate cuts in recent months. Rates remain at an all-time low after six cuts since October last year, when interest rates stood at 5%.
Obama covering up for the bad guys and supporting zomble banks
Bloomberg: Obama Stakes His Fortunes on Failed Banksters
It looks like it will all end in tears. Why doesn’t the Obama administration force insolvent banks and insurance companies to come clean about their losses first? It’s the “why” that’s so vexing. The who, what, when, and how are mere details, by comparison. More than anyone else’s, it should be in Obama’s political self-interest to accelerate the worst of the financial crisis and get as much of the inevitable pain behind us as quickly as possible. Every day he waits is one less day he will have between the time we hit rock bottom and the next election. And yet, Obama and his minions are doing all they can to delay the reckoning, which only will make it worse.
Crock does something right shock!
Telegraph: Northern Rock Mortgage Blow
Northern Crock customers who made overpayments on the (mis)understanding they could automatically borrow the money back are receiving a nasty shock when they are asked a series of perfectly reasonable questions about their ability to afford repayments. It turns out they never had an automatic right to borrow the money back, as it was always subject to NR's lending criteria. The best bit is that the Crock have finally tightened their income multiples. The bulls have finally had their no.1 food supply cut off!!
Will gold fall further this year?
Telegraph: Gold price to break $1,000 as people scrap gold jewellery for cash
Gold may reach a record this year as demand for a hedge against inflation outpaces an expanding scrap supply and weaker usage by jewellers, according to researcher GFMS. "You can't just increase supply of money like that and not expect there to be some consequences in terms of its value against a yardstick such as gold, the supply of which is increasing by about 1pc a year," said GFMS Chairman Philip Klapwijk. "That's going to start to worry investors as much or more than the security of their banks or financial instabilities."
Spin Spin Spin
Credit Crisis Diary 9/4/2009: Independent
Denial denial denial . Talk it up talk it up ....
China, the world's second largest economy by purchasing power parity, contributed over 10% to global
Forbes.com: The Outlook For China's Economy
Despite the fact that China's aggressive policy response included monetary easing, a scaling up of bank lending and a particularly aggressive scaling up of government investment to offset the contraction in private demand, there is an increased risk that China will grow only in the 5% to 6% range year-on-year in 2009, about half its average growth of the previous five years, and well below potential. Such a growth rate would increase pressures on China's government, as the hard landing has been accompanied by job losses and factory closures as well as implying that Chinese commodity demand could continue to be lower than recent trends.
Royal Mint figures released in September last year suggested that 2 per cent of £1 coins - around 30
Telegraph: One in 20 £1 coins could be fake, experts say
He said the figure could be closer to 5 per cent, meaning one in 20 coins are fake. In 2002, one in 100 £1 coins was a worthless fake and in 2007 the figure was one in 50.
Too late for this crisis but still a good idea
Times Online: Bank of England Governor Mervyn King weighs case for forcing banks to split their operations
The Bank of England is examining whether Britain's biggest banks should formally separate their investment banking and retail banking operations, The Times has learnt. News that such a move is under discussion at such a high level will send fresh shudders through the UK banking sector, still reeling from the fallout of toxic debt and the credit crunch. George Osborne, the Shadow Chancellor, hinted yesterday that a Conservative Government would break up Britain's nationalised banks and would also consider whether to block other lenders from becoming too big.
Does this describe you?
Telegraph: Number of grown-up children returning to live with parents triples amid recession
The number of 18-34 years olds living rent free with family and friends has more than tripled as the recession bites, new figures suggest. Numbers have risen to 1.6 million, up from 500,000 this time last year, according to the findings by Abbey Mortgages. A further 300,000 people aged 35 to 54 also find themselves in this position, with the South being the hotspot for so-called Kidults. Nici Audhlam-Gardiner, Abbey's mortgage director, said: "In the current climate many people have little choice but to return home or turn to their friends or family for somewhere to live at no cost. It means there's now more than 1.9million Kidults in the UK and with average rents of £441.78 per month, these individuals are saving £839 million.
Commercial property looking grim, rents down 27%
Telegraph: London's empty office space tops 10m sq ft
Approximately 11.9% of City offices are vacant – up by a tenth already in 2009 and more than double the 5.2% prior to the onset of the credit crisis in 2007, as increasing numbers of businesses collapse or downsize. It is first time since 2004 that empty office space has breached the 10m sq ft mark, according to research by property agent NB Real Estate. The slump is placing immense pressure on rents, which have now fallen 27% in the past year from an average of £65 per sq ft to £47.50. Increasing supply through the completion of new developments is hastening the fall in rents, although the situation is even more dire in the West End. The failure of a large number of hedge funds, many of which are based in the area, has pushed rents down 37.5pc to £75 per sq ft.
Prices fall 87% from peak
Carpe Diem (blog): Average Home Price in Detroit Falls to $12,669
According to the Michigan Association of Realtors (data here), the average sales price of a Detroit home fell to $12,669 in February, a 42.5% decline from the $22,016 average home price during the same period last year. For the entire state of Michigan, the average YTD home sales price has fallen by -31% to $85,892 through February 2009, compared to last year's average price of $124,618 for the same period. [Note: based on the graph in the article, I make that an 87% fall from the 2003 peak.]
HPC is over, 125% LTV will soon be back
Times: HSBC drops interest on low-deposit mortgages
Further signs of revival in the mortgage market emerged yesterday when HSBC unveiled competitive deals for borrowers with small deposits. Britain's biggest bank announced fixed-rate home loans available for up to 90 per cent of a property's value with rates starting at 4.99 per cent. The next best-buy rate for borrowers with a 10 per cent deposit is from Yorkshire Bank, at 5.99 per cent.
Wednesday, April 8, 2009
Pension Scheme Double or Quits
Times: Aviva calls time on free pensions for 16,000 staff
This is getting rather popular at the moment with insurers and may make the old chestnut of 'my house is me pension innit' (or string of BTL's) rear it's ugly head again. The title is a bit misleading though as 16000 does sound more dramatic than 7249 threatened with the boot from their final salary scheme unless they double contributions.
SDRs (Special Drawing Rights )
Telegraph: Sleepwalking our way towards a world currency
Which of these two scenarios would you feel more uncomfortable with: 1. That a shadowy sect of global leaders are conspiring together to set up this new world currency; or that, 2. Instead, clueless politicians are sleepwalking into this, not knowing precisely what they are doing.
Criminals undertake fiscal stimulation
Daily Telgraph: 1 in 20 £1 coins is fake
Looks like the criminal fraternity have taken it upon themselves to help out with a bit of fiscal stimulation
Deflation???
Times Online: Shop prices soar as pound pushes up food costs
Shop prices rose during March as the weak pound continued to push up the cost of food, new figures showed today. Shop price inflation edged up for the fourth month in a row to 2 per cent March from 1.9 per cent in February, data from the British Retail Consortium (BRC) revealed. The findings emerged after official data confounded expectations that the country would slump into deflation in February, as CPI inflation unexpectedly ticked up to 3.2 per cent from 3 per cent.
Hmmm more green shoots..lol weedkiller must have been sprayed!!
Yahoo: Russia banking crisis just beginning: top banker
Russia's banking crisis has only just begun and the government has been slow to react, the head of its largest bank said Wednesday, contradicting optimistic comments by Prime Minister Vladimir Putin. The blunt comments by Sberbank chief executive German Gref, who also said bad loans in Russia were increasing by 20 percent a month, came just two days after Putin said the threat to the banking system had receded.
