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House Price Crash Forum


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Everything posted by Biggus

  1. So much information goes into a price. Mine output, exchange rates, central bank purchases, Indian jewelery demans, comex action and on and on. They all go into a single number. So there's no possible way I'm going to be able to pick a bottom. I'm just not that smart. So I'm not going to try. What I can do is look at the macro and see where I think the price should be going and I can follow a trend. The macro is all about inflation. If you think inflation is going up you want to be getting out of tech and into companies that can respond to inflation. For me that means companies producing stuff that can respond to inflation. Like coffee, sugar, copper and so on. Commodities and maybe some industrials. I found this on the Youtube a few days back https://youtu.be/LT-GopjFgyg?t=331 He's put gold right over the y axis. It responds to inflation but not rates. I agree. I think gold should be going up in repsonse to the massive inflationary expansions. It's like a delicious fruit ripening on a tree. I'm looking at it and licking my lips. But I'm not going to pick it yet. It's not quite juicy enough. I'm waiting for a sustained upwards trend. When the trend is up I'll buy. I'm not going to try to pick a bottom and I'm not going to trade against the trend.
  2. Seems like safe havens, like gold and bonds, are being sold. I think because people feel there are gains to be made elsewhere as the economy opens up after the Corona. So yields are up and gold is down. Gold cares more about inflation than interest rates, so I'm not worried about the effect of rates on the gold price. But to me it looks like inflation is on the up. I don't see any slow down in central bank printing or in defecit spending. That makes me a gold bull. I'm betting we see a new all time high this year. But now does not look like a good time to buy in. Take a look at the chart See the death cross in February? Don't try to catch a falling knife. Could be a few weeks or even months before the steam comes out of this bear trend. By then hopefully the price should be lower and we can pile in. I'm not going to try to call the bottom. Wait for an inflection in the 50dma, or even a golden cross instead. There should be plenty of time to get in. I could be wrong, but in the short term long gold is not a trade I want to take. In fact I'd like the price to go down for a while. Remember, the lower the price goes the more we can make on the upside, which I think will be spectacular.
  3. I've been doubting my sanity for a long time. We live in a world of economic nonsense and bubbles. Closing the entire country down for the Corona has been just about the worst decision action I've seen a government take. Take a look at the countries debt to GDP. https://www.economicshelp.org/wp-content/uploads/2020/04/uk-debt-june-2020.png.webp It's much worse than it was during the 1970s. It looks like we are fighting a major war. Like WW1. I think we'd be up to about 1916 or 1917 in debt levels. At the end of the war debt to gdp was aroung 175%. I'll bet we beat that. Because there are no plans to stop the spending. Quite the opposit. All the talk is of supporting the economy by pulling resources from real production to fuel...what? Debt bubbles and public sector salaries? Seems crazy to me. I remember reading a British embassador to Germany in 1921 or 1922 commenting that the Weimar republic ought to balance the budget so that they could turn off the printing press. That used to be seen as a sensible idea. But now? The idea is viewed as a fringe, crazy, extreme right wing nutcase view of economics. Using accounts to track resources, production and profit is a waste of time when the printing press can supply everything to everyone for free. The whole world seems to have gone nuts. Interest rates at zero percent, three bedroom semis in average areas costing two or three lifetimes median income, money printing, a state that is so out of control it locks everyone in their house for a year. It's mental. Or perhaps I am, as very few people agree with me.
  4. That's actually pretty close to the Keynsian view on bubbles. According to Keynes they're created by 'animal spirits', I think the term was. The Austrian view is that lose credit is spent into a sector of the economy. Increaded spending drives up prices, which sends a signal to enterpreneurs to invest in that sector. Resources poor out of other parts of the economy and into the bubble sector. I think it was Galbraith, in his book 1929 The Great Crash said that both were needed for a runaway bubble, like stocks in 1929. There have been times when credit is loose and interest rates low and nobody was willing to borrow. So it takes both animal spirits and easy credit to create a huge bubble, like housing in the UK. Long time since I read that book, so I could be mis-remembering .
