Scooter
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Posts posted by Scooter
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You rightly point our the margins are'nt overly excessive, however a recent study focused on why insurance the world over is so profitable and that generally insurers are amongst the stallwarts of any stockmarket.
In large part they do exploit vulnerable customers that mistakenly expected the Insurer to THREAT THIER CUSTOMERS FAIRLY (TCF is the focus of the FSA now, because insurers have been incapable of so doing themselves - have you seen the dismall pay - out rate on ASU claims>!!!!!!)
I would really dispute that most insurers are highly profitable over a business cycle-which recent study are you referring to? Most commercial insurers/reinsurers got mauled or wiped out in 2005 from US hurricanes and in 2004 from Euro floods and US hurricanes. There are some very profitable areas of insurance and companies but most, as I said, make a measly few points profit.
Study link please? What is ASU?
S.
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Dogbox said:
"Scoot
As Ive always said the 'logic' referred to by bears is in the main defunct and has no more place in todays world than mangles in the kitchen."
All you are saying is it is different this time. That is a non-argument in itself. Address interest rates, money supply and asset cycles and I might be more impressed by your argument. Sorry! What is outdated (mangles?) about those concepts?
S.
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No one says gamble it all, but to simply chicken out and never 'sweat' the resource of freely gained home equity is to forever flee from potential fear.
You cite a classic bear mantra.
The truth however is that very often people fail first time, dust themselves off and suceed on the second go.
As for restaurants I agree they are a far too risky adventure.
Optimist or pessimist suggests an emotional response/motivation to investing, whcih I think is dangerous. Why not do what appears sensible in the circumstances on best information available?
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Inflation is infinite, which is why the banks and governements love it, they control it alright. The whole problem lies with not having a true financial system that cant be manipulated, hence why the gold standard was abandoned in 1971. We are all being completely screwed and I can see housing becoming so expensive that it will be the 'have's' and the 'have nots', this is the sort of world we are now living in now, its very sad.
Ive posted this before and some will think its lunacy, but each day it seems we are heading to a world where....
PRIVATELY OWNED HOMES — "A THING OF THE PAST"
Privately owned housing would become a thing of the past. The cost of housing and financing housing would gradually be made so high that most people couldn't afford it. People who already owned their houses would be allowed to keep them but as years go by it would be more and more difficult for young people to buy a house. Young people would more and more become renters, particularly in apartments or condominiums. More and more unsold houses would stand vacant. People just couldn't buy them. But the cost of housing would not come down.
Sound familiar ?
I think that is a bit apocalyptic. Assets rise and fall in cycles and houses will fall again, although ****** knows when. Hence my current annoyance.
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Indeed, or could it be that Dogbox is a troll?
I was hoping he would give insurers another good kicking but I am as yet disappointed...
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It will mean that existing owners could see their debt inflated away. Real falls? Definitely. Nominal? Perhaps, but it would depend on how much chaos was caused.
Hmm, that could take a while yet...
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...and just when you think they can massage the figures and manipulate the news until everyone's financially, culturally, and morally bankrupt, something like this pops up and you know it's just a matter of time now
But that's Docklands innit? It's different everywhere else...
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I have been pondering how high could it go before it cant go any higher and i believe until rent/morage on a small flat consumes 100% of the average income.
Ie rent/morgage on an ex council 2 bedroom flat costs 1600k a month, at this level one person in the couple would pay the morgage/rent the other would pay the bill and food. In some EE european/countries prices have almost been inflated to these levels
In real terms thats a morgage of..... 384k IMHO ultimate ceiling at current salaries, BUT... i dont think we get anywhere near it, the longer the bubble continues the bigger the economic damage.
That could be quite a long way off before rent/mortgage consumes ALL of average income! Starvation rations for a while before that point...
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It'll go on until currency has been so debased, the whole system will collapse. They aren't brave enough to control inflation now for fear of crashing the housing market. So they are gonna crash currency instead! Wooopppee! That'll work!
What does that actually mean for real or nominal house prices assuming most of us earn in £ and buy houses in £?
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Just having a rant-I am bored and pissed off with a HPC that refuses to happen, especially in London where I am. I was expecting one around 2003/4 for logical reasons that are familiar to many. Here we are a few years later and house inflation is still rising apparently. I would go and buy a new house but unfortunately I still (logically) expect a crash against all evidence and ,yes, media spin. :angry:
Angry Scooter
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Someone once said to me about insurance.