An indication of what is REALLY going on in the UK residential property market
Mortgagestrategy: Colleys places all 400 valuers into consultation
Colleys, Halifax’s inhouse valuation and surveying firm, has put all 400 of its chartered surveyors into consultation with a view to losing around 106 roles overall. The job losses come as part of a bigger move to merge the two existing support centres into one by the end of October. Colleys has suffered a fall in demand for valuations and surveys as the number of housing transactions shows a marked decline year-on-year.
Yes, the BBC have actually made this programme
BBC: Repossession, repossession, repossession
Europbaron on the forums found this. I wonder if Kirtsy Allslop will make an appearance?
Fixing the gilt market
FT Alphaville: Fixing the gilt market
Article pointing out that the costs of borrowing are about to rise as the government pushes up the yield through excess borrowing.
The unsettling effect of landlords' short-termism
The Guardian: The unsettling effect of landlords' short-termism
While we're on the subject of Landlords .....
Our survey said - "haggle vendors down to the bone on price"
FT: Housing market not expected to recover this year
The majority of Britons do not expect to see any recovery in the housing market this year, according to new research by Unbiased.co.uk. The study found that 58 per cent of people do not expect to see any recovery in house prices this year, while 18 per cent do not see any prospect of an upturn until at least 2011. This situation is exacerbated by the fact that while 28 per cent of people are currently interested in buying a property, a quarter of these are holding off looking at prospective properties in the belief that prices have further to fall.A further one in four are holding off buying to save up a bigger deposit, with this figure rising to almost one in five (18 per cent) of those aged between 18 and 34.Even more worrying for sellers, is that 50 per cent of people feel they would
More green shoots of recovery
BBC: US banker sees 10% jobless rate
A top US central banker has said that the unemployment rate in the country could jump above 10% this year.
Green shoots my a***
BBC News: Confidence Hit by Job Fears
Confidence among UK consumers fell in March as worries continued about jobs, a survey from the Nationwide says.
We are three, six, maybe nine months away from a price shock
Market Oracle: Crude Oil $200, the Price for Wasting Financial Crisis Opportunity
Matt Simmons, the brilliant energy analyst and author of Twilight in the Desert , recently told Reuters, "We are three, six, maybe nine months away from a price shock. We are not talking about three to five years away -- it will be much sooner. These prices now are dangerously low. The lower prices fall, the less oil will be produced and the greater the chance of an oil spike."
Coming out of the woodwork
Telegraph: Goldman Sachs chairman Lloyd Blankfein admits Wall St greed
Mr Blankfein, confessing that the last year has been "deeply humbling" for the entire banking industry, said that "decisions on compensation and other actions taken and not taken, particularly at banks that rapidly lost a lot of shareholder value, look self-serving and greedy in hindsight".
Buy-to-let landlords 'face repossession' - nuff said :)
Telegraph: Buy-to-let landlords 'face repossession' over benefit changes
In April last year the Local Housing Allowance (LHA) was introduced, under which money for rent was paid to tenants, rather than being paid directly to private landlords. But the National Landlords Association said research had shown that many tenants were failing to pass on these payments to their landlords. [HPC spin: Tenants can now hold the threat of payment withdrawal over their landlords, forcing them to actually undertake repairs which they might otherwise neglect for extended periods of time.] As a result, 52pc of landlords surveyed said they would now not let or would be less likely to let a property to a tenant receiving LHA.
Tuesday, April 7, 2009
Recovery USA - where California leads, the rest will follow
Forbes: The American Suburb Is Bouncing Back
The vast flatlands sprawling east of Los Angeles, consisting of roughly 3 million people, have suffered one of the highest rates of foreclosures and surges in unemployment in the nation. Yet now sales are picking up and inventories are finally beginning to drop. Even developers of new properties report a strong uptick in sales. In new developments in the Inland Empire, Brookfield Homes reports sales volumes up 150% since six months ago. Although the economy is still hurting, the housing trend has become much more positive. Statewide, existing home sales have jumped 30% over the past year, taking the inventory from an estimated 16.7 months to less than seven months. Most encouraging, this activity is taking place exactly where the market was hit hardest in the beginning - low-end suburbs.
Pure cash creation
The Daily Telegraph: ECB attacks G20 plan to pump cash into global economy
"This is helicopter money for the globe," said Jürgen Stark, the ECB's chief economist and Germany's member on the bank's executive board. "There hasn't been a study to see whether the world needs additional liquidity. In the old days one would take a long time to to explore such a thing."
Silly sods - don't they realize all they need to do is print money?
BBC: Stephanomics on the emergency Irish budget
Why on Earth are they doing that? That would be a reasonable first reaction to the emergency Irish budget unveiled this afternoon. In the teeth of the worst recession in decades, the government is raising taxes and cutting spending, for the second time in six months. The G20 leaders may have endorsed a global effort to kick-start the global economy, but for Ireland, it's tightening all the way. What gives? There are some lessons for the UK. The first lesson is that, if you're lurching further and further into debt, there comes a point when fiscal stimulus isn't very stimulating at all.
No more electric suitcase
CNN: GM preparing for bankruptcy
"We're talking about what could be the largest industrial company to ever go bankrupt. The preparations better be intense and earnest," the source said. "The preparations are being made because there's a short time frame here."
Worth reading, if only so you can laugh at the quote from the Irish Finance Minister
BBC News: Ireland unveils emergency budget
"The Finance Minister said the Republic had relied too heavily on the housing sector, which had proved a bubble."
Irish property - down, down, down
Finfacts: Asking prices for Irish houses fell 4.2% in the first three months of 2009
A further fall of 4.2% in Irish house prices since the begining of the year. In Dublin city centre - the epicentre of the "Celtic Tiger" prices are down a whopping 11% in 3 months.....and the crash started in Ireland about 12 months earlier then GB.
Former White House Advisor Tells It How It Is...
The Renegade Economist: The Michael Hudson Series - Part 1 Housing Market
Michael Hudson answers questions on the global housing market. The guy knows what he is talking about....
This is what bailouts do for GM... this is a company bound to fail....
Cnn: GM sees an electric, 2-wheel future
General Motors - under an end-of-May deadline to come up with a viable plan of operation - has joined forces with personal transporter maker Segway to develop a two-seat, two-wheeled, electronically powered vehicle for use navigating city streets.
Miore green shots.
BBC: RBS to cut a further 9,000 jobs
The Royal Bank of Scotland is to shed a further 9,000 jobs, half of them in the UK. BBC Scotland understands the losses are to be in its back office operations.
No
Telegraph: Is it time to go back into property?
Stelios Haji-Ioannou, the founder of easyJet, is calling the bottom of the property market. Optimists are starting to see green shoot appear amid the scorched earth of Britain's property market. In March, house prices rose by a modest 0.9%, according to Nationwide - the first price rise since October 2007. At the same time, the Bank of England released figures showing that mortgage approvals jumped by almost a fifth the month before. The international buyer is focused on the truly international market, whether it is St James's, Mayfair, Belgravia or Knightsbridge. This had led to a severe restriction of supply, as vendors hold off selling their prime assets at what they perceive to be the nadir of the market.
