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House Price Crash Forum

toodimm

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Everything posted by toodimm

  1. Then their house is not worth GBP 1 mm if they are unable to sell it! It is worth what the market will pay for it.
  2. I love the idea that it is possible to miss the boat with the houseing market. With stocks or currancy then a day is a long time, but how fast do you really think prices will rise when they are finally ready to go up? Look at the chart on the front page of this site and see how long the last bottom lasted. I think that in the houseing market it is totally safe to actually wait to check that the market has properly turned before jumping in.
  3. Ask them if they have any idea what alt-A and option ARM mean, and if they do follow it up by asking if they have any idea what value of restets are due to occour this year, and to what extent our banks are exposed.
  4. Hi Thanks for all the excellent responses; you've helped clarify most of my problems with this. I study theoretical physics, so the mathematics of (mathematical) derivatives is the simple part, the application in the unfamiliar world of finance (with its own nomenclature), is the harder part. I got An Introduction to Global Financial Markets by Stephen Valdez from amazon for Christmas. Its a very poor book on the subject, very long on unnecessary detail, and unfortunately short on pedagogical explanations. The example he gives is a convertible, which he describes as an option to buy shares in a particular company in the future for a set price. He then says that the position can be dynamically delta hedged by buying or selling the current stock in the company. Is the idea that the person who buys the convertible thinks that it is currently undervalued relative to the price of the stock, and by shorting the stock by the appropriate amount (dynamically changing it depending on the stock price movements), can lock in the difference between the current stock price and the current convertible price. So even if the stock price falls in the future, necessarily taking the convertible price with it, then there is still profit if the relative difference has moved in favour of the convertible. Once again thanks for all the help.
  5. Hi Thanks for all the excellent responses; you've helped clarify most of my problems with this. I study theoretical physics, so the mathematics of (mathematical) derivatives is the simple part, the application in the unfamiliar world of finance (with its own nomenclature), is the harder part. I got An Introduction to Global Financial Markets by Stephen Valdez from amazon for Christmas. Its a very poor book on the subject, very long on unnecessary detail, and unfortunately short on pedagogical explanations. The example he gives is a convertible, which he describes as an option to buy shares in a particular company in the future for a set price. He then says that the position can be dynamically delta hedged by buying or selling the current stock in the company. Is the idea that the person who buys the convertible thinks that it is currently undervalued relative to the price of the stock, and by shorting the stock by the appropriate amount (dynamically changing it depending on the stock price movements), can lock in the difference between the current stock price and the current convertible price. So even if the stock price falls in the future, necessarily taking the convertible price with it, then there is still profit if the relative difference has moved in favour of the convertible. Once again thanks for all the help.
  6. I know that there are a few of you out there that know about these techniques. Could someone give me a nice introductory example, or a good reference (nothing very useful coming up on google) Many Thanks
  7. Hi, I was hoping that someone could explain why the following inflationary toy model is wrong, or where my assumptions diverge from the reality of our current situation. Person X has £10 (Or 10 Oz gold, 10 clam shells or whatever, how he got this is of no concern). X deposits £10 in the newly created bank. Under fractional reserve, the bank lends £9 to Y The bank insists that Y does something productive, that other people will want, such that he can pay the bank back the £9 plus some amount of interest. Y buys some asset from Z for £9 Z deposits £9 with the bank. Y defaults on debt with bank, and the bank repossesses the asset (yes I know he didn’t put the asset up as collateral, but lets assume that the bank takes the asset to try and make good on the debt). The asset devalues, and the bank can only sell it for £4 We end up with a situation where X and Z have £10 and £9 respectively, deposited in the bank. The bank holding only £15 cash, no asset having sold it. So long as X and Z don’t want all their money back at the same time, then the new system appears to have gained £5 from nowhere. The place that the £5 should have come from is the hard work of Y, producing something useful so that he could repay the bank loan. As soon as Y defaults then the £5 is created without the necessary work to go with it, and therefore it is inflationary.
  8. Irwin Stelzer was on the Daily politics today and stated that the credit market in the US has eased up significantly. He claimed that there has been a reduction in rates on commercial paper and also junk bonds. Andrew Neil seemed a little surprised, and said this was the first he’d heard of this. I was hoping that those of you who work in these areas could confirm or refute this. And if it is true, what will an easing of credit mean, in terms of the recession and inflation?
  9. Actually its incredibly british! In the 18th centuary tea was so expencive that it would be stored in a locked box. The masters of a house would use the leaves several times before finally allowing the servants to use what was left for a cuppa.
  10. The retailer and the country! I think that Iceland food is owned by Baugur, which is an Icelandic company.
  11. because it extends a line of credit from the issuer to you.
  12. I remember reading somewhere that one idea about the psychology behind bubbles is the idea of the greater fool. That is, while there is still a greater fool out there than yourself, then it is rational to buy. The really beautiful thing about the crash in house prices is that it allows us to pinpoint, with accuracy, who the greatest fools are amongst our peers.
  13. I wonder if santa brought the bankers lumps of coal this year?
  14. Not that we need any more confirmation of Labour policy, but in answering a question from Vince Cable Harriet Harman just said: We'll do whatever we can to protect the housing market.
  15. sorry if its already been spotted and commeted on bbc
  16. Of course its a bloody teacher! Probably a 'maths' teacher at that. I met up with a bunch of teachers in a pup once, got chatting to the maths teacher, turned out he had an arts degree, but school was so desperate they had him teaching maths.
  17. I meant to post on this topic when I first heard about it, but just watching question time has reminded me. It really pisses when a tiny number of student type protesters can ruin the days of so many people. Fair enough if they believe in man made global climate change and want to protest in a non-disruptive way, then let them. I though that it would be lovely to have an internet based counter protest. Get a group of people who all agree that the next time the eco nuts pull a stunt like this, that they will all run their car engines unnecessarily for an hour. I could just imagine the outrage to this sort of counter protest. On question time it was suggested that the protesters should be made to compensate the airport and travellers. Ester Ransom thought this idea was totally wrong, as she thought peoples right to demonstrate is sacrosanct. I totally agree, I want to protest that ‘I’m a celebrity’ should be removed from the TV, and to do so I will hold Ester in a head lock and repeatedly punch her in the head until ITV give way to my demands.
  18. Hi, I’d really appreciate it if anyone could link to, or supply the following: Market data for the major indices and foreign exchanges. It’s the format, which is important; I would like the data for an entire day, with a resolution of five to ten seconds, in text or excel so I can play around with it. Any help would be gratefully received.
  19. EA's think prices falling by 30%, therefore it must be time to buy! prices up by 50% by next year
  20. If they did this then the government should be forced to pay minimum wage, which would work out at about £200 for a weekly dole payment. I bet the right wing biggots wouldn't like that idea! They want their slaves.
  21. I'm not sure I'm right, but I think the 'money' you are talking about was fractional reserve 'credit money', not pound notes and coins real money. Again I'm not sure if I'm right, but 'credit money' requies interest to be paid, ie somthing of value has to be done/produced so that interest can be paid back to the bank. House prices going up adds no value, building houses add's some value (not as much as they were selling for). Thus when the credit dries up we begin to see the real of the items people have been purchasing. Please shot me down in flames and correct me.
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