July 2009 Archive
Thursday, July 30, 2009 
The Daily Show on the US Housing Market and Tim Geithner
The Daily Show: Home Crisis Investigation
This is VERY good -- and it's John Oliver doing the report as well!
Less Evil Now!
MSN: Could you be a professional witch?
An estate agent will swap selling houses to live in a cave after winning a £50,000 job as a witch at the Wookey Hole Caves tourist attraction.
Could We All Be Winners From This Crash?
The Economic Voice: A Coordinated Property Crash part 2
This is the second part to an "Evolving" proposal for a way out of this mess. All HPCers have the potential to add to this proposal which if far from perfect but if adopted could be a rallying call for many.
Citywire response to Nationwide's latest survey
Citywire: Nationwide house price rises – don't believe the hype
It can’t really be happening, can it? Surely house prices can’t be rising again, even before the last bubble has properly burst? Apparently so, according to today’s monthly survey from Nationwide, which shows average house prices climbing for the third consecutive month in July. One month of rises could be a blip, two an anomaly, but three? Three is starting to sound like a trend, isn’t it? Nationwide is even daring to suggest that prices may end 2009 higher than where they started. How depressing. Only in this country could we get so excited about the level of house prices over the course of a few weeks on the back of pitifully low levels of activity.
Another pathetic by Nationwide to talk up the market
Citywire: Nationwide house prices - don't believe the hype
"It can’t really be happening, can it? Surely house prices can’t be rising again, even before the last bubble has properly burst?"
Not so full of 'advice' these days
Guardian: Question Time: Phil Spencer
It is a beautiful thing when the boomtime property shills and gloaters get their comeuppance.
Will it go negative?
Bank of England: Lending to individuals, June 09
The lowest ever nett lending figure - but will it now dip into negative territory? Those who know how to post graphs here might care to dig out the data series LPMVTUV from the bank's interactive database - I'd like to know what the graph analysts reckon will happen next..
Nothing clever in this.......
BBC News: Homes 'may rise in value in 2009'
''The Nationwide's latest house price survey showed prices rose by 1.3% in July compared with the previous month.''
Don't ignore information just because it's not convenient
Business Week: Obama Denies That He's "Antibusiness"
For the transition and the first three months of the Administration, we were in crisis mode. A huge amount of the conversation revolved around how vulnerable the financial system is, what's required to stabilize it, and how we make sure that as we stabilize the banking system we're not creating new problems in terms of moral hazard or squelching innovation.
Wednesday, July 29, 2009
Blatant stockmarket 'ramping'.
Telegraph: 'Stockmarkets climbing wall of worry'
If that analogy holds, we can expect to see some market gyrations in the short term as investors wait for further evidence of economic and corporate improvement, which may be a few months away. Markets always have to climb this wall of worry and the fear of being left behind will become increasingly strong.
HFT goes mainstream
Telegraph: Is high frequency trading a good or bad thing?
Prices in financial markets always balance supply and demand. But when the price changes themselves influence the supply and demand, some odd things happen.
Dr Doom speaks
You Tube: Dr. Nouriel Roubini
If there is one thing you need to watch ..... this IS IT.
Where's Howard when you need him?
Guardian: Savers drain £2.3bn from building societies
The difficulties facing building societies were highlighted today with figures released showing they suffered the biggest monthly outflow of savings for 54 years in June — and warnings of continued withdrawals as unemployment forces savers to dip into their nest eggs.
To QE or not QE, that is the question...
Telegraph.co.uk: Lending data raises quantative easing fears
Renewed concern about the effectiveness of the Bank of England's quantitative easing policy surfaced on Wednesday after the release of data showing consumer borrowing is down to its lowest level for 15 years. A sharp drop in money supply figures added to the worries but a further rise in mortgage approvals provided more pointers to stabilisation in the housing market although many potential buyers say they are struggling to find money.
A lesson for our time and our sellers?
New York Times: As Prices Plummet, Condo Sales in Miami Perk Up
Despite a vast oversupply of new condos in downtown Miami, sales have been brisk lately at 1060 Brickell Avenue, a twin-tower development with 570 units in the heart of the upscale Brickell neighborhood. The reason? Prices have been cut in half, to about $200 a square foot.
Comedy club replay (The only way is up)
Times: Live debate: Has the housing market bottomed out?
Times Money’s panel of experts will debate with readers the question on everybody’s lips: has the housing market bottomed out? GUESS WHO? - a property adviser and developer. He is an active property investor himself with a large property portfolio including new-build student accommodation, buy-to-let, overseas and UK holiday-let properties and commercial offices.
Greed backfires
Guardian: Mortgage holiday request denied
Last week I asked my mortgage company for a repayment holiday. They said no. It was the grounds for the refusal that was the most galling part. We bought the house five years ago with a 5% deposit, which we did not feel was a particularly risky strategy. But now our loan-to value is 103%, and the bank does not offer payment holidays above 90%. We didn't plan on being in negative equity. Three years ago after business problems we took out an IVA. We could have gone bankrupt, but we would have had to surrender the equity that had accrued in the two years since buying, and at that stage we still had some. That seemed worth protecting even though it meant renting out three bedrooms. Now we have three lodgers, no equity nest egg, and are struggling to meet the repayments.
Estate agent is a witch
HIP-Consultant.co.uk: Estate agent turns to witchcraft
Probably many thought this and is sure to raise a smile to all. Funniest thing i have come accross for some time
At last a thumping great loss
Channel 4: Property Snakes and Ladders
This is essential viewing for anyone who missed it last night. You get to listen to a real life 'Tim nice but Dim' and get to enjoy Sarah at her best stating the obvious which is falling on deaf ears. My favorite quote : Don't make it too trendy as by the time you sell it for what you want in about 10 years it may well have gone out of fashion. Great stuff Sarah - keep it up.
Average House Prices Will Fall To £70,345
MSN: Internships could tackle soaring unemployment
Ignore the actual article; I posted the first thing with unemployment in its’ title, so I could follow on from last night’s unemployment correlation post.
100% deposit ratio
Grepytel: Largest heist in History
This article is a bit old so maybe you read already. But anyway explains the current crisis in terms of basically fraud centered on the loan deposit ratio, aka credit creation, and explains the difference between the finite amount of money created with 100%. Proposes that because the banks are irretrievably(as in cannot be rescued) bust, we should be looking to liquidate and recover fake money from the fraudsters as the only way out. The only bank that had a deposit ratio of
What national rebound?
Las vegas sun: Home prices tumble in Vegas despite national rebound
you gotta read the comments, people have changed attitude totally now...
Big numbers
Zero Hedge: Fitch: Financial Companies Hold 99.7% Of All Derivative Contracts
The companies in question (Total Notional Derivatives: Assets & Liabilities, $ in Trillions) * JP Morgan:$81.7; * Bank of America:$80.0; * Citigroup:$31.5; * Morgan Stanley:$39.3, and of course * Goldman Sachs: $47.8 (this is an OCC estimate: Goldman has not disclosed notional amounts in their derivative book, only # of contracts)
But i thought it was going up?
Yahoo: BSA gross mortgage lending falls 40 percent in June
Gross mortgage lending by British building societies stood at 1.976 billion pounds in June
BBC Reports Bank of England Figures
BBC News: Mortgage approvals 'on the rise'
"Signs of a further pick-up in the housing market during the summer have been revealed in the latest figures from the Bank of England."
Fears of hyperinflation has apparently led to a run on precious metals
CommodityOnline: Swiss banks have no space left for gold!
By all accounts Swiss banks have no more secure storage for precious metals, especially gold bullion. The reason, apparently, is the fear of hyperinflation, combined with the success of gold index funds. The amount of gold links on the site would indicate just a touch of ramping. Bubble anyone?
Still being strangled by high prices more like
Telegraph: Housing: still being strangled by the credit crunch
Conway argues that the UK is heading down the same route as Japan because of the pesky transmission mechanism meaning that banks horde cash rather than lending it against falling assets like residential property. This really shouldn't be a surprise to anyone least of all the BoE and government who seem stunned that we're replaying the fallout from the Asian Financial Crisis to the letter. Anyway, as a demonstration of how the transmission mechanism is failing, look at the graph and note that Conway says that the Skipton BS has increased its cash holdings tenfold "from just over £150m this time last year to £1.1bn". Skipton has also tried to convince the public that the housing market has bottomed out. What does this all point to? The banks want to lend but no-one wants their money.
Tuesday, July 28, 2009
Live debate on house prices
Times Online: Live debate: Has the housing market bottomed out?
On our panel tomorrow: Andrew Ellson Andrew Ellson is Personal Finance Editor of The Times and has been writing about the housing and mortgage markets for the last five years. In 2008, he was awarded Mortgage Writer of the Year at the Personal Finance Media Awards. You can follow Andrew Ellson on Twitter at www.twitter.com/andrewellson David Hollingworth David Hollingworth is Head of Communications at London & Country, the mortgage broker. Stuart Law Stuart Law is Chief Executive of Assetz plc, a property adviser and developer. He is an active property investor himself with a large property portfolio including new-build student accommodation, buy-to-let, overseas and UK holiday-let properties and commercial offices. NOT TO BE MISSED!
World blames banks and US
Worldpublicopinion.org: Publics want more aggressive action on economic crisis
A poll of world opinion (in countries that together have 62% of world population) on the recession (what caused it, what should be done). Half the world blames the US, though almost as many blame their own governments. When it comes to blaming consumer debt in their own countries Britain comes top (83%) and the US is up there with 74%. Way down is China (13%). Britain also comes out top at blaming its own bankers for taking "excessive risks" that contributed "a lot" to the recession. The % blaming their own bankers and "international bankers", respectively, in this way: Britain 89% - 79%. Germany 78% - 88%. US 77% - 57%. Americans come out high on laissez-faire - opposed to bailouts of car manufacturers and banks and far less in favour of international regulation of finance than Europeans.
Amreekan green shoots
Telegraph: Case-Shiller index shows first rise in US housing prices for 3 years
Hopes that the US housing market is recovering have been raised after the closely-watched Standard & Poors/Case-Shiller index showed its first month-on-month increase in almost three years. Prices rose 0.45% on the month, although prices remain down 17% from last year.
More bottom-picking
Telegraph: Skipton calls bottom of housing market
Skipton Building Society has called the bottom of the housing market, and is forecasting growth in profits this year in spite of a prediction of "further bumps along the road to recovery". Speaking after the society reported first-half profits of £17m, David Cutter, chief executive, said: "Our view is that house prices have bottomed out, but we remain cautious." He said indicators at Connells, the group's 460-branch estate agent, "suggest we've hit bottom, but it will depend on unemployment".
From Estate Agent To Witch!!!
BBC NEWS: Wookey Hole employs new witch
An estate agent has won the job of being the new witch of Wookey Hole, beating around 1,000 other applicants. Caroline Bohanan auditioned with 300 other would-be witches, who were told they must like cats, caves and cackling........................................Does the cave benefit from a large bat colony and have scope to be divided into flats?
One for Paul!
Love money: How job losses affect house prices
"According to my nifty spreadsheet, the correlation coefficient in my example was -0.81. In other words, when unemployment rose, house prices dropped 81% of the time, and vice versa. This is quite a strongly negative relationship." Not exactly thesis standard but hey...
How to interpret the Dow Theory bull signal, according to Richard Russell
Investment Postcards: How to interpret the Dow Theory bull signal, according to Richard Russell
There was a great deal of interest in the recent Dow Theory bull market signal on the US stock markets. Investors had many questions on what brought about the Dow Theory bull signal, and specifically whether Richard Russell, "Mr Dow Theory" and the 85-year old author of the Dow Theory Letters, was the last bear standing when he replaced the bear on the first page of his daily newsletter with a long-horned Texas bull. Who better to ask for an explanation than the R man himself?
Will the FTSE 100 break a new record today?
MoneyWeek: How much higher can the FTSE 100 go?
The index closed up 9 points yesterday. That made it the 11th winning session in a row. That's the longest streak of gains seen since early 2004. It's never managed 12 in a row before.
The next sub-prime is coming...
Telegraph.co.uk: Credit card crisis to grip Britain, IMF warns
Britain’s credit card debt crisis will get significantly worse in the coming months with a wave of consumer payment defaults, the International Monetary Fund has warned. The organisation expects £1.5bn of consumer debt across Europe will not be repaid, much of it in Britain which has the highest number of credit card borrowers on the continent. Analysts say failure to pay credit card bills is likely to increase as unemployment rises and the number of personal insolvencies, which reached 29,774 in the first quarter of the year, continues to rise.
Does he know something we don't?
Sharecast.com: UKFI chief Kingman steps down
LONDON (SHARECAST) - John Kingman, the chief executive of UKFI, the body controlling the government's stake in Royal Bank of Scotland and Lloyds, has stunned the City by handing in his resignation.
Slight rise in UK house prices
Breakingnews.ie: Slight rise in UK house prices
House prices in England and Wales moved upwards for the first time in almost a year and a half in June, figures revealed today. The average cost of a property in England and Wales increased by 0.1% during the month, following a 0.2% slide in both April and May, according to the UK Land Registry. The group said the June rise is the first positive monthly change since January 2008.
More ramping
BBC: First 2009 rise for house prices
As we know from experience, HMLR figures just lag Nationwide/Halifax by two or three months, so this is hardly surprising and we can expect similar headlines for the next couple of months, even after Nationwide/Halifax start reporting price falls in Autumn.
Land Registry June Figures - +01.%
Land Registry: Land Registry June HP Index
Land Registry June figures - +0.1%. This is the first positive number since January 2008, and most likely represents transactions agreed during the Spring, when the 'bounce' was at its peak. London is up 2% overall MoM.
More QE
Telegraph: The UK economy is still too sick to throw away its QE prescription
It is still relatively early days, but the plain truth is that so far, quantitative easing has not worked: it has not lessened the credit crunch, as we can see from the row over bank lending rates; it has not stimulated the economy – that was done by the cuts in interest rates over the past year and the cut in VAT.
Gilt yields irrelevant
Guardian: To make matters worse, foreign investors, which own about one third of UK government debt, could also be drawn away as the pound falls,
"To make matters worse, foreign investors, which own about one third of UK government debt, could also be drawn away as the pound falls,"(sic)(as the already fallen pound continues to fall). Does anybody think foreign investors care if gilt yields are 3.5 or 3.7 when the currency they are denominated in has fallen by 25%, and the incumbent government clearly wish to devalue going forward.
Reduced Mortgages..Rising Unemployment = ?
This is Money.: Mortgages £1,800 a year too expensive
Homeowners are paying an average £1,800 a year extra for their mortgages as banks fail to pass on cuts in borrowing rates All the big lenders, including those saved from ruin by the taxpayer, are ramping up loan rates at the expense of families and businesses, a Daily Mail investigation has found. Bank base rate has plunged to a historic low of 0.5%, but business organisations say their members are going to the wall because they cannot gain access to credit, while homebuyers are struggling to find mortgages and then having to pay over the odds.
Monday, July 27, 2009
Tale of two cities: Halifax's London and Nationwide's
Halifax: 2nd quarter 2009 London figs
Halifax quarterly figs slipped out on Friday (24th), with average London price declining to £23,250. There's a marked difference now between the Halifax picture of the capital, with a 26.06% fall from peak, and Nationwide's, where the same figure is just 15.55%. Halifax started out with a higher peak average, but even so the treatment of the quarter just past is remarkably different with Haliax showing a decline of 1.68% against Nationwide's rise of 4.8%.Are they still talking about the same city?
Déjà vu - CDO's back in the news, remember them
Asset Backed Alert: Coming Sales Threaten Mortgage-Bond Gains
"An anticipated gush of selling could cause the values of mortgage-related bonds to whipsaw in the coming months...A hint of the coming secondary-market supply was seen this week, when bondholders voted to liquidate Kent Funding 1, a CDO that Declaration Management issued in 2005 at a face value of $1 billion. The investors gained that power after the transaction hit an event of default on June 4...Of course, troubled CDOs have been unwinding all throughout the financial crisis. But a growing number of investors in those vehicles are expected to push for liquidations in the next 6-12 months, as the debt market's struggles continue. In many cases, they could be swayed by a desire to take advantage of the recent pricing rally."
Latest idea to stimulate the beleaguered UK residential property market
FT: Aviva to launch £1bn fund for rental market
Aviva is to launch a £1bn fund which will buy and rent out large numbers of new-build residential properties, with the aim of stimulating the beleaguered residential market.According to FTAdviser's sister paper the Financial Times, the new investment fund will be launched in partnership with CB Richard Ellis, the property consultancy and a major US residential manager.Aviva's plans are intended to answer government calls for greater institutional investment in the suffering residential market, making the venture the first of its kind in the UK. The Financial Times reports the fund will pre-order purpose-built residential blocks of 100 units or more in the south-east to rent out, mainly around major transport hubs and on significant regeneration sites....
Citywire report on Hometrack latest findings
Citywire: Housing market’s north south divide widens
The housing market is splitting down the middle, with a scarcity of houses putting upward pressure on prices in the South of England, while difficult market conditions remain the key in feature in the north. While house prices across the England and Wales were flat for the third straight month in total, Hometrack reports ‘the emergence of a clear split in market conditions’ between the north and south.
Really?
Independent: Housing slump could have bottomed out
House prices were unchanged in July for the third month running, housing market analyst Hometrack said today, suggesting the slump in the property sector may finally have come to an end.
Sunday, July 26, 2009
Stop worrying - we'll save you ( and pay for your bonuses too)
The Times: Banks set for losses as clock ticks on £300bn commercial property loans
Banks could be heading for a second wave of big losses as financial institutions begin to tackle the crippling legacy of £300 billion in lending to the UK commercial property sector.
UK was clever to let the pound devalue early in the cycle; Europe will be less lucky
Telegraph: Iceland's krona proves the magic wand as Europe ails (Ambrose Evans-Pritchard)
Iceland is over the worst. The country has defied the global shipping crash to eke out an 11pc rise in exports over the last year. Iceland will be back in surplus by next year, from a peak deficit of 25pc of GDP. Icelanders have taken a hit, of course. Unions have accepted 'real' wage cuts of 10pc. Health care and welfare is being cut 5pc, education 7pc, and the rest 10pc. However the jobless rate has risen to just 9.1pc. This is below the eurozone average of 9.5pc, and is stabilising much earlier. Nothing is cheap, but prices have come within reach. Reykjavik's cafés are packed with euro-youth, at last able to afford a taste of all-night dancing at this Arctic Ibiza. Out in Iceland's Eastern fjords, Alcoa has raised aluminium production to record levels.
Another one (seven) bites the dust...
Bloomberg: Lender Failures Reach 64 as Georgia Shuts Security Bank’s Units
check this one: http://www.securitybank.net/ and this one: https://www.waterfordvillagebank.com/home/home then go to Bloomberg and search the news
Emergency resuscitation for FTBs prior to election
Guardian: Ministers consider scheme to guarantee mortgages
"Treasury could underwrite 'risky' home loans Proposed scheme pushed by US insurer Genworth. First time home buyers could be thrown a lifeline under plans being considered by the Treasury to underwrite 'risky' mortgages, allowing people with only small deposits to buy homes. Since the credit crunch took hold, banks have demanded far tougher criteria for lending, asking buyers to provide between 25% and 30% of the price of a home as a deposit." So the state will intervene with taxpayers money at this stage of the economic cycle?
But you promised.....
