Ben is Back

Are you in negative equity and worried that the fact that your house is tiny will stop canny investors snapping it up? Now there is no need to let such things concern you, just employ the talents of this photographer... http://www.rightmove.co.uk/property-for-sale/property-32187604.html (Have a look at the street view to see actual size)

The division of labor breaks down, economically (and in every other way ) life becomes more simple. However this is not more simple in the idilic way you expect but all the stuff you presently can easily buy you have to make for yourself. Larger populations allow for greater specialisation and a better quality of life for everyone. Although there are structural problems in terms of where the people are geographically and socialist welfare systems preventing everyone from getting involved. anyone wanted a genuinely refreshing perspective on this look up a book called The Rational Optimist (by an ex-chairman of Norther Rock no less!)

I've said this before on here and stand by it. The safest job is the world is sales. If I came back to the UK tomorrow I'd have a new job (probably multiple offers) by the end of the day. Become a salesman and you will never be out of work (people will always hire somebody they think will make them money rather than cost them it), become good at it and you can earn well as well. Any job where you cost your employer money, you need to be grateful for. any job where you make them money you can be cocky about (which is much more fun)

I was discussing this with somebody the other day. We came to the conclusion that it didn't make sence for the simple reason that having so much in a savings account will dis-qualify you from benefits. It would be more sensible to pay off some of the mortgage and therefor qualify for government help should you come into dificulties. Put your savings in a pension so it doesn't count or shuffle it off shore somehow. sorry if this has been mentioned already as I don't have time to read the whole thread.

One big part of the legacy of the empire is very much still present and still making us rich. The fact that London is still the world's main place for finance. If somebody in africa wants to build a mine or somebody in south america wants to build an army, the financing of it almost always comes out of London. Notice how the other financial cities are former colonies with close ties to the London finance industry. Obviously finance / banking has a pretty low rep due to the last few years and especially on these boards and with the internet conspiracy theorist community but it seems to me that we have swoped a physical empire (with all the resources that takes to maintain) for a financial one. We have been able to let our 'working' class sit idle because of the profit we make out of this. It is actually quite a sensible move from a national interest perspecitve. We get to either sit in nice shiney offices or at home watching jeremy kyle rather than do any serious work. Hong Kong and Singapore (where I am), which have been mentioned here have achieved the success they have in a similar way - being the gateway through which London's banking industry finances Asian growth (and takes a nice cut from the top). I think of UK as really just an off-shore bankiing city with a bit of land to the north that it has to look after. Following the crisis the world needs re-financing and London is the place where it will happen. emerging markets will boom as living standards there increase but that is good news for the london financial services industry not bad news. The real threat to our living standards comes if we loose this or push it away from the UK. I never understand all the anger about banking bonuses (I'm not a banker but I sell into that business), rather than being angry why don't people just come and work for them and pick up a bonus themselves.

Why? Because of inflation I guess you mean. However if inflation becomes politically acceptable ('one off events' or to protect jobs or the value of peoples houses I would be possible (although unlikely) Is there any other reason?

I don't think they will raise rates for several years, if ever. we are totally in a Japanese situation. Infact an even worse one then them. So many suckers reliant on low IR's to pay their mortgages and a an economy reliant on cosumer spending. Any rate increase would cause instant demand destruction that it would then need to be instantly reversed. The only thing that can put IR's up is public outcry about inflation and with such a high proportion of house / mortgage owners in this country I can't see a mass movement calling for higher IRs. Good news is that it won't stop a HP's falling as that is driven by mortgage availability but it does make me think that it might be worth taking a punt on a house with low tracker mortgage that is likely to stay considerably lower than the rent on a similar property for a few years at least (capital depretiation still convinces me not to though!)

Hmm don;t quite see how it is at all relavent to what I was saying. BTW gilts do have a risk, hense why they pay a high rate of interest than the BoE base rate. Obviously it is highly unlikely that the british gvt will default but the gvt cannot print to repay gilts with the way the current system is designed. Only truely totally risk free is deposit at the BoE which is why it set the floor for IR's accross the country. QE has changed this a bit because essentially BoE printed on behalf of gvt to buy gilts but the essence of the system remains the same. CDO stuff I agree sound all a little crazy but really just a side show

Well if banks were 'investing' in CDO's at a lower interest rate than they would have got if they had just stuck the case on deposite at the BoE that does go against the way the system is designed to work. I can't see why they would, but if you say they did I won't argue as I can't prove they didn';t dugetme

