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House Price Crash Forum


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About Madman

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    HPC Poster
  1. I agree. Credit crunch = deflation. Rate cut = inflation. Credit crunch + Rate cut = wait and see.
  2. I hope so. So you selling your gold then?
  3. Only if the exchange rate doesn't tank!. Which it will, IMO.
  4. Hint: Go to your local cash machine and get a tenner out. Then make way to the nearest auction house.
  5. A month later what happened in the US on 9th of August, we have a bank run in the UK. Is this sticky. I say: this is faster than the speed of light. The angle too is very interesting; it is not that mortgagees of Northern Rock started to default on their mortgages, but buyers of debt held up. We live in a global world. Problems elsewhere kick off amazing things very quickly in far off places. Unprecedented in history. It is different this time. Contrary to what has been told, it is NOT a sub prime problem. No one wants to finance good debt either.
  6. No, in my opinion they will not stick but slide nicely to rock bottom. This crash came from a very unexpected place. My thinking was that decline (not crash) will come because IRs have risen (5.75%) and in most areas rent does not cover interest at current prices and rates (prices and mortgage rates 2 months ago). Wage inflation was approx. nill. BTL was what was holding prices and with the rent greater than interest I thought BTL was slowly going to fade away. BoE were expected to raise rates as well. So I thought a general slow decline is what we will get. However, the dynamics of the current situation was surprising. In that, there was a lack of confidence in the mortgage paper (MBS) which were issued from mortgage loans. It did not happen here but in the US. Suddenly due to exposure of big UK banks in US, which also feared a similar situation here, led to drought in MBS trade in UK. So the problem is increasingly becoming one of having a drought in financing of mortgage loans i.e. finance for houses. It started from the top in the US!. Now house prices are only worth X because you can get a loan for X. If you can't get a loan (or some where in between i.e. high deposit and high rates) then house prices are not worth X. So consider a BTL coming to an end of 2 year fix in December. Realises that new loan will be at 10% and 75% LTV. Initially he was 5% and 95% LTV. Can't afford the loan so sell. Many BTLs doing same thing. Massive sale. House prices drop further. More strict lending. Now 12% and 65% LTV etc. You get the idea. Too many speculators add to the speed of crash. Nominal house decline is only seen when real house prices drop slowly. If house prices drop quickly then it is a real house price decline. Now from what everybody knows this situation built up very quickly and hence there will be real price decreases. I think in the coming months we will all know. Perhaps December. Some people have semi-bought the house price rise so they are reluctant to admit a crash but talk in terms of slow decline. But me, I think crash straight on. The name of this website was proved on 987. 9th of August 2007 (date of MBS crises Bear Stearns). Finally! If you think it is going to be a slow decline, please give your reasons why do you think that will be the case? Regards, Mad
  7. In the past, you had higher wage inflation. Also, previously one was tax exempt from mortgage cost. Not anymore. Not now. I think you are missing a point. Back then economy crashed at double digit IRs. Now it crashes at 5.75%. It tells us that the economy is weak. So I still think x3.5 is about right. This is the case in Japan as well. IRs of near zero but still decline in prices for over 13 years. Same thing, IRs are near zero because the economy can't take it.
  8. With all due respect I beg to differ. It is on the front page because it IS BIG. Run on N. Rock is big news. HOUSING BOOM IS OVER. The magnitude will be dependant on how many more (B&B, A&L) go to the wall in the coming weeks. CHAPS: I REPEAT, IT IS OVER. Thanks for your patience for holding out. You have been rewarded.
  9. Cgnao, is very knowledgeable about economics and I respect him very much. However, I am not able to understand that given a hyperinflationary scenario, why should I buy gold rather than property by getting into debt. Surely in an inflationary enviroment it is better to be in debt. Debt will be wiped away in real terms. Can you answer that cgnao? Regards, Mad
  10. Belief in God is rational. One day I was with a group of friends. We went past a very dated gathering of rocks. It seemed to have a design. Let's call this example as stonehenge. Rocks arranged in a circle. We wondered who built it. My answer was they came there by chance. Maybe a big volcano exploded (or hit from an object from outer space etc..) and a group of rocks landed in that place forming a circle. My friends laughed. Come on they said, 'You are not serious'. The point is when you can't believe that a group of rocks arranged in a circle can not be formed by itself or let's say with a probablity, p. How can you believe that a human body so complex can be formed by chance (evolution) even though the probablity of that event is a lot lot lot lot less that p. I find God less people inconsistent in logic.
  11. Ape Greenpan is responsible for all this. He lowered rates for far too low and for far too long.
  12. Mate, you have been !!!!!!ed. Sorry for being direct. People make mistakes. There is a first time for everything.
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