Jump to content
House Price Crash Forum

aa3

Members
  • Posts

    5,803
  • Joined

  • Last visited

Everything posted by aa3

  1. In the free market life goes on in deflation. Companies simply adjust their prices downwards, renegotiate rents, pay their staff less, manufacturers or in this case brewers charge less to keep sales up. Those staff feel bad, but things they are buying cost less too.. Companies with fixed costs they can't get out of go bankrupt, get liquidated or their competition expands. The issue is many rich get their fortunes wiped out in the process, and new rich are made. The current rich are fighting as hard as they can to stop this process, threatening to take the country down with them.
  2. If there is a big time move down in home prices this year like many here think; say 40% or so, then by the end of the year we will see masses of people simply stopping paying their mortgage. By then every bank besides HSBC would be nationalized and the government would have to decide what it wanted to do with the astronomical losses on its banks books. If it gets to that point, every move at that point seems to lead to the financial system breaking down to me. If the government seized the houses and tried to sell them, prices would head towards 0. If the government took no action on the debtors and printed money to make up the difference the value of the pound would decline on world currency markets. Also if no action was taken on the debtors, then exponentially growing numbers would stop paying their mortgage. The government could maybe do a combination of printing money to make up for losses, garner peoples wages for some of the difference and refinance into the lower rate mortgages. Politically I'm not sure if they could do it though.
  3. Thanks for making this thread. I knew there were a couple, but had already forgotten most of those. You figure its just getting started to, as the recession has barely started and already those are out of cash. Hopefully we can use this thread to keep an updated version of the list. As when weeks and months go by it will be easy to forget which shops went down.
  4. I managed to jump in early to Japanese stocks. I believe in Japanese companies and in Japan in general as it has massive real production to back up its standard of living. And believes in constantly investing great amounts of capital into its industry. Something we used to understand in anglo-saxon countries is the basis of wealth. Capital accumulation in real machinery and research. But I jumped in too early it appears, luckily I didn't put a great amount of my money in. The real trade was nothing so complex as the stocks, it was just to be in Japanese yen. I am nonetheless buying more Japanese stock here as I like the prices even more here.
  5. Something to consider.. Investing in education only makes sense if you are planning on building up some type of industry for those educated people to work at. Like the industrial asiatic nations whose industries need engineers of all disciplines in great numbers. You don't really need more than a grade 6 or so education to do most jobs I see, in a de-industrialized society. Like working retail, or working being like a community sports organizer or a minister in the government. For the good jobs available... we've already got enough accountants, lawyers, and paper pushers of all kinds - a lifetime supply.
  6. Good observation. I think you are right it will go much lower than usual this time. When I might get interested in buying on an investment basis is when the society starts making fundamental reforms. For example if they ditch the radical green ideology and start encouraging industry of some kind to build up. Right now its like betting on a hard drug addict returning to full health and a normal productive life. But their health has just started to seriously deteriorate from the drug abuse. And they've made no changes whatsoever to their habits or the path they are on.
  7. Thanks for the great graph!! I didn't think of putting it into gold terms, but imo that shows the bubble even better. I remember reading an Islamic economist who said 1300 years ago one dirham prescious metal coin would buy a chicken. Today one dirham would buy a chicken. Of course there are times when you want to ditch gold and buy assets that are cheap.
  8. Hehe sure, Japan is my favorite economy, as they have so much real production, and invest so much capital in their industries year after year. For the same house in December 2007 it was 110,000,000 Yen. For the same house in December 2008 it was 57,375,500 Yen. (48% fall) As the Yen went from 220/1 all the way to 135/1 over the year versus the pound.
  9. Consider that British real estate prices have fallen 15% yoy in pounds for arguments sake. And let us take a 500,000 GBP house in December 2007 as a test case. And worth 425,000 GBP in December 2008(15% down). In December 2007, that house was worth 1,000,000 USD. In December 2008, that house was worth 637,000 USD. (36% fall) As the GBP had fallen from 2/1 to 1.5/1 over the year. Now lets look at Euros. In December 2007, that same house was worth 675,000 EUR. In December 2008, that same house was worth 446,000 EUR. (34% fall) As the GBP had fallen from 1.35/1 to 1.05/1 over the year.
