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plummet expert

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  1. The US is worried on two counts. First, the Eurozone could be in financial meltdown, no bail out will stop it and it could cause all markets to fall; second, if the Euro falls and continues falling v USD, Eurozone exports will become cheaper for Americans to buy whilst their own exports will be more expensive to us and curtail their trade with the Eurozone. I think they massage theri inflation figures like we do and really there is plenty of printed money inflation in the wings waiting to take off. It's about the velocity of money and that will suddenly accelerate one day when you all thought it was a deflation.
  2. So, you have lost your marbles? Now, just think about it; rising interest rates, public spending and wages being cut, the budget deficit inducing tax rises, house prices at almost twice the price against income compared to 15 years ago. Eurozone in financial meltdown; likely market crash. ERRRHHMMMMM! This is the worst time to buy a property in living memory. There is nothing inherently bad about renting. When it all hits the fan later in the year you can feel relieved you won't be stuck in negative equity unable to move to an area with a nice school in due course. Does that help? Enjoy the family with less stress - rent!
  3. It's much the same in my office. The feeling that a new govt could change the debt problem easily has evaporated. The sense is more that we will all need to be supportive of each other as this unravels. There will be lots of friends and relatives who may find themselves in financial trouble. The country will need to come together, putting aside petty differences. I am on the side of, 'get it all out in the open NOW and deal with it as quickly as possible'. Let's not stretch it out over a decade or more.
  4. There is a sense of denial amongst some that the market is beginning to reverse. That's because the standoff between buyers and sellers has started to strike again and as yet the real falls to come have not shown through. The anecdotal evidence that the great crash is on the way is already increasing. The figures are catching up. Land Reg shows falls, not rises in recent months. Nothing but the best property, in just the right place is sellling where I am. So much inventory appearing on Rightmove I cannot believe it. IT IS THE MOST DANGEROUS TIME TO BUY A HOME IN LIVING MEMORY. I think it is VERY possible, that the forthcoming correction will be the sharpest since WW11. Commentators may write afterwards that the 'signs were already there' as others pretend 'no one knew it was coming'. Market volatility is increasing week by week around the world. Could it get better from here and we are all wrong? Very Doubtful: The chances that the world economy can recover without a huge market correction and even sovereign defaults is now so slim as to seem almost impossible. It has gone too far and the incestuous intertwined debts of banks and govts are so vast that it now threatens the Euro.
  5. It's a nice area, but a very small modern box. It's the land price 'what done it'. The price of building a box like that is about £90k at cost. That postage stamp of land should not be worth £200k! It is £100-120k over priced on the long term price trend as represented by wage multiples.
  6. This is happening all the time! You should not be tempted to pay above the surveyors valuation. The Vendor probably will be receptive or they are very foolish. Remember that this sort of mortgage valuation will most likely happen again if they refuse your lower offer. The EA will probably tell them that while telling you they won't budge to see if you walk.
  7. It has been hidden for now! Latvia and others were ready to default some months ago. They represent a very small % of the Euro economy and have been repackaged. Greece for example is only 3% of the Euro economy, and theirs are smaller. However Greece represents the next area of contagion. The Western Eurozone banks inc UK have lent all the money to these bankrupt nations - ouch! Although France and Germany have lent the most, like with Greece, UK banks are right in there. So, it could all turn very nasty and quickly when and if the ECB bail out loses credibility. It may have started with the dumping of Greek Bonds. Other dumping may follow soon. If you read The Market Oracle, you will see that the ECB bail out does not add up on known facts, since in simple terms we cannot expect the extra borrowing to be paid back when the old borrowing could not be serviced or paid back! That view is held even with current budget cuts in progress as they are deemed insufficient and too late.