I'm pretty sure I'm right and didn't see anything in your link to disprove it (mostly just entertaining quasi-conspiracy theorist stuff about corrupt goldsmiths). It is quite important to understand because it challenges the constant perception on here that the government is going to have to raise interest rates. there is not much that can force BoE to raise interest rates, other than the obvious political pressure that comes from high inflation. The BoE base rate doesn't determin the rate the government borrows at (as is often stated on HPC) so government borrowing does not force IR's to rise. what it does do is set a floor under lending in the economy. Generally you will not be able to borrow at under the base rate (as you will always present more of a risk than lending to the BoE as you can't just print). This floor under IR in the economy does effect how much the government pays to borrow because as they rise the IR governments will need to pay will rise (as even they have a higher risk than the BoE). But there is nothing directly that can force an IR rise on a country that politically accept low interest rates. I know generally this topic is off topic but this point does effect chances of real HPC quite dramatically! I can see a senario where high inflation and low interest rates are politically acceptable. The home-owning vote is strong and we could feasibly see high inflation and low interest rates lasting quite a while.

correct me if I'm wrong but I don;t think banks borrow at 0.5% from BoE. the base rate is what interest-rate the banks get from BoE for money on deposit there. It therefore sets the interest rate accross the country because it is the rate that they can deposit money knowing for sure that they will get their money back plus interest, as the BoE can just print it if needed.

This is a game changer for me and is starting to turn me slightly bullish on mid-term prospects for HP's. The 70's oil shock caused a spike in inflation. I know people say that inflation is negative for HP's unless it is accompanied by wage inflation. Which is obviously true. however a sharp spike in inflation does eventually lead to wage inflation as the people / countries selling the oil need to spend the cash on something and often that is western (designed at least) luxury goods (and military equipment it seems). Increased demand / prices of these goods leads to wage increases here and therefore house prices. Obviously it will be very negative for HP's in the short term!

errr no they are still building because that way they can hold the suckers who 'invested' in off plan property to making the further payments on the original price agreed (most likely during the boom). Most of these properties were sold off plan on payment schemes that meant the investor pays in staggered payments (with small diposit) while the building is being built. However the full balance was to be payed before the building is finished. As long as it is finished more or less on time these people will have to, on threat of prison, pay up or leave the country. I'm guessing that most can't afford to pay and were planning to flip before completion at a profit. If they stopped building the workers would just be sent home with 1 months salary for each year worked.

Or just replace them all every 3 years and send them packing back home for any disturbance (when they get home they then owe the person who got them the job a load of money which on local wages they would never be able to repay and their fanmily wouldn;t eat). It is an evil system which should be looked into by the UN or something but definately no chance of regime change inducing riots

Quite high. Dubai property market is basically a state monopoly. The two main developers Nakeel and Emar are probably 80% of the market and are both quasi-state owned as is the majoirty of the mortage market. And they use this to manipulate prices. Where I lived (JBR) was a complex of several tower blocks buy the sea. probably 2/3rds of the tower blocks were at least half full. The other 1/3rd, despite being finished were not put on the market. I'm pretty sure that their long term plan is (or at least was) to manipulate the market to attract as many foreign 'investors' as possible into a market where ownership rights are shaky and maintenece fees are crazy. also the current Arab world problems will be quite good for Dubai real estate.

BoE has two ways to influence consumer behaviour. IR - if they go up people have less money to spend on sh!t The Media - through what they way they influence expectations of future actions and therefore people's behavour Personally I believe Merv is making these statements to intentionally create fear of IR rises despite them being a long way off. This way he gets some of the benefits of an IR rsie while still being able to keep the loose monetary policy that the economy thinks it needs. I don't see him as the kind of guy who would honestly give everyone a correct warning without an alteria motive.

This (obviously) is really a question about your risk appitite. A fixed rate is can be seen realy as an insurance policy. the higher rate you pay is basically an insurance premium against the risk of an un-knowable future event (IR going up). Personally I never buy more insurance than I absolutely have to or are legally required to. The reason for this is that insurance companies have very cleaver well trained people working out how to make sure that they win and you lose from buying an insurance policy. You also have to lose to enough of an extent to pay the insurance companies running costs and profit to share holders. This is even more the case within the financial services world where inside information means that other people are almost always making more informaed choices than you can. If you value security enough to pay such a premium to insure yourself than go ahead. If not take the risk. (also bare in mind that 'homeowners always seem to be able to politically protect themselves from consequences). If the last couple of years has tought me anything, it is that in our socialist democratic society being a part of the heard protects you as a political majority can vote (or at least lobby and pressure) to be protected at the expence of a minority who have protected themselves. For this reason, when I come back to the UK for good, I'm buying a house. whatever the prices at the time.

