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House Price Crash Forum


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Everything posted by mattyfc

  1. http://translate.google.com/translate?js=n&prev=_t&hl=en&ie=UTF-8&layout=2&eotf=1&sl=es&tl=en&u=http%3A%2F%2Fwww.cotizalia.com%2Fnoticias%2F2011%2Fnumero-parados-cinco-millones-escala-desde-20110429-68013.html&act=url Unemployment is now 4,910,200, 21,29%. 256,500 Jobs lost in 3 months. Total employment is now 18,151,700. These figures are not seasonally adjusted y/y the unenmployment increase is 297,400. With PC City closing, Telefonica slashing jobs things and a strong € for tourism I can't see much good news. These figures are from before Interest rates were raised at the beginning of April which will not have helped that's for sure! As shown here the effect of the IR increase on the 90% of Spanish home owners with variable rate mortgages http://translate.google.com/translate?js=n&prev=_t&hl=en&ie=UTF-8&layout=2&eotf=1&sl=es&tl=en&u=http%3A%2F%2Fwww.cotizalia.com%2Fnoticias%2F2011%2Fnumero-parados-cinco-millones-escala-desde-20110429-68013.html&act=url Mortgage arrears also increasing http://translate.google.com/translate?js=n&prev=_t&hl=en&ie=UTF-8&layout=2&eotf=1&sl=es&tl=en&u=http%3A%2F%2Fwww.cotizalia.com%2Fnoticias%2F2011%2Fnumero-parados-cinco-millones-escala-desde-20110429-68013.html&act=url Meanwhile the ECB and Eurocrats do nothing to help, put out statements about how everything will be ok. Looks real bad to me. Not sure how Exports are meant to help either since they consist of only 9-10% of the economy, with a strong € and the large increase in the price of oil, the trade balance actually got worse in January / February. EDIT Forgot the retail sales data: Spain Adjusted Real Retail Sales (Mar) Y/Y -8.6% vs. Exp. -4.9% (Prev. -4.5%) http://ransquawk.com/headlines/135634 Only near double forecasts!
  2. The full information from Simon Henderson can be found here: http://www.moneymovesmarkets.com/journal/2011/4/27/uk-gdp-detail-shows-economic-recovery-on-track.html The ONS construction figures are clearly inaccurate IMO. Looks like there will be a bounce in Q2 due to the poor Q1. The construction figures are not representative of actual construction output. Also industrial production was hit in February due to Oil rig maintenance I think.
  3. Good to see Osborne can win, criticised for cutting spending and criticised for spending more. Surely the Guardian should be praising him for boosting the economy... The main problem with PFI is the interest charges paid v what rate the government would pay directly. Without figures to compare it is hard to judge, also depends on how risky the projects are to cost over runs etc. Anyone who has read the “austerity” budget would have realised pretty quickly that borrow and spend never left and has only been slowed down slightly. All our papers seem to get worse by the day. Seems to be sheer desperation due to falling circulation the stories get more biased and sensationalist on a daily basis.
  4. Pretty clear that Greece will not repay the €325b+. That being said a straight default is unlikely as it would sink the eurozone and then world economy. They money will be printed or paid back by Germany, France etc. The currency markets seem to be happy to believe it is all contained, which it is until 2012/13. Greece is fully funded until then, they are meant to return to the market after that which is clearly impossible. Once the austerity programs have failed and ECB monetary policy has run these economies in to the ground a real solution will have to be found.
  5. This is actually good news for Q2, this implies construction output in Q1 was 24,314 vs 25,513 in Q4 10. In Jan Output was 7004, in Feb, 7609 which would mean Construction output in March was 9701. This is a truly massive increase and the highest ever in the new ONS construction series. If this level was even close to maintained across Q2 there will be a very large addition to Q2 GDP from construction. The ONS seems to have a bit of a problem with new construction series introduced last year and it is crazy volatile. (http://www.statistics.gov.uk/downloads/theme_economy/output-feb-2011.xls) Good analysis here also: http://cawidgets.morningstar.ca/ArticleTemplate/ArticleGL.aspx?s=Acquire&r=201104270431NTKN____NEWS_____113566&culture=en-CA&head=off&ads=off
  6. It’s above 0 which is good. Probably not good enough to push the MPC on rates though not good for HPC. No doubt it will be subject to significant revision though. Interesting that construction only seems to have removed 0.3% from the total figure, that implies that the March construction figure was pretty strong and might mean a bounce for construction in Q2, also room for an industrial production bounce. I will also be interest to see the contribution of trade to the figure.
