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House Price Crash Forum


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About mattyfc

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  1. What’s probably happening in my view is just the follow on from the 2007-9 problems. The problems started building from the mid-1990s. Private debt levels soared out of control, and resulted in housing and stock bubbles in western countries. On the other side some countries like China and Germany have run huge current account surpluses. Together this resulted in the first financial crisis. Global imbalances are they key. Sir Mervyn got a lot wrong; he will be proved correct on this though, in the next 12-18 months. Nothing has actually been done to fix the global imbalances and bubbles which caused the financial crisis. Instead interest rates were cut to zero, housing and stock market bubbles reflated. The world carried on. Politicians don’t want to face the truth because it isn’t very popular. Osborne in 2010 should have stood up and said the unbalanced nature of the UK economy, house prices, housing equity withdrawal, the dodgy mortgage market and private debt levels were the problem. That was Gordon Browns legacy. Instead the side issue of the government’s finances were focused on along with maintaining and expanding the bubble at any cost. Zero interest rates and cutting government expenditure are pretty much the opposite of what should have been done. If a severe recession does develop monetary policy will be virtually impotent this time. The can kicking will come to an end. The only way of boosting the economy will be via the government. This is likely to cause some rather serious political problems in monetary sovereign countries and will probably be fatal for the Euro area.
  2. "Monetary trends, meanwhile, have weakened further in early 2018, with G7 plus E7 six-month real narrow money growth falling to a nine-year low in February. Real broad money has also continued to decelerate. The emerging economic slowdown, therefore, could extend into late 2018, allowing for the usual lead." http://moneymovesmarkets.com/journal/2018/4/10/a-monetarist-perspective-on-current-equity-markets.html Monetary trends looking similar to 2007/8 for the moment. There is a clear trend. It will be interesting to see if it continues or reverses in coming months. It looks likely there will be a significant economic global economic deceleration over the next 12 months. Australia, Canada and the UK are lagging and coincidently? have the most advanced housing bubbles / private debt problems. The US, China and EU are also very weak. The Euro aggregate conceals that France and Spain are lagging whilst Germany and Italy are holding up better.
  3. Employment up 100k albeit part time jobs, hours worked rising solidly from Q4-Q1. Things look to have improved more significantly in April as well judging from the 15K fall in the claimant count. This data makes a mockery of the output figures and surely stretches the credibility of the ONS to breaking point.
  4. The guy is a genius really and full credit to him. Lots of talk about slashing spending whilst borrowing £120-140bn a year, printing and spending like Weimar is back in fashion. 33% of the entire debt stock will be owned by the BOE after the latest QE, the interest going in circles between the treasury and the Bank. Why not do the lot; he could probably pull it off. No one actually bothers to read the actual budget, Osborne does such a great job playing the Tory budget slasher. A miracle the UK has not already been downgraded by at least one agency (not that it would matter). With the Draghi put in place no need to worry about the EZ collapsing anytime soon. All coming up roses currently for Osborne currently.
  5. This is the most likely scenario, Greek politicians seem particularly gutless and have chosen the worst possible option for the Greek people. Greece will be hollowed out economically, all the young intelligent graduates will leave. The ECB / Germany will drip feed enough cash to prevent default. The damage will be irreparable, Greece will be in recession for the foreseeable future. For the Germans and the rest of the world the best result. For anyone stuck in Greece things will be very grim indeed.
  6. The bond market is simply reflecting the fact that there is an infinite amount of £ available to the UK government. There is a 100% chance of whatever is lent to the government will be repaid at its nominal value, it seems fairly clear that bond markets are not the slightest bit worried by inflation.
  7. A run seems to have started on sovereign debt all across the EZ, with the exception of Germany. Not surprisingly since giant depression seems to be heading towards southern Europe. Italy did not even release a preliminary Q3 GDP figure, which hardly inspires confidence. The politicians have no solutions, the EFSF is dead in the water and the only thing that will prevent the markets forcing default on Spain, Italy then France and the rest is the ECB buying debt on a gigantic scale. €1 trillion + would probably do the trick, or would prevent economic collapse in the short term. The problem of massive austerity, cutting in to the teeth of a recession will still remain. Southern Europe will enter a permanent state of economic contraction and misery. The only way out is going to be changing the structure of the EZ / a breakup of some kind that allows southern Europe to inflate and grow.
  8. The "rescue plan" for Greece is frankly insane, a decade of austerity and continual recession, unemployment likely to be 25%+, in the best case scenario debt / gdp will still be 120% in 2020. Although considering the ridiculously overoptimistic forecasts 200%+ is probably more likely ,utter, utter madness. The global lack of respect for democracy is rather troubling, financial markets are more important than allowing countries self determination? Weren't there two rather large wars fought to protect democracy from tyranny? Greece needs to default return to the Drachma and regain its self respect. Hopefully her creditors , who refuse to take any responsibility and are now trying to subjugate her to debt slavery get what is coming to them.