I know a lot of people on here think the HPC won't come till we see 'noral' IR but I honestly believe that we won't see 'normal' interest rates for years and years, if ever. This is for the very same reason why so many here think the IR rise spark HPC. Our economy can not take IR rise and as soon as we have one any growth will instantly stop, particularly consumer demand. this will cause inflation to rapidly drop and the MPC will drop rates back down to stupid levels again. Further evidance of this is all the noises the BoE make about rates going up. As I see it the BoE has two roles. One is setting IR, the other is influencing the economy through the media. When they make noises to make everyone think IR are goin up what they are doing is trying to make us act like they are going up (hense reducing demand and therefore inflation). They are basically trying to get the effect of a rate rise without actually having to raise them. From my experience the BoE does the opposite of what it publicaly talks about doing so Merv talking about rate rises is a sure sign they are going no-where. Short of total bond strick and IMF bailout, I haven't yet heard a convincing argument as to why they will have to raise them ever. And even then they can use QE first.

I've been looking arround properties with my Brother and his wife while trying to talk them out of buying. Agents they are dealing with are really encouraging them to make offerrs. Even if they are quite low. If nothing else I think they want to use it to educate the sellers. In the end they have made an offer of 140 on a 3 bed semi. That is only 5 K more than it sold for in 2003. which just seems crazy. seller hasn't accepted yet but haven't turned it down either and it is sounding like they might come round. that is what I would suggest. Put in checky unconditional offers. Low amounts and be willing to walk away. I've been trying to talk my bro out of it but it is hard to do when it is only costing 5K more than 2003 price. thats an increase of 0.4% a year.

Rents are not as high as they were. And there are some places that are cheap as they were built to house the expected ever growing population (who then all left, dumbing their cars at the air port). share a flat in the Marina or Satwa areas, avoid spinneys and if you need it buy your alcohol from the philipino guy who will come nocking on your door. A single person could quite comfortably live off £800 a month and the rest would be saving.

I'd say take it - live somewhere cheap, avoid all the consumerist money traps and save loads of cash. You can then finally get on the ladder with a studio flat shared equity scheme in a former sink estate in Swansea

If things ever did get nasty here the recent diversity experiement would certainly have a big part to play. Near us is a massive Ghurka army base. They make good neighbors and have improved that town in general but if things kick-off I'm sure they wouldn't think twice about obeying orders to attack 'fellow' english people who are causing trouble. they are mercenaries after all.

Not True - Bahrain is a very different place from Kuwait, Qatar and the UAE, which I think there is 0 chance of anything'kicking off' Bahrain has a large population of local nationals, doesn't have the hugh natural resources and wealth of other gulf states. In bahrain Taxi drivers and shop workers ect are oftern Bahraini UAE / Qatar ect this is never the case. Additionally it has the shia / Suni issue which has been well reported. what you say is true in the sense that I can't see fellow GCC members (most notably Saudi) allowing anything in Bahrain to kick-off in a too serious sort of a way.

Dubai is where Iran washes its money and a lot of its trade is basically a front for getting round Iranian sanctions. (when Abu-Dhabi bailed out Dubai the rumor was that they did it as a way of stopping them going to Tehran.) No chance what so ever of Iran thretening Dubai. The only chance of it spreading would be internal. It was interesting to read about the Chinese workers protesting in Saudi. It is not imposible to imagine something like this 'rocking' dubai a bit but since foreign workers have no citizenship or rights of any kind and can be easily replaced regime change is not likely. The locals are all very happy with the 'regime'. wouldn't you be if you were guaranteed to be rich and not have to work for life!

I know a guy who owns 7 lux appartments is Ajman (Emirate near Dubai). Bought off plan in 07, still just a patch of sand and the developer has stopped even asking for further payments. However one of the advantages Dubai has is its relative safety and stability is a very unstable region. It attracts a lot of educated and highly skilled Arabs, Persians and people from Pakistan ect who don't want to or can't get to the west. It also attracts the ritch from all these countries. I'm sure it will do very well from recent events as a brain and capital drain takes place. I imagine recent events would put up prime dubai real estate, Jumeirah beach ect