  10. At some point a military coup or revolution of some kind will probably be needed in many western democracies. Because democracies just don't seem capable of dealing with the problems faced in 2008. For one thing each year in every democracy the government becomes a little bit bigger percentage of the economy. The bureaucracy grows a little bit each year, whether under right wing or left wing governments. I've been following the effort to develop nuclear power in the UK, and it is a ten year process just to get through the approvals, court cases, consultant studies, environmental studies.. and even then the answer may be no. In western democracies the political parties mainly cow to people on the public pay roll in one way or another. Either governmetn workers, contractors of the government, people on welfare, people on state pensions, or a key fact is spouses of government workers. Sure the right wing parties may cow more to the security, intelligence, military side, while the left wing parties more to say health care, education and environmental agencies.. but either way its always an expansion of the public payroll. One hundred years ago only about 6% of the economy was through the state, so this circular system was a factor. But today its about 56%, so the majority of the economy.
  11. I'm not even sure if number 1 is an option at this point. If half the government workers got fired it would have a massive wave effects on the economy. Think of millions not being able to pay their mortgage or rent. The banks would just fail that much faster. The only way I can see number 1 being an option is if the government was willing to let several of the major banks fail, and then write off the debts. Which would free the economy of the deflationary effects of the debt being paid back plus the interest.
  12. Indeed at some point in the future that might happen. However I have followed many young adults lives and up to the age of 35 that hasn't happened yet for them. It might happen when the baby boomers retire and big jobs open up in the corporations, and retiring boomers who sell or shut their business creating an opening for a younger person. On the other hand the retirement of the boomers may mean yet higher taxes, and or falling economic activity. Dramatically falling home prices, like 80% falls could also shift the balance, as another poster mentioned right now the benefits people are getting a gigantic tax free benefit by getting a free place to live.
  13. Anecdotal here.. I know a number of young adults around the age of 30. They have taken different paths in their life, some have done everything right, worked hard in highschool, gone on to university and gotten a degree. Then started working at a compnay, putting in unpaid overtime when neccessary. I also know some who have never done anything with their lives. They've been on welfare, they've worked some odd jobs for a few months at a time. The shocking thing is there is only a marginal difference in standard of living between the two. They both live in the same apartments, one pays for it themselves, one the state pays for it. They both have little spending money, one what the state pays in welfare, and what they can pick up in under the table work. The educated working ones, whatever little amount is left after all of the taxes and liscences they must pay. Whereas for the welfare people most are covered for free. The biggest difference between the two is the working ones do go on a nice vacation once a year to a foreign country. On the other hand the welfare ones do not work all year long, they sleep in, hang out with friends when they feel like it, surf the internet when they feel like it and so on. For those with children which are few that I know, I would actually say the welfare group comes out ahead. And also realize not everyone can get a good education, I am comparing people with university degrees here and good health versus welfare people. If you compare people who couldn't get a university degree for one reason or another its a no brainer, the welfare wins hands down compared to working in some dead end job at a retail store. With a family the welfare wins against teh university degree holder for the under 35 crowd. They are given nice public housing for free, versus the others paying either exorbinant rent, or exorbinant interest and bubble prices. I figure the next generation will figure all this out, afterall a much higher percentage of them are already growing up in public housing to welfare parents anyway. Why try at all when you arguably fall behind doing so. And 'for the good of the country' just doesn't make it when they see super rich getting super richer off the public purse. It will end of course before the majority move to it, as the economy is already crashing for this and a host of other reasons.