BTL is dead
Knight Frank: Property rentals in London at September 2000 levels
The vibrant capital of the small island populated by cash laden city boys spending £10,000 to dine out, with corporate rentals to multi-million salary expatriate bankers... guess what... rentals are down to 2000 levels. Says who? Knight Frank... "Demand for rental property has increased by 20% over the past year, but this has been more than offset by a 67% increase in supply" take that, BTL leeches! bleed cash and hurry up to repay your loans.
Lies, Damned Lies and Statistics
The Economic Voice: Lies, Damned Lies and Statistics
Some excellent observations on inflation. .........The Government’s greatest professed economic concern is deflation yet their preferred measure of inflation the CPI, which has a target of 2%, is currently 3.2%.............
Bloomber Video: Doom & Gloom Guru speaks on current outlook
Bloomberg.com: Stocks May See ‘Correction’ of 10%, Marc Faber Says
Longish video in which Marc Faber gives his opinions not just on current stock market, but a good general round up that will interest all those with views on the economy & investing. He does not speak specifically on the housing market, but his dim view of the long term outlook for the US continues, and about three quarters of the way through the video he says that the current world recession will not end without "war and conflict"!
HIP changes
HIP-Consultant.co.uk: Home Information Pack changes
The changes seem quite positive for the HIP certainly the property questionnaire does not seem as bad as i had read.
There are still more nasty surprises to come from banks
MoneyWeek: There are still more nasty surprises to come from banks
The recent uptick in optimism is gradually being replaced by a creeping realisation that the banking sector and the wider economy is still in a terrible mess. For all the capital raising, and government intervention, and bail-out mania, the world's banks are still very weak, says John Stepek.
Comedy club chief takes the show to the US (Detroit here we come)
FT: US affordable housing shortage flagged as "opportunity"
UK investors are being drawn to the US where there is an opportunity to purchase repossessed property for rent to local residents, according to Assetz. The property investment group is working with local housing departments and developers in the US on an investment programme to refurbish repossessed properties and offer them for rent in the local community. Assetz said the scheme has "vast investment potential" with gross yields of over 20 per cent and longer term prospects for strong capital growth. One particular area that Assetz is focusing on is Detroit, where it said there is an acute shortage of affordable housing.
How to kill buy to let market......read on.....
Contract journal: Taylor Wimpey and Lidl to build homes costing just £64,000Taylor Wimpey and Lidl to build homes costing just £64,000
It is understood the home will only be available to first-time buyers – buy-to-let investors will be barred.
The BBC would have you believe the opposite
Ft: Manufacturing decline worst in 40 years
on another note why should the car manufacturers get a bailout when they have huge stocks of overpriced cars??????????????
It's almost time to turn bullish on stocks
MoneyWeek: It's almost time to turn bullish on stocks
The bear market may not be over just yet - but some markets may finally be worth a cautious bet. If history is any guide, returns over the next few years should range from acceptable in the US to pretty spectacular in parts of Asia…
Something smells
MarketWatch: Government Sachs is in control
Until it was fully extricated, Goldman always characterized its exposure to AIG as "immaterial," and that its $20 billion notional exposure to AIG was hedged. Turns out that it was -- through government bailouts that didn't exist when Goldman entered the contracts. A conspiracy theorist might think this run of fortune has something to do with the former Goldman executives having influential roles in the Treasury Department.
Ireland to Buy Billions of Euros of Property, Loans
Irish Times: Budget to announce spend of billions on bank loans
Irish gov to buy up €60 billion worth of toxic property loans to save banks, in their new budget. “Our budget will strike the difficult balance between making sure our bankers maintain their extravagant standard of living while imposing crushing taxes on everyone else” Mr Lenihan said.
Idiot sloanie with simplistic thinking.. oh and there's Kirsty too!
Times Online: Kirstie Allsopp: no-nonsense, enthusiastic and exactly as she comes across on TV
What makes me ill is that this awful creature and her cohorts have taken their London-centric views and transposed them all over the UK - "There is a brief suggestion that we go to a café, but then she decides that we may as well just go to her house in nearby Holland Park" - "...the Honourable Kirstie Allsopp discovers that she is locked out of her two-floor flat as the nanny has taken her sons for a walk.." - "It is a property show for the credit crunch...accused of puffing up the property market and encouraging us to buy houses we couldn't afford. This makes Allsopp cross.." - "Not a single person who has appeared on the show has found themselves in trouble. We have only ever been responsible..." - "Stamp duty is unbelievable. Then you have VAT on agent's fees..."
Housing green shoots to die
Investors Chronicle: Housing green shoots to die
Four very good reasons why UK house prices are going to drop. THis article suggests another 15% drop over the next 4 to 6 years. "In the last few days, some green shoots have appeared in the housing market. The Bank of England has reported a rise in mortgage approvals, and the Nationwide Building Society says that prices rose 0.9 per cent in March. These green shoots, however, are likely to die. The chances are, house prices will continue to fall. I say so for four reasons...."
Monday, April 6, 2009
I got your stress test right here
MarketWatch: What are the banks worth?
The government's stress test has two fatal flaws: It's being done in secret, and the government is putting its thumb on the scale. It's almost enough to make you think the regulators are protecting someone.
The financial system has suffered a blow unlike anything since the Great Depression
WSJ: From Bubble to Depression
It appears that both the Great Depression and the current crisis had their origins in excessive consumer debt -- especially mortgage debt -- that was transmitted into the financial sector during a sharp downturn. It appears that we're witnessing the second great consumer debt crash, the end of a massive consumption binge.
MSM is coming round to our way of thinking
Financemarkets.co.uk: RICS warns against premature optimism on house prices
"The Royal Institution of Chartered Surveyors (RICS) has warned that it would be ‘premature’ to assume that house prices are on the road to recovery after figures from the Halifax house price index showed an average house price decrease of 1.9% during the month of March." When RICS start turning bearish, is that a sign that our stance is joining the mainstream?
Pricing in the future drops
BBC News: Lenders still want high deposits
Mortgage lenders are still demanding high deposits from buyers as the number of deals expands. More than two-thirds of the 1,485 mortgage deals on offer require the customer to put up a deposit of at least 25%, according to Moneyfacts.
Who's holding what?
TMF: Will Bank Losses Be Worse Than the Great Depression?
Is temporary nationalization the only solution? Does the Public-Private Investment Program really have any hope of succeeding? It's quite clear that the banks have been sinners for some time now, but I don't see how we can determine the optimal flavor of penance until we're doing more than guessing about what's lurking in those banking vaults.
Once again, Trillion is so yesterday. Not long untill the media starts talking about quadrillion!
Timesonline: Toxic debts could reach $4 trillion, IMF to warn
Toxic debts racked up by banks and insurers could spiral to $4 trillion (£2.7 trillion), new forecasts from the International Monetary Fund (IMF) are set to suggest. The IMF said in January that it expected the deterioration in US-originated assets to reach $2.2 trillion by the end of next year, but it is understood to be looking at raising that to $3.1 trillion in its next assessment of the global economy, due to be published on April 21. In addition, it is likely to boost that total by $900 billion for toxic assets originated in Europe and Asia.