  8. Sterling is Targeting $1.37USD in the next couple of months - it has been for a few months on the charts. It may have a small bounce on the way. The 2 factors which will save the pound is a credible plan to cut the deficit to something which results in a medium term reduction in the total national debt AND a gentle rise in interest rates. Labour's plan to cut the annual deficit in half over 4 years leaves a national debt of £1.4 TRILLION that cannot be serviced, much like Greece faces now. So that will not be sufficient. The markets are not yet sure whether the Coalition has the guts to do what is required to prevent this end game. They make the right noises but that's all. The ECB attempt to save the Euro is odds on to fail - it's means countries like Greece borrowing more when they cannot pay their current debts. That is not actually credible. House prices will be falling by the late autumn. In the meantime, the USD will be a good bet along with the Swiss franc and the Norweigian Krona. If there is a crash in the markets, the USD will rise quite substantially against Euro and Pound as USD is seen as world reserve currency. In the short term a fallout of shares and other assets will put upward pressure on the USD. After that it would then likely fall quite sharply. I favour hard assets like gold and silver/platinum/palladium. Most gurus believe the whole overborrowed west will not get away with bail out followed by new rescue package, all invloving yet more borrowed/printed fiat currency. I do not own almost any pounds and absolutely zero Euros at present.
  9. Lenders are bound to put out confident sounding press releases. What else can they do when every fact points to a HPC? Rates must rise, employment must fall, public spending will be savagely cut, homes are grossly overvalued against the longterm average, people cannot afford rate increases, 43% of all UK mortgages are on interest only. Anything I missed?
  10. One reason they still exist in such numbers is the crazy price of property which has risen far above inflation in thelast 15 years. They base their fees on a percentage. Boy, it must have been good in 2006-7. In the longer run, when the meltdown about to commence has finished, taking many agents with it, there will be room for net based agent models, with access to all the srrvices you need including negotiation, for a lot less than now.
  11. There will have to be 5-10% pay cuts and many job losses in the public sector to overcome the budget deficit. That's in addition to just stopping contractual projects like the IT ripoffs for hundreds of millions, even billions sometimes! We can expect strikes and unrest by Christmas. Enjoy the summer!
  12. I agree the frenzy has recently visited and usually means that it will shortly go into reverse. Here in Sussex the mini frenzy of a few months seemed to slow significantly at the end of Feb. You could do worse than to check www.propertysnake.co.uk for signs of the fall in asking prices. Also, don't forget that Rightmove actually posts the sold prices of just about all properties. You can check by postcode and number in the road as to a precise property or the whole road for the last 10 years. You may find that homes you thought sold, never actually were or were removed from sale. Or, you can be surprised by the price actually agreed for some - be it high or many times recently, lower than you thought. A big sell out will soon commence from BTL and others forced by redundancy forthcoming and rate rises to follow the gathering inflation the BoE denies is in the system.
  13. The picture is not clear because sales on a low level over the last year have shown anaincrease. At the same time many homes have simply not sold and keep on returning with ne agents, billed as 'New'. I am in Sussex. Here the number of new homes up for sale is increasing rapidly. Inventory is piling up at the local agents. The tide is turning and as we head into next winter I am sure the news will be of house prices falling. Rates have nowhere to go but up. The govt has nowhere to go but spending cuts. When we are told about the real budgetary hole when the review is completed in the next few weeks, it will be worse than Labour ever admitted. The Land Registry shows that Feb and March were modest falls, despite what you may read in Newspapers or suggested by Rightmove. Most of that is based on asking prices which is not the same thing. I remain a confident bear, that house prices will fall back to the long term trend line of 3-3.5 x average income and may even over shoot down as they did in 1995 to 2.5 x income. That connotes a 30 to 47% fall subject only to wage rises during the period. However, we may shortly see the first public sector wage cuts in living memory. No one can really believe in average houses being 10-13 x average income. EG Houses in Brighton have increased 60 X IN 40 YEARS, BUT wages have increased only 28 x in that period
  14. Well, I'm not going to inherit anything that I know about. Loads of people inherit something, but often sharing with brothers and sisters. The fact is their families paid off a mortgage on a house and should be allowed to leave it to their family. IHT allows married persons or civl partners to leave £650k without tax kicking in, upon the death of the last of them. That is enough in my view. If you don't inherit, well that's the unfairness of life. It never will be fair precisesly in every way. Loads of people still rent or live in council houses. It has not changed that much over 40 years. The price of houses is totally mad though and that is all about to change.
