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david m

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  1. ElmbridgeChap Thanks for your response ... very helpful. My wife and I are still at an early stage in the process, so I doubt we will pull the trigger soon. Right now we're just trying to get a feel for the market and still deciding where we would want to live. We might even rent first to get a better idea. Offer prices look very high to me and (unlike places like Richmond and parts of Kingston where the market is very tight) there seems to be ample supply. Given neither of us have ever "fallen" for a house, we make take the approach of bidding low for a number of properties and seeing if anybody is interested.
  2. Hi My wife and I are looking at buying in the Elmbridge area. We're looking for a 4 or 5 bed detached house within a decent distance of one of the following stations: Weybridge, Esher, Walton-on-Thames, Claygate or Thames Ditton. We might also consider Oxshott or Cobham. Price range would £1mm to £1.5mm. I was wondering if anyone had any advice about which areas are best for schools etc. My wife is Roman Catholic and ideally she would want our children brought up in an RC school at least at Primary school. We've only started to look seriously in last few weeks so we're at the early stages at thus far have only viewed a few houses in Weybridge. For example these 3 we have viewed http://www.rightmove.co.uk/property-for-sale/property-23535229.html http://www.rightmove.co.uk/property-for-sale/property-15535635.html http://www.rightmove.co.uk/property-for-sale/property-15641397.html?premiumA=true these two are under offer but would represent what we might look for at the top of the range http://www.rightmove.co.uk/property-for-sale/property-24333010.html http://www.rightmove.co.uk/property-for-sale/property-24103066.html Does anyone have any idea where these types of properties are clearing relative to typical offer prices? Example 1 cleared at £550k in 2003 but has been rebuilt and enlarged since then. Example cleared at £750k in March 2007. Data seems to imply prices have risen around 30% since then so it should clear at say £950k-£1mm but is on at £1.145m The market seems overpriced to me but frankly that seems to be true of most of South West London or the Surrey commuter belt, so we're just going to have to accept it! Any thougts would be most helpful.
  3. To me this is the bottomline. It was fine to have the pensionable age at 65 when most people were dead by 70 but its not sustainable to have it at 65 when people at living to 80+. We need to move the pensionable age to 75 right now. Add phasing out all defined benefit pensions and replacing all of them with defined contribution is next. It will add millions to the workforce, increase unemployment and reduce the standard of living ... but that was all coming anyway so no real difference.
  4. Good point ... but that what happens when you encourage home-ownership and the population goes out and gets CHF denominated mortgage because interest rates are sooooo much lower than on a HUF denominated mortgage. Of course when CHF/HUF skyrockets, the population all complains and blames it on their banks. I mean how were they to understand such complexities as FX rates! So the government has to help all those poor home voters (sorry owners) out so that they don't default ... by doing stupid things like putting interest rates at all time lows, providing subsidized mortgages and paying rentals for tenants so landlords don't default on BTL ... sound at all familiar?
  5. Hungary is an emerging economy ... not one of the best to be true (in fact always been a bit of a basket case). Nonetheless, it has a better demographic profile than most Western democracies, higher structural growth rate, higher productivity and a lower standard of living (and thus lower expectations from its population). Yet it still finds that its the pension system that is the weight around its neck. It comes down to the same problem in every country: we have too many older people that due to defined benefit pension schemes we are forced to pay too much money too, which due to increased longevity, we have to pay for too long. Its simply not sustainable ... and yet in every case its the younger generation that is having to foot that bill.
  6. Hungary's fiscal deficit was 4.9% of GDP in 2007, 3.8% of GDP in 2008, and 4.0% of GDP in 2009, and expected to be around 5% of GDP for 2010 (possibly higher now clearly). Hungary's public-sector debt to GDP is about 80%. None of these numbers would have implied any real risk of default before Thursday. They are better numbers than many G10 countries coudl have boasted. On Thursday, Hungarian Deputy PM Lajos Kosa shocked the market by saying that Hungary has "a slim chance to avoid the Greek situation" and that the Hungarian economy is in a "much worse" situation than the ruling party Fidesz understand when it took office in April Today, Peter Szijjarto, spokesperson for the Prime Minister, said that "the economy is in a grave situation, yet the government will do all it can to avoid a sovereign default". I think you have to see this as all part of the Fidesz strategy to do as much damage as possible to the country's economy whilst they can still blame it on the previous incumbents. They want to trigger a mini-crisis, so Fidesz with then garner enough domestic public support to step in with their own controversial strategy to save the country and reduce the deficit. What they are considering is to nationalize the second pillar of the nation's pension system. This is a defined contribution system, in which younger individuals (sub 46 years) allocate all of their mandatory pension contributions to private accounts. These individuals do not contribute to the traditional pay-as-you-go defined benefit system. Nationalization would add revenue to the public sector by receiving all future contributions from the sub 46 year old population and allow the Ministry of Finance to discontinue payments to the defined benefit system fro these individuals. This would knock posssibly 3% of GDP of the deficit at an instant and make their pension system sustainable. Dangers to this proposal are clear since if each individual private pension account were nationalized (as Argentina did in 2008), then this would involve some form of confiscation. Hungary's debt/GDP would fall but at a very high cost: a total break in discussions with the IMF and the EU, weakening of the forint (triggering default on Swiss denominated mortgages), and a sharp increase in the likelihood of a sovereign default. Of course this is a frighteningly naive strategy but Fidesz has been out of power for a while. Frankly they could end up with with a full-blown currency and debt crisis ...