  5. The official justification for keeping inflation at two percent and not zero is - 'It allows prices and wages to adjust It avoids the risk of deflation. Deflation is potentially damaging because Increases the real value of debt. It can discourage spending because consumers expect prices to keep falling It can make monetary policy ineffective as you can’t have negative interest rates.' https://www.economicshelp.org/blog/2114/inflation/optimal-inflation-rate/ It's down to the bogeyman of falling prices making us all poor. Debt deflation occurs, or is the cause of, deflationary recessions. Deflation caused by increased productivity is, of course, a completely different prospect. But most people don't understand the difference. So deflation is viewed by people who don't really know what they're talking about as a bad thing. An example of deflation caused by increased productivity would be during the Belle Epoque, sometimes called the guilded era. People were getting welathier as more goods and services available made the value of money go up. It was a 'golden age', people were becoming wealthier.
  6. I think there was a study in 2016 by Johns Hopkins that said iatrogenic deaths were the third leading cause of death in USA. Yes, it's controversial. Probably most medical professions will argue with this. But remember, every time the doctors in Israel go on strike the mortality rate plummets. In one instance the funeral industry lobbied government as the doctor's strike was cutting into their profits! https://www.bmj.com/rapid-response/2011/10/28/doctor-strikes-lowered-mortality-happens-every-time Of course, that does not mean the corona vaccine is unsafe. But I'm wary of it. A friend of mine told me about someone who took the jab and died three hours later. He was 28 and healthy. Left two kids behind. Maybe it was just a wild coincidence, but it's enough to make me concerned. Especially given I've already had the virus. Why would I take the risk? Up to you whether you take it or not, but for me, I'd prefer to not have it. You may feel it's irresponsible of me to argue against it. I wouldn't if there was no question of me being coerced into it. The prospect of being ostracised for not wanting to take the thing forces me to take this position.
  7. I've heared about people being given the vaccine and dying within hours. Sure, it's anecdotal, but do I really want to take the risk? I've had the virus already, so I really don't see the benefit, other than getting one of the 'passport' things. Maybe I'll be forced to risk death to satisfy the howling mob, but I'd really prefer not to. You know being killed by the medical profession is right up with heart attacks as one of the leading causes of death. If I can avoid spending any time in their proximity I'd be much happier. See https://www.amazon.co.uk/How-Stop-Your-Doctor-Killing-ebook/dp/B00JBTG3TI
  8. I don't think you can blame any one person. Where economics is concerned the intellectual zeitgeist is bananas. Partly I think it's a problem of education. Academics really like Keynes because there are some nice equations. You can produce a page of partial derivatives and say 'Look! Look how clever I am!' People who study economics at university come out with a head full of Keynisan nonsense. On top of that you had the likes of Bernanke. Sure, printing money has never worked in the past. But he had a great new justification from printing money, so obviously the results would be different this time. Best I can make out he saw the correlation between contracting credit and recessions and decide if he could prevent credit from contracting, ever, under any circumstance, he could prevent a recession. What a genius. Governments will always favour an economic 'theory' that tells them to spend lots of money and postpone the pain of a correction. There's no way they would ever support someone telling them that unprofitable business needs to go bankrupt and be liquidated so that the resources can be used by sound business and new enterprise. Much better to follow the print and spend idea. Then there's the idea that bubbles bursting would be too harmful for the economy. If the housing bubble is allowed to correct badly run businesses and banks that did not see it coming would go bust, which would be a disaster. Overall I'd say Carney was a product of the times. Worse than useless and a disaster for the economy, sure, but no worse than the likes of Merv, Bernank, Yellen or Powel. All as bad as each other.
  9. Is that a flat above a shop? 20 years of median salary, not counting tax and interest, for a flat above a shop?
  10. The objective of Labour is to bring about socialism. To increase the size and power of government. They really are not interested in improving the lives of ordinary people. Just taking their money and spending it. Most people don't want socialism so they dress it up as helping people, healing the sick or protecting the environment. I've nothing against doing these things but the objective should be to do them as efficiently as possible, not to grow the state. When they thought they could get more votes Labour dropped the working went for the votes of a 'coalition of minorities'. Really cynical. I don't really like the Tories as they are a tax and spend party, all about keeping people poor and asset prices expensive. That's why house prices are so high and interest rates are at zero. It's to stop people working and saving their way out of poverty. We really need an alternative. Good economics combined with looking after the interests of ordinary people. So that people are well paid, get interest on savings, can afford a home and have a pension worth something.