Roger Altman: former deputy Treasury secretary
FT: Why this will not be a normal cyclical recovery
The implications for US policy include a likely second round of stimulus, much more federal capital for the banking system and stunning budget deficits. Households felt wealthier, despite pressure on incomes, because home and financial asset values were rising. Now that wealth effect has reversed with a vengeance. Funds from the Troubled Asset Relief Program are only replacing lost capital, not increasing it. When might they end? With key categories of toxic assets still losing value, the answer is: not soon. The scale of lending needed to support a normal cyclical recovery will not materialise. Despite public opposition, substantially more federal capital will be required for banks.
The G20 and Gordon Brown's spin doctors...
Mail: Brown brings home the moonshine
Let's face it, we have all been had once again.....''KEITH WATERHOUSE: On the moonshine front, Gordon already has a good deal of form. He is an old lag - an expert at what an accountant might call his own private double entry system. Thus, he has no compunction about using the same figures twice under different headings, if it suits his purpose. ''
Loan losses will exceed Great Depression levels
Cnn: Bank woes nowhere near over - analyst
The cyclical pressures of mortgages and an acceleration in cards, consumer credit, construction, commercial real estate and industrial will cause the loan losses-to-loans ratio to increase to 3.5% by the end of 2010 from the current 2%. The Great Depression's peak was 3.4%, according to the report.
IMF Chief economist says western world no better than banana republics
The Atlantic: The Quiet Coup
Great essay. The brief conclusion is that the public is being persistently ripped of by financiers, who are essentially dictating terms to governments. Also points at the absurd privileges made laws to benefit financiers.
Slumdogs and Millionaires
BBC PANORAMA: Dubai: From riches to rags
Having spent the last three months travelling there, I no longer think of the seven star Burj Al Arab hotel when I think of Dubai, but of emaciated, wretched men, lining up for buses before the sun has risen, resigned to the fact that their hard day's work wouldn't earn them enough to buy a round of coffee here. The branding of Dubai has to be one of the greatest PR triumphs of the past 20 years. It works out incredibly well for the developers - they can charge first world fortunes for the dream villas and apartments, but pay third world salaries to the men actually building them.
Barricades
Reuters: Central banks set currency swap lines via Fed for U.S. banks
This seems a bit significant. Preparations are being made for a defense of the dollar.. .Bank of England, the European Central Bank, the Swiss National Bank and the Bank of Japan opened foreign currency credit lines to the Federal Reserve.
Saving the best 'til last ...
FT: House price falls add to eurozone’s woes
There's not much in this article we didn't know (i.e. prices are tanking in UK, Ireland, Portugal, Spain etc) but the really interesting bit is the last sentence: "According to the ECB report, “busts” that follow housing price booms in the main eurozone economies typically last five years." So we're in for the laong haul.
Plenty more of the HPC to go
Daily Telegraph: Beware talk of recovery as the world economy is not a picture of health
Best bit of this from Roger Bootle: "The old joke about stockmarkets having forecast 10 of the last four recoveries remains apposite. And we've already seen at least three false stockmarket recoveries in the last year or so. True, this was the first up month for Nationwide house prices for 17 months. Even so, this does not assuredly mark the end of the slide. In the 1990s downturn, during the housing market's 74-month long downward trend from May 1989 to July 1995, there were 22 months in which house prices rose month on month. That's a rise roughly once every three months. Indeed, house prices rose in four consecutive months between July 1993 and October 1993, leaving them 2.4pc higher in October than they had been in June. But the downward trend then continued for another 21 months."
Destroying UK savings: Get rid of sterling now!
FT: UK is urged to print money
''The government will have to print money to finance public spending, moving quantitative easing to a new level, according to the manager of one of London’s biggest hedge funds. Mike Platt, co-founder and chief executive of BlueCrest, Europe’s fifth-largest hedge fund, had been predicting quantitative easing in the UK for six months before it was adopted by the Bank of England last month. ''
More examples of head-in-the-sand attitudes to property
Independent: Don't trip up if you become one of Britain's 'accidental landlords'
It's hard to imagine a more difficult time to sell a home, and current conditions in the property market have pushed some homeowners into the reluctant role of landlord. Lucinda Marsden, 24, who works in public relations, lives in Notting Hill, west London, but owns a three-bedroom flat in Nottingham which she bought in her second year of university in 2004. She rents out her Nottingham property for £900 a month. This money is used to cover the mortgage and also goes towards her rent in London. Lucinda has no plans to sell the property at present and wants to wait until the market improves.
First REDC auction in the UK and all the buyers were BTL investors!
Guardian: Repossessed homes go under the American hammer
Britain's first US-style auction of repossessed properties took place in Gateshead this week. There's nothing new to repossession auctions – another nine will take place on Saturday, organised by the likes of Savills, Jones Lang LaSalle and Allsop – but REDC does them with a little more song and dance than the Brits. Two croupier-like "bidders' assistants" from California HQ theatrically tease up bids with whoops, hollers and whistles. REDC, and bidders at its auctions, stand accused of cashing in on the misery of repossession victims. REDC deny the charge - "We're turning houses back into homes, by bidding today, you can be part of the solution." However nearly all buyers are BTL investors: "So when will your daughter be moving in?" / "Oh no, she won't be living in it. She's an investor."
"Some buyers are so desperate they have resorted to using credit cards to make mortgage payments"
Guardian: Downvaluing leaves high fliers reeling
New-build property schemes are in disarray as buyers run into trouble. Some Canary Wharf flats were sold off-plan in 2006 at sky-high prices. Investors paid 20% deposits. Now it's 2009, building work is complete, and buyers have to pay the remaining 80%. However they can't get a mortgage because the lenders' surveyors say the properties have lost 17-35% of value. The developers have told buyers they are "required to proceed with the purchase at the contract price" as the purchases were not made "on a subject-to-mortgage basis". [I guess this means they'll lose their 20% deposits. Oh noes.] Businessman Denesh Bhabuta bought his 335 sq ft studio flat for £264,000 in 2007. [Yes, a studio for £264k] Some buyers are so desperate they have resorted to using credit cards to make mortgage payments
Across the pond: record pace of falls, prices down to Q3 2003 level
Mish's: Case-Shiller March 2009 Analysis
The Jan 2009 Case-Shiller data continues to accelerate to the downside at a record pace. The 10 and 20 city index show declines from their peak at 30% and the bubble cities all have declines of 40% or more with Phoenix having the largest percentage drop of nearly 50%. Additionally, all 20 cities tracked by Case-Shiller have now experienced price declines in excess of 10%. The Case-Shiller data uses a Repeated Sales Methodology which provides the most accurate housing data available. Cities such as San Francisco have likely already experienced the bulk of their price decline as prices have already returned to those of 8 1/2 years ago (Oct 2000). However, cities in the Pacific Northwest have only seen prices return to mid-2005 levels and are likely have significant price declines yet.
Across the pond: Green shoots, or pond scum?
BusinessWeek: Housing: Signs of Life
Last year the Cape Coral area of Florida had the highest foreclosure rate in the country. But recently a curious thing has been happening in this blighted former boomtown: Buyers are swooping in. First-time home-owners are suddenly entering bidding wars with real estate speculators from as far away as Spain and Germany. Sales in February outpaced those at the peak of the boom, with some houses getting more than 50 offers and selling above their asking price. So what's going on? In all of these markets, banks are dumping foreclosed properties, attracting cash-rich speculators looking for cut-rate bargains. Government incentives of up to $8,000 in tax credits for first-time buyers and low mortgage rates engineered by the Federal Reserve are luring buyers who otherwise would be sitting out.