  7. http://www.bbc.co.uk/news/business-13116262 Seems pretty clear to me that this is clear evidence that prices are too high and first time buyers are unable to enter the market. Adds up with the constantly reducing mortgage approvals data, and HEW figures showing £7bn a quarter spend on paying down mortgages. Sentiment is terrible and it would seem to be only a matter of time before prices fall to levels that tempt FTB back. Nice VI spin from "Henry Pryor" though, also "Teresa Taylor". Not sure how the obvious conclusion seems to be totally ignored. House prices are clearly unsustainably high.
  8. Seems pretty clear Greece is not going to pay back the money owed. Same deal for Portugal, Probably Ireland, Spain and maybe Italy. The banks who were buying Greek bonds at a tiny margin over German ones are as much to blame as the Greek population. They should never have been lent the money in the first place. The Greek population is now suffering badly, retail sales for February out on Friday should be interesting. The economy seems to be in a debt spiral I expect the economy to shrink more, especially when another €25b of austerity is announced this week. Seems like a Greek debt version of Versailles where the "victors" refuse to take any responsibility for their banks and pile misery on the "defeated" Greeks. No doubt Greece will collapse eventually just like Weimar Germany.
  9. Yes, nice thread title. There is no alternate view given by the media. House price rises are always reported in a positive way. Goebbels ministry of propaganda would have been delighted to sell the public better than our HPI obsessed media. Markets will make people learn (eventually), BOE can print, keep IR at 0% eventually prices will fall back to the long term trend v income. Could take a long time unless interest rates rise quicker than most are expecting.
  10. http://www.guardian.co.uk/politics/2011/apr/26/economy-on-right-track-george-osborne-gdp Osborne has said the GDP figures put the UK economy "“roughly in the right place" and is "on the right track" He gets them 24 hours in advance. I am quite surprised he has commented publicly like this. I am not going bother with a number prediction. As mentioned elsewhere the figures seem to be a created from a random number generator at times. Whatever the figure is I think the best part of Growth will be from net trade and services. Construction will subtract 0.5% ish, Industrial production / Manufacturing should have bounced back from the Oil platform maintenance that led to a 1.2% drop in March. We have all the retail numbers from Q1 (+1.5%, -0.9% and +0.2%). I would be surprised if the figure is negative only because Osborne would look rather silly if "on the right track" was mired in recession.
  11. Simon Ward is a very good economist and his blog provides economic analysis that is generally far superior to the main UK news sources. As RB said there is certainly a large element of protecting house prices in our Interest rates decisions. Inflation is not really the priority. The BOE are definitely fudging the figures, very negative on the economy as any other viewpoint would force them to raise rates. What we need is a sustainable UK recovery that is not based on every increasing House Prices, house prices need to be pushed down and raising interest rates will achieve that. I think most of us would like to watch the UK VI’s, Estate agents, Wilsons etc take the real economic beating they deserve. I would certainly like to see that whilst the rest of the economy is largely unaffected. No point in affordable housing if you don’t have a job / income to pay for it. Recent UK data supports this possibility IMO. It is possible to have a solid economy that is not based solely on consumption and debt we are making small steps in that direction. Hopefully economic data will force up interest rates in the next 6 months and we will see falling house prices whilst the rest of the economy does ok.
  12. This article is total crap and the BBC should be ashamed to publish it. I for one have had enough of the negative spin put on to any economic news by the Guardian and its state sponsored bully boy twin the BBC. Nick Reilly is simply pointing out the biggest weakness of Car manufacturing in the UK. He is quite correct to do this and hopefully more effort will be put in to correcting it. However the key part of the article is: Why would GM be planning to keep / expand UK production of their vehicles if “Vauxhall boss warns over UK car-making future”. This is a total contradiction, did the BBC even bother to read the content of the article or were they to busy talking down the economy to damage the government who dared to cut their budget by £350m a lot of which has been cut from BBC online. Car production was up 14.8% y/y in March, was this mentioned in the BBC article? Hopefully the author of this article will be sacked first and the BBC will at least attempt to produce impartial news content in the future.
