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boom_and_bust

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Everything posted by boom_and_bust

  1. Hi, Isn't that approximatley the same excuse Enron gave to the senate?
  2. Hi, Welcome to the lovely, experimental world of NuLabour macro-economics (replace words "IOU's" with house price inflation and basically, that is a pretty good ananlogy of the "miracle" economy).
  3. Hi, Very good, it's very good to make visible predictions. I would say as well, perhaps - like the market physcology section of the forum - an analysis and trends section could be an option for these types of postings as well? In your spread sheets, perhaps you could provide a spread of outcomes like best case and worse case scenarios, these are figures that change quarterly and the world is a dynamic place, a good opportunity to further compare at future dates differening, detailed predictions on the site (there are already a number of chartists here who may care to rise to the challenge!) against each quarterly announcements of things like GDP, RPI, HPI, etc., Remind ourselves of where we have come and where we are going (possibly). Another thing of course is to make a decent analysis of shocks and unexpected events - good or bad - when they arrive and avoid bear-or-bull knee jerks that we sometimes can become accused of (every decade a major shock to the domestic or international economy can be expected, it always happens - winter of discontent, big bang, Black Wednesday, ERM, Iraq, DotCom, etc., etc., I guess that is the whole point of insurance!). We do have a good collection of monthly, quartley and annual figures posted here on each announcement, it might be nice to have a more technically orientated, pinned area to keep an organised history of it together. Particularly quarterly, three months of postings here is a collosal volume to check back over. Another area of analysis that I think will become incresingly important is the pensions situation. It is bad now and will get much, much worse in the future given the current governments bias towards house-price, demand-management macro-economics. This will have to be addressed at some point and is very much linked to housing and personal consumption. It is the biggest potential, domestic shock for future generations on the current course sailed by the Treasury. Boomer
  4. Hi, I am open minded to it but no, Gordon Brown is reckless, truely reckless, if he doesn't come forward with some grand plan. Like Mr King said, "House prices are a matter of opnion, debt is real". This is unchartered territory, it isn't a neatly planned and executed policy by the treasury and the BoE and worse, this past year has appeared to show whole thing spinning out of control. It is easy to look back at Britain in the 70's and 80's when monetary policy span out of control but this approach has never been tested before and is largely being made up as it goes along. Public spending cuts have only just kicked in, the consumer is maxed out, industry and the high street are hurting, the markets are watching the pound, and so on. That is why I rephrase my question and indicators now to "what can keep the thing going?". How much longer can the treasury tacitly support private sector credit, public spending and trade & budget defecits when the economy is hardly responding to the massive injections? Boomer
  5. Hi, This is a line of reasoning I have been following up the past few weeks, exactly how a big, nationwide fall was avoided - so far - a year ago, when all the signs were ripe. I am trying to approach the question from the viewpoint 'how will prices continue to rise?' One thing for sure, with both America and the UK hiding - or at least keeping them tucked away or not updated regularly - their broad scale money supply measures now (also see my previous posts-links below on new labour macro economic approach reposted below). The treasury and BoE are supporting credit expansion covertly within the private sector, with houses the preferred tool of demand management and channel for money supply control. Can this private-sector keynesianism carry on forever? It didn't in the seventees (different methods, same policy) and governments going to the printing presses has had some catastrophic affects in history. Will prices fall everywhere? If Gordy can time the UK economic cycle cleverly to the world economic cycle, maybe he can get away with it and stay within his 'golden rule' with the debt burden being eroded of a couple of decades. He is most definitely running out of time though. If he doesn't pull it off, you are looking at at a 1976 type scenario, bringing a faltering economy through a recession by public spending and stimulating demand in a non-productive area could just delay and worsen the outcome. Interseting times! ----------------------------------------------------- Hi, Higher up the VI chain, they are looking at Gordon's (and New labour's) policy of private sector kenysianism. If you want to follow the underlying battle of the VI sales men, this is the area to follow, particularly in trying to second guess where it may all end. The old brand of kenysianism was discredited in the 1970's for it's failure to control inflation, the failure of government to adapt public investment into the economy and manage demand in in an efficient and orderely manner, amongst other things. You cannot really separate Kenyesian management of an economy from labour policy for ideological reasons, New Labour's modern day Kenysianism