Taxes are for the little people
The Times: MPs claim stamp duty on expenses
MPs are avoiding stamp duty of more than £10,000 on second and third homes by claiming it back on their parliamentary expenses. They are claiming it in addition to furnishings and mortgage interest payments for homes they are allowed to keep after leaving parliament.
Sunday, April 5, 2009
It Could Happen!!!
The Economic Voice: Estate Agents Take LSD To Alter Reality Of Housing Market
In attempt to beat the crash estate agents have resorted to taking large quantities of LSD to alter the housing market. Potential buyers are being spiked before viewings in order to make the asking price seem more reasonable.
Our real suffering lies here.....Inflation destroys all
Daily Telegraph: Breaking the silence before the inflation tsunami
"You must be the only person worried about inflation, Liam". So I was told on Newsnight last week – by someone who's spent four of the last five years in the cabinet......This scares me on more levels than I care to mention, not least the deafening silence............
Rental price index
Renting.co.uk: Residental Rental Price Index
I was curious and searching on Google and came across this. I thought it was interesting for the renters here. Seems rents have been falling nationally since late 2007.
The recession is bottoming out.....not
Cantos: Economist Intelligence Unit
This erudite analysis from highly respected source suggests the world economic deterioration is accelerating. Grim outlook with significant recovery unlikely until 2011. Housing market not directly mentioned but I think one can infer from this that continued decline is on the cards. Good sensible antidote to the recent G20 hype.
HPC gets a mention
Times: The water margin
We put in a low bid for quite a nice house the other day. The agent we dealt with was cross about our low offer and seemed to take it as a personal insult, which was silly. He said he was almost certain that the property slowdown had bottomed out and prices were heading skyward once again. “But I don’t understand. Is there any reason why you won’t offer any more money?” Lucky he was having the conversation with the old man and not with me, because I would have found it impossible not to cackle, then to point him in the direction of housepricecrash.co.uk, a website with which I have recently become obsessed. Its tone is as one-sided as the name suggests, but I’m rather taken by a chart I have printed out and pinned to my wall...
Merryn's back with some common sense on the housing market
FT: Merryn Somerset-Webb: Investing
She says a lot of commentators and contacts in the industry believe the market has hist the bottom. She explains why they are misguided.
BTL leeches got what they deserve
FT: Buy-to-let blow for wealthy
Wealthy borrowers are being given as little as one month's notice to pay £1m off their mortgages, as banks take ever more dramatic steps to cope with the housing downturn
Obama administration seeks to avoid restrictions, including limits on pay
MSNBC: U.S. aims to help firms sidestep bailout rules
The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials. Administration officials have concluded that this approach is vital for persuading firms to participate in programs funded by the $700 billion financial rescue package.
Former IMF official on the banking crisis
ICH: The Quiet Coup
Slightly off-topic, but a laudable synopsis of the US banking crisis from Simon Johnson, a former chief economist at the International Monetary Fund (2007/08). Professor Johnson puts the US crisis in the context of his experience at the IMF and his diagnosis and suggested remedies are highly relevant to the UK.
Value of holiday homes dropping by up to 24 per cent
Telegraph: Holiday homes: Second place
Having a terrace house in Wandsworth and a small stone pile in the Cotswolds has been one of the great aspirations of the high-earning upwardly mobile for half a century. Now, however, a subtle change is taking place. Just as the sale of Agas has dropped by 15%, so the number of second homes has fallen. Owners in the second-home havens of Salcombe and Rock are holding their breath to see what the market will do. "They grew exponentially in the boom times, hugely fuelled by City money, with thrusting young buyers eager to purchase at any price," says Martin Lamb of Savills in Exeter. "The market has gone very quiet here now. We have not yet seen distress sales but this was a real bubble, fuelled by high levels of gearing, and debt-driven sales are a distinct possibility." [Clever man!]
Sofa surfing is on the rise in these tough times
Telegraph: Sofa surfing: C-ouch! Crisis hits home
There is nothing like a recession to focus adult minds on making life more practical and affordable. In times like these, the yachts, the horses - and the second homes - have to go. There are many more pied-a-terres on the market now. Business-people are selling their crash-pads and crashing on sofas instead. "I had assumed that sofa-surfers would be hippie travellers, but people making bookings tend to be business people in the UK. My first booking was from a businessman based in Portsmouth who stayed on a futon in a drawing room in Brixton which was much more cost-effective than a hotel and nicer than a hostel. It is a wonderfully inexpensive way of staying in town." [More sales and less rental demand = falling prices and downward pressure on rents. Sweeeeeet!]
"The severity of the disruption is no longer worsening as sharply as it was"
Telegraph: Credit crisis is easing for UK business, CBI says
The CBI's latest credit conditions survey, published today, shows that companies were less negative about the availability of new and existing credit in March than they were in February. The CBI report is significant because the inability to access credit has been cited by businesses as one of the most serious obstacles to survival since the onset of the downturn. [Access to credit was their biggest problem. Their next biggest problem is finding customers who have access to credit.] Firms are not saying that credit conditions are getting better, but the severity of the disruption is no longer worsening as sharply as it was three months ago. And the combination of easier monetary policy and the Government's measures to support the banking sector may be starting to have an impact.
Have commercial-property funds reached rock-bottom?
Independent: Signs of life in crippled property fund market
Property funds – which invest in offices, shops and other commercial buildings – have slumped 40 per cent since hitting their peak in June 2007. Does that mean it's time for investors to pile in to take advantage of some juicy recovery? [Erm, no. Fancy boutiques are closing and re-opening as charity shops - which means significantly lower rents. Offices are emptying as companies announce redundancies, just as millions of newly-built square feet are coming onto the market.] In fact, anyone speculating that the property market has reached the bottom is likely to be proved wrong, if the experts are to be believed. Any recovery is likely to be months away at best, says Scottish Widows. They predict that the commercial property market has a further 10 per cent to fall.
Banks demanding cash from Buy-to-let borrowers
Financial Times: Buy-to-let blow for wealthy
Wealthy borrowers are being given as little as one month's notice to pay £1m off their mortgages, as banks take ever more dramatic steps to cope with the housing downturn. Charles McDowell, a prime property consultant in London, told the Financial Times that lenders had asked a number of his clients with large buy-to-let property portfolios to come up with more cash after falling prices slashed the level of their equity. NatWest had asked the owner of a £5m property portfolio in London to hand over £1m in a month to compensate for a 20 per cent drop in value, even though there was no evidence the client was likely to default on the loan.
Pyramid scheme fraudster funded lavish lifestyle from property scam
Guardian: Buy-to-let tycoon jailed for conning millions from investors
John Potts, 60, siphoned money from a pyramid selling scheme to pay for luxury cars, fine art, antiques and racehorses. In one instance he bought Inspector Morse's red Jaguar at auction for £53,000. A penchant for Savile Row suits cost £125,000.
Saturday, April 4, 2009
Lender repossession auctions
The Times: Failed banks accused over showbusiness-style property auctions
Dozens of homes repossessed by two nationalised banks are being sold this week for knockdown prices at a series of auctions where buyers are whipped up into a frenzy. Northern Rock and Bradford & Bingley have been accused of profiting from the misery of repossessed families by disposing of their homes in showbusiness-style sales. Critics claim that the high commission charged to buyers by Real Estate Disposition Corporation (REDC), which claims to be America’s biggest seller of foreclosed property, mean that there is less money for borrowers to pay off their mortgage debts.