Why don't I just take a loan pay for the repairs myself and cut out the middle man.
You could, or you could self-insure by keeping money otherwise used for premiums in a deposit account. I guess that is fine for small claims you might otherwise make up to a point. But if you hit someone with your car and are liable for £250,000 for long term care? Or if your house burns down and needs rebuilding? Ultimately loans have to be paid back (unless you declare bankrupcy, hardly attractive.)
S.
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Because they grossly misprice the risk and make excess profits.
More specifically, when you do need to make a claim, say your car window is smashed and the stereo is stolen, it is not worth claiming because of the hit your NCB would take (even though you've already paid premiums for this eventuality over many years). This is wrong, immoral and typical of policies I've seen. If you do claim in this scenario, they will mark your insurance record as "At Fault", which is absurd.
This is why I hate insurance companies.
JY
Do you actually know what range of profits most insurers make? Not much in most cases, often one or two percent on total premiums and lately negligible investment income. Results are rarely above 10% so hardly excessive IMHO or evidence of gross mispricing. I suspect most people have no idea what price their insurance should be to break even (do you?) and just whine that they personally have not made a claim, failing to understand the whole nature of insurance/risk transfer. I am a bit suspicious of interfering in private markets to cap "excess profits"-we are not all working for Brown yet and someone has to make profits to pay taxes to pay for the running of the country.
Regarding your specific point above, the way to beat it is probably to choose a big deductible for a lower premium and only claim on major losses, otherwise you are correct in that you are just swapping premiums for claims.
And yes I am an underwriter, albeit not cars.
S.
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http://today.reuters.com/news/articlebusin...p;from=business
Home values surged 32 pct from 2000 to 2005!!!!
Tue Oct 3, 2006 10:03am ET168WASHINGTON (Reuters) - Home values across theUnited States soared 32 percent during the first half of this decade,according to new data released on Tuesday by the U.S. Census Bureau.Among U.S. cities, the largest increase was in San Diego, where the real median home value surged by 127.2 percent, a jump to $567,000 from $249,000 from 2000 to 2005, the American Community Survey report showed."Just about anyone who owns a home or has been in the market for one in the past few years knows first-hand how home values jumped from 2000 to 2005," said Census Bureau Director Louis Kincannon.Among other large cities, Los Angeles saw a 110.2 percent rise in median home values and New York saw a 79.1 percent gain.Monthly costs for home owners with mortgages rose 5 percent over that period, while the median cost of renting a home increased nationally by 6.7 percent.No wonder the US market is correction. With horrific HPI at 32% prices have drifted too far out of line with wages and other fundamentals. Good thing we are not like the Americans with all that irrational exhuberance pushing the average house up almost one third in just 60 months. Hang on........, ooh-err.
I just do not understand why they are apparently crashing on 6% odd annual inflation and we are apparently not on far higher inflation. ********. :angry:
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Spot on!
Are that really those only choices when investing, fear or complacency? personally I think it is pretty essential to consider a downside (pessimism?) whilst being aware of possible upside, all in context.
S.
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They're short pessimism and are long premiums.
I hate insurance (companies) - does that make me an optimist?
JY
Insurers just take the premiums of the many to pay the claims of the few (because no one-not the insurers or the buyers-knows exactly who will have a claim) with a usually very small profit well below 6% built in. What is your problem with risk transfer? Do you love insurance companies if you have to make a claim?
S.
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Down in Docklands?
A rise in repossessions is casting a shadow over one of London’s property success stories, discovers Helen Davies
The regeneration of east London’s Docklands has been one of the capital’s great property success stories. Since the summer of 1981, developers have transformed crumbling wharves into yuppie loft apartments, and built steel and glass towers. There is even a three-storey Waitrose.
A quarter of a century later, buildings are still going up. But the area is not proving an unmitigated success for a number of buy-to-let investors, who have borrowed heavily in order to buy and are now struggling to keep up with mortgage payments and cover rental voids.
Adam Stackhouse, head of sales at Chesterton’s Tower Bridge office, estimates 25%-30% of properties on his books are repossessions, most originally bought by investors.
“They started to gather momentum 18 months ago and have grown steadily ever since,” he says. “Amateur buy-to-let investors who simply barnstormed into the market have found themselves in over their heads.”
http://property.timesonline.co.uk/article/...2378182,00.html
Ha!