  14. Capitalism is the greatest system ever devised for improving standard of living. Unfortunatey it eventually self-destructs from its own efficiency and advancement. Eventually steel is mined in basically automated mines, shipped on basically autonomous ships, to basically automated steel mills, then to the auto plants where robots weld, cut, bend, bolt and so on the steel into a car. The car lasts twice as long as a car a generation ago. Oh ya it breaks down less and less too, needing less mechanics, less spare parts, less and less labour involved throughout. But all those workers who worked in those assembly plants, steel mines, steel mills, repair shops and so on are gradually automated away. Which is an incredible feat to replace human toil, and nowadays with robots even go beyond what a human being can do in terms of precision and consistensy. But if less and less people are making cars, how do they get paid, so they can afford to buy cars? It was simple in the 50-80's, you paid them to work making the cars, so much demand for cars and electrical appliances meant so many workers needed, and they got pricing pressure on their wages like the auto union. That broke down at some point, and we switched to getting money into the hands of people through credit expansion. Money was pumped into the economy through bankers, loan brokers, real estate agents, contract builders and the owners of property which was a great percentage of the population. Through when they sold and more importantly through home equity extraction either directly or through increased borrowing in other forms with their house equity to back it up. Now the credit expansion path is broken too, it can't go any further, and the loans can't be paid back. It hit a fundamental wall in 2008 where it just could not keep going. Now we need a new path to get money into the hands of the people. Or else things are going to continue downwards. And it needs to get there without too much distortion or without the lion's share going only to a few getting billions. My proposed idea is sending money directly to each citizen regardless of income. Unfortunately the powers that be are going to fight this idea all the way.
  15. Anecdotal here.. I know a number of young adults around the age of 30. They have taken different paths in their life, some have done everything right, worked hard in highschool, gone on to university and gotten a degree. Then started working at a compnay, putting in unpaid overtime when neccessary. I also know some who have never done anything with their lives. They've been on welfare, they've worked some odd jobs for a few months at a time. The shocking thing is there is only a marginal difference in standard of living between the two. They both live in the same apartments, one pays for it themselves, one the state pays for it. They both have little spending money, one what the state pays in welfare, and what they can pick up in under the table work. The educated working ones, whatever little amount is left after all of the taxes and liscences they must pay. Whereas for the welfare people most are covered for free. The biggest difference between the two is the working ones do go on a nice vacation once a year to a foreign country. On the other hand the welfare ones do not work all year long, they sleep in, hang out with friends when they feel like it, surf the internet when they feel like it and so on. For those with children which are few that I know, I would actually say the welfare group comes out ahead. And also realize not everyone can get a good education, I am comparing people with university degrees here and good health versus welfare people. If you compare people who couldn't get a university degree for one reason or another its a no brainer, the welfare wins hands down compared to working in some dead end job at a retail store. With a family the welfare wins against teh university degree holder for the under 35 crowd. They are given nice public housing for free, versus the others paying either exorbinant rent, or exorbinant interest and bubble prices. I figure the next generation will figure all this out, afterall a much higher percentage of them are already growing up in public housing to welfare parents anyway. Why try at all when you arguably fall behind doing so. And 'for the good of the country' just doesn't make it when they see super rich getting super richer off the public purse. It will end of course before the majority move to it, as the economy is already crashing for this and a host of other reasons.
  16. Imo when the powers that be decided not to address the fundamental structural problems int he economy. Like ever growing bureaucracy causing heavy industry to leave and invest capital elsewhere.. Or fewer Brits going into hard engineering and sceince based on the laws of nature, and instead into degrees based on social theories. And so the society instead went down the road of the ponzi scheme of a credit bubble to keep things going. Now that the bubble has stopped growing the ponzi scheme is going to blow up. So all resources of the state are going to keep the game going, as if it stops the economy crashes. Of course thats not the end of the road, then we can really reform the system, but it will involve removing most of the people up high right now. Naturally they are gonna fight to stop that.
  17. To me its the 1984 ideology. The class society can't exist in a place with prodigious surplus production. Where energy and homes and cars and such are cheap, the poor can enjoy 99% of the lifestyle as the rich. Where there is shortages your position in society and wealth is very important. Its the difference between being freezing cold in the winter and having a nice heated room. In the book 1984, they fought meaningless wars with each other in order to divert the surplus production. In modern Europe there is an ideology where human industry itself is evil and we have to pass laws to restrict its output in key chokepoints. Namely in energy. Luckily most of the world isn't buying into this radical anti-humanist ideology, and is ramping up energy production to raise not lower the standard of living of their people.