Guardian: Darling tells banks to live up to lending promises
Darling puts on his stern look and tells the banks they failed to keep their promises to improve lending facilities in exchange for taxpayer support. Either (a) he's committed tens or hundreds of billions in exchange for nothing more than a verbal, easily broken promise from cowboys who played fast and loose with the financial system or (b) despite the bailouts banks are having real problems lending but Darling doesn't understand what those problems are or (c) he's misleading us. NB it's illegal to keep badgers as pets but you can rescue them as long as you hand them in shortly thereafter.
Usury and the banks
Guardian: Banks show little interest in lending
There is growing public discontent with banks, and the issue is spanning traditional religious divisions, as RBS chairman Sir Philip Hampton discovered last week. He was handed copies of the Torah, the Qur'an and the New Testament by religious leaders protesting about exorbitant rates of interest.
Groundhog Day
Telegraph: Huge gilts row barely registers as the UK sleepwalks into stagnation
The UK's inter-bank market remains gridlocked largely because banks are still unwilling to lend to each other. That gums up the wheels of finance, starving credit-worthy firms and households of the cash they desperately need. This inter-bank torpor stems from fear of counter-party risk, because our banks continue to sit on billions of pounds of toxic liabilities which they still refuse to reveal.
Savvy investors benefiting from end of house price crash, apparently
Times: How to cash in on the credit crunch
Two years after “credit crunch” virtually felled the housing market, a group of definite “winners” has emerged from the rubble. A fortunate few have managed to make the most of the downturn thanks to clever dealing, far-sightedness, serendipity. Lower asking prices, low interest rates and higher rents were tempting prospects for investors looking to increase their portfolio or acquire their first buy-to-let. The desire not to miss low-price opportunities has grown — So much so that some parents are using their children as a vehicle to plough money into property. IT consultant Richard invested in two city centre properties in February this year. "I reckon I must have bought on the day the market hit the bottom" he says.
'How come nobody could foresee it?'
The Guardian: This is how we let the credit crunch happen, Ma'am ...
A group of eminent economists has written to the Queen explaining why no one foresaw the timing, extent and severity of the recession.
Finance for Buy To Let from China
FT: Bank of China offers mortgages to UK borrowers
The Chinese bank’s tracker rates, available for homeowners and buy-to-let customers, start at 2.5 percent above the base rate, the newspaper said. The bank is marketing its loans through four distributors including Savills and Legal & General Mortgage Club. China's US dollars reserves have to be invested before they becomes worthless. UK mortgage market is ideal cause it holds its value still...
Print more money to destroy the pound and trigger inflation?
Bloomberg: Blanchflower Says BOE Risks Choking Off Recovery
Former Bank of England policy maker David Blanchflower said the central bank risks cutting the economic recovery short and should expand the program to buy bonds with newly created money. The honourable gentleman although no longer working for BOE still advices on creating worthless paper money.
Goodbye safe havens, hello risky assets
Investment Postcards: Words from the (investment) wise for the week that was (July 20 – 26, 2009)
“Goodbye safe havens, hello risky assets” seemed to be the theme during the past week as investors placed their bets on a global economic recovery, propelling stocks and other risky assets higher amid better-than-expected earnings reports and tentative signs of stabilization in the US job and housing markets. Global stock markets, commodities, oil, precious metals, high-yielding currencies and corporate bonds also put in a stellar performance as a bullish mood prevailed. 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/2009/07/26/words-from-the-investment-wise-for-the-week-that-was-july-20-%E2%80%93-26-2009/
Competitive devaluation
Asia Times Online: Bernanke still a speed demon
This article makes some interesting points and argues that major economies have resorted to a defence against a devaluation policy pursued by the US, in particular the Euro appreciated 88% against the dollar between 2000 and 2008. This resulted in the asset bubble. Bernanke is blamed particularly for not realising the bed debt consequences of an easy money policy also " his theory, inflation was related only to the output gap. " . The output gap is criticised for being arbitary and meaningless in cases where " current account deficit is large, an economy has no slack resources " i.e.(presumably) were the output gap to be filled it would out of debt driven necessity be appropriated by government, Zimbabwe as example. Argues against zero interest rates.
Saturday, July 25, 2009
Surely they aren't profiteering?
BBC: Banking costs 'put up mortgages'
Financial website Moneyfacts claimed mortgage profits had increased nearly fourfold in recent months, with typical fixed-rate deals also going up. The British Bankers Association has defended the rise in the cost of borrowing - despite the base rate remaining at a record low.
Banks run out of cash to fuel the rally
Telegraph: Banks 'ration mortgages even for five-star home buyers'
There may be plenty of clean credit record people who are willing to provide big deposits and take on huge mortgages, but the banks are running out of money to service them all. In other words - anyone remember the credit crunch? Well it's not gone away.
The UK can't measure the output gap
Investors Chronicle: Output gap points to deflation
This article has a chart showing output gap vs inflation which correlates fairly well from 1984. The BoE uses measurements of the output gap as a primary influence on inflation predictions (not so much money growth..). Currently deflation is predicted because the output gap, the difference between production and capacity production is large and growing. But, in this particular article but mainly elsewhere, there are mumblings that measurements of the UK output gap are highly inaccurate, namely that while we have floated on financial services GDP contribution, our actual production is very low. This seems reasonable because our high imports/trade deficit. The consequence of over-estimating the output gap to decide policy is high inflation (which will come as a surprise).
Now the Chinese are conspiring to keep house prices unafforable
Ft.com: Bank of China offers mortgages to UK borrowers
Bank of China, the world’s third largest bank, has started offering mortgages to credit-starved British borrowers at rates that undercut many of the deals available from established UK lenders. The bank, which has previously focused on Chinese communities in the UK, wants to become a household name alongside lenders such as HSBC and Barclays.
Lighthearted challenge
This is money: House prices caption competition
Enter your caption in the comments box at the bottom. Rules: No filth. No prizes. Just make us laugh - or think.
Keeping the UK out of the black and in the red
The Daily Mail: Benefits cheat who claimed she could not walk is caught out... after winning darts tournament Read more: http://www.dailymail.co.uk/news/article-1201924/Benefits-cheat-claimed-walk-caught--winning-darts-tournament.html#ixzz0MFl7jtIo
A female darts champion who claimed she was too disabled to work was exposed as a benefits cheat after she played in a string of tournaments.This type of benefits fraud is repeated many millions of times throughout the UK. Of course Mr Brown doesn't want to tackle it too heavily because such people along with 5m civil servants forms the core of Labour support. Take away the bankers, the thieving chavs and Labour's client state and lets look at what we could have won. "Its a thriving prosperous economy and could have been ours in the throw of a dart."
More ramping from the Ashworth
Times: How to live in Chelsea on the Cheap
So, the sun rose in the east again this morning and Ashworth is busy doing what she does best - ramping. This time she extols the virtues of part ownership, using a 40 year old on a £50k salary buying a 35% share of a 2-bedroom flat in Ealing as an example. IF SOMEONE EARNING £50k CANNOT AFFORD TO BUY A WHOLE FLAT IN LONDON, THEN PROPERTY IS STILL MASSIVELY OVERVALUED!
Friday, July 24, 2009
You know it.
Telegraph: British economic collapse rivals Great Depression
The collapse in Britain's economy now rivals the worst days of the Great Depression, it has emerged.
Assetz says up, rest say DOWN!
Money Week: Moneyweek: Roundtable's Where next for the property market
Moneyweek invite the best (LOL) experts to discuss the state of the British property market. Is the bear market over – or are signs of recovery just a blip? Well worth a read and apologies if a re-post.
Please give him your best wishes
The economic Voice: Only In Great Britain................
Completely off topic I know, but please ignore the article. For anyone who know Titanic Captain please his first comment.
It ain't over till it's over!
Mail online: Recession twice as deep as 1990s as economy suffers worst slump since records began
"The size of the drop came as a surprise, as the City had predicted only a 0.3 per cent decline following signs of a pick-up in the housing market and High Street spending".
Bloomberg Video: Thoughts on the GDP figures.
Bloomberg.com: Wraith, Shaw, Kendrick's Own Words on Slump in U.K. GDP
Worth a look for the opinions on what the figures mean. Most take a dim view on the outlook for early recovery..
All roads lead to Rome.
Sky: Car Production Falls By More Than 30%
"As production volumes and registrations begin to stabilise, Government must help to sustain consumer confidence and encourage banks to deliver the credit industry needs."
More data
FT: GDP shrinks at fastest rate for 60 years
Britain’s economy contracted in the second quarter, marking a full year of decline sharper than any since the 1930s barring that of second world war and its aftermath.
Dr. Michael Hudson on Real Estate and the Real Economy
The Renegade Economist: Renegade Economist US Special with Dr. Michael Hudson
The Renegade Economist ventures to New York to hear Dr. Michael Hudson's view on the state of the global Economy. Simply put - you won't hear this stuff on the BBC.
And dow for the Bull!
Dow Theory calls a bull market: Investment Postcards
Sorry about the "pun"ishment but worth a look.
It seems we may take a little longer to “get back to normal”
MoneyWeek: Britain’s economy is still in real trouble
There's a continued growth in mortgage approvals and more upbeat news generally so what's with this awful GDP figure?
B, B, B, But what about all those green shoots?
Yahoo News: UK economy suffers further slump
The recession-blighted UK economy shrank by a far worse than expected, 0.8% between April and June, gloomy official estimates showed. Well here's a MSM news article that completely goes against the grain of all that greens shoots nonsense they've been feeding the public for the last few months. About flippin' time.
Still in Recession
BBC News: UK economy continues to contract
The UK economy contracted 0.8% between April and June, more than double the figure economists had expected. The bottom line was that today's number is pretty dire, and a sharp wake-up call for anyone who had already been dreaming of recovery
Property professionals useless? Surely not
Guardian: How the surveying profession failed
"Valuers live by the maxim that the price of a property is the amount that someone is willing to pay. But this has turned out to be nonsense. In truth, the price of a property is the amount someone is willing to lend you to buy it. Value is not in the eye of the beholder, it's in the spreadsheet of a lender."
Will this new stimulus succeed? Will the depression end soon? ‘No’ is the right answer
Fleet Street Invest: The U.S. Depression Must Run Its Course
' “These are not layoffs... they’re permanent job losses,” said Barry Rithotlz this morning. “These people are not going back to work anytime soon.” That is the difference between a recession and a depression. In a recession people get laid off... and then they are called back to work when things go back to normal. But in a depression, they are let go permanently.' Bill Bonner hits the nail on the head in this article in my view, I've got a few Uni mates now who are employable but have been laid off and have not found any work for over 6 months despite their efforts (all with mortgages and young families). Common sense says another market correction event has to happen in the next 6-12 months. HPC should follow, resilient though it seems...
Index up 31% since 6 year low in March.
Times: FTSE aims for 10th day of gains
So far today FTSE is up 0.71 and looks likely to achieve its 10th day of gains. Will the recent gains pull those adopting a "wait and see" approach back in and propel the markets forward?
UK GDP Contracts Further Than Expected
ONS: UK output decreases by 0.8 per cent
Gross Domestic Product (GDP) decreased by 0.8 per cent in the second quarter of 2009, compared with a decrease of 2.4 per cent in the first quarter. The decline in output was due to decreases in all component aggregate series. Construction output decreased by 2.2 per cent, compared with a decrease of 6.9 per cent in the previous quarter. Total production output declined in the second quarter, decreasing by 0.7 per cent, compared with a fall of 5.1 per cent in the previous quarter. Electricity, gas and water made the largest contribution to the decline falling by 3.8 per cent, compared with a fall of 3.7 per cent in the previous quarter. Manufacturing output fell by 0.3 per cent compared with a decrease of 5.5 per cent in the first quarter. Mining and quarrying fell by 1.0 per cent...
Thursday, July 23, 2009
235bn US bond sales coming this week
Deninnger: HOLY !@#!! Treasury Auction Schedule
This article was flagged up by Quiet Guy in the thread of a gold article posted earlier today, so credit to him. It need it's own article though. 235bn annualised is 12 trillion dollars. How long can this insanity go on? When will China and the world finally say no thanks?
Subprime Homesick Blues
FT: S&P SUBPRIME REVISION
These 'assets' are held around the world... (nb i think my title is cracking)
Quick, quick, get in now before there's a stampede (says an EA)
NY Times: Prices for U.K. Properties May Be Bottoming
"I believe that the market will bump along for the next year or so, but as soon as the banks’ confidence begins to slowly return, especially to the U.K. property market, then we will see the bottleneck of people currently waiting to buy come forward. When that happens, demand for good property will go through the roof, and finding a bargain will be much harder than it is now. Anyone looking to buy should consider borrowing as much as you can. With interest rates so low, borrowing to buy property can be excellent way of stretching your dollar, yen or euro." Oh come all ye international buyers, a Knight Frank sales pitch... However this bonkers market continues, wreck in Sevenoaks (albeit with 2/3 acres land, OK location) went on the market today and sold immediately, WTF...
Green shoots galore
Bloomberg: U.S. Stocks Rally, Dow Tops 9,000 for First Time Since January
The Dow is over 9,000. What, 9,000? There's no way that can be right!!!
Bigger than expected jump in US house sales and company earnings propels markets forward
New York Times: Report on Home Sales Gives Wall Street a Push
Markets had already been reacting positively to better than expected earning reports have now been pushed onwards by better than expected volumes of house sales providing hope that housing and the overall economy are in or approaching recovery.
Average home price falls 15.4% from last June.
Cnn: June home sales flat - again
For the ninth straight month, home sales were below the bench mark 5 million rate. Average home price falls 15.4% from last June.
To lend or not to lend, that is the question...
BBC News: Business still being crunched by banks
The chief executives of our biggest banks have been summoned to the headmaster's study on Monday morning. Alistair Darling, Peter Mandelson, Shriti Vadera and Paul Myners will grill the bosses of Royal Bank of Scotland, Lloyds, Barclays, HSBC, Santander and Nationwide about whether they are lending enough to support an economic recovery - and, in the case of Royal Bank of Scotland and Lloyds, whether they are lending what they promised when kept alive by a massive injection of public funds.
Take a look at what's going on in Spain
MoneyWeek: A warning from Spain about the property market
Almost every day, it seems, someone else wants to tell us the housing market's picking up. On Tuesday, even the taxman had a go. Apparently the number of British homes sold (for more than £40,000) was up 15% in June compared with May. That followed Monday's upbeat message from property website Rightmove that house prices are bottoming out. Don't believe it. If you want a glimpse of just how badly things can go wrong, take a look at what's going on in Spain...
ONS Rubbish
BBC News: Big jump in retail sales in June
How can this possibly be true? All the negative economic factors, rampant unemployment, wages down, everyone saving rather than spending and the ONS reports we are spending more in the shops! IDIOTS!!!
OK- Panic Over, Sell Gold
Telegraph: Gold rush over as demand slows
"The gold price increased modestly in the second quarter, supported by ongoing inflation fears but demand for gold from private investors has slowed after its record start to the year, according to World Gold Council's latest Gold Investment Digest". Iterestingly, " The recent study, which examined the relative performance of four traditional inflation hedges (gold, real estate, Treasury Inflation-Protected Securities (TIPS) and general commodities), found that in two of the three historical scenarios gold would likely outperform other traditional inflation hedges". (Does anyone think House Prices will perform better than Gold by Christmas?)
Would never happen here
Bloomberg: South Korea may act to cool property market
South Korea may act within “two to three weeks” to cool property-market speculation after gains in house prices, government minister Chung Jong Hwan said. The government “sees speculative demand in some areas and we won’t allow it,” Chung said. The central bank is monitoring a “big” increase in mortgage lending and a pickup in real-estate prices, Bank of Korea Governor Lee Seong Tae said. Record-low interest rates that are stoking the nation’s economic recovery may also inflate property-price bubbles. “The government is afraid excessive idle money is flowing into the property market, driven by record-low rates,”
Innovative ways to conceal future market fears
Times: Mortgage deals mask hidden catches
Building societies preying on people by selling short term cherries for what I thought was meant to be a long term investment.
Good Market commentry
Housingexpert.net: Sales, fees and prices all down!
We’ve heard talk of ‘green shoots’ and of the return in some quarters of gazumping but however hard they try the optimists seem to be loosing the PR battle. Consumers and the media refuse to buy the story that the housing market is on the turn. House prices are officially down 25% from the peak according to the Halifax. The number of homes recorded so far as having being sold in May is just over 14,000. Down from 63,000 in May last year and 106,000 in 2007.
Wednesday, July 22, 2009
Vampire Squid responds to criticism - does the right thing
Bloomberg: Goldman Sachs Payments to U.S. Give 23% Return to Taxpayers
Unlike JP Morgan, Goldman Sachs agreed to pay the full amount sought by the US Treasury for its warrants, generating a 23 percent annualized return for U.S. taxpayers
Don’t be fooled by market optimism
MSN: Don’t be fooled by market optimism
The global economy is a bit like one of the ugly sisters. Worried that the economic ball we'd all been having will collapse, she's been dressed up by hundreds of billions in taxpayers' cash which has been pumped into bank bailouts, public works, selected industrial rescues and a kind of financial liposuction called 'quantitative easing.' This has produced some substantial cosmetic improvement, but things are far from attractive underneath.
Daily Mail Heaven - take their homes away and stick them in the slammer
Daily Mail: Thousands of England's worst families to be placed in 'sin bins' to improve behaviour
England's worst families could find themselves put in special family sin bins. This does seem somewhat appealing.
Thought So
Evening Standard: Think-tank forecasts bleak years ahead for Britain
"There has been talk of stabilisation and some recovery in the housing market, but we don't think this is the case” House prices will resume their decline because recent gains were driven by a lack of supply not strong demand. It also says unemployment will rise for another two years. The grim forecasts for the housing market and unemployment came as ....
New bank Aldermore lays down the savings gauntlet
MSN: New bank Aldermore lays down the savings gauntlet
A new bank called Aldermore has launched an attack on the big names in savings with market-leading accounts that it promises are here to stay.
How not to get on the proppety ladder...seems quite dissuasive overall.
Moneysupermarket.com: How to get onto the property ladder
from the transcript.... Q6: And the good news on the savings horizon is that, because house prices aren't racing away, they are still falling or at best flat, you don't have to worry that if you don't buy now you are going to be priced out of the market? LC: That's a really good point, absolutely. Q7: So take your time and save the deposit? LC: Yes.
Good idea?....I don't think so!
Metro: First-time buyers taking out loans to afford deposits
More than one in 10 (13%) 18 to 34-year-olds are considering buying property for the first time in the next year, but of those 16% are considering taking out a loan to cover the cost of the downpayment they need, according to a study by moneysupermarket.com.
Tee hee, try dropping your price a bit more!
Metro: No sale for £1m house with 'free Ferrari'
In December last year Duncan Jones said he would give away his Ferrari F430 Spider, worth £100,000, to entice offers on Tall Pines, a six-bedroom property in Henbury Road, Westbury-on-Trym, in Bristol. The 28-year-old bought the Ferrari specifically to give it away with the mock-Georgian home after struggling to find a buyer in the months after it was put on the market in September last year - even when the asking price was cut by £300,000. He says three buyers were interested in the three-storey house but were unable to get mortgages because lenders were asking for larger deposits as a result of the economic downturn. "Instead of asking people for a £100,000 or £150,000 deposit, the mortgage lenders were asking for £300,000 or £400,000."
Pricing debt after the bubble - Don Corleone financing
Bloomberg: CIT Hit With Interest Rate More Than 25 Times Libor
CIT, the 101-year-old commercial lender struggling to retire $1 billion of debt maturing next month, agreed to pay a 5 percent fee to the creditors and annual interest of at least 13 percent. On top of that, the New York-based company pledged assets worth more than five times the amount of the loan as collateral. - “This is called Don Corleone financing,” Egan said, referring to the patriarch in the organized-crime family depicted in the 1972 film, “The Godfather.” “You can’t lose money on this deal.” Outside of the “urban underworld,” Egan, 52, said he couldn’t recall seeing a loan backed by as much collateral that paid interest rates so high. “These terms would make a pawn-shop operator blush.”