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Just when you thought Aramanth cocked up. Traders in the UK are forking out for people to take the stock of their hands;
Gas traders giving it up, baby.
So when do you reckon the likes of Gritish Bass will drop their prices?
They will not drop their prices. They will increase their profits.
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Perception:
http://www.themovechannel.com/News/2006/September/29a.asp
Housing market hit by rate rise after all?
29 September 2006Recent housing market surveys have shown strong price rises suggesting that August’s increase in interest rates had not subdued the UK housing market activity.Only yesterday, Nationwide’s September index showed house prices increased by 1.3% this month, surprising the lender and prompting group economist Fionnuala Earley to suggest, “Just like the weather, the housing market was unseasonably warm in September as August’s interest rate hike did nothing to cool the rate of house price inflation.”But today, a different picture is emerging as the Bank of England’s lending to individuals report for August shows mortgage lending and consumer credit rose by less than expected in the month.Mortgage lending rose by £9.138 billion in August, less than the £10.0 billion forecast by analysts and down from £9.269 billion in July.Approvals for home loans, which are seen as a leading indcator for the housing market, were also lower than expected at 119,000 in August from 120,000 in July.The annual growth rate of consumer credit continued to fall, said the Bank, to 6.6% in August, and the three month annualised growth rate fell by 0.9 percentage points to 5.1%.Is reality!
Surely this was released by mistake-it is not due to be released until just before the next MPC meeting to stall any further rate rise.
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More depressing spin from the Express... :angry:
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http://www.telegraph.co.uk/money/main.jhtm...8/cnhouse28.xml
Property prices could slump
By Edmund Conway, Economics Editor(Filed: 28/09/2006)Experts warned that the housing market could be heading for a"mini-crash"next year after new figures showed property prices are jumping ahead again.What is a MINI-bust exactly? How do you distinguish it from the start of a major bust?
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I'm a complete newbie to this site. I am no expert, no Economist and wouldn't even pretend to profess to understand what most of you chaps/chapesses post about. I am a plain simple thirty something gal who sold up in what I thought was the peak (2003!! Ha. Idiot) and have been renting since.
Anyway, I read waitingforhpc's post on the homepage with interest but would be curious to know what a 'repossession drive by' was. Also, he states that it's 'not long now'. I have also been of the opinion that these things tend to take about 7 years to trough. Do you all believe we are looking at another 7 years til we see the bottom of the 'coming crash' (if it ever bleeding happens!!!)
I'm on both sides of the dilemma as I desperately want to own again in the UK whilst desperately trying to get rid of a place in Florida (we have reduced the price 4 times since April.... there is the distinct hiss of a bubble bursting over there).
Any advice/thoughts would be gratefully received.
See my thread on Miami somewhere below for depressing reading. The UK media are a lot more coy about calling a bubble than in the US so sentiment may remain positive enough to prop things up for for a while but rising interest rates broadly mean falling asset values. It will come eventually but no one can say when...
S.
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quite, what happens when the finance dries up! we had a piece of junk mail the other day saying we should refinance because EQUITY = MONEY
We're going to buy but not around here unless there is atlest a 60% price reduction
60%? Now that would be a crash...
If we could just have that in North London as well... -
tell me something I didn't already know
Are you in Florida?
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Just got back from doing a bit of biz in Miami. I had a few conversations about property including a few renters who see no sense in buying at present. There are a lot of new residential blocks going up and a lot of what we would call BTL. Most recent buyers are anectdotally non-occupiers from Sth America and UK.
Basically, rental yields seem to be sub-5%, finance costs are 5-6% but crucially the cost of insuring against hurricanes has risen massively since last year to about 3% of value. You might also add in maintenance costs of say 1% annual. So in summary, (optimistic) yield of 5% against annual combined costs of 9-10% = major crash surely? This will be true of all of the Gulf States that have to buy hurricane insurance to satisfy a bank and also in California, where quake insurance prices are also costing a few percent.
S.
40% House Price Increase By 2011?
in House prices and the economy
Posted
I will certainly keep waiting for a while. Luckily I am in my own place pretty much paid up but I am still pissed off because I want to move after twelve years in the same place. I realise others are in a more frustrating position. I do expect a crash as I said but my logic is being severely battered by the current persistence of HP inflation and, as I said, the media ********.
S.