could be heading just the other way as the old one, the VI's know that the Treasury and BoE will covertly support irrational bank lending and credit into the economy for as long as the government will provide a tacit support, or encouragement, to those organisations. That is the whole point of their policy, to continue Kenysian style management of an economy but using private, citizen's debt to try to deliver full employment and growth during the business cycle. When Gordon says 'no more boom and bust', he is basing that on a theoretical economic policy that was stumbled upon by chance and has no precendent to compare. One excellent backgruond article on the subject by Dr Madsen Pirie at the adamsmith institute of economics ; http://www.adamsmith.org/thinkpiece/000515.php You can also check out a good academic article on the New Labour 'Private Sector Kenysian' model of economic policy from Warwick and Cambridge Universities here; http://www2.warwick.ac.uk/fac/soc/pais/sta...eynesianism.doc And some interesting words from Gordon on his ideas of Private sector Kenysian demand management in a globalised world here; http://www.pbs.org/wgbh/commandingheights/...ordonbrown.html The point is, it is an unchartered experiment that is heavily reliant on an upturn in the business cycle within the near future if he is to pull it off. So far, some of the strains of Kenysian policy begining to show again. If your outward policy is to support private sector credit binges and housing bubbles to smooth the economic cycle, you live and die by your covert support for that policy. I don't think this is a point lost on many Bank and Loaning institute boardrooms. Will the distortion-making economic policies of new labour's 'Private sector Kenysianism' cause unbearable imbalances within the economy? Will he run out of time during the business cycle? Will some other external shock topple the precarious position? That would be my main concern, we have reached an astounding and deliberate position of debt, focused on housing as an assest, stumbled upon by government - quite by accident - to prop up an economy that was headed for recession and now is boxed in by that policy.
  6. Hi, Exactly, the world is too complicated a place, the future too uncertain to just make seeping generalisations. Houses were not a very good investment during the seventies in relative terms when general inflation was very high. Houses were a very good investment ten years ago and all through the recent years of low general inflation and government induced high house price inflation. Many people saved into pension schemes and saw in recent years those pension firms or indiviual, employer based schemes renegade on their commitments, house prices fell massively in the early ninetees. Assess risks, spread your investments, don't put all your eggs in one basket. If getting onto the housing ladder means, for you as an individual, stretching to massive income mutliples on an interest only mortage, that would seem a risky stratergy in the short and medium term. Of course, that's why every so often the Halliwide splash articles across the media about how 'in the long term, house prices always go up' or 'houses prices risen 100% in the past five years'. On a snap shot basis or on a long term, historical view, that is correct. In the short to medum term, it could reduce your wealth. It may also curtail your work opportunities and ability to plan for families etc., in the future. You really need to examine things and weigh things up, that's for sure.
  7. Hi, Figures from CML have shown house repocessions creeping up and up over the past couple of years and predominently hitting the 25-40 age groups, over stetched by historically high house prices. The average age of the FTB is at a record high at mid-thirtees, the building socities continuously produce reports that 90 odd % of properties are out of the financial reach of FTB's, presumably the remaining 5-10% who are hauling themselves onto the ladder are those borrowing 6-10 times income mutliple, interest only mortgages (that do not actually pay off the mortgage and so could leave you in a dire, future position, particularly if house prices were to fall or stagnate sufficiently below the general inflation level), some studies have even shown people hitting 100-120% expenditure out of annual income each year, accounting for the very low savings rates in the UK - house prices and taxation the biggest culprits, so pensions have become a virtual impossibility on the back of huge mortgages. Just last week the IMF reiterated its warning that excessive house prices in the UK are the biggest short-term and long-term threat to the economy and economic instability here, OCED reports have put UK house prices amongst the highest in the world. And if we are in a low inflation environment now under Gordon Brown, with the BoE vowing to keep wage inflation within it's inflation target of 2% per anuum - and say house prices were to continue rising at 5-10% per year for the future - well, you're stuffed either way unless you can comfortably afford a house you want now that is big enough for you not to need to trade up in the future and assuming that your work is stabe enough for you not to need to relocate at some stage. And assuming that the deliberate Labour policy of house price inflation will not all unravel in the near future. Have a read of the WiKi - there are lot's of interesting links there that can get you thinking more deeply about the housing market and what it means to you personally.