  7. Dont' get me wrong I think this was a bad number but I do think you have to remember the seasonal adjustment applied for May was negative 659k. So the actual non-seasonally adjusted NFP figure was around 1090k. I am very skeptical about the Birth Death adjustment procedure but I am also pretty skeptical about the size of the seasonal adjustment they applied. Frankly the market was always going to dump, it was weak going into the number ... I think people were just hoping that a good NFP number would allow them to sell at better levels.
  8. I think you need to stand back and think about what this "zerohedge.com" website is actually saying. If someone has amassed a short of $3bn of UK 5y CDS that is only $1.4mm/bp of risk. UK CDS over the past two months has traded between say 70bp and 95bp, so we are talking about a P&L swing of say $35mm from low to high. Do you really think $35mm of profit or loss is even significant for the whole market? It is miniscule ... totally irrelevant. Cable (GBP/USD) trades in the tens of billions per day, moving 1%+ quite regularly. Gilt auctions are sized in the billions, sometimes tens of billions of £. Also remember CDS is a zero sum game ... for every buyer there is a seller, so the net position is zero. This website doesn't seem to actually explain what these numbers mean or what the source is. They are making a mountain out of a molehill and I'm not sure they really understand what they are talking about.
  9. CAD like AUD or NZD has done really well. Fundamentally, the economy is is great shape, the BoC is moving into a hiking cycle, the banking sector is fine etc etc. Problem is that trades like short EUR/CAD or short GBP/CAD have become very consensus on the street. I've observed twice in the last fortnight that when we have had a major risk off move, EUR/CAD has gone up sharply, indicating heavy positioning. Also oil is starting to get hit lower by the market since fiscal tightening from Europe/UK is not good for demand, a clear negative for CAD. Valuation wise CAD is looking expensive on most crosses. Ask yourself would you add to your long in CAD at these levels? If not then i'd think about scaling out of some. If it goes higher then fine, you make a bit less but you still make money and if it goes lower you hae at least taken profit on a proportion. Being "fully in" on a position tends to be stressful since you are limiting yourself to only reducing.
  10. Blanchflower was always the uber dove loon at the BoE so nobody should be surprised. The problem is that the BoE is showing a strong level of politisation, rather than sticking to their correct role as unelected technocrats who execute a mandate. The loonies at the BoE will now argue than in return for some fiscal austerity they will keep rates low for long to stave off the risk of deflation. The problem is a) we won't get any real fiscal contraction since its politically suicide for any party to do what is really necessary the fiscal contraction would have no impact anyway on inflation since we import most of it and the real problem is asset price inflation not the cost of baked beans. Until the BoE starts focussing on asset price inflation rather than some made up CPI (or even the old RPI) metric, nothing will change. Printy, printy to inflate another asset bubble. The market is just totally shocked by the BoE as can be seen by the reaction of short sterling contracts. Mar 11 closed at 98.77 (1.23%), lower in yield by almost 20bp. Libor is just under 0.70%, so futures now only price a 50bp hike over the next 10 months. But really the market is just pricing some risk premium into the futures, most have given up hope of a hike in next 12 months. Totally irresponsible just doesn't describe it.
