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FTBagain

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Everything posted by FTBagain

  1. The title was a direct quote from Robert Peston. If you had bothered to read it you would have know... Secondly, the spelling is correct according to Cambridge Dictionaries... http://dictionary.cambridge.org/results.as...amp;x=0&y=0 http://dictionary.cambridge.org/results.as...amp;x=0&y=0
  2. Simple really. They should be made to share the risks in future then may be we would not get into this kind of mess. http://www.bbc.co.uk/blogs/thereporters/robertpeston/ Edit: Sorry for the double post. DOH!
  3. Simple really. They should be made to share the risks in future then may be we would not get into this kind of mess. http://www.bbc.co.uk/blogs/thereporters/robertpeston/
  4. Check this out. Top graph show SA data for Rightmove, Nationwide and Halifax http://www.housepricecrash.co.uk/forum/ind...showtopic=64446
  5. VI's are hardly going to predict a crash, but anything below inflation signals precisely that. 0% growth is VI speak for "we're ****ed", IMO.
  6. Good luck with the building project. As for the derivatives market, I recon it will break the banking system as we currently know it. I realli don't think the CB's are goning to be able to fix it. I suspect this whole thing will accelerate out of control next year. If it does, then the banking system will need to be re-invented and quite a few bankers will end up in jail. The best we can do is watch carefully and be ready to move our money quickly if needs be. Hopefully, I am wrong in this gloomy outlook, but i do not think NR will be the last bank to run into trouble.
  7. Precisely. What so few people realise is that demand for houses depends on TWO factors. 1. A willingness to commit financial suicide, and 2. someone willing to provide the money for you to commit financial suicide. The latter just got pulled, therefore, demand just collapsed. Sudden, catistrophic and irreplaceable funding removal. Game over! And few even realise it! Amazing!
  8. You are welcome. Glad you liked them. I just hope they are the start of an ordinary run of the mill recession, but the turn around looks pretty steep to me. Coupled with the credit / liqiuidity / solvency crunch we could be heading for something much more serious and protracted.
  9. I agree with your point about a solvency crisis, however I think the main problem with the cash injected by the CB's is that it is simply way too little. The derivatives market is worth Trillians of dollars. I have seen figures in the region of $250T quoted. Whatever the figures are they are apparently more than the entire global GDP! The CB's simply do not have enough money, nor can they print enough to cover that type of debt. A mere 10% default rate on that much debt (for that is what it really is, as I understand it) would be a financial disaster. I think we will be lucky if only 10% goes into default. The problem as I understand it, is the the same debt has been recycled (or leveraged) so many times that no one knows who holds the original debt! If the original debt goes into default, do all the repackaged (recycled) derivatives also go into default as well? I suspect that they will, but may be someone who knows better than me can explain how it works. My personal suspision at this point in time is that if a mortgage holder in the US (or anywhere else where repackaging of debt has occurred) goes into default then there could be up to 10 times the 'value' of CDO's (and other cons) effectively in default as well. If I am right then the big banks have every right to be scared witless (assuming they had any wits about them in the first pace, which I seriously doubt). Throw in some miss selling that we are heading a years of financial scandal after scandal after scandal. This is just the being.
  10. We have had the trigger. It manifest itself as Northern Crock in the UK, but the Credit / Liquidity Crunch has removed the excess crash needed to support the current prices. Prices would fall even without the added pressure of repossessions that we will see next year. The trajectory of the second graph (Right Move, Nationwide and Halifax data) shows that a flat lining market is impossible. By February or March at the latest this market will be in negative YOY territory IMO. That downward trajectory has only really started since the credit crunch hit the public consciousness which suggests that there is still a long way to go, especially as many US commentators are suggesting that the US mortgage disaster is still in its early stages! The banks are running scared. They are rapidly getting into survival mode, profits will become a secondary consideration in 2008. Crash follow is going to be the big story of nest year. Remember the holiday firm that went bust in the run up to Xmas. Crsh follow was the problem. No one said WHY cash follow was the problem, but someone pulled the plug. Could it be the first business to go bust (other than a bank)??
  11. As some on here will know i have been collecting HP data for sometime now. The following graph show some firsts. 1. First time since (my) records began that Halifax have shown three monthly price falls. 2. The first time that the 'big' three Haliwide and Rightmove have all show falls in the same month. I think that if we get Natiowide and Halifax giving -ve monthly figures for this month we will start to see panic setting in. The following graph shows just how close we are to getting -ve YOY figures. We are getting close very close. Happy 2008. FTAagain
  12. Goldfinger, It really depends on the market conditions and how asset prices are behaving. If an asset is used as collateral for a loan of say £100k, then the money supply is increased by a £100k. The £100k is in effect 'backed' by the value of the asset. (Remember what Murve King said about values?) Now the value of the asset falls and the borrower goes into default. At this point the bank can call the debt in and repossess the asset. The asset is sold say for £50k. The bank is in effect out of pocket by £50k (ignoring any repayments that may have been made). There is little or no chance of the bank ever recovering the missing £50k because the bank was a bit loose with its lending criteria, for example. The borrower does not have the £50k either, so the money supply has been reduced by £50k. I think the point to note (and it seems that many have forgotten by many in the industry) is that money is an abstract. It must be backed by something tangible to have any real value. As the example above demonstrates, if the asset backing the money falls then money falls in some manner as well, in this case in supplies terms. Also I believe that some measures of money supply include some assets, but that is a different point.