  13. http://online.wsj.com/article/BT-CO-20110423-700269.html The target was 7.3% which they initially claimed they had hit. (http://my.ojornal.com/news/portugal-says-it-met-2010-deficit-target-73pc) I can see this doing wonders for the economic credibility of the Portuguese government. How many other skeletons are going to come out of the cupboard? Portugese bonds anyone? Countdown to harsh austerity measures imposed by the EU which will destroy the Portuguese economy, push them in to a debt spiral which will inevitably lead to default.
  14. Exactly, austerity in Greece has been show to be completely counterproductive. Unemployment has exploded, retail sales are collapsing, and government revenue has fallen 8% in quarter 1 2011 instead of rising the forecast 8%. No doubt that the same results will be seen in Ireland, Portugal and Spain as well in time. Default, Germany etc paying off the debt or debt monetization seem to be the only options. I can’t see straight default being allowed as contagion would spread like wildfire and another economic crisis would ensue. Virtually no chance of Germany etc picking up the bill either would doom any government that tried and probably violate the constitution. That only leaves the ECB printing press. Can’t see Germany going for that after the Weimar experience. No doubt they will resurrect the DM and convert their own citizens’ savings, France and other northern countries will do the same. The debt will then be “paid” by the ECB. I expect them to string things out for a while, try and extend the maturities and reduce interest payments. This will only makes things worse as Investors will dump other periphery debt as they won’t want to be next. Eventually endgame will be forced.
  15. Mainly agree with us, the only thing that will accelerate the correction in house prices is rising interest rates. A small rise and the signal of a tightening cycle could spread panic through vendors and lead to pretty descent drops. The only way this will happen is if the economy is able to grow without needing HPI for support, trade, ,investment, business services will be key to a potential HPC. Hope for a good result on Wednesday which could change sentiment and force up interest rates.
  16. The Guardian is becoming more of a propaganda machine every day.. Seems pretty obvious that any countries AAA rating would be under threat if it was not growing. Moody's are actually very supportive of the government's budget. This story refers to the same story on the WSJ but has been reported rather differently... http://online.wsj.com/article/SB10001424052748704425804576220040459707796.html I would also like to know why the Guardian has not written a piece on the latest trade figures, possibly because they can't stand to write anything positive? The only thing I could find was a tiny editorial rather than the full piece that is done normally. (http://www.guardian.co.uk/business/internationaltrade )
  17. Looks like restructuring (default) is being planned: http://www.guardian.co.uk/business/2011/apr/22/greek-reported-to-be-restructuring-debt This is the worst idea ever, if they only change the maturity and interest payments the bond markets will just assume a proper haircut is being served up as the main course. Even more panic selling will take place contagion will spread to all other peripheral bond markets. The EU, ECB and apparently the Greek government are in denial. The €325b~ in debt will never be repaid in full. Every day the Greek economy is destroyed a little more and the debt continues to mount up.
  18. Good news, I would be very surprised to see prices fall this fast though. The only way it could happen is if the economy other than housing / consumption (trade etc) starts booming. Interest rates would get forced up as the BOE would no longer have reason to depress rates. If rates were pushed up 2-3% in the next couple of years big falls would be possible. Could panic vendors leading to a big correction in prices. Looking forward to Wednesday Q1 GDP to see if there is a chance in hell of this happening.