Conspiracy theory ? Whose turn to post the BS ?
Financial Times: House price movements cause confusion
Different data from Nationwide and Halifax this week have been part of a confused picture of the status of the housing market. While Nationwide prompted hopes that the bottom of the market may be in sight when it reported a surprise rise in house prices this week, Halifax data to be released on Saturday shows house prices are still falling. In March its index decreased by 1.9 percent. The disparity in the respective data is mirrored by the differing opinion reported by estate agents, with some noting a sharp increase in buyer interest and a higher volume of sales, while others are being more cautious.
Quantitave Easing
Marketoracle.co.uk: Governments Printing Money Can't Make Money
We are told over and over again that the problem is banks stopped lending to each other and now to businesses and people seeking mortgages. The reality however is shortage of money within the UK and globaly because of the overvalued assets and bad debts. This cannot be solved by simply printing money (quantitave easing) as this further increases debt and also causes currency devaluation and subsequently inflation. The Chinese know this well and hence their argument for an alternative currency to the Dollar in a way to protect their wealth. On the other hand, providing sheap money/low interest rates hardly stimulates the economy in a market dominated by growing unemployment and uncertain future. Many savers feel punished and those with spare money aside now opt to repay their mortgages
Proof that anyone buying in the present market is stupid
BBC News: Buyers blocked by low valuations
Homebuyers are being prevented from buying many properties because lender valuations are coming in too low, say estate agents. One buyer, Chris, wanted to purchase a one bedroom flat earlier this year in SE London, which was on the market for £175,000. However his lender's valuation survey came back at £140,000. [In the radio programme, it transpires that other flats in the development were repossessed and sold by the banks at auction for £135,000. Chris can only negotiate his down to £160,000. So why doesn't he buy at auction???] The CML said some flats have lost a lot of value, and lenders are concerned that the only resale value they'd get is through a forced sale. Countrywide (surveyors and valuers) said many sellers still have unrealistic expectations of what their property is worth.
No Green Shoots
Independent: Jeremy Warner: This housing correction has a way to go yet
Hardly news I know but good to be reminded what negative equity does to the market
Anne Ashworth again
The Times: Knock-down auction prices risk knocking back recovery
Apparently the best time to buy is BEFORE the light appears at the end of the tunnel, so you can guarantee initial capital losses. Also property auctions are doing us all a disservice by actually selling houses for what people are prepared to pay for them. My brother is currently buying a house, quite possibly after reading such tosh, and against my advice. You can take a horse to water etc. As the price falls continue, I hope Ashworth ends up in a few years' time as unpopular as senior bankers are now.
Well done BoE MPC.
BBC: Warning of food price hike crisis
Thousands of pensioners will die an early death thanks to the BoE's policy of bailing out reckless house speculators with low IRs.
New World, New Rules; Now Brown must dare to spend
Guardian: A different perspective from the article below
A new world order? Really? That hope still hangs in the balance, on a knife edge, by the skin of its teeth. The world has turned upside down in Obama year: the G20 seemed to thunder out the death knell of the Reagan-Thatcher neoliberal experiment. A year ago who would have dared predict a G20 finding a trillion dollars to save weak countries, or hedge funds and banks globally regulated with bonuses restrained, and an end in sight to tax havens? Change is in the air. Social democratic solutions are proving the best economic as well as social answers.
Friday, April 3, 2009
Smoke and Mirrors go Global
Daily Mail: Hubris, hoopla and claims that were false, cynical and very, very dangerous
Analysis of G20 communique reveals cracks and falsehoods regarding the amount of 'new' money involvedn and it is more likely that Gordon Brown seems to have corralled fellow leaders into perpetrating a gigantic collective fraud on world public opinion. Unfortunately it is also a sign of the degradation of the civil service over the past ten years that senior British government officials were happy to throw their weight behind what was little more than a lavishly funded PR stunt that President Obama may well end up bitterly regretting.
Nothing to be ashamed of.
The Daily Telegraph: Britain should not fear asking for IMF cash
Britain should not be afraid or ashamed of taking money from the International Monetary Fund, a senior Cabinet minister has told the Daily Telegraph. Economists have warned that the UK's public finances are in such a bad state there is a real possibility that Britain will seek help from the fund.
'green shoots' long enough for Brown to win the election, then the bust
FT: Signs of green shoots raise hopes
''Scattered signs of green shoots in the global economy are raising hopes that the recession could bottom out later this year, paving the way for economic recovery in 2010.''
Would this make most of property flopping VIs criminals by default?
24 dash com: Home sellers face 'swathe of legal consequences' over PIQs
The introduction of the Government’s latest addition to the Home Information Pack (HIP), brings with it a 'swathe of legal consequences' for those selling homes, according to a property law specialist. From April 6, sellers will need to fill out a Property Information Questionnaire (PIQ). The PIQ is a set of mandatory questions about the property. Most importantly, it commits a homeowner to make representations that have legal ramifications even before a contract has been agreed.
Margin Call!!!
FT: Borrowers forced to pay down buy-to-let loans
Lenders are now forcing professional buy-to-let investors to inject large cash sums into their mortgages, as sharp falls in house prices have eroded the equity in their properties. Agents said some banks were becoming increasingly nervous as the drop in house prices meant loans they provided two or three years ago were now too large relative to the value of the property. Owners of multi-million pound portfolios have been ordered by banks to top up the equity in their properties by paying off up to 20% of the outstanding mortgage - even if they were not in any breach of their financial obligations.
Mad Max? .... I don't think so!
BBC 5 live: Max on G20
The differences between an economics editor 2.07 - 2.11.40 and a proper analyst 2.11.40 and 2.16 "Glambler-a-holics" - class!!
VIDEO:George Soros likes the G20 deal but considers British Economy to be in deep trouble
BBC News - Video: George Soros on G20 deal
Worth a view in case you missed it on Newsnight. Soros mentions "extreme" over valuation in UK housing market mid way through interview.
Global Currency?
Telegraph: The G20 moves the world a step closer to a global currency
A single clause in Point 19 of the communiqué issued by the G20 leaders amounts to revolution in the global financial order. "We have agreed to support a general SDR allocation which will inject $250bn (£170bn) into the world economy and increase global liquidity," it said. SDRs are Special Drawing Rights, a synthetic paper currency issued by the International Monetary Fund that has lain dormant for half a century.
U.S. Non-Farm Payrol: unemployment hits 8.5%
Beuareau Of Labor Statistics: The Employment Situation: March 2009
Nonfarm payroll employment continued to decline sharply in March (-663,000), and the unemployment rate rose from 8.1 to 8.5 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Since the recession began in December 2007, 5.1 million jobs have been lost, with almost two-thirds (3.3 million) of the decrease occurring in the last 5 months. In March, job losses were large and widespread across the major industry sectors. In March, the number of unemployed persons increased by 694,000 to 13.2 million, and the unemployment rate rose to 8.5 percent. Over the past 12 months, the number of unemployed persons has grown by about 5.3 million, and the unemployment rate has risen by 3.4 percentage points.
