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House Price Crash Forum


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Everything posted by mattyfc

  1. The Tories seem to have counter offered a referendum on A/V to counter this Labour move. This is what the labour party offered in their manifesto and it would appear the majority of Labour MP's will not support more than this. Can the labour leadership bulldoze there own mp's? Absolutely unbelievable!
  2. They have probably worked out lending Greece more money will only prolong the agony. Far too much has been lent to Greece and they will never be able to pay it back. Restructuring is inevitable. How the other European leaders can't see this I don't know. $400Bn Debt. An income of only $108bn and expenses of $145bn. It seems a classic debt trap. They need to cut 30% out of the budget to break even, let alone start paying back the debt. The economy will no doubt be plunged in to permanent recession by such massive cuts . How anyone can expect the Greek economy to grow for the next few years with such massive cuts and the tourist industry in decline. The European leaders need to sit down and reasses the whole euro project. It would be best for the Greek people if they left the euro, restructured debt in to drachmas, and started to rebuild.
  3. It's amazing how fast things can move against sterling. There has been little worthy news / change of circumstances. Yet the pound is getting battered. There is nothing wrong with UK that is not mirrored elsewhere, QE, Budget deficits, unemployment, interest rates, government policy etc. The UK hardly stands out. If anything the recovery is looking stronger than ever with the 4th quarter GDP figures released on Friday. Unemployment basically flat and signs of pickup in the economy. More descent manufacturing data again today. Whilst Labour badly managed the economy between 98-2007, causing the current crisis with combination of poor regulation and a belief that the economy would grow in a straight upward line for ever. No risk to lend money to businesses / consumers when you think income / assets will rise forever. The response to the crisis has actually been very effective. You could argue we are in a better position than both the US and Euro zone. This seems to be a speculative attack, and a rather successful one. At least we will be able to make a profit out of exporting to the US now..
  4. It would seem to be fairly obvious that raising taxes and punishing the productive part of the economy would severely damage productivity, incentives to work and the economy. It is not a viable option. We should have already learned theses lessons after the 70's 98% super tax which was essentially wealth confiscation. The only option we have is to cut spending gradually over a 10 year period. Cutting £200 - 400bn is one go is not really an option! Cutting 30 - 60bn a year for 10 years seem perfectly possible to me. Yes it will cause unemployment and misery but there is really no alternative. The economy needs to be rebalanced, the structure of the country that was put in the place in the 1980's is still the way forward. We have been living in a bubble for the last 10 years, living far beyond are means and now we face the yang. The key points are to retain the work incentive and reward the productive and profitable parts of the economy, not punish them. Prevent future bubbles and realise that growth does not go in an ever upward straight line, spending needs to be planned on that basis.
  5. The BOE have admitted that they have been deliberately attempting to devalue to boost exports and rebalance the economy. Not really a surprise with the negative quarterly bulletins, QE, 0.5% rates and all the negative comments Mr King has been making. Devaluing against the dollar is proving to be rather difficult since the Fed are doing the exact same thing. Every time the pound loses value to the $ it seems to regain it in a few days. I would imagine the large exporting economies of Germany, Japan etc will not be impressed as they need the US, UK to buy there imported products to help them recover from their own recessions. I have not really been paying attention but I haven’t seen the price of Imported goods such as German cars etc increase by 30% ? Probably would not be too popular in the middle of a recession? The ECB haven’t joined in the game yet, if the eurozone economy does not pick up as they hope I would not be surprised if they start trying to knock the euro as well.
  6. This recession is pretty different to anything else seen. In the 20's / 30's Bank's were allowed to fail ( 9000 of them) and there was a proper crash, investment dried up and certain industries ground to a complete halt. That seems to have been avoided by propping up the banks this time around. The debt still remains though and repaying it will choke any real growth for quite some considerable time to come a decade or more prehaps?. Ironically I think the Banks will do pretty well in the long term as this highly profitable debt is repaid. I think we are in uncharted territory though and things can change unexpectedly.
  7. How Long before all the duplicated branches are closed? No sense in them having two physical locations on every high street. Once they get all the IT integrated they will surely merge them all, same for HQ's, call centres and the rest. Lloyds will end up considerably more profitable in the long term once the debts are absorbed and all the extra weight is shed.
  8. We can only hope labour get a real pasting and poll at a level where the removal of Brown is inevitable. An election and a new labour leader is needed desperately. Labour desperately need a change of direction how anyone can think staying with Brown is a good idea is beyond me. The only possible reason is short term gutlessness and the worry of having to face an election. Perhaps the total destruction of the party could be avoided if a new leader is appointed and an election is called for the autumn. I can't watch the BBC coverage as it seems to have moments of unbelievable bias which is not a surprise since they are aware there funding is likely to be slashed if the Conservatives are in government. Utterly unbelievable.