  19. Greece getting pretty desperate. Pretty obvious to everyone (other than the EU & ECB) that Greece will only be able to pay a tiny fraction of its debt if any at all. The austerity program has been a disaster and the domestic economy is detonating so fast the cuts are having virtually no effect. Wait for the deficit revision for 2010 ( to 10.6%+) coming up next week. The number out of work had risen 25% since Jan 10 and retails sales down 16% y/y in Jan. It would have been better not to have had austerity at all. The more the Greek economy is destroyed the less future capacity they will have to pay off debt. The damage will be permanent as a large amount of the workforce emigrates to find work elsewhere. (http://news.bbc.co.uk/1/hi/world/europe/8616434.stm) (http://greece.greekreporter.com/2011/04/20/deficit-seems-incontrollable-additional-measures-expected/) A straight default would almost certainly lead to default in Portugal, Ireland then probably Spain and maybe Italy as well and is not an option. That only leaves Payment of Greece’s debt by Germany / France etc or it being monetised by the ECB. I can’t see Germany / France picking up the bill and there domestic political situation could become dangerous if they tried. That only leaves an eventual announcement that the euro project has failed Germany maybe others will end up running dual currencies the austerity programs will be reversed and the ECB will fire up the printing press. The clock is ticking as Greece erupting in to anarchy, government overthrow and default being forced cannot be ruled out.
  20. BOE will fight tooth and nail to keep rates down, Correctly IMO. If they were only taking the domestic economy in to account they would raise rates tomorrow. I think there is at least a 50% chance of another financial crisis starting in the EU before the end of the year. Makes no sense to raise rates with a potential economic hurricane heading in our direction. Better to wait and see what happens than raise rates just as the storm hits. Could be very difficult for the BOE if inflation starts moving towards 5% and other data is solid though.
  21. http://www.statistics.gov.uk/cci/nugget.asp?id=206
  22. http://www.statistics.gov.uk/pdfdir/rs0411.pdf More unexpected data, forecast was for -0.5%. This and the trade figures bode well for Q1 GDP Rate rise back on the table?
  23. This is really getting silly now. I think the Germans have realised that any money lent to Greece now is only adding to the problem. Greece is meant to tap the market for €33bn in 2012, if the markets will not provide the money the only other option would be a further bailout. I do not believe this is politically feasible in Germany. I am pretty sure behind the scenes they are looking for another solution. A straight default is not really an options as the debt would only keep building up. They need some kind of planned default with a 70%~ haircut that does not destroy the European banking system and enables Greece to grow. The clock is ticking, despite the bailout. The number of Greeks out of work has risen by 25% since 2010 and is deteriorating fast, retail sales plunged 16% y/y in January. There is a strong possibility of government overthrow in the medium term if there is not light at the end of the tunnel. EU leaders need to act well in advance or another economic crisis would surely follow. The Greek economy may become so badly damaged the haircut needed will rise to nearer 100%, especially if the young people start leaving the country to find jobs elsewhere.
  24. The so called austerity plan is nothing of the sort and is not remotely comparable to Greece etc. Despite the BS spewed by Osbourne. How is it an experimental gamble? Never been done before? Maggie did something almost identical in the early 80’s http://online.wsj.com/article/SB10001424052702303550904575562230161698908.html#project%3DSORTABLETABLETEST%26articleTabs%3Darticle (http://online.wsj.com/article/SB10001424052702303550904575562230161698908.html#project%3DSORTABLETABLETEST%26articleTabs%3Dinteractive) No doubt whichever party was elected we would have had an almost identical budget. Brown would have pointed out how health and education spending are increasing and how much is being invested... Spending is increasing by £40-50bn over the parliament and the plan was the absolute minimum required for the conservatives to claim they are seriously “cutting the deficit”. Almost all of the “cuts” / “deficit reduction are budgeted to come from increasing tax revenue and growth I am still waiting for someone to come up with an alternative. Especially on how much extra would have to be cut out of the budget post 2015 due to the extra debt interest that would accumulate through spending more in the current budget period. The UK media is incredibly dishonest when reporting on the economy.
  25. Good question, despite this being obvious the ECB and Markets seem oblivious. They are meant to return to the markets next year for €33bn. There is a report being released in June by the IMF on debt sustainability. I would go for late summer, before 2012 some kind of soft restructuring at least. Even with a 70% haircut the debt would keep building up. They need to default restructure and grow simultaneously. With the ECB raising rates and a 10%~ 2010 deficit that looks impossible. I don’t think there is any good outcome here. Best solution for the Greeks would probably be 70% hair cut and figure out a way to leave the € and start again.
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