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indirectapproach

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Posts posted by indirectapproach

  1. The inflationary pressure from quantitive easing is a concern but not overly so on the information available to me. The hyper inflation of Weimar was over by 1926, pre the 1930s depression and more a German attempt to wriggle out of war reparations than anything else. The hyper inflation of Zimbabwe is the product of tyranny. Neither was the result of QE as a response to the danger of deflation.

    When the Japanese used QE in the 1990s it did not lead to mass inflation.

    If inflation is “too much money chasing too few goods” and if we have masses of unsold cars and everything else and everyone is skint, inflation fears don’t keep me awake at night.

    QE is unlikely to have enough impact to create inflation, will probably absorb some of the shock but not dodge it and ease the pain rather than prevent it by spreading it over more time.

  2. The best data I can find about Japanese residential real estate comes from the Japan Ministry of Land.

    It gives me a 48% fall between 1991 and 2007 and it is not constrained to Tokyo.

    http://tochi.mlit.go.jp/english/6-05.pdf

    Since 2007 Japanese land prices have gone down.

    Tokyo residential prices were insanely high at the peak of their bubble, 1989. That’s why they fell 90%.

    Anyone care to give us an adjective to describe UK residential prices summer 2007?

    Detroit land prices are down 90%. That’s why you can get a house there for $100.

    But Detroit isn’t Seattle. In Seattle prices are only down 30% from peak and falling.

    http://seattlebubble.com/blog/tag/graphs/

    You can choose whatever percentage you like for wherever you want.

    Fact is, we are in the “mother of all meltdowns” and there is nothing anyone can do about that.

  3. I do not think it is lunacy to entertain a 90 per cent fall from peak.

    http://en.wikipedia.org/wiki/Japanese_asset_bubble

    The UK has all the ingredients of the Japanese model, too much money, too much bad debt, bank bail outs, zero interest rates, well ok 0.5 per cent but what is the difference? and then quantitive easing and then capital flight.

    Remember too that when the Japanese bubble burst the rest of the world may have been spluttering but it was not on its knees and it seems the Japanese banks were throwing away money that had actually been deposited with them, not borrowed on wholesale money markets.

    I do not think anyone worth listening to would "predict" a 90 per cent fall in the UK, why bother?, but it has happened in Japan and I do not think anyone serious would be surprised if it did happen in the UK.

    The suggestion that only the great unwashed suffer from forced sales is wrong, eg Bovey and Turner and that UK house prices will rise in 2009 is risible, 40,000 repossessions 2008, CML predicts 70,000 2009, how many 2010? more than 20,000 for sure, maybe 100,000, lets see.

    To quote the IMF, "Advanced economies will experience their sharpest contraction in the post-war period."

    http://www.imf.org/external/np/g20/020509.htm

    If this can happen to Detroit

    http://www.detnews.com/apps/pbcs.dll/artic...D=2009903080323

    90 per cent falls, why not Coventry (no disrespect to Coventry)?

    And if that happens to Coventry, what price a three bed semi in Ealing West London?

    If it has happened to the Japanese and to the Americansm why can't it happen to the Brits?

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