  8. Hi, Higher up the VI chain, they are looking at Gordon's (and New labour's) policy of private sector kenysianism. If you want to follow the underlying battle of the VI sales men, this is the area to follow, particularly in trying to second guess where it may all end. The old brand of kenysianism was discredited in the 1970's for it's failure to control inflation, the failure of government to adapt public investment into the economy and manage demand in in an efficient and orderely manner, amongst other things. You cannot really separate Kenyesian management of an economy from labour policy for ideological reasons, New Labour's modern day Kenysianism could be heading just the other way as the old one, the VI's know that the Treasury and BoE will covertly support irrational bank lending and credit into the economy for as long as the government will provide a tacit support, or encouragement, to those organisations. That is the whole point of their policy, to continue Kenysian style management of an economy but using private, citizen's debt to try to deliver full employment and growth during the business cycle. When Gordon says 'no more boom and bust', he is basing that on a theoretical economic policy that was stumbled upon by chance and has no precendent to compare. One excellent backgruond article on the subject by Dr Madsen Pirie at the adamsmith institute of economics ; http://www.adamsmith.org/thinkpiece/000515.php You can also check out a good academic article on the New Labour 'Private Sector Kenysian' model of economic policy from Warwick and Cambridge Universities here; http://www2.warwick.ac.uk/fac/soc/pais/sta...eynesianism.doc And some interesting words from Gordon on his ideas of Private sector Kenysian demand management in a globalised world here; http://www.pbs.org/wgbh/commandingheights/...ordonbrown.html The point is, it is an unchartered experiment that is heavily reliant on an upturn in the business cycle within the near future if he is to pull it off. So far, some of the strains of Kenysian policy begining to show again. If your outward policy is to support private sector credit binges and housing bubbles to smooth the economic cycle, you live and die by your covert support for that policy. I don't think this is a point lost on many Bank and Loaning institute boardrooms. Will the distortion-making economic policies of new labour's 'Private sector Kenysianism' cause unbearable imbalances within the economy? Will he run out of time during the business cycle? Will some other external shock topple the precarious position? That would be my main concern, we have reached an astounding and deliberate position of debt, focused on housing as an assest, stumbled upon by government - quite by accident - to prop up an economy that was headed for recession and now is boxed in by that policy.
  9. Hi, She is the exception to the general case, apparently ; http://www.telegraph.co.uk/news/main.jhtml...9/13/nfat13.xml
  10. Hi, Depending how you read the cycle I guess - we've discussed it enough and it does seem to be fitting the picture more more over the last year - for property boom prices leading to reductions in consumption and recession, property falls, etc., I am really interested to see if Gordy and BoE have a plan 'B' in waiting, what with their hands tied on interest rates, public spending increases, devalution or a manufacturing-export lead recovery. Gordy certainly seems to be betting the kitchen sink on ever increasing consumer-demand in the latter part of the year, backed by lovely Mortage equity withdrawal and mortgage take-up. I certainly don't intend to make any new moves into property until that little pickle becomes a bit clearer. Boomer
  11. Hi, It is a very good point I was just thinking of the other day. Having lived around central London for a few decades, it really is astounding to think of the wasted fuel and pollution created within London's road and transport network, often because of road and train networks shifted around an antiquated planning system. Nice one Gordy, go preaching to the rest of the world about the environment when your own capital city struggles to transport (and house - it's all connected) the populations in an environmentally and business efficient manner. I remember reading after the great fire of London that the emminent architect of the day, Sir Christopher Wren, proposed that the smoking ruins of London (with many areas erased of people and loose records to even trace land holdings for relatives) be rebuilt on a grid system with wider avenues and boulevards, central parkland areas and the like. Of course, in the mad grab for vacant land and existing land rights, it was rebuilt much the same way on a horse-and-cart medievial village style. 