Up Shed With Titanic Captain
The Economic Voice: Up Shed With Titanic Captain
Halfway through video dedicated to house prices.....possibly informative to new readers of HPC.....possibly not.....excuse the hangover.
JRF Housing Market Taskforce launched today
Mortgage Introducer: JRF establishes Housing Market Taskforce to end boom and bust
A number of the UK’s leading housing and economics experts have been brought together by the Joseph Rowntree Foundation (JRF) to develop a series of long-term policy options that would help end the cycle of boom and bust in the housing market. Launched today, the JRF Housing Market Taskforce will seek to challenge the root causes of instability in the housing market that have led to a damaging cyclical pattern.
A sign of things to come?
Bloomberg: Spain Housing Collapse Cuts Rents in Worst Glut Since 1950s
July 22 (Bloomberg) -- Arancha Ibarra considers herself one of the lucky victims of Spain’s housing collapse. After struggling to find a buyer for her renovated two- bedroom apartment in Madrid for two years, Ibarra found a tenant for 750 euros ($1,066) a month, becoming one of the 1.5 million second-home owners thrust onto the country’s rental market.
Spin and more spin. Last chance to burn some cash...
Mail Online: Property investors are back in profit as buy-to-let booms
Cash on deposit is earning next to nothing and the stock market is becalmed, with many companies unable to afford to pay dividends. So where do you go if you want a reliable income? Believe it or not, the answer for some people is property. Yes, house prices are still falling and taxpayers continue to pick up the pieces of some of the big lenders that destroyed themselves in pursuit of property-related profits. And yes, thousands of amateur buy-to-let landlords and distressed homeowners face repossession and bankruptcy. But many of those currently eyeing property investments are cautious investors. They don't aim to make quick money from rising property prices, but just want a steady income - and they believe current investment opportunities are outstanding.
Is now the time to buy?
Fleet Street Letter: UK property: Is Now the Time to Buy?
Recent newsflow from the UK housing market has become much less negative in the last few months, leading some commentators to speculate that the market has already reached the bottom. In this piece we examine the latest evidence and look at future developments that will shape the property market going forward.
More Rose Tinted
BBC News: Further Signs of Housing Pick-up
Usual thing, this time interpreting figures from the tax authority. There is now, a strong united theme emanating from all the ramping articles which is the lack of lending. Pressure on the banks and building societies has yet to work but the focus is definitely on them. As the bounce begins to flatten I expect to see huge amounts of government money and publicity on scheme(s) that offer 75/80% mortgages from the banks together with 20/25% guaranteed loans from us, the taxpayer. House prices are the single most essential requirement for GB to get re-elected. No effort will be spared, no stone left unturned in order to avoid another downturn in prices. Market forces against a desperate government.
Latest on the UK from the NIESR think tank
National Institute of Economic and Social Research: The UK economy
• After contracting by 4.3 per cent this year the economy will grow by 1 per cent in 2010. • Consumer spending will fall by 3.5 per cent in 2009 and by 1.1 per cent next year. • Unemployment will peak at almost 3m or 9.3 per cent of the labour force in spring 2011. • House prices will resume their fall, declining in real terms on an annual basis until mid-2012. • After running at 12 per cent of GDP in both 2009–10 and 2010–11, public sector net borrowing will fall only gradually to 7.5 per cent by 2013–14. ** NIESR corporate members: Abbey National plc, Bank of England, Barclays Bank plc, Ernst & Young LLP, Marks and Spencer plc, The National Grid Company plc, Nomura Research Institute Europe Ltd, Rio Tinto plc, Unilever plc, Watson Wyatt LLP **
Buttonwood tells it like it is.
The Economist: Buttonwood: Dropping A Brick
Already, in the British residential market at least, estate agents are talking as if the crisis is over. Many people seem to assume that once the recession has finished, property prices can resume their traditional upward course ...property’s relative stability may be an illusion caused by an illiquid market; values have simply not been marked down as much as they should have been ...property prices since 2000 have been driven not by fundamentals but by the availability of credit ...in practice the result of inflation would probably be a one-off rise in rental yields caused by a sharp fall in property prices ...A strong economy is a far better backdrop for property than inflation ever could be. ** jcfoot has an interesting point, although I'm not sure it's a highly probably scenario **
Sounds logical.
The Independent: This is a stick-up: Spaniards take revenge on banks for credit crunch
With Spain's economy in freefall and loans squeezed, desperadoes are resorting to robbing banks to solve their personal credit crunch. Bank robberies have risen by 20 per cent in two years, Spain's banking association says; and those who adopt the tactic of the stick-up to pay their debts are novices rather than hardened criminals.
The FED open to scrutiny, now that would be interesting.
Bloomberg: Bernanke Seeks to Cordon Off Monetary Policy From Lawmakers
July 22 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke sought to cordon off the central bank’s independence on monetary policy from congressional scrutiny as lawmakers challenged its authority on everything from currency swaps to emergency loans.
A more realistic view of House Prices
BBC News: I would pay £3,000 for a big house
Just a fun article from some schoolkids but nice if it came true. £3k for a big house, £2k for a medium house and £1k for a bungalow. Also when asked about Alistair Darling, one girl said "I heard of Darwin!!"
Tuesday, July 21, 2009
No rise for some time yet
Yahoo: How job losses affect house prices
We've just seen the largest quarterly jump in unemployment on record. So can house prices rise while job losses soar? While watching for the first signs of 'green shoots' in the UK economy, along come the latest unemployment figures to deal a body blow to the hopeful.
Current housing market optimism is a rose-tinted view
Telegraph: Wishful thinking about house prices smacks of dotcom delusion
It is amazing what you can believe when you really want to. I don't believe this rose-tinted view of the housing market for at least four reasons. House prices are still above their historical trend. Unemployment is heading relentlessly upwards. Credit, the lifeblood of the housing market, has drained away. The downturn in the housing market since the 2007 peak is short by historical standards. It took six years from the peak in house prices in 1989 to the bottom in 1995. It is inconceivable that a housing downturn triggered by an as-yet unresolved credit crunch should last barely a quarter as long. Is it any more likely that a 20pc price correction has done the job of unwinding a 12-year, debt-fuelled bubble that saw prices rise three-fold?
Brace yourselves for massive writedowns...
Bloomberg.com: Lloyds to Write Down $82 Billion by 2010, Chen Says (Update2)
July 21 (Bloomberg) -- Lloyds Banking Group Plc, Britain’s biggest mortgage lender, will post writedowns of 50 billion pounds ($82.2 billion) by the end of 2010 as rising unemployment causes bad debts to soar, said Sandy Chen, Panmure Gordon & Co. banking analyst.
Neil Woodford - "Green shoots with no roots"
Citywire: Woodford: Green shoots already look 'illusory'
Invesco Perpetual's Neil Woodford has said the green shoots are already starting to look illusory and is not forecasting an economic recovery for the next three to four years. 'In my view, when considering economic recovery it is essential to look at how we reached the position we are in today.' he said. The consumer boom, built on easy access to credit, the housing market bubble and the excessive risk and leverage adopted by banks all grew over a number of years. These massive imbalances built through the extended boom phase of the economic cycle and just as they took a long time to build, they will also take some time to address.'
More questions than answers...
BBC News: Recovery risk for government borrowing
Robert Peston looks at the risks of further government borrowing and the possible impact on the economy
The Nutty Professor
London School of Economics: Housing Markets and the Global Financial Crisis
Residential property is the single largest asset in people's everyday lives and its associated mortgage debt constitutes one of the biggest financial assets in most economies. Yet political economy largely ignores both. We know that the kind of housing people occupy and their level of debt affects their preferences for the level of public spending, taxation, and inflation. Housing is intimately tied to welfare systems and can be seen as a social right or as a means to acquire wealth over one's life. Housing systems are built from political struggles over the distribution of welfare and wealth. The organization and transformation of housing finance systems affects both national economies and international financial stability.
No Spring bounce in this FT publication
FT: Private landlords lose billions in property value
Private landlords have seen the collective value of their properties fall by £118.4bn between the first three months of 2008 and the same period this year.According to new research from Sainsbury's Finance, as house prices have fallen, private landlords have witness the collective value of their properties fall by an estimated £324m a day. The worst affected area is London, where the value of their properties has fallen by an estimated £37.36bn. Lucy Hunter, landlord insurance manager, at Sainsbury's Finance said: "The environment for landlords has become increasingly difficult.
The real cost of new Labour is becoming clear...
BBC: UK debt hits a record of £799bn
''Total outstanding government debt in the UK has risen to a record £799bn, or 56.6% of UK GDP - the highest since records began in 1974. New borrowing in June was £13bn, almost twice as much as a year ago, the Office for National Statistics said, after the downturn shrank tax receipts.''
The Whacky Whacky World of the Rightmove Index
Write About Property: UK House Prices in Steady State for 2009 Says Rightmove, What?
People, this is asking prices! And not asking prices on the whole, but of properties as they are added to the site. How can we use asking prices of newly marketed properties to forecast what house sold prices will do? In my view we can't. Maybe the Rightmove index would be a better indicator if vendors were being realistic about their asking prices, but according to industry experts they aren't.
Remember policy makes want you to believe in inflation
Zero Hedge: No inflation here
Scroll down and there is an interesting piece on why policy won't work to cause inflation in the short/medium term. Noticed a lot of angst on site past few days about house price increases. There is no possibilty of real (as opposed to nominal) increases in house prices over time in the UK. To think it is possible is akin to believing that if you pour the contents of a half pint glass quickly enough you can fill an empty pint glass. The volume isn't there and when it comes to house neither is the income needed to sustain head line prices. There is no interesting discussion to be had here. Nominal house price increases are possible in the event of souped up inflation, which I guess is why the inflation/deflation debate is so heated. Certainly if you believe inflatation (contd)
This sums it up really....
Daily mail: Council snoopers sifting through rubbish bins to find out if you're wealthy or poor
nearly 100 town halls ordered secret searches of their residents' rubbish bins last year.
Spending will have to be slashed in order to balance the country's books.
The Times: Labour under pressure as borrowing hits £13bn
Britain's debts surged in June as dwindling tax receipts hit the Government coffers, nearly doubling public borrowing to £13 billion. The rise in borrowings, up from £7.5 billion last June, took public sector net debt to £798.8 billion, equal to 56.6 per cent of GDP - the highest level since records began in 1974.
How peak oil relates to debt
The Oil Drum: Peak Oil Overview - July 2009
"The underlying problem is the fact that the current level of debt (by individuals, businesses, and governments) cannot be maintained, unless we have a growing economy. The reason we need a growing economy for the debt system to work is that a person can borrow from tomorrow only if tomorrow is better than today. (This is especially the case if loans require the payment of interest.) But if tomorrow is worse than today, borrowing from the future doesn't work. Even if tomorrow is the same as today, the system doesn't work, if loans need to be paid back with interest. The problem is that the economy cannot grow unless oil production is truly rising. This lack of growth in world oil production since 2005 is what is causing the debt collapse we are now seeing."
Unemployment trends
Love Money: We've just seen the largest quarterly jump in unemployment on record. Can house prices rise while job losses soar?
Cliff D’Arcy points out that there is some evidence of an inverse relationship between property prices and unemployment levels whilst cautioning against making incorrect conclusions. That said, unemployment forecasts are clearly bad and it's hard to see how that can support higher property prices.
Your tax money at work
Mail: Blair makes £2m profit on house that taxpayers helped pay for
Tony Blair has made a £2million profit on the London mansion he bought with help from the taxpayer. When Mr Blair and his wife Cherie bought the luxury 19th century home in Connaught Square in October 2004 it cost £3.65million. Estate agents estimate it is now worth £6.6million. Controversially, the taxpayer has helped the pair pay for the home. In 2003, the then prime minister remortgaged his constituency home in Trimdon for a second time, raising £185,000 which he used as a deposit for the Connaught square townhouse. He then reclaimed the interest on the repayments for the Trimdon house remortgage on expenses.
Putting more money into our economy to boost spending
Bank of England: Quantitative easing explained
The MPC’s decision to inject money directly into the economy does not involve printing more banknotes. Instead, the Bank buys assets from private sector institutions – that could be insurance companies, pension funds, banks or non-financial firms – and credits the seller’s bank account. So the seller has more money in their bank account, while their bank holds a corresponding claim against the Bank of England (known as reserves). The end result is more money out in the wider economy.
What weighs more heavily on the next generation?
Pollcode.com: One trillion-plus of public sector debt. One trillion-plus of mortgage debt.
Just tryin' to put it all in perspective.
Monday, July 20, 2009
Last gasp government denial stage
Times: Ministers bury £32bn tax crisis as recess starts
A mountain of bad news was buried by the Government today as it rushed out a series of reports and 26 ministerial statements on the day before MPs go on holiday. The dangerous state of public finances was laid bare revealing that the Government’s tax take had plummeted by £32 billion last year. Figures from Revenue and Customs also show that income tax, national insurance, VAT, stamp duty and corporation tax have fallen by £21 billion and other debts and legal liabilities had cut income by a further £10 billion.
Denninger comments on latest estimate.
TWENTY-FOUR TRILLION DOLLARS?!: The Market Ticker
Barofsky said that while the TARP program that Congress passed amounts to $700 billion, the total federal government support since 2007 for the economy and the financial sector could reach a far higher figure of $23.7 trillion. The government has committed significantly more money through a variety of other federal agencies and programs This is outrageous and threatens the very stability of our nation. How anyone can believe our banking system or indeed our nation's Treasury can survive the exposure of $24 trillion dollars, twice our GDP, is beyond me.
Compare and contrast.
CNBC: Gloomy Budget Forces White House to Face Harsh Reality
Two quotes from the same article... Vice President Joe Biden recently conceded, "We misread how bad the economy was" in January. Obama modified that by suggesting the White House had "incomplete" information. "If we were at the brink of catastrophe at the beginning of the year, we have walked some substantial distance back from the abyss," said Lawrence Summers, Obama's chief economic adviser.
Get stuck in
Times: E-Poll: Do house prices now represent good value?
Current results: 83% No, house prices are still overvalued. 17% Yes, the current level is fair. 0% No, house prices are undervalued if anything.
Missed the boat? - more like missed a sinking ship
Citywire: Home 'bargain buy' window closing
Property website Rightmove says asking prices rose for the fifth time this year in July. Miles Shipside, commercial director at Rightmove, said: 'There is now clear evidence that there were some fire-sale prices last winter, when a few brave buyers correctly called the bottom of the market. 'In most parts of the country, prices have consistently improved during spring. With growing confidence that we’ve passed the bottom, buyers are more active, although they may discover that many of the best buys have gone,' he goes on.
Quantitative easing - it's not over yet
MoneyWeek: Quantitative easing - it's not over yet
By halting its 'quantitative easing' programme, the Bank of England may be trying to convince us the economy is back on track. But quantitative easing will be back, as the next leg of a 'double dip' recession looms.
By August, 65% of all filers for unemployment insurance will have run out of
Cnn: Out of work, out of benefits, out of luck
NEW YORK (CNNMoney.com) -- The next bubble in the recession is about to burst. More than 650,000 Americans will have used up all of their unemployment benefits by September, in what experts say could be the start of a looming crisis.
Deflation my derriere
Retail Week: Argos set to hike prices 5%
An example of how the week pound is going to effect inflation.
Getting to grips?
Conservative party: Plan for sound banking
This is not intended as a political post, but as the Conservatives will almost certainly win the next election, it makes interesting reading. They are clearly intent on returning to RPIX for inflation targetting, thereby including housing costs in the inflation index. If you can't stomach all 50 odd pages, have a look at page 42 (pdf sheet 44) - seems to make it clear that they understand the core problems of the housing market. (I still don't like George Osborne though - I doubt he drafted this document personally)
Ever get the feeling that the government are doing everything to make sure house prices keep rising?
BBC: Summer rise in mortgage lending
''The total amount of UK mortgage lending rose sharply in June compared with the previous month, according to lenders.''
Mortgage Lending up by 17%
SKY News: Mortgage Lending up by 17%
Mortgage lending rises by 17% during June to around £12.3bn, the Council of Mortgage Lenders says.
Britain risks sliding into a long deflationary recession if the H1N1 swine flu pandemic develops alo
Telegraph: Swine flu threatens deflation slump, Ernst & Young ITEM Club report warns
he group said a pandemic reaching 100,00 cases a day by August, and lasting six months, would lead to a 7.5pc fall in GDP this year. The lingering damage would cause a further fall of 1.2pc next year.
Almost a million people are being forced to work part-time because they cannot get a full-time job,
Telegraph: Recession forces a million to work part-time
In the past year more than 250,000 extra people who would like to be in full-time employment have found themselves working four days a week or fewer, according to the Office for National Statistics.
Where to next for house prices?
MSN: Where to next for house prices?
Why the housing market is not going to pick up just yet
That is a notice to the agent to say 'please substantiate your claim that this property was for sale
Abc.net: ACCC crackdown on real estate sectorcrackdown has been prompted by complaints of misconduct.
If we have a suspicion that there is a problem in relation to a particular auction or in relation to a particular agent, we'll be able to issue a substantiation notice," he said.
Sunday, July 19, 2009
No political party will make the necessary cuts
Telegraph: If the Government fails to make cuts now it will be racked with gilts
Why is it suddenly a good idea to spend our way out of recession and print money? The debate over the Bank of England's "quantitative easing" scheme – or QE – has been practically non-existent.
Rightmove: Asking prices up 0.6% in July
Times: Rise in house prices boosts hopes of resurgence in property market
Property prices rose by nearly £1,500 this month, while the number of sellers jumped by a fifth, boosting hopes that the housing market may be over the worst. The average asking price this month is £227,864, up from £226,436 in June, figures from Rightmove show. This is the fifth rise in the past six months, prompting Rightmove to say that the market has already bottomed out. Spokesman Miles Shipside said, "Last winter a few brave buyers correctly called the bottom of the market. In most parts of the country, prices have consistently improved during spring." He predicted house price changes of between zero and +5% this year.
“Banks make so much money with these things that they don’t want transparency because the spreads ar
Bloomberg: Mobius Says Derivatives, Stimulus to Spark New Crisis
Derivatives contributed to almost $1.5 trillion in writedowns and losses at the world’s biggest banks, brokers and insurers since the start of 2007, according to data compiled by Bloomberg. Global share markets lost almost half their value last year, shedding $28.7 trillion as investors became risk averse amid a global recession.
Hey its the Ponz
Telegraph: Police uncover £80m 'Ponzi Scheme'
City of London police have uncovered an £80m Ponzi scheme, so elaborate that many of the victims still don't realise they have been conned. Apparently the bad boys endeared themselves to their victims and many considered them friends. Apparently the 600 victims include many celebrities amongst their ranks.
Fed chief may offer an expansion plan rather than an exit strategy
MarketWatch: Will Bernanke make case for more asset purchases?
Dean Baker, co-director of the liberal Center for Economic Policy Research, said he would support more asset purchases... The move wouldn't be inflationary because the U.S. has massive untapped resources. "When Zimbabwe prints money, they don't have retail stores filled with goods or factories so more money chases few goods. We have the ability to produce in accordance with the money," Baker said.
This makes me sick - literally!