Dual Nationality Bankrupts
Myvesta UK Articles: Bankruptcy From Outside the UK
Given the number of people with dual nationality in the UK, I always wondered how many would take the step of declaring bankruptcy here, to avoid paying off debt fruitlessly. Like the abandoned cars at Dubai airport. This article suggests a growing number of enquiries and states that all external assets are within the scope of UK bankruptcy recovery. However, this would require the trustee going through the courts of the foreign country to acquire the necessary rights, with attendant costs, and also disclosure from the bankrupt(!) as to assets. The price to government of this kind of debt avoidance remains to be seen.
Meanwhile back on planet earth.
Gaurdian: US unemployment rate set to reach 26-year high
• American jobless rate for March predicted to hit 8.5% • Some economists begin cautious talk of recovery • Alistair Darling warns UK unemployment will keep rising. Does anybody have stats comparing the unemployment rate to house prices?
Licence to print money revoked...
Msnbc: Slump takes swagger out of once-booming U.K.
"Glancing at her mortgage bill, Jennifer Wilson can’t help but lament that a portion of her monthly payment covers the cost of her dalliance with decadence." Hah. Serves her right.
It's all over then...
The Times: The property market is improving - but not to the levels of old
Probably one of the weakest and myopic pieces of analysis I have ever read. And they pay this woman money...
Inflation/Deflation take your pick!!
The Economic Voice: And what exactly is wrong with deflation?
"We have now talked ourselves into the position of fighting deflation at all costs. To get an idea of why you need to look at who wins and who loses with regard to the inflation / deflation argument."
"...the most debased form of rentier capitalism"
Guardian: Buy-to-let: The truth is out
Article from Tuesday's paper on the shattering of B&Bs illusions. Current mortgage arrears are at 4.6% (compare with worst figure in 1992 of 3.55%)
No such thing as a free lunch (for most people)
Daily Mash: G20 PRODUCES ONE TRILLION DOLLARS FROM BEHIND YOUR EAR
What the coin basically means is that your retirement will last the eight seconds it takes for you to collapse at your work station, fall to the floor and die and up until that point you'll be taxed every time you say the word 'a'.
Normal service resumed
BBC: House prices 'drop 1.9% in March'
UK house prices fell by 1.9% in March compared with the previous month, according to the Halifax.
The Halifax Don't Agree With The Nationwide
BBC News: House prices 'drop 1.9% in March'
UK house prices fell by 1.9% in March compared with the previous month, according to the Halifax.
It's al over
Telegraph: G20 summit: Gordon Brown announces 'new world order'
Gordon Brown announced the creation of a "new world order" after the conclusion of the G20 summit of world leaders in London. The Prime Minister claimed to have struck a "historic" deal to end the global recession as he unveiled plans to plough more than $1 trillion into the world economy. "This is the day that the world came together to fight back against the global recession," he said. "I think a new world order is emerging with the foundation of a new progressive era of international co-operation,"
Banks selling each other their bad assets
The Financial Times: Bailed-out banks eye toxic asset buys
US banks that have received government aid, including Citigroup, Goldman Sachs, Morgan Stanley and JPMorgan Chase, are considering buying toxic assets to be sold by rivals under the Treasury’s $1,000bn (£680bn) plan to revive the financial system. Spencer Bachus, the top Republican on the House financial services committee, vowed after being told of the plans by the FT to introduce legislation to stop financial institutions ”gaming the system to reap taxpayer-subsidised windfalls”. Mr Bachus added it would mark ”a new level of absurdity” if financial institutions were ”colluding to swap assets at inflated prices using taxpayers’ dollars.”
Do what you want. It wont change a thing.
Independent: Why not knock years off the mortgage?
It's a question on many home-owners' lips: what to do with the spare cash in their pockets now rates have been slashed so dramatically that some borrowers on tracker mortgages for example, are now paying less than 1 per cent in interest. Should they simply enjoy the lower repayments and save the extra cash, or start overpaying to knock years, and possibly thousands of pounds in interest, off their mortgage?
Thursday, April 2, 2009
Mark it zero
TIME Magazine: Banks told they can ignore the market. The market rejoices.
Mark to market accounting rules have been just suspended in the US. HPC regulars who follow this sort of thing will know this is huge news. Basically banks can pretend their assets are worth whatever they like, rather than pricing them at the market price. It would be like you denying your house has fallen in price by 20%, and getting a loan on it based on its 2007 value. So say goodbye to writedowns, and also goodbye to transparency and accountability. This is a license to lie. Capitalism is dead.
BLT properties up for grab
The Times: £80m buy-to-let fraudster John Potts jailed
A company director whose luxurious lifestyle was funded by an £80 million property fraud has been jailed for five years. Potts, 60, from Sunderland, and fellow directors of his buy-to-let company, Practical Property Portfolio, stole from 1,750 investors, who were promised 15 per cent annual rental returns.
More bank lending but margins are increasing
The Times: British banks expect to increase lending
More banks expect to boost credit availability than to reduce it in the next three months, the Bank found in its closely watched survey of banker intentions. The new Credit Conditions Survey also found that margins on loans to people and businesses had widened considerably and banks expect them to continue widening. Default rates rose in the past three months and are expected to continue rising.
Oops - no more money to lend
Ft: B&B struggles with loan book
B&B has tried to encourage customers to leave by waiving early redemption charges for those who redeem all or part of their mortgage by June this year. It has closed its doors to new mortgage applications.
Law charged up by the Nationwide
Assetz: The House Price Recovery Is Here - Make No Mistake
I decided to have a look at assetz to see what Mr Law says about the Nationwide March reported. I wasn't disappointed. "Make no mistake, the house price recovery is here and savvy cash buyers have been purchasing in volume from us since around November ... The next big phase of this market will be the first time buyers coming back in high volume - don't be fooled by the withdrawal of 100% mortgages, the average first-time buyer put down a 10% deposit two years ago and I would hazard a guess that parents would subsidise them even greater if necessary (sic) to take advantage of current pricing."
This is not good reading guys .....!!!
Guardian: The G20 communique in numbers
By the end of next year a "concerted fiscal expansion" of $5tn ... raising output by 4%
Gasp!
BBC: G20 leaders seal $1tn global deal
Leaders of the world's largest economies have reached an agreement to tackle the global financial crisis with measures worth $1 trillion (£681bn). To help countries with troubled economies, the International Monetary Fund (IMF) will get extra resources worth up to $750bn.
Toxic assets still a huge problem
FT: A task fit for Herculean policymakers
Gillian Tett points out that govts are avoiding the subject of bad assets with unknown value. Meanwhile IMF estimates of the losses are increasing. Puts ideas about economic recovery and house price rises into shadow.
Published yesterday but relevent
THE SUN: The Ghost Towns
THE credit crunch is creating ghost towns the length and breadth of Britain. Our High Streets have been hurt by more than 50 chains — including household names Woolworths and MFI — hitting the wall in the past year and smaller stores are going the same way. Nowhere has struggled more than Edgbaston, Birmingham, the official ghost town of the UK. An exclusive survey reveals that an astonishing 67.9 PER CENT of store space in the suburb is EMPTY.
Sure houseprices will kep going up???
Yahoo: Hundreds Of Jobs Go At Aircraft Maker
Nearly 1,000 jobs are being axed at aircraft maker Bombardier in Belfast, union sources say. The figure is on top of 300 jobs that were axed earlier this year.
Why there's a lot more pain ahead for the economy
MoneyWeek: Why there's a lot more pain ahead for the economy
"...the G20 is unlikely to lead to anything except mutual recrimination and more financial regulation. Exporters – unsurprisingly - won't see why they should be pushed into spending more money by profligate consumer countries. That'll leave the consumer countries like the UK, pressing on with printing money, which will continue to weaken their currencies and make imports more expensive."