  13. FreeTrader, Thanks for the well informed post. I have long being expecting an inflationary recession along the lines of the 1970’s. However, over the last few months I have become more aware of the possibility of a 1929 style deflationary recession and to be honest this option worries far more. As I see it there are two contradictory pressures building within the global system. The credit crunch is clearly deflationary in nature. I have come to the conclusion that (on a national level) £1.4T debt is never going to be paid back. Instead we are going to have a lot of bankruptcies (your point about the insolvency crisis) both personal and corporate. We have spent the last 15 years or so generating far too much money, now it will be destroyed as debt gets written off, I believe. The inflationary issue largely comes down to the fact that we (humans in general) are consuming more than the earth can sustain. There was a good piece on the BBC 1 o’clock news today about how rising oil prices are driving up the price of food. The critical thing here is that the basket used for calculating CPI still has a large number ‘wants’ in it (the latest iPod etc). On the other hand, the ‘needs’ food, heating and transport (to work) are now rising well above the official rate of inflation. Sooner or later the need will dominate, even if they are officially recognised. This will see real effective inflation jump and spending on the wants fall. I believe that the fundamentals’ of the economic system change slowly if at all, but the inputs to the system change all the time, hence the impossibility of accurately predicting all the future all the time. This time round the new inputs are an unprecedented Credit Crunch, Globalisation and for the first time in human history we are consuming more than the earth can sustain. Which of these will come to dominate only time will tell. Inflation or deflation? A very interesting and slightly unnerving question.
  14. They don't have any cash. They are in debt up to their eye balls and that includes the banks! People borrow from the banks, that we all understand, but what I had not fully appreciated until the credit crunch, is just how much the banks have been borrowing from each other to fund their lending! It is one greatest merry go rounds ever and it just broke. We have witnessed one of the greatest money creation schemes ever seen, in which the banks could create money provided there was an asset (houses) to justify the new money. We are now about to witness the greatest (possibly) money destruction processes as debt after debt gets written off. Northern Rock was just the first.
  15. Pretty good chance they will just chase the market down. Secondly, if it does sell wait for the Land Reg data, do not just assume they got the asking price. If it makes you feel better I sold in the mid 90's at £45k. I nearly held on to it and rented it out (an early BTL if I had). Wish I had now, same flats were selling for over £120k 2 or 3 years ago. DOH!
  16. CNN have some good ideas about putting the cost back squarely where it belongs... http://money.cnn.com/2007/10/26/magazines/...sion=2007102905 I particularly liked this bit... If you have banking shares, then you should have dumped long ago. Best do very soon.
  17. I read an artical a couple of weeks ago, sorry cannot remember where, but the high end is getting hit quite badly in some places, even to the point of being repossessed! It seems that even well educated high earners simply borrowed up to the limit and now are struggling to pay the resetting mortgages. It is not entirely down to interest rates, either. The credit crunch basically means that if they have taken out a large mortgage (above ~$400k I think) they are very much less likely to get a good deal on remortgaging. Risk is getting factored back into the market in a big way apparently, particularly if prices are falling. It seems some lenders are reducing the Loan to Value ratios, effectively demanding a high equity level. That can mean finding $100k or so in no time. Boom house gets repossessed. Same will happen here possibly quicker than it did in the US, because the leanders over here have already had experience of what can happen when prices stall or worse fall.
  18. Most of you own your own businesses, and hats off to you all. I work for a large research company, have done for 19 years (come next Wednesday, gulp!). The last few years have not been good for me, struggled to keep busy, however, this year has been much better. I have managed to find a niche for myself, and boy do I intend to exploit it. What is really worrying is that my company is not afraid to close posts if the sector is not doing well. They apparently close about 200 a year. They either redeploy into new markets or show you the door. I guess if I can keep myself busy I should be OK, but it means regular direct contact with the customer, something I have only really been able to do this year. In effect I am in the position of making my own sales and then delivering the product. Good news is I seem to be quite good at it as most of my experience is on the delivery side. The thing is my position, on a personnal level, feels not unlike some yours. My investment is different to all of yours, but 19 years with company pension (which incidently just took a hit) would be a huge loss to me. I have a strategy in place which I hope will see me through, all any off us can do is keep going and hope we earn a little luck along the way.
  19. But aren't they borrowing euros to cover operating cost in stirling? I which case they could get hurt by a change in the exchange rate at the end of the 3 month loan period.
  20. Barclays have been borrowing from the BoE as well. It seems they may have something worth keeping quiet, me thinks. Although, I would really like to see the numbers including 'normal' activity numbers as well. Fat chance.
  21. I agree that there is much that can be done now, however, I question the willingness to do it. For example, there were some figures quoted recently (either on here or in the press can't remember which) where apparently 78% of new build housing association stock are up to the latest voluntary energy efficient standards. However, just 2%, yes TWO %, of new private housing is up to the new standards. According to the builders its' too expensive, and this at a time of the largest price bubble in history... Greed and stupidity have a habit of ensuring that we will go to the very edge before something actually gets done.
  22. Please correct me if I am wrong, but doesn't this amount to a stirling euro 'carry trade'. If so just how vulnerable are these banks to getting whacked by some of their big investment collegues betting against them? I mean if the currancies were to move against them couldn't they end up loosing huge sums (to add to their losses on the CDO markets).
  23. All good points, but this focusses of energy, particularly transport energy. Oil is used to produce chemicals that are used in many very important industries. Here are some examples that I am aware of: Fetilizer Dyes for the textile industry Medicines and many more. Oil price hikes will hit drive inflation in more ways than just transport costs. This has only just begun...
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