The David Smith Forum: I wouldn't be surprised if this time next year Haliwide was showing gains of 10%
''I wouldn't be surprised if this time next year Haliwide was showing gains of 10%. The market, has no supply and excess demand. With lenders slowily increasing the LTV, and the MPC not moving on rates for a fair while yet, then I can only see HPI picking up from here. FWIW, went for a drive in Surrey, 23 Sold signs 2 for sale. Normally the total number would be around twice this level, and approx 30% sold. Last Oct I only saw 2 sold boards.''
Yearning for the good times
The Times: Home Economics: the worst of the house price crash is behind us
An important milestone was passed last month, according to the Royal Institution of Chartered Surveyors (Rics). For the first time since May 2007 — before the credit crunch — more surveyors expect house prices to rise, rather than fall, in the next three months. In a generally upbeat survey, Rics members reported rising demand, increased sales, limited supply and falling stocks. It is still, in many ways, a strange market, with prices apparently stabilising at levels of activity much lower than normal.
More brown shoots
BBC: Economic recovery in UK 'on hold'
The UK economy is set to shrink by 4.5% in this year, the biggest fall in a single year since 1945, according to an influential think-tank. The downbeat forecast is more pessimistic than the consensus view, and considerably worse than the 3.5% fall predicted by the government. The Ernst & Young Item Club also warned that hopes of economic recovery are "running ahead of reality". It does, however, predict a return to modest growth of 0.5% in 2010"Unfortunately, it is hard to see any very solid grounds for sustained optimism at the moment," said Professor Peter Spencer, chief economic adviser to Item.
Missed the point again
Times: Banks may be too weak to support the recovery
True to long term form, David Smith succeeds in completely misunderstanding the current crisis. He still retains the notion that there are credit taps somewhere in a lobby in an office block in the city that just need a good bash with a wrench and a drop of oil to get the money flowing again and - basically - back into the housing market. Didn't the rest of the media already identify about a year ago that this is categorically NOT going to work? He then argues (not very well) that the UK's banks are too small, as opposed to being too big! Why is Smithy so slow on the uptake?
The Pyramid
Stock Masters: Jon Stewart v Goldman Sachs
Good to see a lot of negative coverage for GS.Doubt it will matter tho
Saturday, July 18, 2009
Hearty LOLs all round
Mail: Bailiff for Mr Bovey
He famously threatened to sue anybody who suggested he was suffering financial difficulty. But here are exclusive photos of the moment the tables turned on Grant Bovey as he is served with legal papers that could lead to him being declared bankrupt. Anthea Turner’s husband - whose buy-to-let property empire Imagine Homes collapsed last year with £50million debts - was given the papers outside the £6million house he recently purchased. Bovey, 48, was involved in a tense exchange with the bailiff when he arrived home in his £60,000 black Range Rover.
Fiscal ruin of the Western world beckons
Telegraph: Fiscal ruin of the Western world beckons
For a glimpse of what awaits Britain, Europe, and America as budget deficits spiral to war-time levels, look at what is happening to the Irish welfare state.
Bank of Spain reveals that loan delinquency rate has tripled since last year
ABC News Spain: The bank returns to the delinquency levels of the crisis of the nineties
Very interesting article that has not been covered in the English speaking press, data released yesterday by the Bank of Spain reveals that the arrears on the loans granted by all banks, cash and credit cooperatives that operate in our country reached 4.563% in May, a figure that is expected to reach 6% by the end of 2009. Hope the link through Google Translate works!
Lambs to slaughter
This Is Money: Property investors return to buy to let
Blonde bint Lisa Knights, 36, a presenter at Setanta Sports, was laid off when the company went titsup last month. Her husband Nick, 41, has also resigned his job as director of water polo for the London Olympics (?). With two children and no job between them they need their assets to provide income, so are diving in to buy to let. Nick and Lisa are not fussy about the type of property - period or modern, houses or flats. Instead, it is all about price. Lisa says: 'If the price is right, the type of property or tenant doesn't matter.' The Humes have been scouting properties for months, attending auctions and researching the market online. Interest from similar buyers is on the rise, Lisa believes.
Merkel has balls!
Reuters: Merkel attacks Wall St and City
NUREMBERG, Germany (Reuters) - Germany will not allow financiers in New York or London to dictate how money should be made and then leave others to pay for their mistakes, Chancellor Angela Merkel said on Friday.
2009 Projected Foreclosures in the USA: 1 of every 21 households !
Mish Blog: American Dream or American Nightmare?
Mike Shedlock gives a brief commentary on a communication he received about American foreclosure rates. Obviously we must be wary of using data about the American market to forecast the UK but there is a well known tendency for American economic problems to visit our shores. I knew things were bad but Mish's prediction of 1 in 21 households being reposessed is horrific.
The age of the orcs is over
FT: Return of the banks’ golden age is an illusion
Amid the inane clamour of EAs and the like falls the sense of John Authers
An industry too important to fail......
Brown's Broadcasting Corp: 'Upturn signs' in housing market
More VI's out in force today. The problem with housing in this country is that - like some banks - it has become far too important to the UK economy to fail. ''The housing market is showing the first signs of an upturn since 2006, the Home Builders Federation (HBF) has said. The body's survey of Britain's major home builders found 60% of those asked had seen an increase in sales compared to the same time last year.''
No faith in Gordo
BBC News: Purnell 'lost faith months ago'
Purnell's resignation letter: I owe it to our party to say what I believe no matter how hard that may be. I now believe your continued leadership makes a Conservative victory more, not less likely. That would be disastrous for our country. This moment calls for stronger regulation, an active state, better public services, an open democracy. It calls for a government that measures itself by how it treats the poorest in society. Those are our values, not David Cameron's. We therefore owe it to our country to give it a real choice. We need to show that we are prepared to fight to be a credible government and have the courage to offer an alternative future.
Delusion, delusion, delusion
Daily Telegraph: Word on the street: London house prices are rising
Lower and lower offers, yet still convinced she can sell for her asking price. 'Maybe I'm grasping at straws, but I'm not convinced our flat has reached its target market'. . Yes love, you ARE grasping at straws. Either you want to sell your poxy flat or you don't. If you're serious, price it accordingly.
Woot! Woot! Let's parteyyyy!!! er, wait a minute...
FT: US banks unleash wave of optimism
World stock markets roared ahead this week as two of Wall Street’s largest banks put the worst of the financial crisis behind them and delighted investors with surging profits. From Hong Kong to New York, shares in the world’s biggest companies rode a wave of optimism after Goldman Sachs and JPMorgan reported strong growth in second-quarter earnings and China announced resurgent economic output. The bullish mood swept across Europe and the FTSE 100 index enjoyed its biggest weekly gain of 2009.
Friday, July 17, 2009
Swine flu and deflation
Reuters: H1N1 flu seen prolonging, deepening UK recession
This article makes the point that swine flu "could tip Britain's economy into a downward deflationary spiral", but I cannot see how this can possibly be true. People staying at home and not working, or dying, is not going to reduce prices ! I read this view a few times before but absolute rubbish IMO. I hope as many as possible are not affected by swine flu, this is a reminder of the "real world" our government seem to have closed their eyes to.
Housing Market Bubbles Analysis
The Market Oracle: The Seven Immutable Laws of Bubbles: Example, Housing Markets in USA, UK &
The cycle of bubble and bust in housing is drawing to a close. For many the ferocity of the bust and the collateral damage that followed was a shock, but bubbles and busts are not new; chances are there will be more. I got interested in bubbles in early 2008 trying to figure out why my model of real estate prices that had worked perfectly for ten years was saying that prices in Dubai which is where I was at the time, "should" have been 30% less than where they were.
Too big to fail, it would appear.
Reuters: CIT in talks with JPMorgan, Goldman: source
CIT Group Inc is in talks with JPMorgan Chase & Co and Goldman Sachs Group Inc about short-term financing as it looks for ways to avoid bankruptcy, a source close to the company said on Friday, sending the lender's shares and bonds up.
Inflation is Dropping !
Guardian: BT raises call prices for the second time this year
12 million customers to be hit in October as call costs go up 34% since January
Exceptionally bright outlook for house prices
BBC: Gloomy outlook for mortgage costs
The long-term cost of mortgages is likely to rise as lenders continue to resist taking on too much business, brokers say. The cost of funding certain mortgages has fallen but lenders have failed to drop home loans costs in response. The amount banks charge to lend to each other, measured by the Libor rate, has fallen below 1%. An industry body said restoring the stability of the financial system was costing money in the current climate. And brokers said that mortgage rates remained at relatively low levels.
Dr. Doom says it's not over...
CNBC.com: Ultimate Crisis Is Still Coming: Marc Faber
We haven't seen the last of the crisis despite all talk about green shoots, and the surge in markets was caused by nothing more than the excess liquidity coming from central banks, Marc Faber, author of the Gloom, Boom and Doom Report, told CNBC Friday. "If you pump money into the system and you create large fiscal deficits, you create volatility," Faber said. "We've seen an intermediate low in March, we'll rally for a year or so or maybe 18 months… the ultimate crisis will happen much later, and the ultimate crisis would clean the system," he added.
Save more or pay more into mortgage?
MoneyWeek: Should you build up your savings or repay your mortgage?
A recent survey from the Co-operative Bank suggests that 80% of people overpaying on their mortgage while interest rates are low believe they are better off.
Thursday, July 16, 2009
Debt is set to double to 100% of GDP
Telegraph: IMF warns pound could be at risk from uncertainty
The International Monetary Fund (IMF) has warned that Gordon Brown risks a run on the pound if he does not set out a clear path for reducing national debt.
What's going on with savings rates?
Telegraph: Rate alert: fixed rates reach 5.4pc
Moneyfacts' figures show that the interest rate on the average fixed-rate bond has risen by 1.37 percentage points since base rate was kept on hold in March.
Buyer Beware
Sky news: WHO SHOULD YOU TRUST?
nicely summed up.......
Green shoots? Yea right...It ain't over, till it's over...
Bloomberg.com: Foreclosure Filings in U.S. Reach Record 1.5 Million (Update1)
July 16 (Bloomberg) -- U.S. foreclosure filings hit a record in the first half, a sign that job losses and falling property prices deepened the housing recession, according to RealtyTrac Inc. More than 1.5 million properties received a default or auction notice or were seized by banks in the six months through June, the Irvine, California-based seller of default data said today in a statement. That’s a 15 percent increase from the year earlier. One in 84 U.S. households received a filing.
Investors too complacent about the outlook for property
Economist: Buttonwood Dropping a Brick
Property was indeed a great investment at a time when financing was easy and recessions were occasional and mild. But that world has disappeared for a while. Even low interest rates may not help, as the Japanese example has illustrated over the past 20 years. The naive belief that American house prices could not fall at the national level has been exposed by the current crisis. The belief that property prices must rise over periods of a decade or more may also prove to be false. Figures from Robert Shiller of Yale University show that real American house-prices were lower in 1945 than they were in 1900, for example.
Hedge funds: too big to fail?
Marketwatch.com: Obama wants SEC to peer into the books of all hedge funds
These firms continue to present unknown risks, and that lack of transparency is no longer tenable. Is UK going to be offering exemption to the registration requirement? Why registration and need for transparency is being seen as uncompetitive in the UK?
One of the biggest lenders to American businesses (CIT) could go bust
MoneyWeek: This 'unknown' big bank could now go bust - making the US recession worse
CIT, One of America's biggest lenders, may go bust. If it does, it would be the fourth-biggest bankruptcy in US history. That would deepen America's recession - and hit the UK too
The (leaving) party just never stops ...
Metro: Lloyds axes 1,200 more jobs
Banking giant Lloyds was accused of "betraying" the taxpayer today after plans were revealed to cut another 1,200 jobs. Unite said it was "Groundhog Day" because of the number of job loss announcements made by the company, estimating 8,200 staff had now been told they were losing their jobs this year. The union called for a freeze in the expansion of work done abroad by the bank because of the "uncertain future" faced by UK employees...
How did they do that? Free use of taxpayers money?
Telegraph: Just how did Goldman Sachs manage that?
''Conspiracy theories abound as to how Goldman Sachs has spun record profits from global turmoil.''
Those poor slumlord .....
BBC News: Benefit tenants 'rip off' landlords
When the government started paying housing benefit to new private tenants rather than straight to their landlords last year, it was meant to give tenants more choice and help develop their budgeting skills - but instead it just means rents are not being paid, say some landlords. Interesting that this article is written by the BBC Asian Correspondent.
Brown must be on drugs!! Or figures are fluffed!!
Yahoo: Brown questioned in parliament
"The record of the Bank in controlling inflation has been very good indeed. "Inflation has been far less of problem in the last ten years than in any previous decade and that is the success of making the BoE independent."
LIBOR Down - Now What?
Telegraph: Banks and building societies under fresh pressure to cut mortgage rates
The rate at which banks and building societies lend to each other fell to the lowest level for more than 20 years.
Labour won't take their pain...
Market Oracle: UK Unemployment Record Rise, a Jobless Debt Fuelled Economic Recovery?
''...the mainstream press focus has been on the headline unemployment data and the benefits claimant count, however the real number of unemployed stands far higher when taking into account all those of working age (16 to 64) as illustrated below with the total at 7.915 million...''
A property mogul's tale
The Scotsman: Down but not out after property bust
"THE credit crunch has definitely been a game of two halves for Edinburgh-based property tycoon David Alexander. On one hand, business at his eponymous property rental firm is booming – but on a personal level, the downturn has spelled something of a disaster. For Alexander, who started out in the industry 27 years ago at the age of 21, admits he lost his entire personal savings in the collapse of property investment fund Heritor's Residential Property." By Scotsman's standards, I found this article quite balanced instead of the usual ramping. So what does the future hold for a business man who says: "In 26 of the 27 years I've been in property, it has been pretty straightforward to predict that the market will rise. That is no longer the case."
Three reasons to worry!
Times Online: Don’t worry about rate rises, fear stagflation
There seem to be three widely-feared threats to the British and world economies that are not worth worrying about and three others that are definitely ominous.
Wednesday, July 15, 2009
Not to be confused with Citigroup
Reuters: US officials fear CIT situation has worsened-source
U.S. officials are still exploring providing government assistance to CIT Group (CIT.N), but are increasingly concerned that conditions at the lender have deteriorated too far, according to a source familiar with government talks.
Directors got Fired for Subprime Stupidity
Evening Standard: Ailing Cattles gets £500m extension
Stricken subprime lender Cattles has struck a deal with its lenders to extend its £500 million lifeline banking facilities.
Their Title Said It All
Lovemoney: Five big banking balls-ups
1) Relying on the securitisation market 2) Ridiculous lending policies 3) The bonus culture 4) Listening to the rating agencies 5) Carrying on regardless
Building the UK debt mountain
UK Bubble: Can they do it?
The UK Debt Management Office needs to sell ₤220 billion of government debt this year. Three months into the year and they have flogged ₤57 billion. It is a tall order.....
UK: 7.6% US:9.5% Eurozone:9.2%
Telegraph: Britain's unemployment rises by a record
Many people seemed surprised by the recent resilience of the UK housing market and the Pound. However, when you look at the unemployment stats in the title, the reason for the resilience becomes clear. We are doing better than everyone else. It is relatively easy, if you have the data and the right models to calculate the unemployment number that will cause the housing market to accelerate its rate of decline. The magic number is 2.75 million unemployed. It is not quite as easy to calculate when we will reach 2.75 million unemployed but not many people would argue with early October.
VC Investments stats
ChubbyBrain: Venture Capitalist Activity up 69% in Q2 09. Is the worst over?
Though this blog is not directly related to HPC, those that like their stats may find interest in this link. It provides a details on the sectors VC funding is being channelled. The article is well-balanced for a VI and confesses the increase could just be a blip.
Britain ahead of leading economies
Telegraph: Britain 'further ahead' in race for recovery
If Britain needs to change from being a net importer to being a net exporter, then it is hard to see how we can independently recover ahead of the creditor nations. But apparently we are.
Price Falls Neccesary for Recovery
Write About Property: UK House Prices Falling Slower, Government Figures
No one can deny that things are currently heading in the right direction (the wrong direction for those who still can't afford to buy), but as it is the low supply levels that are the main driving force behind the price rises, we are very vulnerable to supply increases which could well see price falls accelerate once again. According to Joseph Harwood director of Gloucestershire property investment firm Rock Star we are very vulnerable to supply increases, but ironically supply increasing in one way, while it will cause prices to fall is necessary for recovery.
Up Shoot Creek !
The Guardian: And next for Britain, the semi-slump
Lots of green shoots, green yummy shoots of freed and denial yum yum yum let me eat them all up. Oooh, where are they all, errm, I ate them!
UK unemployment hits 2.38 million
BBC: UK unemployment hits 2.38 million
"UK unemployment rose by a record 281,000 to 2.38 million, in the three months to May, the Office for National Statistics said. The jobless rate increased to 7.6%, the highest in more than 10 years. "
Another big spray of weedkiller!!
Cnn: How to respond to distress signals at a big lender to small businesses
"As the bridge between Wall Street and Main Street, CIT remains one of the few significant sources of liquidity for small and mid-sized businesses who are struggling to survive in today's challenging environment," CEO Jeffrey Peek said in a statement last November, when CIT applied with the Fed to become a bank holding company. Now, it seems, CIT is struggling to survive as well.
"Less wealthy people are more pessimistic"
BBC News: Job cuts 'hit two in three' in UK
Maybe less wealthy people are always more pessimistic but long before this crisis developed I thought that it might cause a widening of all the old class, wealth and social divides. Maybe a poorer distribution of wealth is necessary for a more sustainable Britain but it'll cause some trouble along the way. A widening divide also goes some way to explaining why upmarket areas have seen very little of the HPC
While observing that Goldman made a "bloody fortune", he said the immediate issue was not the rights
Truveo: Spitzer Says Banks Made `Bloody Fortune' With U.S. Aid
While observing that Goldman made a "bloody fortune", he said the immediate issue was not the rights or wrongs of making a profit - but the question of where the proceeds go.
After an infusion of billions of taxpayer dollars to keep Wall Street banks afloat, Spitzer asks whe
Guardian: Is Goldman Sachs a blood-sucking vampire squid?
Proof, as if we needed it, that Wall Street inhabits a parallel universe. While the rate of US unemployment creeps towards double digits and businesses across the heartland struggle to stay afloat,
Tuesday, July 14, 2009
Banking on Goldman
Cnbc.com: Goldman may have beat earnings expectation but they did it as a commercial bank with access to the Federal Reserves discount window, reports CNBC's Charlie Gasparino.
Goldman may have beat earnings expectation but they did it as a commercial bank with access to the Federal Reserves discount window, reports CNBC's Charlie Gasparino.
Question: Is Goldman Sachs an investment bank?
BusinessWeek: Goldman Sachs: A Special Case
Hold off celebrating the end of the financial crisis. Goldman's results may be more indicative of its unique spot in the industry than what's to come across the rest of the banking sector. The investment bank, which shrewdly navigated through the mess and even profited from it, has emerged as one of the strongest financial institutions around.
Lord Mandelson of Hartlepool turns on the government smoke generator
Telegraph: Britain faces 10 years of public spending restraint, says Lord Mandelson
Britains unelected deputy PM proclaims that the UK's recession has come to an end but there will be 10 years of greater public spending restraint. Characteristically vague as usual Mandelson proclaimed that "there will be spending choices and a growing need for greater efficiency across the board, and less spending in some programmes."
Not really worth posting but....
Express: HOPE AT LAST FOR HOMEOWNERS AS LACK OF SUPPLY BOOSTS HOUSE PRICES
''HOUSE prices are set to rise consistently for the first time in two years, research showed today. The Royal Institution of Chartered Surveyors (RICS) said a low level of properties on the market, combined with increasing buyer inquiries, was providing a platform for 'modest price increases'.''