  9. I can't listen to any more Labour propoganda and have turned the sound off till Mandy is off. Surely he should be propoganda or communications minister, at least be honest about his purpose in government. I hope everyone watching is able to see through it.
  10. Probably depends exactly what Setanta have paid already.If as suggested the rights go back to the league to resell they can't sell the EPL rights to Sky because the EU have prevented one broadcaster holding all the packages. They would auction them to the highest bidder maybe ITV or the BBC could get them? Some of the other packages they own would probably sell for considerably less than Setanta paid which could cause some real problems for the SPL amongst others.
  11. The tories don't seem to have a lot of specific policy. The general principles of a smaller state, lower taxes. less red tape and bureaucracy, less welfare still hold true and I would expect policy along those lines. The real problem with our economy is the short and medium term is to much public and private debt. The repayments on this will smother any growth for the foreseeable future. Even with interest rates at 0% the economy is very weak if they have to rise the economy will be choked further as disposable income is hoovered up by the Banks. Long term economic policy needs to focus on keeping debt at sustainable levels and identifying and preventing asset bubbles so we do not end up in the same position in 10 years. I have not seen any political party recognize the real causes of the economic slow down let alone come up with any policy to deal with it. The irony of this is that with the Bank's short term liquidity issues fixed by the government they will be the main beneficiaries. I would suggest if people do want to line the bankers pockets they refrain from borrowing ginormous sums of money in the first place.
  12. Had the banks been allowed to go we would probably have seen a fairly precipitous crash. The chances of this happening now seem to be remote. The market will be governed by Supply and Demand in the long term no matter the smoke and mirros of EA's. Demand is being supported by low interest rates. Rising unemployment, low confidence and wages deflation and will prevent any sustained rise in prices and will likely force prices down for the foreseeable future. The speed of falls will vary greatly between different kinds of properties and different areas. I think we are set for a long period gradual price falls and stagnation with very low sales volumes. It will probably take quite a few years before any sustained growth is seen.
  13. Could this be an glimpse of things to come here. They can't increase taxes apparently borrowing is pretty impossible as well due to California's low bond rating, nor would would it be wise in the long term so they have to cut spending. $20~ Billion seems to be about 20% of the total budget. Closing Parks, Pay cuts for all public staff, Cutting health services to the poor there is no good way of cutting that much money out of the budget. At least they seem prepared to accept they have to live within their tax income no matter how unpleasant it is. How long until we have a similar budget problem.
  14. This seems like good news to me. Having a slower reduction in house prices is going to benefit the economy overall in the long term. It should help to retain confidence in the economy and consumer spending. This should help unemployment and it's associated misery. Unemployment is still rising fast and the long term trend is still downwards. The government's response in the initial stages of the Crisis seems to have been quite effective, reducing rates, the VAT cut etc seem to me to have reduced the steepness of the decline of the economy. I still think we are in a for quite a few years of economic stagnation whilst debt is repaid, house prices fall and I don't see any potential for growth for a while. It could be a lot worse. The long term plans are what worries me. Dealing with HPI and creating long term house price stability, reducing debt should be the top priority. This seems to be politics getting in the way of economics, it is accepted that high inflation is bad for long term economic growth yet HPI has been allowed to rage out of control. The link between the credit bubble and HPI seems to have been missed? The is no policy or even discussion of how to keep HPI under control and prevent this exact scenario happening again in the future. Instead they seem hell bent on yet more borrowing and spending and seem unable to accept that spending will have to match revenue. No wonder we have a debt problem when our government can't understand the most basic economic principles.
  15. Economic forecasting is just educated guess work. No one can say exactly what is going to happen. In the housing market there appears to be an oversupply of property in some areas and I think that falls from peak vary greatly from one area to another and it is difficult to generalize. Look at the economy currently, rapidly rising unemployment, low interest rates, low confidence and security. There appears to be little room for price increases and it is more a question of exactly how fast and for how long property has to fall. My guess is the average will fall back to between 100-130k but it could take as long as 5 years for the bottom to hit. Market forces will do their work eventually no matter how much dodgy lending, EA bull and general propaganda is spread about the market.
  16. Looks GM are going to go in to chapter 11 restructure there debt, sell the Euro Opal division and then carry on trading. I don't think they are going to go under as such. Not enough demand for cars, some factories will have to close. It's just a matter of where and when.
  17. Yes UK seaside resorts are a rip off. I have been on a UK holiday recently and the prices were pretty ridiculous. It is because people are reluctant to spend that they are looking for cheaper holidays. The main beneficiary of this will be the Turks, Northern Cyprus, Croatia, North Africa and anywhere else that has a lot of sunshine not to far from Europe and has a low cost of living. From a European's perspective London is now 30-40% cheaper than it was 2-3 years ago, whilst still not cheap that is a pretty large reduction.