  11. Lib-Con coalition should engineeer short-term positive feeling. Public sector cuts won't be that drastic this year since Cameron is far too wet and Liberals are far too left wing. IRs won't go up any time soon. The BoE says its worried about deflation (nutters!) and they will promise to keep IRs low for some time in return for a "fiscal austerity" package. Low IRs and high inflation will force more savers to buy assets, typically property. In trade-weighted terms Sterling is already cheap but will probably depreciate further against decent economies (Loonie, Aussie, Kiwi, EM countries and probably US but not Euro) due to low relative IRs, weaker economic growth due to fiscal consolidation, and concerns that underlying structural deficit is still deteriorating. Foreigners will buy even more houses in South East England. So will we get a HPC? Yes in real terms, we already have it in foreign currency terms but not a chance in nominal terms. Lets be realistic stopping a HPC in nominal terms is basically the one thing that all political parties can agree on. They will do anything to stop it, whatever the long term implications
  12. As an aside on that subject I recently caught up with one of my ex PhD colleagues who now works on the ITER project in France (an experiemental nuclear fusion reactor with the aim to deliver 10 times the power it consumes). He went to Washington as part of a team to lobby for additional funds and he found that oil lobby was there in force to make sure US funding was kept to an absolute minimum. Very sad since economically viable nuclear fusion woud create a real step change in the global standard of living (and be far more environmentally friendly).
  13. You need to define "standard of living" and basically you are probably right that the ability to buy more crap doesn't actually mean we are better off! What the end of the Cold War did do was allow faster globalization. Developing countries could exporting to developed Western markets far more easily and this (combined with technology) brought down the price of many goods. This pushed down most CPI baskets and forced most asset prices higher. Asset prices went even higher as emerging countries bought developed market assets with proceeeds of exports etc etc. So people in UK felt much better off since house/equity/bond prices rose while cost to buy "crap" went down. Thats was ok initially but then everybody in UK used low interest rates that were result of low inflation to leverage to buy more assets and buy more "crap" leading to a few problems in recent years!
  14. I'm no permabear but I think the "observed" standard of living in most developed countries improved substantially in the last twenty years. However, technology was only a small part of that. More important was the impact of the end of the Cold War. It massively accelerated globalization reducing the cost of consumable items. Inflation fell globally from the mid 80s onwards ... which was good for all assets (bond yields went from 15% to 5%, property up, equities up etc etc). Also the reduction in defence spending from 4%-5% of GDP to around 2% allowed a reduction in taxation and spending on other things (NHS etc). The problem is that it is hard to repeat any of this. Add the demographic problems we face and I find it hard to beleive we can repeat the last two decades. Also while the "observed" standard of living went up in developed countries this was at the expense of racking up debt mainly to cheap emerging economies. Over the next 20 years many of those emerging economies will emerge ... and they will end up as 65% of global GDP, leaving the old developed countries as only 35% of GDP, a reversal of the current situation. Perhaps our standard of living may rise, more probably it will stagnate or even fall. But relative to those emerging countries, it will fall and I think we will feel poorer because of that. The basic concept of the nation-state that we've had since the end of WWII looked pretty outmoded but both citizens and politicians don't want to replace it or don't know what to replace it with.
  15. I'm no permabear but I think the point is that the "observed" standard of living in the UK has seemingly improved substantially in the last twenty years. However, technology was only a small part of that. More important was the impact of the end of the Cold War. t
  16. If house prices were solely due to London's richer workers I can see why house prices in the prime market might fall this year. You have the introduction of the the 50% tax (plus extra 1% NI), reduction in pension tax relief, clamp down on EBTs, lower bonuses in the financial sector compared to 2009 due to lower margins/volumes, and risk of another banker bonus tax. However, you still have all the Russian, Chinese and Kazak (yes Kazak) buyers who will do anything to get there money out of their own country and into somewhere safer. Moreover, given EUR/GBP level, there are plenty of European buyers out there. For them house prices in London have fallen off a cliff ... so I just don't see prime house prices coming off at all ... and thus no downward price pressure on cheaper houses. Hope I'm wrong
  17. While I think a Labour would be very bad for the country, and a Lib-Lab pact a nightmare, i'm not sure i see any quick upside from a Tory win. The problem is that we won't see much improvement near-term. They won't cut taxes straight away and it will take time (hopefully) burn the public sector to the ground. I doubt they will ever grasp the nettle of public sector defined benefit pensions. It will probably take 5 to 10 years for a positive impact to be observed ... but will the Tories get the second term necessary in that event to see the policies through? I doubt it. I never thought I'd ever want to leave the UK but right now I'm really concerned that if I stay here I am essentially gambling the future of my 1 year old child. My company has done detailed business studies for Spain and Switzerland and is waiting to see what happens before pulling the trigger. Spain is offering a 25% flat rate to us locked in for 10 years and a cantons near Zurich offer 20%. I would happily move to either. The alternative is Hong Kong at 15% but that isn't ideal from a work perspective. Something like Dubai is a non-starter. With my wife being an Aussie perhaps I just bring forward the whole move to Australia and find something to do over there, though that country has some issues and globally it's a bit of a backwater.