Random house price survey of the week
Citywire: House prices fell in May - DCLG
UK house prices fell 0.8% in May, according to the government’s data on sales, contrary to the rises recorded by building societies. Prices were 12.5% lower than in May 2008. The 0.8% fall in prices recorded by the Department of Communities and Local Government (DCLG) compared with the rises recorded by Halifax and Nationwide and Rightmove for the same month. It is also a sharper fall than that recorded by the Land Registry.
Original piece, objective and reflects a lot of my observations
Old Holborn: Manning the barricades
Collapsing credit has plunged the world economy into the deepest recession in more than 70 years. What began as a property bubble in the US has spread rapidly as troubled banks have stopped lending and consumers and businesses have stopped spending. As demand in the US and Europe evaporates, oncethriving emerging markets are losing their best customers and biggest investors. An increasingly synchronised global economy will contract in 2009 for the first time since World War II...............Well worth reading, I promise.
Signs of bounce in housing market
Telegraph: Signs of bounce in housing market
Signs that the housing market is bouncing back have emerged as figures showed a record numbers of new buyers amid a shortage of properties.
Debt is bad, equity is good?
FT: Time to tackle the real evil: too much debt
The core of the problem, the unavoidable truth, is that our economic system is laden with debt, about triple the amount relative to gross domestic product that we had in the 1980s. This does not sit well with globalisation. Our view is that government policies worldwide are causing more instability rather than curing the trouble in the system. The only solution is the immediate, forcible and systematic conversion of debt to equity. There is no other option. [...] The only solution is to transform debt into equity across all sectors, in an organised and systematic way. Instead of sending hate mail to near-insolvent homeowners, banks should reach out to borrowers and offer lower interest payments in exchange for equity. [...]
Fed up with insolvent banks paying lower IR than inflation
FrugalDad: Seven Secret Places To Hide Cash In Your Home
It’s a good idea to keep a little cash in your home for emergencies, and if those Armageddon theories come true...
Deleveraging
Telegraph: UK house prices: history suggests it won't be until 2016 that they recover to pre-boom level
This article draws comparisons with the 1992 crash and suggests that the current UK saving rate of 3% will rise to 10-12%. I am guessing that a consumer led recovery is off the menu. Even the UK government is on a timer before frantically deleveraging, when they will attempt to sell BoE debt, their banking shares, the Royal Mail and probably anything not nailed down. Cash is king. A savings rate of 10-12% is uncharted water with this much debt and falling wages/rising unemployment. 2016 is mooted as the trough. If this isn't the start of a deflationary spir al then what on earth do they look like?
No real surprises here..
BBC: Controversy to surround Goldman success
When Goldman Sachs unveils its latest results, they are widely expected to reveal a hefty profit. Reports suggest it will have made more than $2bn (£1.23bn) between March and June - pretty staggering given that just six months ago it was seeing its first quarterly loss since going public in 1999.
Startling insights from Auntie Beeb
BBC: Economy 'to dampen house prices'
The sluggish UK economy is likely to mean that house prices will not see any "meaningful" recovery for some time, two separate surveys suggest. There will be no "sustained" upturn until mortgages become more available, the Royal Institution of Chartered Surveyors (RICS) says. Meanwhile, PricewaterhouseCoopers has warned further price falls are likely in 2009 and 2010. The government's own house price survey reported property values fell in May.
BoE hits target!
BBC: UK inflation dips to 1.8% in June
"UK annual inflation fell in June as the Consumer Prices Index (CPI) dropped to 1.8% from 2.2% in May, the Office for National Statistics (ONS) said. CPI, which met analysts' forecasts, fell because of lower food prices. It is the first time since September 2007 that the CPI is below the Bank of England's target of 2%. "
You can hope till the cash runs out
Home.co.uk: Sellers More Hopeful Despite Weak Market
Asking prices have been edging up overall as sellers regain some confidence, although, unless the supply of mortgage credit improves, these gains may be unjustified and easily lost in the latter part of the year.
Just print some more dollars !
Aljazeera: US deficit surges past $1 trillion
The US federal deficit has ballooned past the $1 trillion mark for the first time and could grow to nearly $2 trillion by the end of the budget year.
Property price nostalgia for bulls
The Times: Homes shortage set to push up property prices
Property values are set to rise in the next three months as a lack of homes props up prices, estate agents believe ...
How to get even deeper in debt......
MoneyWeek: What Nationwide's 125% home loan means for the property market
''To qualify, you have to be an existing Nationwide borrower...[and]...there's the fact that it's very, very expensive indeed. For a start, you still have to cough up a deposit of 5% on the new home from your own funds. The charge on the loan for the other 95% is a painful 6.73% if you want to fix for three years, or 7.48% for five.''
Not quite deflation
Press Association: Inflation dips below 2% target rate
Data for June is set to show the Consumer Prices Index (CPI) falling to 1.8% - its lowest level since September 2007 - compared with 2.2% the previous month. RPI is expected to slip further to -1.5%. CPI has been on a downward trend since peaking at 5.2% in September last year, but has not fallen as quickly as forecast. But the steep rises in food and fuel costs last year, with oil hitting $147 a barrel in July 2008, have not been matched this year.
Et tu, Brute?
FT: Goldman executives sold $700m of stock
Executives at Goldman Sachs sold almost $700m worth of stock following the collapse of Lehman Brothers last September, according to filings with the Securities and Exchange Commission. Most of the sales occurred during the period in which the investment bank enjoyed the support of $10bn from the troubled asset relief programme. The surge in selling among Goldman partners, at a time when the US government had thrown a lifeline to Wall Street, is likely to draw criticism from lawmakers on Capitol Hill.
Houses prices to stay in doldrums for years
The Guardian: House Prices will stay in the doldrums for years
Britain's housing market will stay in the doldrums until the middle of the next decade, and there is a 30% chance that prices will take until 2020 to return to their peak before the crash, a consultancy firm predicted today . PricewaterhouseCoopers said recent signs of a recovery in the market which had been detected by a fresh survey of estate agents released this morning were a "false dawn". John Hawksworth, the chief economist at PWC, said prices would experience a gentle decline for the next 18 months and then pick up slowly over the following years.
'false dawn', with prices set to fall even further next year.
Mail online: Market recovery hopes dampened with warning house prices won't peak again until 2020
House prices may not return to last year's levels until 2020 or beyond, a report warns today. The study by PricewaterhouseCoopers dampens hopes that the housing market is already in recovery. It says recent predictions may have heralded a 'false dawn', with prices set to fall even further next year. Hamish McTavish said "I was wrong then, I'm stunned and shattered, I'll go into hiding, I can't BEAR to be seen by anyone"!
Tax them to death, yes or no?
Mail Online: Call for a 90% tax on banker bonuses
Bankers should pay 90 per cent tax on massive bonuses, a group of MPs said yesterday. The call came at a timely moment as it appeared that City banks are again distributing huge pay and perks. Wall Street giant Goldman Sachs is expected to confirm today that it will pay an average. As much as I despise them for their massive bonus's, if we tax them at 90% will they all move abroad!
Will tax payers make profit?
Times Online: Government considers plan to reduce bank holdings
The Government could start to sell part of its stakes in state-owned banks within months, but it will retain the majority of its investment for several years, it emerged yesterday. Glen Moreno, the acting chairman of UK Financial Investments (UKFI), the body set up to manage the Government’s stakes in banks, said yesterday: “I would not be at all surprised to see some transactions occurring within a year or so . . . and continuing over the next several years.”
Green shoots galore
RICS: UK house prices fall more slowly, outlook brightens-RICS
House prices in England and Wales fell at their slowest annual pace in almost two years last month while confidence in the price outlook turned positive for the first time since May 2007, a survey showed on Tuesday. The Royal Institution of Chartered Surveyors' house price balance rose to -18.1 in the three months to June, its best reading since September 2007, from -43.8 in May. Analysts had forecast a much more modest improvement to -40.0. New buyer inquiries increased for an eighth consecutive month and at their fastest rate since the survey began in 1999. The findings echo other recent indicators in suggesting record-low interest rates may be helping to stabilise the housing market.
Monday, July 13, 2009
Meredith Whitney sees GS up how much?
Karl Denninger: Meredith Whitney: The Internet NEVER SLEEPS
Watch about 1 minute into the interview: "The underlying core earnings power of these banks is negligible. Its a crazy positive momentum based on zero fundamentals." Guess when? Two months ago. And Merideth, you haven't changed your macro forecast one iota; you still expect much higher unemployment (13% U3 .vs. in the mid 9s now) and yet you start talking about write-ups, issuing buy calls into stocks that have more than doubled in price with, in your own words, zero fundamentals and negligible earnings power?
Whatever.
Telegraph: Tim Geithner: recession will be over within months
The American and world economies will be out of recession in a matter of months, Tim Geithner, the US Treasury Secretary, has declared.
Charlie Bean Says what we Foresaw a Year ago
Guardian: Bank of England cautious amid double-dip recession fears
"The deputy governor of the Bank of England pledged tonight to remove Britain's emergency economic policy boost slowly after a warning from the US treasury secretary, Tim Geithner, that the global economy was still at risk of a double-dip downturn".
Try Beating That, Brown!
BBC: US budget deficit at $1 trillion
"The US budget deficit has moved above $1 trillion (£616bn) for the first time - with three months of the financial year remaining, official data shows.The government stepped up spending to counter the recession, and the bailout of financial institutions has taken a huge chunk out of government finances". "These are mind boggling numbers," said Sung Won Sohn, an economist at the Smith School of Business at California State University. "Our foreign investors from China and elsewhere are starting to have concerns about not only the value of the dollar but how safe their investments will be in the long run!" (Fancy that!)
More like £30,000 a year
Daily mail: How the average household now pays out £18,000-a-year on bills every year http://www.dailymail.co.uk/news/article-1199369/How-average-household-pays-18-000-year-bills-year.html#ixzz0LAOW9Ljr&D
look at how the mortgage figures are, wonder where they got this info from???
Meredith Whitneys sees GS 15% up short term
CNBC: Meredith Whitney Earnings Outlook
Some really good overall points from MW, who has been spot on with financials throughout. Long term she is bearish but short term she sees banks extending their rally on this quarters earnings. She particularly likes GS who have no effective competition, but also banks doing mortgage business. It also seems that on May 20th the Obama Administration gave away 18 billion to incentivise banks to refinance mortgages and this incentive goes up to 75billion if critieria are met. Short terms this will improve net tangible book which should see mortgage banks rocket up. If you are short sterling get our the way!
Property futures still expecting 10% more falls to come
Tradition: "Future HPI" for June
The recent rally in house price forward values came to an end during June and early July, but one needs to view this retracement in context. The worst of the market’s destruction phase is over, but the road to recovery will be neither smooth or quick. While first time buyers are excluded from the physical housing market by severely limited bank lending, the relatively small number of house purchase transactions can make for choppy movement in the index month to month. Expect more of the same.News that one building society had offered a more than 100% Loanto Value mortgage to existing clients caused some consternation in the newspapers, but it needn’t have. After such a mark down of the house price why shouldn’t LTV rates recover for prime borrowers?
NAEA sees Specsavers
Home Move: NAEA sees improvement in housing market
10% drop in trade volume MoM. 3% drop in registered buyers MoM. But no sir! It is an improvement, sir! And I swear on my dead grandma this time it is really a greenshot, sir!
Unemployment
Market Oracle: Mass Deflation or Inflation
This article is a very interesting take on events in the US from an inflationist point of view. Also, I was remembering the other day about the arguments against having a policy of full national employment, basically because of inflationary problems. Whether by accident or design, rising unemployment in the UK is an extremely useful block against inflationary pressures, whether this is a policy or not, "we had to burn the village to save it" type thinking. Worth a read anyway, because the situation is broadly similar in the UK. The conclusion drawn is mass inflation when the government cannot extend state ownership (nationalised banks, car companies etc) further, and the banks have no other choice but to restart lending.
The great public-sector pension rip-off
Economist: Dodging the bill
In Britain the liability adds up to 85% of GDP. There is, in effect, a hidden transfer from private-sector workers to their public-sector peers. In Britain it may amount to as much as 30% of pay. Can someone list countries by off-balance-sheet liabilities so I know where to bet the next 25 years of my financial future on.
It never rains but it pours
FT: Borrowers hit with steep rise in home loans
"Some of Britain's biggest lenders have pushed up sharply the cost of popular fixed-rate mortgage deals, in defiance of ministers' calls for more competition to revive the housing market. Banks rescued with billions of pounds of taxpayer money are among those that increased interest rates yesterday or withdrew deals. Northern Rock, the state-owned lender nationalised last year, raised the cost of some of its deals by as much as 0.6 of a percentage point, taking its two-year fixed-rate to 5.09 per cent and its five-year deal to 6.29 per cent. The Bank of England's base rate is 0.5 per cent. Last night, Royal Bank of Scotland, which is 70 per cent- owned by the taxpayer, pulled some of its best mortgage deals from its website, said London & Country Mortgages..."
What an investment!
The Times: Government loses £10.9bn in RBS and Lloyds
UK Financial Instruments (UKFI), the body that manages the Government’s shares in some of Britain’s biggest banks, today admitted that it is sitting on paper losses of £10.9 billion. The body, which is in charge of the Government’s 70 per cent stake in Royal Bank of Scotland and its 43 per cent holding in Lloyds Banking Group, also refused to give an indication of when it expected to dispose of the shares in the lenders.
Bring out your Dead, Bring out your Buyers
Write About Property: Will the Current Stability be the Start of UK House Price Recovery?
As usual I have been advising caution about viewing the current price situation positively, because it is fuelled by only a moderate rise in activity from very low levels, not the major increase you would expect if the market had bottomed, but, coupled with the current drastically low stock levels, enough to put upward pressure on prices. Thus, the current stability and even growth in UK house price has been very vulnerable to an increase in supply, which was being made more likely by the price rises. I had become stuck in a negative rut, and I was absolutely sure that prices would fall again when supply increased, which I believed was inevitable. The Zungalow post stopped me in my tracks, the writer says
Higher Taxes if it isn't Green
Mail: Make Your Home Greener or Pay Higher Council Tax, Government says
"Those who do not have double glazing or insulation would be hammered under proposals drawn up by an environmental pressure group which will be considered by ministers. They want the punishments to be brought in alongside 'green mortgages', under which homeowners can apply for loans to spend on energy-efficient equipment such as new boilers and even solar panels". (A useful move, stealth tax or just more politicking?)
Pay tour way like everyone else
The telegraph: Tax collected from landlords could rise
Buy to let investors..........hope you have put aside £££££££££,s to honour your tax liabilities!
Sunday, July 12, 2009
My House is my Pension, Remember?
Telegraph: Pensions experts predict 'horrific news' on funds
"Calls for the trustee system to be overhauled, as the retirement funds crisis deepens and Royal Mail mulls changes to its pensions scheme". "Over the next few months we are going to see some horrific news on pension funds," says Ros Altmann, a former pensions adviser to the Government. "Around half the pension funds out there have a three-year valuation cycle that ended in March 2009. Trustees will face some awful deficit challenges as the new valuations come to light."
Banker MD email doing the rounds
FT Alphaville: Doomsville
Clear and concise telling of what is going on - read US housing/US consumer/valuations sections
Keep the Faith...this graph has to play out
FT Alphaville: Culpability of Central Bankers
For all those losing faith, buying into the green shoots "kool aid" - look at this graph, deleveraging has only just begun - the equivalent for the US is about 130%
Thieving public sector fat cat help themselves to more cream
The Times: Quango executives grab 20% pay rises
This one is designed to make the blood boil. Despite the downturn and the public sector being bankrupt, UK QUANGO chiefs have awarded themselves record pay rises of 20%. I see on John Redwood's blog he is is calling for 10% pay cuts for QUANGOcrats on over £100k and more for those on over £200k. I'd go further, these people are literally just stealing public money, they should be imprisoned, have their assets seized and their pensions taken away. This isn't deserved or earned income - its theft pure and simple.
Forward to the past?
Observer: Remember, gentlemen, Thatcher's cuts didn't actually work
Interesting article on benefits of public debt. ' "Some people think that the national debt is like a company debt, owed to people outside the company. But most of our national debt is owed to ourselves, ie to UK residents (individuals, pension funds, trusts, banks, charities and so on). Since the government has the power to raise taxes to pay the interest, there can never be a question of default ('the country going bankrupt', as the media like to say)." '
The UK has no more money. It's all gone on propping up house prices and quangos
Telegraph: UK can't afford another fiscal rescue, warns IMF
IMF says we don't have enough cash for stimulus plans next year and plans to cut government debt don't go anywhere near far enough. Expect a ratings downgrade soon.
Fresh wave of risk aversion in financial markets
Investment Postcards: Words from the (investment) wise for the week that was (July 6 – 12, 2009)
The past week has been characterized by a fresh wave of risk aversion, as uncertainty over the global economic outlook took its toll on stock markets, commodities and precious metals, and investors favored safe-haven assets such as government bonds and the Japanese yen. The S&P 500 Index, Dow Jones Industrial Index and the Reuters/Jeffries CRB Index – all now in corrective mode – closed down for a fourth consecutive week, while US Treasuries recorded gains for a fifth straight week and the Japanese yen for four out of the past five weeks. Read more about this and the implications for financial markets in the weekly “Words from the Wise” review: http://www.investmentpostcards.com/2009/07/12/words-from-the-investment-wise-for-the-week-that-was-july-6-%E2%80%93-12-2009/
U turn after 30 years
Guardian online: Tory about-turn on council houses
Conservative insiders are quick to stress they do not wish to see a return to the days of large-scale municipal estates. But they are preparing the ground to allow councils to build tens of thousands of new homes in smaller developments.
We don't need no regulation
Guardian: Ban on 100% home loans dropped
Tough new curbs on mortgage lending to limit loans and force homebuyers to come up with far bigger deposits are being eased amid fears that they could wreck the emerging recovery in the housing market. Earlier this year, Gordon Brown asked the Financial Services Authority to consider a ban on mortgages with a high loan-to-value (LTV) rate. FSA executives told a parliamentary committee last week that such restraint could lock first-time buyers out of the market just as they were starting to regain confidence. Their warnings reflect a growing consensus in Whitehall that banning higher-risk mortgages may be counterproductive.
Saturday, July 11, 2009
Commercial property again! ...Ouch
Times Online: Lloyds braced for £13bn writeoff
LLOYDS BANKING GROUP is poised to write off as much as £13 billion on its loans to commercial property, businesses and mortgage holders as the crisis engulfing the taxpayer-backed bank deepens.
Why not to trust any government!
Mail online: 13 doctors demand inquest into Dr David Kelly's death
Unusually, no coroner's inquest was held into his death. The only official verdict has come from the Hutton Inquiry, commissioned by Tony Blair, which concluded that Dr Kelly, 59, died from loss of blood after cutting his wrist with a blunt gardening knife.
HOW MUCH! It's not THAT nice.
Times online: An old bakehouse, a brand-new Range Rover and a boat for sale
Now he’s promising a brand-new Range Rover and an inflatable boat, together worth £90,000 And he has dropped the asking price by 32.5%, from £2m to £1.35m. (Right at the outset, and briefly, it was on at £3m.) Blain is not just a desperate house-seller. After spending almost £800,000 on renovating the property, Blain was encouraged in March last year when Knight Frank estate agency valued it at £2.5m. That July, Marchand Petit, a Devon agency, proposed a guide price of £2.9m; Savills suggested £2.5m-£3m. So Blain put it on the market himself and waited for the buyers to come — but they didn’t.