  18. Not a real surprise. The euro is so strong it makes sense for Europeans / Brits to holiday outside of the eurozone and get much better value for money. Conversley I live in Central London and I have never seen so many European tourists. I barely heard a word of English whilst out and about over the weekend.
  19. I have been going on about this for months. Even our house bubble pales in to comparison when you look at the Spanish housing market. Talk about about a slight supply overshoot. Already 4m unemployed 17.4% and the recession is just getting started. 90% Falls from peak anyone? The next financial crisis will probably occur in Spain. Probably a good bet on them leaving the euro in the next 5 years.
  20. This is all relative I think. The chances of financial meltdown, rioting, revolution 99% falls in house / asset prices seems to have been avoided and the banking sector seems to be stabilizing. If HBOS and RBS etc had gone to the wall we would have had a crash to dwarf the 1930's. Now we will just have a bad recession, a lost generation to debt, 3-4m unemployment and a very large 30-40% correction in house prices. The worst of unemployment and the recession are still to come but things could be one hell of a lot worse.
  21. Totally agree with this. Both main political parties refuse to actually reveal any policy to deal with the main issues we are facing. The national debt, taxes, public spending, Europe, and the rest. All we have to go on are the broad ideology of each party. I want to hear from Brown and Cameron how they are going to balance the books before the election not afterward s! The BNP and other extreme parties will probably gain some support as people lose there jobs and become disenchanted. Full scale revolt / rioting will be avoided as long as we don't run out of food. I am thankful that we use first past the post for our general elections and it is virtually impossible for any extremist party to even win a single seat at a general election. I am surprised this point is never brought up as it is quite possible for a party to have a large proportion of the votes and still end up with 0 seats in parliament. There is no reason at all not to call an election for October. I hope brown is removed after the Euro's and we get our election then.
  22. A good article which sums up the problem of house price inflation pretty well. People need to wake up and realize HPI is not a good thing. A grim financial future awaits the British "lost generation" who purchased near the height of the bubble and will now be either underwater or have had their equity destroyed. The government and democracy in general has a lot to answer for. The bubble was seen by the economist in 2005 and others before that yet nothing was done and there was not even any real debate on the subject. I can't seriously imagine that the explicitly populist Blair government would have done anything to curb the bubble and to prevent the property crash we now face. The government were incapable of doing anything unpopular (iraq war aside) no matter how sensible. A couple of interesting points are made about limiting loan values, minimum deposits, and the removal of 125%, self certified and sub prime loans. I agree that self certified, 100% + and no income / bad credit sub prime loans should be outlawed. The real issue is transparency in the market place and educating the buyers / general population about HPI and what financial commitment they are making when purchasing property and what the likely / possible long term financial implications. Also encouraging the population to see HPI like any other kind of inflation and not as a one way street to wealth and fulfillment. Estate agents also have a lot to answer for are virtually unregulated and contributed to the problem. A central property database should be created based on the land registry on which every property is listed along with historical values / transactions and if the property is currently on the market, the historical and current asking price or rent. Currently all the information is fragmented and hard to find. The more transparent the market is the better it will function.
  23. Nadine Dories seems to be symptomatic of the problem with UK politics. Does she have an opinion on any issue of substance? Having heard her on the radio her arguments were paper thin and with out substance. I agree that the MP's expenses have been done to death now and I don't think that there are many groups of people who when put in a self regulating environment would not rinse it for every penny. The claims for nonexistent mortgages / expenses aside, these MP's should be prosecuted. I have not seem her provide any evidence of what she is saying about expenses prior to 05. Her views on MP's salaries are ridiculous, 65k is nearly 3 times the average UK salary and many MP's have other part time jobs, speaking etc etc. She claims to have been a potless nurse scraping by and now thinks MP's should be paid more than 65k a year. How did she get selected and elected in the first place.
  24. The tax rise in good old fashioned socialism and completely politically motivated. You would think that labour would have learned lessons from the 1970's? It is likely that the increase will not generate any significant extra revenue as those who earn over £150k will either evade it or worse, leave the country all together for tax purposes. Increasing tax will stifle the economy and is not a viable long term option to reduce debt due to the de-motivating effect it has on the working population. Unfortunately the only viable option for the country looks like slashing public expenditure and it is ironic that labour will have caused this by the spend thrift public spending policies they have pursued over the last 10 years. I believe Brown has lost his grip on reality and is no longer operating in the real world at all. The whole philosophy of our government is wrong and they do not seem to understand what credit is for, nor how economic growth occurs. They seem totally unable to accept that there spending plans are not affordable and they are unwilling to lead the country by example and balance the books.
  25. I have been considering this for a while as well and I think Sterling is going to have a 3-4% sustained rally against the Euro to around 0.85~ and should continue to strenghen slowly from there as the depth of economic problems in the eurozone become more apparent. I would not be surprised if we get a slew of bad economic news / more QE from the government to try and keep sterling weak though as it is going to be a major factor in how fast the economy can recover and is really helping us currently.
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