  15. The markets already know that the UK has these liabilities as does the Daily Mail who managed to write the article before the review/info has been published. The markets would actually approve of a real determination to deal with the debts. Osborne 'Coming clean' IS ESSENTIAL IF HE AND CAMERON AND CLEGG ARE TO TAKE THE COUNTRY WITH THEM. People will not have it unless it is explained now and the hidden parts exposed. It was commented upon through the election that all parties were 'keeping stum' on the true extent of the crisis for fear of 'frightening the voters'. Sadly we are a nation of people who tend to vote for the most palatable but unattainable policies, in what I call a 'promises auction' provided by policiticians we then like to blame when it all comes undone later. Then we call them liars, when in fact we wouldn't vote for them if they told the truth. We are all at fault over this and need to change it. That is why Cameron and Osborne paid lip service only to the extent of cuts required. They are massive and unprecedented in peacetime. Right now is the only opportunity to 'come clean' and tell people that Brown has left a scorched economy behind him. If they don't they will be balmed as if they caused it themselves. It saddens me to say it, but it is always Labour which has over borrowed in this way and left office on every occasion with the economy in tatters. The tories have managed to get it right some of the time and Labour have never done so in their history. Look at 1945-1951 - huge debts of war never tackled and spent ALL the Marshal loan gift from USA in 5 years (About £160BN in todays money). 1970 - country in turmoil and permanent economic crisis through 64-70. Weak tory lot doing no good, then useless Labour govt to 1979 again leaving it worse than before. 2010 - worst ever peacetime debts.
  16. You are right Erranta! National Car Parks have done best at wealth creation in the last fifty years, all out of bombsites too! No nasty manaufacturing or exporting or worrying about world economics or even interest rates. You are right on 'interest only mortgages' too. It has slipped out that a staggering 43% of all mortgages are currently interest only. The Banks are surely mad to have allowed this. In my humble view all devices designed to help are in fact no help atall. All they achieve are....wait for it.... higher house prices that people cannot afford. The only thing that will help is proper rules about mortgages that no lender may transgress from. When I were a lad.....no don't fall asleep! Erhmmmm....the lender could only lend 2.5 x the first income and 1 x the second and max 95% LTV on a proper repayment basis. If we asked homeowners to apply this principle to themselves and imagine they were about to buy their own house, it would be interesting to see how many of them could actually buy their own home on their current income. Lots of folk could not afford it, even after allowing for a 35% deposit coming from proceeds of former home. It was a lower standard of living in 1959, but it was actually easier to buy a house for many people.
  17. Well, where do they get it from! I have just checked a few figures. The average house price was £2410 in 1959. There has been 1700% inflation from '59 to 2010. So if average wealth was £72,700 in today's money, then it would have actually been £4276. Now comparing an average house price to that wealth, it represented just 56% of the wealth.Today the same calculation shows the average house price as 70% of the total average wealth. What a surprise! It is therefore much more expensive to buy a house now than it was in 1959. Well, we are poorer in house terms. Many more people live in flats and converted homes that were originally whole houses. The figures do not take account of that atall. So in fact, it is much more expensive to buy a home than those figures suggest as you cannot really compare like with like, when homes have gotten smaller and the density of living is often far greater. It is vehicles, central heating, inside bathrooms, foreign holidays and electrical goods which have made us feel better off. Our debts will be much greater though. Now our pensions have been plundered by Brown, the figures may be even more debateable, since the likely pension is much less in actual value per pound.
  18. These BTL folk should be pleased if there are any 'gains' to whine about. The fact is the CGT regime only very recently became an 18% jamboree. Before that there were numerous reliefs involved ANYWAY. Most of them were bought then and not in the last 2 years I expect. I don't really blame the BTL brigade completely. Its the Govt's fault that credit became so lax, that interest rates fell so low, that interest only mortgages on high LTV were being dished out without even checking somone was working. Weak humans seeing this 'opportunity' went in blind to the future, when any sensible govt would have known the wider picture should have prevented it. The govt even designated certain places as ripe for growth and encouraged a vast building programme which could not be absorbed by local demand. Guess who bought all these superfluous places in areas like Manchester and Leeds- Btl piled in like lemmings only to find the rents were lower than the valuers said and the valuations were often quite inflated. The other wheeze which was most unfair on taxpayers and was stopped by the last Labour budget, was the reliefs applying to a holiday property. The fact that previously you could deduct the 'loss' made on the lack of rent being unable to pay the mortgage against your own earned income tax was disgraceful. I cannot think why a person able to buy a holiday home should have it sudsidised by other tax payers.Hopefully the Coalition will not now alter this new Labour policy - about the only thing they did right in my view.