Gilts glut
Bloomberg: Gilt 30-Year Sale Haunted by ‘Ghost’ of 40-Year U.K. Auction
UK government is backing off from issuing 40 year gilts. Today there is a 30 year issuance, presumably they have done their sums are confident of getting them away. As events move on average gilt maturity will shorten. Two aspects of this, one is that auction prices will become more sensitive because as the maturity shortens the number of auctions/borrowed pound increases, and there is a current technical depression of shorter maturity gilt yields as investors seek to get out of long-dated positions.
This is will no doubt push houseprices up too..lol
Daily Mail: Seven price rises to hit families from this week adding an extra £145 to average weekly bills
April 1 was the trigger date for increases on the cost of everything from a tank of petrol or a hot shower to a dental appointment or a doctor's prescription.
Round 2 ding ding
CNN: Housing bust hits Manhattan
During the boom years, Manhattan was churning out double-digit price increases, with a 20% jump, for example, during 2005. ============= "The tipping point was in September and was largely triggered by the bankruptcy of Lehman Bros. and bailouts of AIG, Fannie Mae and Freddie Mac," said Miller. "This marked a sharp contraction of credit, greatly restricting demand as participants had more difficulty obtaining financing.
Now For Some Real News (rather Than Fantasy News)
Bbc: More than 1,000 Swiss Re jobs cut
Does anyone think it strange whilst we are hosting the G20 we have news like houseprices going up etc, maybe it is fixed for the purpose of making UK looking like it is bouncing back.......... after all vauxhalls looks like it might now go..........
Nationwide: March: +0.9% :(
Surprise Bounce to March House Prices: Nationwide
Commenting on the figures Fionnuala Earley, Nationwide's Chief Economist, said: “Spring brought a surprise bounce to house prices in March. The price of a typical house increased for the first time since October 2007, rising by 0.9% during the month and reducing the annual rate of fall from -17.6% to -15.7%. This brings the price of a typical house to £150,946. The moderation in the annual rate of fall is somewhat distorted by conditions last year and so it would be unwise to draw strong conclusions from the significant slowdown in the annual rate of fall. Equally, while the rise in prices in March is welcome, it is far too soon to see this as evidence that the trough of the market has been reached. The Bank of England has already taken strong measures to ease the tensions in econo"
Nationwide HPI bounces up a little....
BBC News: 'Surprise bounce' in house prices
House prices rose in March for the first time since October 2007, according to the Nationwide. The building society said that property prices increased by 0.9% compared with the previous month. That reduced the annual rate of house price falls from 17.6% in February to 15.7% in March, with the average UK home costing £150,946.
Confidence will be eroded further
The New York Times: Obama’s Ersatz Capitalism
THE Obama administration’s $500 billion or more proposal to deal with America’s ailing banks has been described by some in the financial markets as a win-win-win proposal. Actually, it is a win-win-lose proposal: the banks win, investors win — and taxpayers lose. Treasury hopes to get us out of the mess by replicating the flawed system that the private sector used to bring the world crashing down, with a proposal marked by overleveraging in the public sector, excessive complexity, poor incentives and a lack of transparency.
Wednesday, April 1, 2009
Estate Agents Comedy Act arrives in Chelmsford
Essex Chronicle: At long last, house sales are starting to pick up
"I keep telling my friends with children wanting to get onto the property ladder that you'll never get a better opportunity than now – mortgage companies are lending and it's much more expensive to rent these days than pay a mortgage." "Chelmsford attracts a wide variety of people including families and commuters. "It is all about confidence. At the moment Chelmsford has been able to retain its unique bubble from the rest of the housing market and people are now feeling more positive about the situation."
Backlash
Sky: Arrests As G20 Protesters Go On The March
My mate discussed the forthcoming march on Monday. He's wearing a bright yellow top with POLICE on the back. He feels pretty much the same as many of the protesters and is hoping that they stick to throwing soft fruit.
Cattles Slaughtered
BBC: Sub-prime lender facing £700m hit
"Last month, it said there had been a failure of internal accounting controls and it had suspended senior managers. Batley-based Cattles trades under the Welcome Finance brand, and it also owns debt recovery firm Lewis". Cattles said an investigation was still continuing into how and why the estimates of bad debt was miscalculated.
The markets in action ...
Metro: Britons reduce mortgage debt by £8bn
The short article in full "Britons reduced their mortgage debt by a record £8 billion during the final quarter of the year, figures showed today. The amount of equity people withdrew from their homes was negative for the third quarter running, as they instead made the biggest net injection of equity since records began in 1970, the Bank of England said. It is only the third time that housing equity withdrawal has been negative since 1998, with the rate at which people are repaying their mortgage accelerating from the third quarter, when net repayments of £5.9 billion were made."
The demise of the dollar
MoneyWeek: The demise of the dollar
With America's foray into quantitative easing and China calling for a new world reserve currency, the dominance of the dollar is under threat...
Propertybee sells out
Propertybee: Rightmove acquires property-bee.com
**** April Fools!!! **** Looking forward to hearing more from Beerhunter on the consequences of this for coverage of other sites etc. "Rightmove. (FSTE: RMV) today announced that it has acquired property-bee.com. The purchase of property-bee.com, is a key part of Rightmove's strategy to provide a range of new initiatives in the rapidly developing area of web based services to buyers. Following the acquisition, property-bee.com will continue to operate independently to preserve its successful and passionate community. Commenting on the purchase Milles Shipside, commercial director of Rightmove said: "I'm delighted that we have been able to secure this deal. property-bee.com has become a revealation that is difficult not to admire."
Hyper-inflation or hyper-deflation?
Antal E. Fekete via Market Oracle: The Marginal Productivity of Debt, Why Obama's Stimulus Package Is Doomed to Failure
I hesitated to post this because it is too apocalyptic. However, I believe it has something intelligent to add to the inflation vs deflation debate. It concerns the cost of holding debt. If you have a profitable business taking on debt to expand can be profitable. But there is a point where more debt is no longer profitable. That point has now been reached; we are "eating our seed corn". More debt now actually harms the economy. Growing government intervention causes debt to grow. The only profitable investment speculation now is goverment bonds. Money printed is needed to pay off debt and does not go into circulation. Money printed during quantitative easing (buying up government bonds) causes the economy to contract; a vicious circle causing asset and commodity prices to fall-deflation
Falling Fast
Daily Telegraph: US property prices down 29pc and still falling fast
US house prices have fallen 29pc from their peak and are still tumbling at the fastest rate on record, according the closely watched Case-Shiller index.The latest figures dash hopes that emergency action by the US Federal Reserve over the winter would at least slow the pace of decline. Prices dropped 19pc in the 20 largest cities in the year to January, with an accelerating downward lurch during the first weeks of 2009.
It's not over yet
Daily Mail: Homeowners face further falls in prices
House prices in Britain have nowhere near bottomed out even after a 20 per cent dive, the Organisation for Economic Cooperation and Development warned yesterday. Property values are still 140 per cent of their historic averages, suggesting further declines are unavoidable, the Paris forecaster warned. Economist Petar Vujanovic of the OECD said: 'Affordability is still nowhere near back at what it has been historically. So we think it has got a way to go."