350 odd years later we still have trains trying to snake around central city areas in a fragmented infrastructure, around streets designed for horse and cart, buses sitting in narrow streets for hours at a time belching fumes, cars gridlocked. All the time, continually planning to cram everything into London and the South East. And then look at the Barker review for NuLabs future for housing and communities. Predominently building satellite communities around exisiting big cities or flood planes, on the cheap, legoland style of design with thousands of rabbit hutches requiring a car to drive down to the nearest mega-mall with B&Q, UCI ten screen cinema, Burger King, etc., to see anything else other than thousands of other cheap build houses for miles in either direction with nothing else inbetween them. And definitely requiring commuting for work, often commuting in a car just to get to the nearest train station to get to work. And they haven't even started or made any progress with the Barker recommendations yet (of course, NuLab don't want to admit there is a problem, unrealistic house prices and a MeW-driven economy are their raison d'etre). Gordon Brown and the environment? People who live in glass houses shouldn't throw stones, I think is the saying. Boomer
  12. Hi, Let's quote Gordy from some of his pre-election speeches ; http://www.labour.org.uk/index.php?id=news&ux_news_id=ac04gb Hummm, those pesky stats for generational high property prices, disproportionate debt amongst the under 40's and record levels of income multiples cetainly fit that quote. Uh-hu? So that will be BTL and your socialist property boom then, I take it? What's that? There are no FTB's? Perhaps they don't have shared needs for luxuries like housing. What do you think Gordon? Now, I hear what you're saying Gordy old chap, problem is that housing is a little more important than the cheap IPOD's, plasma's and DVD's that China has bestowed upon us. What's the plan for that then? Manufacturing and exporting, oh dear. Ok, it was over a year ago he made that speech. When is he going to mention housing? Obviously it isn't on the radar. Whooooaa! Here we go. OK, barker review...... shared equity housing ..... subsidies for public sector employees. Ok, hu um. Haven't started any building or planning reforms yet, ok. Hold on, that's it! Now he's gone off on some other tangent in the speech. Hummm, guess it really isn't on the radar (or maybe under the rug). And the Barker review, to remind ourselves, recommends ; Between 70,000 and 120,000 additional private sector homes each year Between 17,000 and 23,000 social homes each year, at a cost of up to £1.6bn The government introduce a tax on land held with planning permission to stop house builders ‘land banking’ Planning laws be changed to make local authorities respond quickly housing demand Planning bodies take great account of ‘market signals’ – such as hour prices, demand and affordability – when setting housing targets and allocating land Local authorities be allowed to keep the council tax revenues from new housing for up to three years rather than pass it to the Treasury to give authorities incentives to support development A Community Infrastructure Fund be established to help to unlock some of the barriers to development they haven't even started. Yep Gordy, Liberté, Egalité, Fraternité all around please. I'll have a big dollop of your special brand red-socialist sauce on mine please.
  13. In a country that increasingly produces less and less and relies increasingly on credit-cards-and-mortgage-equity-withdrawal to prop up growth, combined with ever increasing taxation of business, buying and selling houses, with a lick of paint and a markup, is the only way to become an tax-free 'entrepeneur'.
  14. http://www.phespirit.info/montypython/four_yorkshiremen.htm
  15. Hi, Inflation, watch inflation. If world inflation does rip (US and japanese seem worried enough), events can change dramatically. Houses were a dog investment for much of the seventies for the exact reverse situation of this last boom. If general prices are going through the roof every quarter while house prices stagnate, fall or rise only weakly (and due to rental agreements and contracts, it can be very difficult to even try to chase general CPI or RPI even though your expenses are escalating), the net affect is the same. Your purchasing power and relative wealth is declining, in much the same way that a few years back, having your money in a bank account paying single digit returns while HPI was roaring around 20% was making you less wealthy, in relative terms. (The Brown miracle economy). In it 'for the long term' could very quickly lose appeal if, like the seventies, inflation lets rip. Real and nominal house prices and revenue can mean real falls in wealth. Relative wealth means real wealth in this respect as many will have observed in the past decade of 'the miracle economy', only this decade it was wages compared to assets. Same net affect. So ................ house price falls? Could be irrelevant if the inflation genie is out of the bottle. Enough economists have discussed it. Who seriously believes the stats the ONS publish? One thing for sure, economies never stay static, except maybe feudal British society 500-600 years ago.