  18. Feel sorry for the younger brother. Is the problem A-level grade inflation? Has an A grade just been so devalued that it isn't worth that much so that the unis now simply get too many students with 4 A (or now A*) grades for the places available? Do we still have S levels (or STEP exams) to differentiate between the good and very good? If we don't then perhaps we need to re-introduce them since I'm not sure i believe there are no university places for 50000 with "good grades".
  19. "The ONS just change the components of the index, took out house prices in 2003 as it was making the index look bad. They can also change the weighting of various components. They are now going to include some mortgages(housing affordability) which are surprisingly at an all time low apparently...." Sorry satch you are right. I completely forgot that when there is any risk of anything that might be vaguely inflationary in the inflation metric, the ONS just changes the metric to exclude it. Silly me ... sorry BoE would you please keep rates on hold for the rest of eternity since prices are clearly going down everywhere i look!
  20. The market doesn't seem to expect much in the way of rate increases this year ... look at where Dec10 short sterling futures are. The problem is the BoE's models predict inflation to go below 2% toward year-end and into 2011. So given monetary policy is based on forward inflation not spot inflation, they see no reason to increase rates. My problem is that the BoE models take most of their input economic data from the ONS ... and ONS data hasn't actually been all that reliable recently ... perhaps Gordon is on the phone telling them what to type into their excel spreadsheets. Also what value for the currency are the BoE forecasting? I think the BoE could find its a case of rubbish in = rubbish out for their models and when the reality dawns on them we could get a few nice rate hikes ... please.
  21. My point is the market will anticipate and price-in any downgrade well in advance of any of the major rating agencies actually pulling the trigger. Rating agencies move very slowly. The whole nature of sovereign credit ratings also depends on whether we are talking about the local currency rating or external debt rating. If Moody's downgrades the external debt rating that doesn't necessarily impact Gilts since the local rating would remain AAA. A downgrade to Aa1 may be a hindrance from a number of angles and I'm sure would be taken negatively initially by currency and bond market. Nonetheless, other G20 countries have survived losing their AAA without government bond yields exploding permanently. The UK would still be nowhere near sub-investment grade. Credit ratings seem less and less relevant these days ... Greece has a A2 credit rating with 5y CDS around 300bp whilst Turkey has rating of Ba2 and a 5y CDS spread at 160bp ... clearly the market doesn't currently agree with Moody's.
  22. Does anybody actually care anymore about what Moody's, S&P and Fitch say anymore? In my experience they are generally so far behind the curve they are the last people to the party ... normally when the downgrade somebody its a signal that the time to buy is rapidly approaching!
  23. Would never had thought of pawnbroking but it might be a top idea. I overheard a PA at a firm i visited telling one of her colleague how she had received £500 for pawning a watch an ex-boyfriend had given her ... and the interest was only £20/month and she had up to 12 months to repay! She seemed to think she was genuinely getting a great deal. I thought she's paying £240 per annum for a £500 collateralized loan ... 48% interest! She's actually be better off racking up debt on a credit card.
  24. The impact of the emerging economies of Asia, LatAm & Africa is going to have a huge impact on the standard of living in (so-called) developed economies. Probably 60-70% of global GDP will be coming from emerging economies in 20-30 years time. Their education standards are improving, their productivity is higher, the cost base is coming form a much lower base and many don't have to be concerned about an overburdened state or what the voters might think. The baby boomers found themselves in a lovely sweet spot in the Cold War period that the current workforce is now finding impossible to emulate. We can go protectionist but our standard of living will drop or we can go with globalization and find our standard of living probably stays where it is but will drop relative to the emerging economies ... making us feel poorer either way. For most people now in their 30s or 40s the retirement age is likely to be 80+ depending on how medical science improve lifespans. Any sensible government with a state pension scheme will eventually realize that you need to set the pension age at a level where 50%+ of the potential beneficiaries are already dead. So probably you're best years aren't 30s-40s but 40s to 60s if you're lucky!
  25. So you think there is no role for universities? How are you going to train up all the scientists without universities? Who is going to do the research? If my daughter wants in the future to become say a molecular biologist, I'm not sure how she does that without going through a rigorous educational system. It very hard to self teach these things (not impossible but much much time consuming). Also university isn't about getting a job ... thats the wrong approach. For me it was about gaining self-confidence, testing my intellect versus others. My mum and dad wanted me to do engineering or computer science because that was a "practical subject that would get me a job". I just wanted to do the most abstract subject there was ... the jobs offers that came later were not planned. University isn't the right place for everybody but for many its great ... I don't understand the total negativity?
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