Good Opinion
Sunday Herald: British lemmings will drive our banks over the edge once again
LAST WEEK, like the first cuckoo of spring, we heard the first sign of a return to abnormality in financial affairs: the Nationwide announced the return of the 125% mortgage. Nine months after the greatest financial crisis in 80 years, financial institutions are reinventing the worst excesses of the credit bubble, aided and abetted by the chancellor, Alistair Darling. He made clear last week that there is to be no serious financial regulation in the City of London, still less any break-up of the banking behemoths. Panic over. All that stuff about returning to "good old-fashioned banking" - he was just kidding.
Take that you nasty piece of work
Home move: High Court rules against Foxtons’ letting terms
The Office of Fair Trading (OFT) has won a High Court case against Foxtons, following complaints from landlords. In February of last year, the OFT began an action against the London-based estate and lettings agency, which had been accused of trapping landlords with small print in its contracts. The OFT issued proceedings under the Unfair Terms in Consumer Contract Regulations 1999 and following yesterday’s judgment will ask the High Court to grant injunctions preventing the continued use of the terms by Foxtons.
Retail Outlet for Sale - Prime Location
Independent: Olympic shopping centre struggles to attract retailers
The developer of the £1.5bn flagship shopping centre of the 2012 London Olympic Games has signed up just three retailers out of 300 units less than two years before opening, laying bare the crisis gripping retail property. (my old mum, who lives a 5 minute walk from the site asked why we needed more shops...).
Huge property crash sees 9 in 10 homes sell below the asking price
Telegraph: Mini property boom sees one in 10 homes sell above the asking price
Parts of Britain are experiencing a mini property boom as estate agents report one in ten properties selling for more than the asking price. In pockets of the country - including London, Oxford and Cornwall - the market is buoyant as buyers fight to secure the best properties amid one of the most dramatic shortages of homes for sale in three decades. After 18 months of one of the worst property slumps the country has ever seen, there is pent up demand in the market that has led to a surge in demand for good quality homes. Lucian Cook of Savills says, Cash buyers who have sat on their hands for the past 18 months or so are now keen to take advantage of the price falls seen to date."
A fairer system for people who need to enter nursing homes?
Times: Hope for pensioners forced to sell homes
A Green Paper discusssion document is to suggest a range of measures that would let pensioners hang on to their properties when they need care in a nursing home. Options mooted include a one-off payment at retirement or death, or compulsory insurance paid throughout a career.
Friday, July 10, 2009
It's all David Van Day's fault.
Telegraph: China criticises Dollar
The discussion, which took place between the leaders of five emerging economies and the G8 industrialised nations, including Barack Obama, caused concern among western leaders.
Unity in Diversity
Bloomberg: Medvedev Shows Off Sample Coin of New ‘World Currency’ at G-8
July 10 (Bloomberg) -- Russian President Dmitry Medvedev illustrated his call for a supranational currency to replace the dollar by pulling from his pocket a sample coin of a “united future world currency.” “Here it is,” Medvedev told reporters today in L’Aquila, Italy, after a summit of the Group of Eight nations. “You can see it and touch it.”
IMF Bailouts: Get in Line Behind E Europe!
Reuters: Bulgaria, Croatia deny in IMF bailout talks
Croatia, Bulgaria and Macedonia denied a report in a German daily on Friday that they were among at least 10 eastern Europe states in talks with the IMF over billion-euro emergency loans for their ailing economies. The report, which put the euro EUR= under pressure in Asian trade on Friday, cited sources close to the International Monetary Fund naming the three countries
I have a question.....
Bank of England: Ask the Deputy Governor
Who gave you the right to steal my savings?
New build pwnage
Telegraph: New-build prices have falen 50%, not 9%
We were told that house prices started to fall officially in late 2007, but the reality for people who bought new builds is altogether different. Their house price crash began as long ago as early 2006. Flat 7 Henry Laver Court, Colchester, was bought for a princely sum of £246,995 in the Spring of 2006 only to be sold for £120,000 less three years later. It is not the only flat in the three-year old development that has fallen in value by 50%. Housebuilders, along with everyone else, jumped on the property bandwagon and actively encouraged a wave of budding buy-to-let tycoons with juicy incentives such as paying their rent for two years. Such incentives were still dangled after it emerged that the values of flats, mainly in city centres, had started to plummet.
Geithner wants to tame $700 trillion market gone wild
Associated Press: US official says derivatives surprised government
For those who still think derivatives had nothing to do with the housing bubble and credit crunch: "The influence that derivatives can have on the financial sector was most evident when American International Group Inc. sold so-called credit-default swaps to protect investors against potential losses on mortgage-backed securities. When the housing market collapsed, AIG was unable to make good on its promises and took a $182 billion government bailout to keep from collapsing." Add in a bit of corruption too:"But Geithner said many investors used the instruments to evade regulation, exploit regulatory loopholes or minimize taxes."
Foxtons 'unfair' can this be true?
This is Money: High Court: Foxtons contracts are 'unfair'
The High Court has upheld an OFT decision that landlord contracts from estate agent Foxtons were unfair. The company, which developed a reputation in the boom years for hard-sell tactics and high fees, was accused of hitting landlords with repeat charges - renewal commission - even when it may have done no extra work to keep a tenant. The case, which has implications for other rental agents employing the same practices, reached the High Court after the Office of Fair Trading (OFT) deemed elements of Foxtons contracts with landlords in breach of the Unfair Terms in Consumer Contracts Regulations.
Drugs, chopped cars, what else can an empty house be used for?
Las vegas sun: Metro works to keep empty houses free of chop shops
the big problem in Las Vegas is banks are holding onto repos in a bid to release them slowly onto market to keep prices artificially high, however this clearly comes with pitfalls... when will banks ever learn?????? Do they care? I have heard they have around 40,000 properties hidden in their books ready to release...
A Chance to Take Part in a House Price Poll
Lovemoney: Debate: The future of house prices
Which way are house prices heading vote online
Looks more and more like a bull trap to me!
Times online: Factory prices fall at fastest pace since 2001
The price of British-made goods fell at the sharpest pace in 8 years in June, putting further downward pressure on inflation. Factory gate prices fell by a bigger-than-expected 1.2 per cent in the year to June — four times larger than the 0.3 per cent decline recorded for May and the sharpest decline since the end of 2001, as manufacturers battled dwindling demand. Howard Archer, chief UK and European economist at IHS Global Insight, said: "Although the rate of decline in manufacturing activity has slowed substantially, increased spare capacity and still difficult conditions are maintaining pressure on firms to price competitively to gain business."
Foxtons loses legal battle over landlord fees
The Times: Foxtons loses legal battle over landlord fees
Foxtons, the estate agency, today lost a High Court case when a judge ruled that some of the terms and conditions it imposes on landlords are unclear and unfair. The Office of Fair Trading (OFT) took the property company to court over terms that force landlords to continue paying commission even if Foxtons is no longer involved in letting or managing a property.
The interest rate cycle to start over.
Citywire: World headed for serious 'inflationary shock' says A-rated Pothier
As well as the intrinsic value offered by soft commodities and minerals versus devalued currencies, over a five year horizon the world would face supply issues, he said. ‘A lot of commodities are now trading at below production prices and we are facing further pricing pressure – a lot of the easiest sources have been fully mined, we are facing deeper extraction, mines in less stable regions and in areas where people want a fair shake – there is not going to be a return to the old days. Both themes came together in gold pricing over the long term, which had both intrinsic and relative value as ‘the most liquid currency in the world’ and its resistance to anything more than the most short-term price manipulation.
18% on someone else's misfortune
Market Oracle: How to Earn 18% Interest From the Government
A bit off subject - but does include house prices, foreclosures, US housing market, auctions and property tax so please be kind. What are peoples thoughts on this - especially in mind of California
Bigger more centralised goverment anyone?
The Renegade Economist: Renegade Economist Talk Show
"Hi I'm from the government and I'm here to help..."
More rehashed house price statistics
FT: UK house price falls slow in June
House prices in England and Wales fell again in June but at the slowest pace since April 2008, confirming other signs that the housing market is stabilising after steep falls over the past year. According to the FT House Price Index for June, house prices fell by an average 0.3 per cent, bringing the year on year decline to 13.1 per cent. The data are in line with the general picture formed by a variety of house prices indices, all of which measure activity in slightly different ways.
Tossa
Telegraph: EU's regulation of City would 'strangle' London, says Mayor Johnson
Boris Johnson, the Mayor of London, said yesterday that European plans to regulate the financial services sector threatened to drive hedge funds out of London and Europe, even though they were "blameless" for the crisis.
Thursday, July 9, 2009
At last some sense, but not from all.
Times Online: Vital mortgage reforms needs to help the first-time buyer
The treasury wants to enforce good practice for lending. The FSA are broadly in tune with the treasury, so far so good, or maybe not. Anne Ashworth a property journalist from the Times thinks otherwise! She can't see that if mortgages are restricted 75% LTV mortgages that prices will fall and FTB's will be able to buy but on sensible mortgage terms which they can afford . She thinks if this is adopted FTB's will have to save and rent for too may years! I think I'd rather go for cheaper houses that I can afford the repayments on, otherwise you could get a bit of a boom and bust! It could happen, no really!
Bye bye parasites Hello reposessions.
The Times: Landmark ruling on sale-and-rent-back schemes
A family who were about to lose their home to a sale-and-rent-back scheme have won a landmark ruling that will allow them to stay in the property for life.
Land Lord should hang and all land lords should carry out electrical safet checks
Daily Mail: Mother of two electrocuted as she turned on tap to run a bath in her family's new home
The electrical wiring in the home had not been inspected since 1981 and the Earth Bonding had corroded. When Thirza Whittall touched the taps in the bath with wet hands she was electrocuted by 175 Volts which put a lethal charge through her body
Credit where credit is due.
Times On Line: Five golden rules for regulating the banks
The Times wording not mine! "It is unfashionable to say so, but Alistair Darling’s response to the financial crisis was broadly right — at least after his Pauline conversion in mid-October to the necessity of offering unlimited government guarantees to all British banks".
This article needs the housepricecrash guys to leave comments on their website
Las vegas sun: Las Vegas breaks record for monthly homes sales
come on guys help me out on their website, 2 agents are trying to make out we are all idiots and agents never lie...
Telling it Like it is
Write About Property: UK House Prices Fell in June - More Falls Inevitable and Necessary
If this current positive data should trigger a large number of these people to begin marketing their property and prices will likely go back into freefall," he said. And that is certainly the worry throughout the industry, having been voiced by major industries bodies including the Royal Institute of Chartered Surveyors. But at the same time you can't have a healthy housing market, or a housing market recovery on the current levels of stock
We dont care, its the tax payers problem!!
Bloomberg: Bradford & Bingley Swaps Triggered by Credit Event
Looks like the B&B are taking a page from there own cusomers book, if you cant beat'em...join'em. I sit here, I read, I think and I ponder, where, when and how will it all end :-(
Interest rates on hold
Times Online: Latest:Bank holds rate to pause in fight against slump
The Bank held interest rates again at their existing 315-year low of 0.5 per cent ...bla,bla,bla. This is to encourage the sheeple to go out and spend money they don't have. It is likely to be on exports, as we don't make anything anymore!
Not printing as much as expected
Reuters: BoE maintains rate at 0.5%, holds QE steady
As expected, interest rates are held at 0.5%, but the markets were expecting the Bank of England to announce QE2 - a massive £25billion expansion of the quantitative easing programme. That didn't come today, although the bank hinted it would reconsider the issue at the August meeting. Sterling has jumped 2% against the euro and the dollar on the news.
UK economy built around property values!
Timts Online: Housing recovery stunted by 'lack of mortgages'
Redrow also sounded a note of caution on the mortgage market, stating: “Without doubt this is a major obstacle to the recovery of the housing market and we are of the view that resolving this issue can play a significant role in a recovery of the economy as a whole." "However, both said that a lack of mortgage finance was impairing recovery".
Mixed signals from CML
Mortgages rise on parents' help for first-timers: The Times
A record number of young first-time buyers are getting help from their parents to enter the housing market, according to the Council of Mortgage Lenders (CML), sending the number of home loans granted in May up by 4 per cent. The CML said today that around 80 per cent of first-time buyers under the age of 30 appear to be receiving help from their parents after failing to save the necessary deposits to climb on the housing ladder. Over the past two years, banks have reversed their policy of easy credit and dramatically clamped down on offering mortgages to customers without large cash deposits. First-time buyers are been particularly hard-hit by the squeeze. The CML, which represents most banks and building societies, said while first-time buyers have had to rely increasingly on help ...
Never thought a bank would say that
BBC: HSBC said it wanted to cut losses from cheque fraud and to discourage people from spending money they did not have.
HSBC said it wanted to "discourage people from spending money they did not have." "It is about reducing risk from a mechanism that allows a customer to continue to make purchases from their current account when they know they don't have the funds or an approved overdraft."
A real humdinger
BBC 5 Live: Wake up to Money: Wake up to Money 09 July 2009
Andy is on fire today. Gave Darling a right grilling, then "We ask Peter Bolton King, chief executive of the National Association of Estate Agents, how they came up with these figures".
'The chronic shortage of mortgage supply'
Redrow sees results at lower end of expectations: Reuters
I thought the supply of credit had improved. Apparently not: mortgage supply is not just bad, it's 'chronic'.
House prices to double in 10 years
This is Money: House prices debate on Radio 4 Moneybox
Check out the reader comment on how supply and demand will 'double prices in 10 years'.
!
Bloomberg: Gilt ‘Russian Roulette’ Deters Pimco From U.K. Debt as BOE Buys
"The biggest gilt investors say U.K. government securities provide little value even though the Bank of England probably will extend its bond-purchase program." "Investors are losing confidence in Prime Minister Gordon Brown’s economy as the government embarks on the biggest fund- raising effort in Britain’s history. " "The U.K.’s recession extended into a fifth quarter during the three months ended June 30, according to the National Institute of Economic and Social Research. House prices fell in June, a sign Britain has yet to shake off the property slump as unemployment increases, a report by Halifax, a division of Lloyds Banking Group Plc, showed yesterday."
Where Have I heard this before?
Times Online: Recession will be over by Christmas, says IMF
Britain’s recession will end this year, with the economy returning to anaemic growth in 2010, the International Monetary Fund (IMF) said yesterday, as it upgraded its view of prospects for the UK and other leading economies. So that's nice!
Hmmm
BBC News: Nationwide offers 125% mortgage
Nationwide Building Society has introduced a mortgage allowing borrowers to take loans worth 125% of the value of the home they are buying. It will only be available to existing customers in negative equity who want to move house.
Pump up the volume
BBC News: Bank may pump more cash into UK
The Bank of England is expected to keep interest rates at their historic low of 0.5% on Thursday. But it may announce an extension of its quantitative easing scheme under which it prints money to buy bonds in order to stimulate the economy.
EAs want govt to pressure banks to aid the recovereh
Press Association: Quarter unable to get mortgages
Nearly one in four people claim they are unable to get a mortgage due to the tighter lending criteria being used by banks and building societies, a survey has showed. Around 22.5% of people said they did not qualify for any of the mortgages that were currently available, according to the National Association of Estate Agents. Peter Bolton King, chief executive of the NAEA, said: "We cannot let the banks convince us that shutting up shop when it comes to mortgage lending is a responsible move. The decision to restrict mortgages so severely is rooted in self interest. The Government must do more to put pressure on those banks that are refusing to lend, while highlighting those banks that are easing restrictions."
Wednesday, July 8, 2009
There, there, nanny is on the case!
Telegraph: Finance white paper: Financial education
A new consumer education authority will be set up to raise the public's "financial capability" through a "national money guidance service". The Treasury estimates that the total cost of setting up and running the new body and it's advice programme will be between £1.37bn and £2.7bn over 52 years. A 52 year budget Now that is impressive!
Return of sub-prime mortgages
The Guardian: Nationwide offers 125% mortgages
Mortgages allowing people to borrow up to 125% of a property's value are making a surprise comeback after Nationwide launched a deal aimed at homeowners trapped in negative equity who are keen to move house.
Not one for Blue Beach
Telegraph: Shipping flashes early warning signals
Stocks are rolling over (S and P below 200 sma and looks as if it might close under) oil price (which was speculation anyway) down $10 a barrel over past few days, sterling droping sharply against the $ and the yen. The Baltic Dry Index is also starting to retrace. Bank stocks looking fragile. If this quarters figures (out soon) can't be pumped up, we're going to head down sharply from here.
There Goes Risky Mortgages...
REUTERS: Darling outlines tougher bank regulation
The government set out its blueprint for beefing up regulation of the financial sector on Wednesday in a bid to prevent a re-run of the crisis that forced it to bail out banks with billions of pounds of taxpayers' money.
Get Your Homebuying and Mortgage Q's Answered
Guardian: Property Clinic
Our panel of experts will answer your homebuying and mortgage questions from 1.30pm on Thursday Simon Rubinsohn, chief economist of the Royal Institution of Chartered Surveyors, Richard Morea of mortgage broker London & Country, Andrew Montlake of mortgage broker Coreco, and David Smith of property consultancy Carter Jonas will do their best to answer your questions on mortgages, homebuying and the wider housing market. Advice is for guidance only – if you want to take your query further use our search to find an independent financial adviser in your area. If it's just the basics you are after try our factsheets page. Our panel will answer as many questions as they can during the hour, but unfortunately it may not be possible for them to help everyone. Answers will appear below.
5 years
Telegraph: House prices drop to 2004 levels, Halifax says
Currently prices are back to 2004 levels, so anybody who bought in the last 5 years overpaid.
Houseprice Spin? Now only 5.5% down/yr
Rightmove: The Rightmove House Price Index
Rightmove have again released their house price index results. Evidentally reflecting the state of 90% of the property prices on the UK market over the past year, their figures imply that the market isn't quite in the bad state some scaremongers would proclaim. There will always be the odd cries of "Wolf!", but their 90% statistics suggest that though the housing market is relatively quiet and lenders are erring on cautious to say the least, the market is set to move on and seems to be doing so.
Why Sellers are Delusional About the Value of Their House
Bloomberg: U.S. Housing Market Is Cursed by Brain Freeze: John F. Wasik
Interesting bit of psychology, equally applicable to other over-valued housing markets.
Tales of the Unexpected
Bloomberg: U.K. June Home Values Unexpectedly Fall, Halifax Says
House prices "unexpectedly" fell in June. Stephen Nickell, formerly BoE, now government advisor, identifies the lack of mortgage availability as the fundamental factor(!). This is an interesting view to hold, that house prices are still likely to be determined purely by the limit of debt available going forward, or that house buyers collectively compete at maximum debt levels.
Stock markets rolling over
Investment Postcards: Stock markets rolling over
Uncertainty over the global economic outlook yesterday took its toll on stock markets around the world as risk aversion favored safe-haven assets such as government bonds, the US dollar and Japanese yen. The S&P 500 Index yesterday breached the key 200-day line (for the third time in 26 trading days), joining the Dow Jones Industrial Average and the Dow Jones Transportation Index in bearish mode. The technicals undoubtedly look ugly, and investors will now focus on the second-quarter earnings reports as a test of whether stock prices have run away from fundamental reality. As Randall Forsyth said in yesterday's Barron's: "'Less bad no longer is good enough' has become the new market mantra." The link is: http://www.investmentpostcards.com/2009/07/08/stock-markets-rolling-over/
Down 0.5% in June
BBC: House prices 'fell 0.5% in June'
Well, that's urinated on those green shoots.
Back on track?