  9. It does occur to me that this could be an attempt by Greece to force other countries out of the €. There is no way of forcing Greece to leave the € even if they default 100% as far as I can see. Leaving the € voluntarily would be suicidal, as would the proposed decade of misery in the EZ plan. It is clearly in the best economic interest of Greece, and other southern European countries to force Germany out of the monetary union, then to take over the ECB turn it in to a proper central bank lower interest rates to zero and kick start the presses. If the Germans don’t want any part of it they cam reissue the DM.
  10. http://www.rttnews.com/Content/AllEconomicNews.aspx?Id=1746706&SM=1 It will be interesting to see how markets react once the recession really kicks off in Q4 and through 2012. No doubt the Italian deficit will start increasing and the proposed austerity plan will crush any chance of an economic revival in the short term.
  11. Wow, just wow it's at times like these I am very glad of the government we have. However, a double dip is pretty certain in 2012. Continental Europe is heading for a 1930's style depression and we will be dragged down as well. No avoiding it, things are going to get very very ugly. The ideas put forward in the article are completely ridiculous thiugh. None of them will create sustainable growth in the long run. Probably the worst ideas to solve the problem I have ever read. Investments in education, research science and technology along with building needed infastructure, e.g a new airport for London etc large capital projects would be the only sensible uses of public money. Solving the heart of the problem, global wage disparities between consuming / producing nations and rampant irresponsible private sector credit creation will be needed for a sustainable recovery.
  12. Problem in Spain is there is no escape from your mortgage, even if you default the property is auctioned if the amount does not cover the mortgage you still owe the bank and become a debt slave. Whilst in the short term this may provide support to the market it will also prevent any kind of recovery long term. Who would take out an inescapable debt in a plunging market, when friends and family are in debt servitude already? Banks may also be hiding non performing loans, the cajas that were taken over by the Bank of Spain have double the non performing construction loans of the cajas that have not had there books examined. With the economies of Northern Europe also in the toilet like us in the UK, the traditional foreign market for Spanish properties is also very depressed. Mortgage defaults in Spain have been very low so far 2.5%~, I think in the next 12 months this rate will begin to rise, the unofficial economy will grow to prevent wages from being garnished, emigration will rocket and Spain will turn in to a much larger version of Ireland without the predatory rate of corporation tax.
  13. I would not want to be the new Spanish government coming in to power in November. It is pretty amazing how effective the propaganda of the current administration has been. This really shows in the spread between Italian and Spanish debt recently. The reality seems to be somewhat different, new jobless claims doubling y/y in September (48k – 95k, +250k total y/y), the PMI surveys have been abysmal for the last couple of months with new orders plunging suggesting further downside. The manufacturing PMI is only 0.5 points above Greece. Mortgage approvals hitting a record low in July, Housing sales plunging 38% y/y and the Tinsa index showing prices plunging at an accelerating rate. Whilst industrial production rose slightly in August this may be because of a SA problem (an extra day in the figures?). Also in the FT today the deficit is looking to be at least 1% over target this year. A vicious recession seems to be on the way, the housing market is heading over a cliff and the effect this will have on the Spanish banking system and sovereign should not be underestimated. Spain increasingly looks like the next Greece to me, if the new government confesses the collapse could come hard and fast.
  14. The telegraph is really going downhill and turning more in to a tabloid every day. You can smell the desperation to stop there ever declining circulation. They could at least get the borrowing figures right for the last two years. The borrowing figures for one month are also completely irrelevant, they are revised constantly for years after release. The figures for last year have been revised +/- £10bn 3 times in the last 6 months. Benign gilt rates? Last time I checked Gilts were touching 150 year lows and the ten year is trading a real rate of -2.5%~ I think there is a big misunderstanding of public / private credit creation and the entire fiat monetary system. Private credit creation has done far more damage blowing up the housing bubble than a mere £75bn of QE, which will almost certainly do nothing. We place far too much emphasis on £ debt / credit values in sovereign terms. The whole fiat system is one of pretence. Sovereign nations with control of the medium of debt are nothing like a private household or business and should not be looked at in the same way.
  15. Merv has this one right, 2012 is going to a blood bath and at least trying to do something seems like a sensible course of action. The data coming out of Europe has been beyond awful this week, the EZ services PMI indicate a deep recession taking hold in the periphery. We are heading for a deflationary bust of epic proportion in Europe and with austerity taking hold there is no counter balance. The best case scenario for the UK is probably flat growth next year. on the continent a 1929 or worse style bust seems likely with the rest of the periphery heading for a Greek style meltdown. Frankly I don't think QE will work, the UK and global economy will crash hard, there are structural issues that run far deeper than a quick fiscal or monetary policy fix.
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