  11. Frissers made a video about this not long back. https://youtu.be/M0PQTyN8urc?t=39 In the '90s a 9% interest rate on savings was not uncommon. People's savings would grow. Houses were affordable. People invested in pensions with the expectation that they would grow vastly over time. There're no reliable measures, so there's no way to compare inflation now to inflation then. My feeling is that it was about the same or maybe even lower in the '90s.
  12. No such thing as too big to fail. Housing is diverting massive amounts of resources away from the rest of the productive economy. It needs to be allowed to adjust. Propping up house prices is an act of destruction. The bigger the bubble the worse the effects on the rest of the economy.
  13. Yep. The current crop of Tories come across as weak. Unable to make difficult decisions, chucking money about like confetti. Really needs someone with a bit of backbone to take charge of the economy, balance the books and allow the market to correct the economy. This latest Great Leap Forwards is a very bad joke. But come the next election there will be a choice between the tax and print to spend Conservatives and total and utter crazy people. There is no option for someone who wants a sound economy based on production. Just a choice between flavours of economic ruin.
  14. You are often right, but this time I think you are in error. Sure, the state can print money. But that does not add any real assets to the economy. There are only so many resources. When the state consumes them in one way it prevents the productive economy from using those resources in another. It's the stuff that people in the real economy work to produce and exchange that is the real wealth. Resources that can be used to create capital and generate growth. Everything the state spends is a drain on the real goods and services that have been produced. If they print money and send it to you to spend resources are being drained from the productive economy. The garbage about stimulating demand is just that, garbage. Money is a medium of exchange allowing people to exchange the goods and services they produce for other goods and services. Somthing for something. Printing money takes out without putting in. It is something for nothing. Less is then available for investment. People are working to support a bunch of freeloaders and deadbeats that add nothing.
  15. But government must take resources out of the economy id they want to spend. So how does taking stuff out of the economy then putting it back again help?
  16. Food prices rising 'faster than inflation'. 'People will have to get used to paying more for food,” said Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University in Canada. “It’s only going to get worse.”' https://www.bloomberg.com/news/articles/2021-03-01/inflation-2021-malnutrition-and-hunger-fears-rise-as-food-prices-soar-globally So it's just food, energy, MP's pay, transport, housing and taxes that are rising faster than inflation, then.
  17. How wonderful. Pensions will now not only use the shares paid for by workers to vote for higher exec pay and lower worker pay, but also be used to increase housing costs. Fantastic idea.
  18. If you like it and can affor it good luck to you. Do what makes you happy.
  19. In the past extravagant displays of wealth and status were an indication of sucess. These days it's almost impossible for many people to climb out of the rut they've been pushed into. I guess people lose interest in the peacock dance when they are excluded. Driving a posh car now seems a bit distasteful. It's more a display of being born into wealth or being very lucky, than any achievment based on merit.
  20. Owning a flash motor is not something most people under forty can realistically hope to achieve. The countries capital has been hollowed out by decades of low interest rates. You can think of young people as living in a poor country, unable to save for the future, invest or even buy a home of their own.
  21. Inflation pushes up the state's costs. Typically they will create more money to pay those costs, creating more inflation. It can easily spiral out of control. And just as it takes time for inflation to begin to rear its' ugly head it also would also take time to bring rising prices under control if sensible policies were ever enacted. At some point I suspect saving their own pensions and sinecures will be more important to them than forcing people to pay huge sums for housing. How long it takes is anyone's guess.
  22. Not taking piles of money out of the economy and wasting it seems like an alternative.
  23. Wasn't it Milton Friedman whi said 'There's no such thing as a free lunch'? Pitty he never met Rishi.
  24. Obama planned to repay the US debt held by the Fed by minting a few trillion dollar coins. https://hangthebankers.com/obama-to-pay-us-debt-with-trillion-dollar-coins/ The Fed threw a tantrum. It wouldn't be fair. Paying off the paper cash they printed with coins minted by congress would be immoral. It must be paid with real goods and services created by the hard work of the population!
  25. It's more a question of how much the government should spend. The budget in 1999 / 2000 seemed reasonable at £338,578 bln. Perhaps a little too high, as there was not a surplus in 1999. The Bank of England tells us that adjusted for CPI that equates to £600,048 bln in 2020. But the state consumed 842 billion in 2019 -20. My view is that the state should copy the budget for 1999 and throw out their current 'budget'. Then we might find that tax increases are not needed.
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