Halifax: House price index June 2009
There was a 0.5% decline in average UK house prices in June. On a quarterly basis, the 1.9% fall in house prices in the second quarter was the smallest since 2008 quarter one. These figures provide evidence that the underlying pace of house price decline is easing. There are further indications of a modest improvement in sales activity, albeit at a very low level. Industry-wide figures show that the number of mortgages approved to finance house purchase increased for the fourth successive month in May. Approvals were at their highest level since April 2008 and 10% higher than a year earlier. Improvements in affordability and low interest rates have stimulated housing demand. This, together with a low level of properties available for sale, has helped to stabilise activity...
Mortgage Lenders Have Shut Up Shop
Estate Agent Today: Buyers left in the lurch as lenders shut up shop
"It says that at the height of the market, in August 2007, first-time buyers could choose from 20,000 deals, but now have 1,195. Home owners could pick from 30,000 mortgages, but now have a choice of just 2,283. Peter Bolton King, chief executive of the NAEA, said mortgage lenders had shut up shop. He called on the Government to apply pressure to get them lending again. " Of course the BIG question is WILL THEY? Or will they allow the market to find its own level ?
Lending to be regulated?
BBC: UK to reform financial regulation
"New powers will be proposed to curb bank lending and prevent asset bubbles, such as the housing boom undermining the real economy. " What? I thought houses prices are an indicator of the economic health of the Country. When they go up, we're all rich! Unermining the real economy? - are these guys on drugs? Sorry, feeling particularly sarcastic this morning.
Weed killer and green shoots spring to mind!
Times Online: Factory output fall dashes recovery hopes
Mr Hamish Mctavish said 'Opinion is divided on whether the recession is over, all the experts say it's not, I say it is'!
Buy to Lose - another nail in the coffin
Telegraph: Tenants fall behind on rent
Letting agents are reporting seeing a rise in the number of tenants struggling to pay their rent as unemployment rises, research showed today. Around 65pc of agents said they had seen an increase in the number of people falling behind with their rent in the past six months. A further 93pc said they had also seen a rise in the number of tenants haggling with landlords about rent since the beginning of the year, according to the Association of Residential Letting Agents (ARLA).
One of the downsides of big mortgage debt
The Times: ‘Vulture funds’ prey on hard-up homeowners
Secretive investors and “vulture funds” have been accused of profiting from other people’s misery by buying up residential mortgages on the cheap in the hope of making a quick profit. Hundreds of thousands of people have had their debts bundled together and sold on to these shadowy investors, who have been forcing hard-up borrowers to remortgage elsewhere or lose their homes. Once they own the mortgages, they have the power to set interest rates, employ debt collectors and repossess and sell properties if borrowers default.
A nice cosy little understanding
The Times: Housebuilders ‘drip-feed’ new homes to prevent further price falls
Housebuilders are “drip-feeding” homes on to the market to prevent further falls in prices, industry experts claimed yesterday. They said that the practice — to avoid flooding the market — was widespread among large-scale builders such as Barratt and blamed a lack of competition among the developers of large sites for the problem.
Tuesday, July 7, 2009
David Rosenberg puts a generous valuation on the S and P at 650.
Zero Hedge: 40% Dead Cat Bounce
and thinks new lows likely. I hear similar stuff from Albert Edwards Felix Zulauf who are def worth checking out
Anyone want to guess the next quarter figures from the UK?
Bloomberg: Delinquencies on U.S. Home-Equity Loans Reach Record
Late payments on home-equity loans rose to a record in the first quarter as 18 straight months of job losses and a slumping economy left more borrowers unable to pay their debts, the American Bankers Association reported.
Green Shoots?
Guardian: Mortgage products market shrinks by 90%
Despite all the pressure from various quarters money lenders still making it hard to borrow. Not great news for those seeing green shoots huh? No money means no recovery in my eyes, and what about all those needing to remortgage soon???
The "Unanswered Questions"
The Renegade Economist: Prepare for the Dead Certainty: The Next Boom/Bust
Fred Harrison's thoughts on the UK's White Paper on financial regulation (it isn't worth the paper it's written on). If the economic profession has even bothered to engaged with any disucssion over how they failed to predict the financial crisis - well then were in for trouble. How about an inquest?? No...just throw around some more regulation. That'll do it.
Commercial Property Shows the Way
Reuters: UK comm. property prices fall 0.8 pct in June
"The total value of transactions in the UK commercial property market fell again in the second quarter this year, making it the worst quarter for deals since the turn of the century" - opening paragraph on same news from efinancialnews where I don't have a subscription
Will california start an avalaunch of USA Bond defaults?
Bloomberg: California’s Nightmare Will Kill Obamanomics: Kevin Hassett
Interesting article on the dowgrading of California's state bonds, this could feed through to other states and ultimatly UK bonds. At some piont the UK and US will run out of people willing to buy bonds and we will have to tax and cut. can governments do this before a crisis or are they incable until the they have run out of all other options. Will the next Tory Government engineer a false crisis like this to allow them to cut public spending and allow the rich to keep thier assets intact?
How to play a stock market correction
Investment Postcards: How to play a stock market correction
Stock markets might just have finished a particularly strong quarter but started to look tired last month, and July is also off to a shaky start. This article discusses the likely characteristics of a correction and how to play it.
Woops - maybe some duff shoots still there
The Times: Shock factory output fall dents recovery hopes
Just when the bulls were having it all their way. A sharp reminder. Silly Spring is over...
Even more green shoots
Forbes: Housebuilder Persimmon says second quarter sales beat forecast
British homebuilder Persimmon said Tuesday that sales in the second quarter were better than forecast and that it had cut its debt by 45 percent. Since late April, the company said sales volumes have been consistently ahead of the pace a year ago and that recently revenue was exceeding 2008 levels. Persimmon said it expected the improving trend to continue through the year. It said it had seen its own house prices decline by around 4% on average in the last six months, but that house prices are now stabilising in some areas, and the level of cancellations is at historic lows. Nor does it expect to have to write down the value of its landbank any further.
More positive news from Aunty Pravda
BBC News: Worst of the recession 'is over'
A gossamer thin article following a bullish headline. The BBC reporting a rise in confidence from the British Chambers of Commerce (Vested Interest anyone?). This piece was one of the highlighted headlines on the front page of the BBC website today.
MPC say they don't know what they are doing
BBC Newsnight: We could have forecasted recession sooner
Retiring MPC member David Blanchflower has said fellow members of the MPC could have forecast the recession earlier, but misread the data.
More bull for the bulls....
Telegraph: Comment: House prices will rise this year - June +1.6%
This is the fifth consecutive month that the widely reported seasonally adjusted figures have shown worse figures than the real ones. The cumulative difference between these two figures in the first 6 months of this year is 1.9pc
Addictive quantative easing.
Bloomberg: BOE Should Seek Darling’s Consent to Print More Money, BCC Says
The Bank of England should ask the government for permission to start a further phase in its money- printing program because a recovery from the recession “is not guaranteed,” the British Chambers of Commerce said.
Oi!! Give us back our Market Manipulator!
Bloomberg: Goldman Trading-Code Investment Put at Risk by Theft
Goldman Sachs Group Inc. may lose its investment in a proprietary trading code and millions of dollars from increased competition if software allegedly stolen by a former employee gets into the wrong hands, a prosecutor said. “The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,” U.S. Attorney Joseph Facciponti said.
Monday, July 6, 2009
It could be worse - we could live in California
The Street: California Bonds: Attack of the Killer BBB
There's not much golden about California these days -- least of all its bonds. Fitch Ratings downgraded the state's long-term general obligation bond rating to BBB from A- on Monday, the second cut on the reading since June. The bonds remain on rating watch negative. Fitch attributed the downgrade to California's continued inability to achieve timely agreement on budget- and cash flow-solutions amid its severe fiscal crisis. An agreement was suppose to be reached by the end of the state's fiscal year on June 30. The state has been unable to close its $26.3 billion deficit and plans to resort to issuing more than $3 billion in IOUs to thousands of creditors. The use of IOUs for non-priority payments would offset cash shortfalls into September 2009. The BBB rating is two notches above junk.
Renewed pressure on banks
FT: House price slide hits recovery hopes
European house prices fell more quickly in the first three months of this year than even in the fourth quarter of 2008 when global recession struck, a trend that looks set to dim the region’s hopes for economic recovery. The FT’s European House Price Index showed the rate of annual price declines in the 16-member eurozone edging towards the even sharper decreases for the wider European region, driven by substantial house-price drops in the UK.
Fitch negative equity stats - huge impacts in some towns
Oxford Mail: Negative equity in Oxford on the rise
OXFORD house owners are trapped with a negative equity of over £11,000 on average, according to a new report.Global rating agency Fitch Ratings has estimated the average house in Oxford is worth £11,276 less than its owner’s debt, with homeowners unable to get out of negative equity by overpaying their mortgages because of salary freezes, overtime bans, soaring household bills and job losses.
Hoh hummm
Wall street journal: Buyer's Remorse Hits Vegas Project
One of the costliest and highest-profile condominium developments in the country -- the $8.4 billion City Center project in Las Vegas -- is facing a revolt from some early buyers
Catch 22
FT: UK banks’ reluctance to clean up GBP 250bn commercial property exposure fuelling fears of continued lending freeze
Banks don't want to offload distressed assets at 40p in the pound, and they can't revitalise the market with fresh loans until they do so. Currently they are pushing back maturities and there is fear about the ability to rollover in 2011/2012 . "The trouble is that with more than half the debt maturing in the next three years, and new lending terms requiring LTV ratios of around 60%, there is not enough money in the system to refinance the loans."
Freefall
BBC: Freefall
I wondered how long it would take for a crash "drama" to come out. Looks like it's littered with the typical sterotypes.
Sterling fears
Wallstreet Journal: Banks Press UK To Issue Foreign Currency Debt
Banks want the BoE to issue foreign currency debt because they don't think there will be sufficient demand for sterling denominated debt in the future. This is gloomy news for sterling. The UK obviously doesn't use foreign currencies to pay for government expenditure, so by borrowing in a foreign currency would require sale of that foreign currency in exchange for sterling. Put it another way, foreign holders of sterling don't trust that the pound will keep its value.
What Cooked the World's Economy? - It wasn't your overdue mortgage.
Truthout: What Cooked the World's Economy?
The advantage of treating these credit derivatives players like racketeers under federal law is that their ill-gotten gains could be forfeited. The government could recoup these odious gambling debts instead of simply paying them off. In finance, the bottom line is the bottom line. The bottom line in this scandal is that fantastically wealthy entities positioned themselves to make unfathomable fortunes by betting that average Americans - Joe Six-Packs and hockey moms - would fail.
More nonsense from the media
Counterpunch: Detroit's collapse: The untold story
Ever wondered why, given US technology and know-how and America's early lead in car production efficiency, Detroit ended up making gas-guzzling 'boats' for a shrinking home market. Incompetent management? Greedy unions? No. The reason is that Japanese and Korean home car markets are so protected that their carmakers can make monopoly profits there and use those profits to subsidise predatory pricing abroad and undercut Detroit's home market, leaving Detroit without the investment required to keep abreast. (The J and K home markets are so protected that, though they trade a lot with each other, thet don't export cars to each other.) Meanwhile the high dollar and protectionism has dented a large part of Detroit's export market.
Imagined dangers can be as pernicious as real ones.
Times Online: Inflationary monster is just a bogeyman — there’s nothing to fear but fear itself
'In an economic environment fraught with uncertainty, we can be certain of two things: that this emerging inflation scare will become steadily more strident as the recovery takes firmer hold; and that the ensuing panic will prove to be a false alarm'. 'By next year, though, both inflation measures will unavoidably begin to climb as the past falls in energy costs and interest rates drop out of the sums. Adding to the upward pressure will be increases in VAT and petrol duty, which will add about 1.5 percentage points to inflation rates next year'.
Yes, sure it has..
BBC News: Scrappage scheme helps car orders
Not really on topic, but a heavily spun fiction of the sort often produced by housing VI's. Do the sums - only one in ten new car sales has enjoyed the benefit of the scheme - what percentage of new car buying households have a car worth less than £1k that they'd be getting rid of, with or without the scrappage deal ? 10%, perhaps..?? All this does is to reduce the supply of cheap old cars.
Still Way Overvalued
BBC Money Box: House Prices 04 July 2009
"We speak to Ray Boulger, technical director of mortgage brokers John Charcol and Andrew Oxlade, editor of thisismoney.co.uk."
Why so much?
BBC News: Increase in Land Registry fees
The Land Registry unashamedly blames the increases on falling workload - any other business would be shedding staff.. does it really take £200 (on average) of staff time, just to change the name on a title deed..?
Sounds familiar
FT: Securitisation reinvented to cut costs
Investment banks, including Goldman Sachs and Barclays Capital, are inventing schemes to reduce the capital cost of risky assets on banks’ balance sheets, in the latest sign that financial market innovation is far from dead. BarCap’s structures involve the pooling of assets from several clients into a secured financial product that can be sold on to other investors and rated by a credit rating agency, potentially reducing the capital allocated against the assets by between 10 per cent and 50 per cent. These new mechanisms are in some respects similar to the discredited structured products, which were widely blamed for fuelling the financial crisis.
Debt reduction plan for the next government
The Times: Whitehall lines up ‘doomsday’ cutbacks
Secret “doomsday” plans for 20% cuts in public spending are being prepared by senior civil servants, who fear politicians are failing to confront the scale of the budget black hole. Whitehall mandarins have begun creating detailed dossiers containing reductions in expenditure that are far deeper than the more modest savings being proposed by Labour and Conservative politicians.
There's a big lump starting to form under the carpet.
Telegraph: US lurching towards 'debt explosion' with long-term interest rates on course to double
The US economy is lurching towards crisis with long-term interest rates on course to double, crippling the country’s ability to pay its debts and potentially plunging it into another recession, according to a study by the US’s own central bank
Why not to buy for a few years yet!
Times Online: In 2009 as in 1931, debts must be repaid
Britain is not free from the laws of finance, which say that debt eventually has to be repaid and cash is king. Gordon Brown will go to the G8 on Wednesday as the leader of what is becoming a debtor nation. There is no longer a gold standard to maintain, but many of the other factors of the 1931 crisis are present in 2009, including unemployment, public service pay and the recession itself.
These green shoots....I think there dead!
Times Online: Recession may get worse, Gordon Brown warns world leaders
'The worst of the recession may be yet to come and world leaders are in danger of hampering the recovery, Gordon Brown will say today'. 'The remarks are a departure from Mr Brown’s usual rhetoric. His forecast that the British economy will emerge from recession by the end of the year is expected to form the basis of Labour’s general election campaign. Downing Street sources denied that the remarks were a change, saying that he had not spoken about the international economy for a while'. Hamish Mctavish to speak to world leaders to say they are all wrong, in fact everything is just peachy.
Sunday, July 5, 2009
Busted
Thisismoney.co.uk: From buy-to-let to fraud and a lost £100k
BTL landlord didn't realise he might be committing Mortgage fraud when declaring the asking price for a property rather than what he was actually paying. It's hard to feel all that sorry for the bloke if the report is accurate.
Video of John Major on the Andrew Marr Show
BBC News: Video: 'We have never seen anything like this'
Former Chancellor and PM speaks out on the state of the economy in an interview with Andrew Marr. He tells it like it is...no spin...but hard facts. Anyone planning to take out a mortgage now or in the near future take note.
Lending must shrink
BuyToLetMortgages: UK Lenders Ought to Cut Lending by £500 billion
Existing lending needs to shrink by 500 billion due to the failure of residential property securites, according to a BoE report. This is at odds with the government's policies of expanding lending. Not really, though, if you split lending into categories. We need additional lending to business and reduced lending for asset purchases. The only way to square this circle will be to introduces caps, and to regulate loans by type. Mortgage restrictions have been mooted in the past by the FSA amongst others. I am sure we will hear more of this in the future.
Doesn't sound like much of a recovery to me!
Mail On line: All public sector workers should have pay frozen, urges head of government spending watchdog
‘Let’s assume the Prime Minister is not going to cut public expenditure as he says, then there would have to an increase in income tax. ‘To raise the revenue required it could not just be the top rate that is increased, the standard rate would have to rise too.’ When Mr Marr asked how much, Mr Major said a 5p increase would be needed.
I despair, Is it April 1st?
Times Online: City firms scheme to hide bonus boom from HMRC
City firms are drawing up schemes to help staff to dodge the new 50% rate of income tax, ahead of what is expected to be a rapid return to bumper bonuses in the Square Mile. Grant Thornton, the accountancy firm, has sent a document to clients outlining one scheme that could afford a “potential tax saving of approximately 40%”.
This will spoil your day!
Times Online: Job losses report bring gloom to Fourth of July
HOWEVER! "Goldman Sachs is on course to pay bonuses of $20 billion, or $700,000 per employee, twice last year’s payout, and Morgan Stanley is projected to top last year’s average bonus of $262,000 per employee with cheques close to $340,000".
Is sir ready for your bill?
Times Online: Alistair Darling hits at cuts and pay squeeze as finances worsen
The state of the economy is worse than at the time of April's Budget and could result a squeeze in public sector pay announced within weeks, the Chancellor has admitted. Alistair Darling also acknowledged that government spending faces "much tighter" limits as a result of the recession, in one of the most frank interviews about the state of the public finances so far.
Hot off the press
The Times: Bank of England injects £25bn more into economy
It appears that another £25bn will be committed but that might not be the end of the matter: “There was a widespread feeling among the members of the IEA’s shadow committee that QE was the only effective monetary policy instrument presently available to the authorities,” it said. “Several committee members believed that the present schedule of gilt purchases should be extended. Some members thought that an additional £100 billion to £150 billion of debt repurchases was required once the current package had run its course.”
Roller-coaster ride into the long weekend
Investment Postcards: Investment Postcards from Cape Town: Words from the (investment) wise for the week that was (June 29 – July 5, 2009)
The holiday-shortened week in the US saw pundits pondering the depth of the economic rabbit hole as the curtain closed on the second quarter. As investors vacillated, most financial markets were characterized by a roller-coaster ride. Friday’s worse-than-expected US jobs data left no doubt that the economy was in recession. 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/2009/07/05/words-from-the-investment-wise-for-the-week-that-was-june-29-%E2%80%93-july-5-2009/
'Yes, it was crazy money to a layman, but this is property. It was like that.'
Mail: Anthea Turner and Grant Bovey explain how they lost £130m in the blink of an eye
Grant goes on to tell me me that it took £19million to get his property company Imagine off the ground. Where on earth does a man with a horsebox get that sort of money? '£1million I raised myself; £18million was borrowed from the bank,' is the answer. Wasn't that crazy money - both to be lending, and borrowing?
Mortgage Rationing Could Put a Lid on Recovery
Property Times: Have house prices finally found their level?
Quite a bearish article for the normal bullish Property Times " Caveats apply: Bank of England figures showed mortgage approvals rising but only modestly, and still well below normal levels. Mortgage rationing could put a lid on any further recovery in activity, and the fear remains of a W-shaped graph — where prices rise only to fall back again. " "t would be wise to wait to see what happens to mortgage availability over the autumn and winter before concluding that prices have stopped falling. Some say an overshoot on the way down is required to lure cautious buyers back into the market. "
Saturday, July 4, 2009
Phase II of the Great Unwinding
Telegraph: The unemployment timebomb is quietly ticking
The message has not reached Wall Street or the City. If bankers know what is good for them, they will take a teacher's salary for a few years until the storm passes. If they proceed with the bonuses now on the table, even as taxpayers pay for the errors of their caste, they must expect a ferocious backlash.
Sugar rush - nice analogy!