  19. It must be better in the Eurozone then! The USD has a long way to go before it will be 'hammered'. As the world reserve currency, it will enjoy a big upswing at some point this year as the fallout commences again. The first place the selling institutions have to go is, into cash. The demand will be horrendous. Then the big downswing as they all buy hard assets like silver and gold or platinum or palladium or even farm land. Then, you will see the USD hammered so hard the poor country will squeak. It may survive as a reserve at that point and the seismic shift of wealth to the East will have taken hold for the foreseable future. The Aussie dollar will be a good when the USD starts its fall.
  20. The article is spot on for many people. Does not matter what anyone says, in the end, conditions in our economy cannot be put right without having a HPC aswell. It will happen and correct itself. The frustration is just how long this theatre show takes to reach Act 5 scene four - Armagedon. However, the sign of the forthcoming crash is alrrady with us. Huge inventory appearing all over the country. Cuts, then fear, employment problems, rate rises, lack of confidence. Volatility in financial markets has begun. There was months of volatility before the 2008 crash. So there will be this time. I have suggested buying gold and silver for some months. These metals are showing real signs of detachment from the stock market up and downs. They are reflecting the demise of fiat currency worth. We are all about to find out that these bits of paper are, well...just that, bits of paper. Not backed by a thing except a waning belief in their worth. If the pound and the Euro are going together, then the USD will temporarily benefit.
  21. That's sad and predictable. The so called recovery is unravelling, bit by bit. What happened to last month's news suggesting a surprisingly fast recovery in manufacturing? The problem is, our manaufacturing base is only about 17% of the economy, when it should be 35% or more. The trade deficit will have increased on account of the falling pound making it more expensive to import, combined with the tail end of Brown's pre-election pump up of the economy. In fact the trade gap will fall when the deficit is tackled, imports are squeezed, the pound eventually recovers and we export more. Keynesian economics, as always, when taken to extreme has again been found wanting. It should have stayed where it belonged - in a school text book. The real shocks are yet to come. Cannot think why any economist should be shocked by the news. It's obvious - the world has filled itself with phoney printed money and its' all coming home to roost. The ballon, so hurriedly re-inflated, is gradually deflating, apart from a few monetary puffs injected from time to time, in a feeble effort to pretend we can print and not pay our way out of debt.
  22. Inflation is on the up although the BoE spends its time saying it isn't. The true rate as per RPI was 4.4% in April and rising. They will be forced to raise rates by the autumn. Even if the Boe does not raise base rates, the money markets will do. BoE are not going to provide the £300bn mortgage liquidity put in for the 'crisis' over again. It ends very soon. Just watch out as mortgage funds become very tight. Look at the number of homes now coming on the market. A huge change and growing. People have not suddenly thought they will sell because it's spring. It's financial reasons making the chnage so apparent. It started before the election is continuing unabated. The number of sales are totally unable to keep up. The weight of inventory, cuts, tax rises, increasing unemployment, uncertainty and inevitable rate rises to come, will ensure the HPC that begun in 2008, will resume.
  23. We can get stagflation and very likely will. Some prices can still deflate in this too. So far, the BOE keep on believing inflation will soon reduce. But in fact it continues to rise. If they have to put up VAT that will feed in too. A lower pound means higher import prices and more inflation. So, likely scenario is higher interest rates gradually. Then, as the cuts and tax rises join in, it will bear down on house prices. Also, the banks ability to borrow on the markets is going to be severely tested when the BoE $300bn of liquidity comes to an end shortly. We also know that a large proportion of people cannot afford much of an interest rate hike. The sheer volume of houses suddenly coming on the market recently must tell us something. Just take an area and look on right move for the number of new on the market for the last 7 days. You'll be amazed. It's far more than ever get sold! HPC is on the way. Buy Silver or Gold!
  24. It would be great to see Brown in his own brown mess, but somehow I cannot see how a economic illiterate could sort out this hideous financial bombshell. If the EU thinks the British public will back any govt here paying into the ECB for other failed govts and their borrowing it will cause riots. Norway got this right and is a member of the free trade zone only. Their currency is strong as is Switzerland and in fact, come to think of it they are not in the EU atall.....so, the answer must be the the Euro and the EU is a sham. Except for the free trade area part, what has the EU ever done for us? (Monty Python Grin)
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