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About Richelieu

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  1. Indeed. But I see his point being more than you might have more bargaining power when before the bottom, when all the indicators are pointing toward an ever-decreasing price spiral, to convince a seller to sell before it's too late (and accept a far lower offer) than after the bottom, when all things look rosy and sellers might want to start wating for a better offer. I could see it occurring if the media was actually reporting peak and bottom correctly (so the seller could get information about it in the news...) I suspect that analysts and VI will claim bottom every single month of decline, so actually reaching the bottom won't change the sellers' attitude.
  2. I fail to understand the logic behind this. I was baffled when reading it on Bloomberg, and apparently I am not alone. Basically, every economic sector is at its nadir, and yet they are finding growth, so growth must continue? I understand that usually, recessions are driven by housing and car markets, because they can be volatile and overshadow the other sectors of the economy. Now that they have pretty much disappeared from the economy as a whole, according to this article, the logical conclusion should be that a possible next leg of recession won't come from them, but from other sectors that are usually not driving recession since housing and auto crash before, not that no recession can happen... Am I missing something?
  3. Most of you seems angry or surprised by the new that the current generation is considering bankruptcy as a way out. I am not: for someone who has near zero chance of acccruing wealth, defaulting doesn't incur a too harsh penalty... And given the prospect of spending her life half the time unemployed, and being milked to pay pensions while she works, a massive amount of people face the prospect of not accruing wealth during their life. How could she realistically think she wouldn't be able to repay her debt? Of course, her plan which relied heavily on the Tooth Fairy to bring money home was certainly flawed, but at no point the tie-wearing, very professional lender who approved her was seeing any problem with it... How could she? You may advocate for harsher penalties for defaulters, I say that irresponsible lenders who didn't screen applications correctly should incur the full extent of their loss.
  4. is apologizing for butchering English on this board :(

  5. If, as he implies, providing shelter is a basic need that can't be left to private organization, how is the solution to nationalize the lending activity in order to boost shelter-providing private persons' balance sheet? He should advocate for nationalization of houses, not lenders...
  6. Apparently, their own data comes from an opinion survey. These are totally flawed as a way to assess real trends. People are asked if they would consider buying overseas, but they answer without thinking of the implication (moving to Australia isn't exactly the same thing as moving to the other side of the street...) Basically, it's a popularity contest between countries, and most respondants have never really considered moving, nor have studied the housing market. Speaking of exchange rates is ludicrous : they say one in four FTB (and in survey lingo, that means renter...) is considering leaving the UK (good news, a few years at that rate and you'll have no more housing bubble, no population either...), and I am pretty sure not one person in four even knows that exchange rate fluctuates, let alone time their emigration to benefit from short-term FX trend (it boggles the mind that someone at moneycorp is seriously thinks they do...) The second most-popular destination is France, because, according to moneytrend, of the rebounding housing market. Because we all know FTB are housing experts, and study real estate markets abroad extensively before deciding in which country they'll live in... (well, not that expert because they'd know the market isn't rebounding at all in traditional area of UK immigration). So basically, people like Australia (kangaroos are pretty). They still like Spain (sun, beaches...), but maybe a few of them had heard there was an housing debacle, and that was enough, but it's still the third most popular destination.... I guess a place where it may make sense to buy, Germany, because their was no housing bubble there, ranks #178.
  7. In other news, US existing home sales fell to the lowest level ever (ok, that only means the 90's as they didn't track the number of sales before, but hey...). There is a 12 months inventory, plus a shadow inventory of (conservatively) half that size. You're an US buyer. Would you choose to buy a traditional house, or a special house with a contract stipulating that, to resell it, you must pay 1% of the amount to a company AND you must ensure in the sale contract that any further buyer will comply with that contract, thus limiting your reselling opportunity ?
  8. French follower of this site (as history showed that the London market often moves in advance of the Paris one (by two quarters), I finally decided to subscribe to post in transversal threads regarding house prices. The French market is even more frothier than the UK market relative to earnings, so I totally feel your pain!