Telegraph: QE just acting as a sugar rush for insolvent banks that deserve to fail
At this point, people in my position are supposed to explain that QE isn't "printing money". I'm not going to do that. For the only difference between the UK's current policy and Zimbabwe-style economics is that QE involves the creation of electronic balances rather than actual notes.
Austrian Economics Seminar... sort of.
You Tube: Peter Schiff explains the economic meltdown
interesting 4 parts . These are the others : (part 2) http://www.youtube.com/watch?v=7YmfkyQVCvs&feature=related ; (part 3) http://www.youtube.com/watch?v=wrHeoFoABgs ;(part4) http://www.youtube.com/watch?v=1MsgzcyOgMg
Systemic problems for housebuilders in todays market
The Times: Housebuilders have not made it to sunlit uplands yet
An examination of the problems facing housebuilders today. Land banks that no longer appreciate in value due to deflation, lack of innovative building techniques, the requirement for less capital intensive projects, relatively high material costs and environmental standards overheads are just some of the issues builders need to address: "The development model on which housebuilders’ returns have been based for the past half a century is badly damaged, possibly broken. In short it has relied on buying and holding land, adding value through securing planning consent, keeping a lid on building costs (largely materials and labour) and looking to house price inflation to lift operating margins."
More on the way?
Bloomberg: Halabi Companies Fail to Fix Mortgage Bonds Default
"Investor Simon Halabi’s real-estate companies failed to remedy a default on 1.15 billion pounds ($1.9 billion) of commercial mortgage bonds at a time when, according to Fitch Ratings, “pretty much” all such European deals would breach loan-to-value conditions if they were tested."
Containment to Treatment
New Scientist: Swine flu 'containment' is dangerous PR
The UK has abandoned Containment for swine flu in London, Glasgow and Birmingham, and moved to Treatment. In other words, we are all expected to eventually contract swine flu now, with a 0.4% fatality rate (the same as winter flu). Swine flu is unusual for a flu because it spreads readily in summer. Thus far, swine flu is a flu (!) which we have all had probably many times over our lives, but not usually in summer so it is hard to not expect some affect on the economy.
Bankruptcy in over-65s 'triples'
Bbc news: Bankruptcy in over-65s 'triples'
The number of people over 65 filing for bankruptcy has almost tripled over the past five years, research based on Insolvency Service figures suggests. Some 2,595 people aged over 65 went bankrupt in England and Wales in 2008 compared with 983 in 2004 - a rise of 164%, accountants Wilkins Kennedy said.
Fat cat money wasters to go
The Times: Treasury announces 'bonfire of quangos' to save taxpayer millions
I'll be amazed if the Government actually pulls this off, as it is their own babies they are killing. But abolishing and consolidating most of the UK's 1250 QUANGOs would be a good start. Many of these organisations are either morally or in some case actually corrupt but whatever they are they represent the looting of the taxpayer. One Regional Development Agency Chairman spent over £50k on Taxis in a year when he works a 3 day week, and its only a thin line to cross to other cases of officials at such agencies taking bribes or deceiving people into paying them money for supposed favours. These organisations started by overreaching their expenses, and the next logical step is quite literally fraud. Time for them to be abolished.
Friday, July 3, 2009
BT calls time out on staff
Telegraph: BT offers thousands of workers 'holiday of lifetime' on quarter pay
A senior manager in BT said the scheme is designed so that staff can go off on the "long holiday they've always wanted without having to quit their jobs", which is probably quite nice if you don't have a large mortgage to pay and a family to support so I guess there may well not be many takers. Green shoots anyone!
Avoids the wider issues, but a good read nonetheless
The Times: Housing is turning the corner
The housing bears say that the market is driven by first-time buyers and first-time buyers can’t get mortgages. Therefore, prices will slide. But the market could equally be said to be driven by last-time sellers — people trading down to smaller properties as their children leave home or they retire. It is this army of natural sellers who are declining to do the natural thing and trade down. Why? Perhaps because they can’t see a better place for their money than property.
The Yanks will riot!
Times Online: Coffee Republic set for administration
Still more green shoots turn into the brown stuff. The future of Coffee Republic, the coffee shop chain, was in doubt this evening after it asked for trading in its shares to be suspended ahead of the appointment of administrators to a number of subsidiaries, including its UK offshoot.
Another record broken
Retuers: U.S. regulators close seven banks
FDIC has bailed out seven banks today. This is the highest number of failed banks in a single day ever, and the second week running that the record has been broken.
Trying to Balance the Books
Telegraph: UK homeowners pay back a record £8.1bn of mortgage debt
"UK homeowners repaid a record amount of mortgage debt in the first quarter of the year, in the latest sign that the credit crunch is forcing Britons off a decade-long spending splurge.Britons injected £8.1bn to pay off their mortgage debt in the first three months of 2009, the Bank of England said on Friday, as falling house prices, greater caution and tighter credit conditions prompted a change in habits".
From +85% to -2%
This is Money: My buy-to-let barometer swings from plus to minus
It seems search engine interest in buy-to-let, the sharp end of property interest, has plunged in recent months. So surely that will begin to filter through to the market shortly and snuff out the recent revival, won't it?
Willem Buiter proposes Debt Jubilee
FT: Quantitative easing, credit easing and enhanced credit support aren’t working; here’s why.
I propose a combination of mandatory recapitalisation of the banks and a debt Jubilee for the household sector to remove the two key obstacles to an economic revival.
Indian IT staff taking British jobs at Lloyds Banking Group
Mail Online: Indian IT staff taking British jobs at Lloyds Banking Group
Hundreds' of Indian contractors are being brought to the UK by state-backed Lloyds Banking Group, which is using them to slowly replace British IT workers. At the same time Llloyds Banking Group announced the biggest single jobs cull yet under its integration programme as it axed another 2,113 workers, taking the total cuts so far to 7,500.
Prices are rising so the market must have bottomed eh?
Write About Property: Worst of UK House Price Falls Over - Yeah Right
Addressing a Treasury Select Committee on his appointment to the interest rate-setting Monetary Policy Committee, Miles said: "Expectations are crucial in the housing market and they look a bit better now than a few months ago. My hunch -- and I put it no stronger than that -- is that we have seen most of the overall aggregate house price falls." If I was his boss at the Monetary Policy Committee, I would have sacked him there and then.
Why the crash isn't over
Renegade Economist: Talkshow 3rd July
Fred Harrison shares his thoughts on when the housing market is going to recover and why this crash is so different to the 90’s. Views that you won't get from BoE.
Those who caused the crisis reap their rewards.
Daily Mail: Goldman Sachs staff in line for record average bonus of £430,000
Apparently the banking crisis is over - workers at Goldman Sachs are set to receive record bonuses of £430,000 ($700,000) each this year, totalling £12.2billion Furious reaction has been fired from critics who say that it is this system of lavish bonuses - and the resultant culture of greed - which got the world into the economic mess it is currently languishing in.
General Consensus Further 10% Falls this Year
Independent: The Big Question: Is the housing crash finally over, and is the market now recovering
Once you get past Mr Miles and his "hunch" this is quite a balanced article. "So what indeed. In the housing slump of the early 1990s there were 17 months when house prices rose, even though the overall trend was firmly downward – a downwards staircase pattern rather than a ski slope. Most graphs in economics exhibit a certain amount of volatility or "noise". ...... ..Some say the current revival in house prices is simply a function of special factors, such as the release of pent-up demand from cash buyers or those with very large deposits. They have been waiting for signals that the market may have bottomed out and are now taking advantage. However, by their nature, these sorts of buyers are neither very large in number nor a sustainable source of strength for the market......"
Green shoots turn into brown heap
RGE ecomonitor: Job Report Suggests that Green Shoots are Mostly Yellow Weeds
The OECD believe its worse in England than in the USA. In the USA yesterdays massive unemployment news has demonstrated to many leading economists that there are no green shoots at all. We are still deep in recession and its going to get worse without doubt according to Nouriel Roubini who correctly predicted the downturn to begin with. House prices which have already fallen 27% will fall a futher 40% in the USA - so if its worse in England lets hope all the property crazed idiots are bracing themselves for the real down turn most of which is yet to come.
Green shoots
MarketWatch: Seven banks bring 2009 U.S. failures total to 52
Seven banks were closed by regulators on Thursday, including six in Illinois, bringing the total for 2009 to 52 as the U.S. banking system remains under pressure from rising unemployment and record foreclosures.
For Old Times' Sake
Times: The future of house prices: 10 times pay
Just a reminder of the nonsense being spouted a couple of years ago.
Thursday, July 2, 2009
Could we see negative IR in the UK?
Mish: Sweden Cuts Deposit Rate to NEGATIVE .25%
There has been a lot of ludicrous recommendations recently to combat deflation by making deposit rates negative. I did not think any central bank would be dumb enough to try it. I thought wrong. Today, Riksbank, Sweeden's central bank cut the deposit rate to -0.25% effectively charging savers interest on deposited money.
'Rogue trader' runs up £6m crude oil loss at London office of PVM Oil Associates
Telegraph: “unauthorised trading” could have caused an eight-month high in Brent crude oil future prices.
A number of senior brokers – the company's only shareholders – are expected to be the main losers from the "rogue trades" Mr Perkins is believed to have been run up in Asian trading during the early hours of Tuesday morning.
Suddenly renters are trend setters!
Telegraph: Property market: renting is all the rage
A feel good article for renters that ends up being hijacked by Yolade barnes (Savills) to ramp BTL. "Renting is the future, but the future is already happening because it is the fastest-growing sector of the market," says Yolande Barnes, head of research at Savills. She anticipates that the private rented sector will grow to over 20 per cent of the property market because it offers a good deal to investors.
It's all over
Telegraph: BoE's David Miles says housing crash is now past its worst
The worst of the housing market crash is now over, David Miles, the Bank of England's new resident expert on the mortgage and property market, claimed yesterday. Professor Miles, who wrote a Treasury report on mortgages five years ago, said that both the housing market and the broader economy had now endured the worst of the slump, and could recover soon. "Expectations are crucial in the housing market and they look a bit better now than a few months ago. My hunch is that we have seen most of the overall aggregate house price falls."
Number of job loses in the US much more than expected
BBC: US job losses worse than expected
The number of job loses in the US totalled 467,000 last month, far worse than expected. Markets on both sides of the Atlantic appear to have reacted to the news with significant falls.
Where goes the US, so go we?
Bloomberg: Payrolls Fall More Than Forecast, Unemployment Rises
July 2 (Bloomberg) -- Employers in the U.S. cut 467,000 jobs in June, the unemployment rate rose and hourly earnings stagnated, offering little evidence the Obama administration’s stimulus package is shoring up the labor market.
Construction sector deteriorates
Guardian: W-shaped recession feared as construction sector deteriorates
If demand really does exceed supply as Nationwide says then why are construction companies still not building any houses? David Noble, CIPS's chief executive, said: "Against the backdrop of difficult market conditions the UK construction sector is on a knife-edge. After the improvements seen in April and May, the sector has retracted as firms battle to consolidate their position in the tough market. This data adds to speculation of a w-shaped recession."
Fort Knox won't like this..
BBC News: Audit fails to find missing gold
The Royal Canadian Mint has lost a little gold - about 0.32% or some £8m - peanuts, really.. - but with concerns that the US reserves have not had a proper audit since Eisenhower was in the White House, Mr Obama might feel it's a good time to count the pennies; while he's still the clean new kid in the Oval Office. Not really on-topic, but with so many gold hoarders using the yellow metal for their savings here, I thought I'd post it..
Are New Builds Value For Money Or A Money Pit Waiting To Fall Down?
The Economic Voice: TheTitanic Captain Interviews Part 2
With a large price tag are "New Builds" all they are cracked up to be?... Includes interview with one of our own.....Jonathan Davis.
Damned if you do
Wallstreet Journal: Timing the Endgame in Government Bonds
and damned if you don't. BoE stopped repurchasing 5% gilts due 2014 and 8% gilts due 2021, and the price plummeted. QE can accordingly be seen as a fake success because they are only temporarily manipulating the market. Increasing UK government debt is becoming problematic.
Get to grips with reality from JD
BBC Radio Ulster: The Stephen Nolan Show
JD explains the basic notion of a TREND, which the media don't seem to understand, or ,more likely, choose to ignore. You can't get better advice in life than "strop listening to estate agents.
Throwing a tax bomb into the BTL foxhole
Telegraph: Falling tax revenues are about to balloon our budget deficit
"One idea, floated this week by George Osborne, is to end the tax deductability of interest payments on debt". I'd be quaking in my boots if I were a BTL'er
US Recession - Reality for the Public Sector
SKY: Arnie Owes You: California Halts Worker Pay
Californian workers will receive "IOU" notes promising payments as governor Arnold Schwarzenegger declares a "fiscal emergency". "The state's lawmakers are at odds over how to plug the budget gap".
Wednesday, July 1, 2009
Green shoots
Telegraph: Northern Rock losses grow by more than £500m
Northern Rock is expected to heap further embarrassment on the Government next month when it reports losses for the half in excess of £500m, putting it in breach of even specially relaxed regulatory rules. Despite breaking the rules, the FSA is letting the bank continue to write new mortgages and take deposits.
Was banking the ultimate bubble?
Guardian: Banking system like South Sea bubble, says senior Bank of England official
'Banking became the goose laying the golden eggs. There is no period in recent UK financial history which bears comparison,' says executive director for financial stability, Andy Haldane. A senior Bank of England official today compared the banking system over the last 20 years to the South Sea bubble of the early 18th century and said bankers had merely "resorted to the roulette wheel" to keep up with each other. The Bank's executive director for financial stability, Andy Haldane, said in a speech in Chicago that having been stable over much of the 20th century, returns in the banking system relative to the wider stockmarket shot up after 1986 until 2006.
Will we follow on?
Bloomberg: Fed’s Yellen Says Rates May Stay Near Zero for Years
Federal Reserve Bank of San Francisco President Janet Yellen said the prospect that policy makers will leave the benchmark U.S. interest rate near zero for the next several years is “not outside the realm of possibility.” “We have a very serious recession, we have a 9.4 percent unemployment rate,” and inflation possibly falling further below the Fed’s preferred level".
Northern Rock losses grow by more than £500m
Telegraph: Northern Rock losses grow by more than £500m
Northern Rock is estimated to have lost more than £500m in the past six months, putting it in breach of regulatory rules even after they were relaxed for the nationalised lender last year.
Global currency?
WSJ: Dollar Falls; Report Says China Wants G8 Forex Debate
The dollar sold off Wednesday afternoon, falling nearly a full cent against the euro. The move came after a report that China has asked to discuss the issue of a new global currency at next week's Group of Eight summit in Italy.
Looks like very significant news
Bloomberg: Obama expands LTV of 125% for house refinance
Not sure of details as yet but pursued here would be our collective nightmare.
US house prices are falling at about a 10% annualized rate in April
Calculated Risk: House Prices: The Long Tail
The Case-Shiller house price index fell by 0.6% on a non-seasonally adjusted basis in April – and by 0.9% on a seasonally adjusted basis – which suggests that the second derivative of house prices is improving.Calculated Risk has everything you need to know about this, including a reference to a statement by Prof. Shiller, who says that the situation may be slowing improving, and a good discussion about the tail-end of a housing bust, which consists of a long series of small price declines. The overall conclusion is that the decline in US house prices still has further to go.
Don't Miss Out
The Times: The top ten buy-to-let hotspots
Buy-to-let landlords have been hard hit by the property crash, along with private homeowners. But one small silver lining in the generally gloomy outlook is that, with property prices coming down faster than rental values, yields are actually rising for many purchasers of rental property.
Last credit card
Business Day: Historian Niall Ferguson warns of looming sterling crisis in UK
Currently the UK is running on the last credit card in town, which may last into 2010. As a matter of urgency we need to reduce the liabilities of the banks by encouraging savers to move back into UK assets. Also, I can't link to another article, because I can't find it, but the private/state employment division is in fact 21 million private, 5-6 million state (yes I was surprised so few). Most of taxmoney is simply redistributed. Which makes me think, how are we going to cut government spending by 10%? Cutting state workers won't be enough. Unemployment benefit/state pensions are barely enough to survive as they are. I have a very gloomy feeling about 2010.
Gordon Brown's best PMQ answer ever - 0% growth
Crown Blog: Gordon Brown's best PMQ answer ever - 0% growth
Gordon Brown's best PMQ answer ever - 0% growth Watch it here http://tiny.cc/liar138 he is delusional
Roger that.
Citywire: Roger Bootle: House price affordability misleading
He said: 'Houses would still look expensive if rates hit average levels of around 6-7%, and the average house price to earnings ratio is now still at it's previous all time peak seen in the 1980's even after recent falls, so house prices have some way further to fall.'
'Repossession is a ticking time bomb,' says Vince
Telegraph: Just six families helped by government Mortgage Rescue Scheme
"The numbers of repossessions are likely to soar in the next two years because of rising unemployment. Temporary Government schemes are deferring the problem, not solving it."
Nationwide monthly figures - the eye of the hurricane?
Financial Times: UK house prices hold steady
Balanced report - notes v. low volume of sales - v low no. of mortgage approvals - relentless drop in stock for sale. Conclusion: once supply increases, prices will start falling again.
Who wants the bentley? some cheap subprime loans maybe sir??
Cnn: Psst! Wanna own a bit of a failed bank?
Bill Bartmann, a former distressed bank debt investor who recently published a book entitled "Bailout Riches" aimed at teaching people how to profit from buying bad loans on the cheap, notes several of his students have invested as little as $5,000 in loans once owned by failed banks.
More rewards for failure
Times Online: Win Bischoff set to lead Lloyds Banking Group
Helping destroy $218 Billion in shareholder value at Citibank just wasn't enough. Now he's here to help the British taxpayer.
Renters of the world unite
Timesonline: Home ownership for all is a low-rent idea
It has been clear for many years that renters have been classed below those willing to shackle themselves with ownership and aspire to bigger and better things. Renting allows for freedom of movement and if the UK adopted similar tenancy laws as are prevalent in most of mainland Europe then tenants and landlords would and should feel more secure. We have been sold a fantasy over the past two decades or so, that we all have a right to own and we all MUST own and keep up with the Jones's, Mustafas, Changs (add your own). Yes property can be an asset and has made people very rich over the last few years, but it should be treated as a roof over our heads, a home, not as a speculative tool.
Told you so!
Times Online: Patience is a virtue in the housing market
But analysts think not. Most still believe there is another leg downward to come. The number of forced sellers will rise as the redundancy axe falls. And potential sellers who have opted to be reluctant landlords rather than sell in the current market will have second thoughts as rents fall. Yesterday’s revision of the first-quarter economic output figures to show a 2.4 per cent contraction also revealed that the savings rate fell back to 3 per cent, from 4 per cent in the previous quarter. That is hardly going to help to sustain the housing market rally.
Home repossessions 'to soar again'
AOL MONEY: Home repossessions 'to soar again'
The UK will face a second wave of repossessions starting next year which could see up to 120,000 people lose their homes in 2011, a housing charity has warned. Shelter said a combination of rising unemployment and increases in interest rates would lead to a steep increase in people who were unable to keep up with their mortgage Comments Please!!
How could you Darling!
Mail Online: Deepest recession since World War 2: Slump was far worse than Darling forecast
Britain is being battered by its worst recession since the Second World War, Government figures show. Gross domestic product tumbled 2.4 per cent in the first three months of the year, the steepest fall for 51 years, the Office for National Statistics said. The decline
The Times nails its colours to the mast
Times: Bank run
Reflating the economy must be an imperative, no matter where the gains fall politically. This newspaper supported the Government’s bank rescue. But the reason for recapitalising the banks was so that they could start lending again.