  16. Hi, The last crash was vicious, truely terrible in parts of the country, some valuations in hotspots losing 50% or so on purchase prices. There was a recession but the country did not grind to a halt, people carried on going to work, buying and selling houses, taking holidays, etc. Infact, in my own business, the early ninetees was one of the best boom periods for a few decades as we trade internationally in the large part. According to CML figures for the era, only around 0.8% of mortgaged-arrears properties were repocessed.
  17. Could HPI carry on upwards? If wealth under NuLan continues to polarise - particularly within REITS savvy, high earning public sector workers - I could see prices in prime locations continuing upwards, mirrored with some falls in less prime areas, giving an overall +ve indice. Maybe if Gordy could pull off a substantial, orderly fall in the pound, perhaps at a time of a world trade revival, steeper falling dollar and a fall back in oil and commodity prices. Seems to me the needs for continuing HPI are very much dependent on international and domestic, political wills, in the UK at least. The fundementals ran out of puff a while ago. Peugeot are leaving, a successful, healthy car manufacturer, in the face of a falling UK demand and rising cost base. Maybe indeed recession does follow property boom, in which case Gordy's 'No more boom and bust' stratergy would be spectactularly misunderstood by him. Interesting times!
  18. Hi, Estonia (intakes breath)? Now Slovenia, there I could see some FTB potential. Historically linked with Austria and Italy, nice summer climate, beautiful mountain, lake, forest and Adriatic scenery, central European location, low prices. Then I looked the other week in a sunday supplement at opportunuities for REITS investment in Dubai, Bulgaria, Morroco, Senegal, etc., I am not a banking loans executive but some of these 'me too' locations seem nuts, nuts I tell ya!
  19. About twenty-thirty years ago, this is the 'champagne' variety of socialist. However sleazy the conservatives got last time, they weren't anywhere near as bad as Brown and Blair. Hypocrites, shocking hypocrites.
  20. Hi, Hummmm, maybe, difficult to see how a mass consumption economy can mimick the early post or pre industrial era's of british history (since mass consumption economics can't work on that basis). Let's just wait until we pass the spring bounce and see how the debt bubble and rising world interest rates and energy costs pan out in the short run. Spring is in your hair now but you never know, this could be you later in the year when the spring bounciness has receded ;
  21. Hi, Asking prices in a rising market, yes. Asking prices in a slowing market? They react differently, it's not so straightforward, I tend to agree with some of the research of the BoE structural economics unit regarding asking prices, approvals wrt gazundering in a falling market versus gazumping in a rising market and final sales prices recorded in the LR. I am also open minded and would expect a spring bounce of some description, depsite the poor market fundamentals, after all, in the last big crash, transactions did keep rising for many years despite falling prices (the affect's of gazundering in a falling market as the previous BoE reports identified), springtime is the busiest period of the year for house sales, people still do buy and sell houses bar a comet hitting the earth. Let's see when we get to the summer. I still have that nagging feeling about the stats and reporting during the last crash that presented a static, occasionally bouyany but generally healthy market for all intent and purposes when of course we later saw the huge falls in many valuations, I personally need to see the rest of the year through on this one before I made a call either way on this one. It could be consistent with a resurgence or a swang song. I still have a deep, deep mistrust of the Halliwide for the way they presented the market during the early stages of the last crash, they are the proverbial 'boy that cried wolf' about market health, given their previous behaviour. They forfeited any professional respect on that count a longtime ago.
  22. EU hardship funding for the affects of British HPI on local communities in cornwall? I bet it's the same bunch of UKip holiday home owners who are probably providing the begging bowls.
  23. http://www.housepricecrash.co.uk/forum/ind...showtopic=28105 Been covered already a few threads down.
  24. Hi, A currency collaspe of the UK pound to the scale of the seventees and the ninetees that on each occassion helped push the economy into severe recession, until a point where real inflation, land and industry costs reach a genuinely competitive level on the international stage.
  25. Hi, Very interesting, given it's role as one of the single biggest props of the current housing boom. Interesting times ahead, for sure.
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