  9. It could certainly have been avoided.... But the HPC is only a revert to the mean after the HPI. And during the housing boom of Ireland, I recall a smug Irish government criticizing other European government who wanted them to increase taxes (to moderate their economic growth prompted by very low rates) that they should manage their own countries better, and if they had to impose taxes, it's basically because they weren't competitive and should follow the Irish example. It could have been avoided, but nobody seemed to want that.... The only country that seems to care (and fails majorly to do anything meaningful anyway) is China.
  10. If they bought a house to live in, they don't suffer, because they won't sell it and be happy not to have to pay a rent. If they bought a house to let, they don't suffer, because they won't sell it and be happy with the fixed income. If they bought a house with the intent of using home equity or speculate on the resale price, they were not saving for their retirement age but doing a speculative operation, with associated risks. Where is the problem exactly ?
  11. Yes, because in the event of a Communist revolution, everyone loses. My take is that they benefit a little, if circumstances are right, from the hyperinflation, but less than someone who was cash-rich before and managed to hedge his assets from the hyperinflation (foreign investment ? Even gold is not safe, because, as you mentionned, the popular movement could push for a seizing of real assets like gold... but who owns gold nowadays? I guess most retail gold owners, contrary to what happened in the Roosevelt era, only hold gold/commodity based ETF and not real commodities, which makes them even easier to seize). Oh yeah...
  12. I guess some people are, especially some who have borrowed heavily and hope to repay fully their mortgage with a gallon of oil. They imagine being the big winners of the HPI but the situation is much less rosy than they imagine. But they are certainly not a majority. I never accused you of that. My remark was for the "smirking homeowner with a huge mortgage" described in an earlier post. The OP asked about what would happen to the homeowner, not the public debt. And based on other example, said homeowner will face hard time (as everyone will, in fact).
  13. OK, I'll let it rest, then Just... My point : people wishing for hyperinflation don't understand how bad it is and how removed it is from their daily lives, because, in their daily lives, they only know low inflation or 70's inflation, not hyperinflation. They don't imagine deflation either, but that's not the point. I give examples of real hyperinflation (Weimar, Argentina, Brazil, Chile, Yugoslavia, Zimbabwe) to compare the current (or 70s') situation and show it's quite different, and how the economy could still work in the 70's in a way it can't in an hyperinflation situation, and you answer "silly comparison". How so?
  14. Yes, it could last longer, and even if it doesn't, there is a huge risk in how the mortgage are converted. Usual exits from hyperinflation involve using another currency, either a brand-new one or a foreign one. Given the size of the UK, it wouldn't be practical for it to adopt the euro or the dollar without the support of the Fed or the ECB (while Argentina could ride the dollar)... So basically, existing loans would be converted to a new currency, and the adjustment rate of mortgage would have to be changed also (because their would no longer be a GBP libor rate, for example....) So it's a huge uncertainty.
  15. They were obeying some kind of government, not private local interests. The Red Army was certainly no saint, but they weren't thugs paid to enforce local interest. If you want another example of a relatively crime-free hyperinflation, let's take... (that's hard) Brazil ? OK, it's a military dictatorship, but private crime was contained, or Chile during the presidency of Salvador Allende. Which (again based on the few examples we can draw upon) leads either to : 1. the realizations by gangsters that they can extract rents without having the deed and not giving back the rent to the landlord (if you take the increased risk, you might as well benefit from it) ; 2. a few LL do that and get convicted and sent to jail (like the one who currently do that to expel defaulting tenants, it's a very few minority as long as the state is still able to maintain order). Remember that in a context of strong popular discontent, the government will face heavy pressure to pass harsh laws against LL abusing their property deeds by trying to circumvent the rent cap. The general (ruined) public will want blood. I stand by what I said. 20% a year is nothing next to 100% every 24 hours. Even if you assume a steadily declining value to the money you hold, you usually expect it to decline at a manageable rate, not to lose half of its value by the time to reach the bank (or the grocery market) to convert it to something else. Even in the 70, people weren't paid bi-daily as they asked for in the Weimar Republic...
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