  18. I have read they are losign 5 billion a month now. Which is 166 million a day. 6.916 million an hour. 115,000$ a minute.
  19. As I mentioned in another thread I do not believe it will be possible for a democratic government to fix the problems the UK faces. As they are so deep and structural. Like how do you have a debt backed money system that requires constant growth of the economy, AND a state ideology of radical environmentalism which seeks to restrict real output. How do any politicians do serious reform or reductions in government if the electorate when a super-majority of the electorate either works directly for the state, indirectly through contracts for the state, or has a spouse who works for the state. Or otherwise gets their main income from the state. How do they reform the bureaucracy? What are they going to do lay off a couple million bureaucrats, what would the impact be on the economy. And would the elites ever want to give up that minute control of peoples lives. Seems unlikely they would give it up unless by force. So I believe the society is headed for a crash. But I do not yet know what will emerge from the other side. One thing I will say is economically Brits will probably get richer quickly whatever comes out the other side post collapse. Because the new order will wipe the slate clean of the entrenched bureaucracy.. (then start growing their own, but it will be in its infancy). The downside is reaching that bottom could take awhile and could get very ugly.
  20. Good summary of the Democratic options people have to choose from when voting. I could fall into the group who is sniping on blogs at politicians. I guess why is I do not believe the problems the UK faces are solvable by a democratic government, at least without going through a collapse. The problems are so structural, so deep, and the reforms would have to be so massive, I don't think its possible for a politician to do it. And there are some real contradictions in fundamental levels of the society. Like how can a society have a debt backed money system, which requires constant growth of the economy, AND a radical green ideology which seeks to restrict and reduce real output. Are any of the leaders capable of breaking the vast, never ending bureaucracy in so many areas, or have they even talked about that? Can they even legally fire those government workers, I do not know. I think changes will be forced on the society.
  21. A lot of the argument on who would be a better prime minister to me is like debating which of the leading soviet figures would be better to lead the soviet union in the mid to late 80's. David Cameron is from what I can tell a disciple of the global warming religion, which the new taxes, restrictions and bureaucracy will further chase any remaining industry out. Is there any sign whatsoever that the tories would break up the crushing bureaucracy which is paralyzing the large scale economy in the UK, just as the Soviet Union became paralyzed in the 70's and 80's.
  22. If there was such food hyperinflation relative to other goods, any country that produced food would be good. And there the US has prodigious production of food. Along with Canada, Australia, Brazil and Argentina. I personally don't see it though. Food nowadays is mainly the cost of oil and natural gas - they use the natural gas to make the fertilizer. And those are falling, actually oil has collapsed in price. It will take time for those cost declines to work through to the customers.
  23. Right now it certainly looks like it is going to be a deflationary death spiral. There is no big way yet done to get money into the hands of the people. Without money getting into their hands they can't bid against each other to drive up prices, even if real production is falling. Huge overcapacity everywhere doesn't sound like real production is going to disappear either. As soon as any demand comes back, factories and such can roar back online. For more than 5 years I've been warning of a deflationary depression, as automation replaced human beings, those human beings can no longer buy the products they use to produce.. and the only real solution I could think of was sending money directly to the people. Even the 300 dollars sent to Americans last year had a real noticeable impact on the economy. On the other hand bailout money buying bonds or bailing out banks simply distorts the economy and disappears into a black hole, taking healthy companies with it. In fact an argument can be made the bailout money is actually accelerating the deflation. If governments like the UK, started sending thousands of dollars directly to citizens, then we can say there is a mechanism of getting money into the hands of the people, and start watching for inflation. But they are very unlikely to do that, because giving people money directly empowers the people. Money in their hands gives the people more freedom to make decisions for themselves, and thats not what the elites want.
×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.