Bystander

True - The odd thing is to look at where it went wrong. In some ways its the dullest simplest bit of the whole damn i.e business lending money to people to buy residential property. Its what banks have been doing for hundreds of years. In the end it wasn't the hedge funds, the programmed trading or else the evasion of controls (ala Barings) it was simple mortgage lending that got somehow so wrapped and obfuscated that no one could really follow it any more.

Well its 100% of my cash! ... the rest is all bank deposits! To be serious I've got a month's salary at the moment - probably silly but if I could predict the next week... I do wonder whether cigarettes would be a better "end of the world" investment than gold btw - wasnt there a malboro economy in germany at the end of WWII? But perhaps not enough people smoke these days... but I mean how do you buy a microwave curry with a gold coin?

If you look on this board you may occasionly find mention of a yellow metal. The ownership of this is both curiously pointless and contributes nothing to the advancement or well being of society. Reading HPC one may conclude that an unfortunate planet without any of this element but with an abundance of oil, coal, and iron can never sustain an advanced civilization. (certainly not one that can invent a CDO!) Whilst I strongly disagree with this as an investment on principle ( I think for many of the same reasons as ?..! was discussing above) I must confess that I do now half fear it may be a safe haven in these foolish times. I should point out that I do not own any of this ridiculous substance... However I do have some cash under the mattress at the moment.

I half wondered that this morning when they weren't going up the aisle with HBOS. Surely mitigates any competitive aspect of the HBOS/LLoyds merger. Doesn't mean that its going to happen... but RBS could be next in the firing line

I follow now, its the future over regulation that you see as the danger. The shocking think to me about this crisis isn't the structure of the instruments, its the fact that the big 5 ended up as the victims. They believed in the mathematical models that they created (based on the fact that every mortgage is an individual coin toss). When faced with such a complex set of cash flows how does a risk manager argue against a successful (profitable) team? What if a different model can be fitted to the (limited) data set and gives different (better) results?

In a world with 1000s of small banks then one can be allowed to fail on it own with minimal consequences and the government can reimburse you at their leisure. If one of the big UK banks fail then they all will. If all the banks have failed then we either get a new start of 1000 "gordons" each or they in effect nationalise the whole banking system and you get something in proportion to your deposit. The world cannot turn without banking for 6 months.

I don't follow the argument. JPM "rescued" Bear Stearns, MS and GS will find partners as Merrill already has. Barclays is preying on the corpse of Lehmans. The problem surely isnt the absence of a 150 year old organisation who used to perform a particular role its a total lack of confidence in the system. The world kept turning without Drexels & Salomons - whether it will keep turning now is perhaps less certain.

Funny how its possible to read things very differently. The report states that "A UCG project site with the appropriate operational controls should present a very low risk to groundwater" "US tests in shallow coal seams produced significant groundwater contamination, but the deeper European trial showed no detectable effect on groundwater concentrations in surrounding boreholes" (which is presumably more relevant to the UK) "significant subsidence will be unlikely as cavities will be narrow, compared with longwall mining, and separated by pillars of coal" "The traditional emissions of concern are the oxides of sulphur and nitrogen, particulates and heavy metals such as mercury. Air emission controls are already stringent for these materials and the technology of mitigation is well developed. UCG should have no special difficulties in meeting current and future regulations." It suggests that 5 brownfield sites might be able to service 27GWe of electrical generation for 20 years (Unless i have misread then this is actually about the size of the current UK coal electrical generating capacity and is about 1/2 of total UK electrical generating capacity). Now clearly this is all hype based on new technology but as the report makes clear there is a big overlap with oil and gas extraction technologies so it does hold a degree of promise. So to try to answer the OP there is still an enormous amount of coal deep under the UK. However most of this can never be economically extracted by deep mining and the run down in the 80s and loss of infrastructure affected the amount which could be extracted in future. There is some hope that UCG may allow extraction of some proportion of this but this is as yet unproven and there are a lot of challenges to overcome.

Oh and here is the DTI report ofn UCG mentioned on the UK Coal website http://www.berr.gov.uk/files/file19143.pdf

I think it explains how its possible to reconcile memories of many 100s of years of deep coal supply being quoted in the early 80s with the reality of todays situation. I would assume that most open cast coal mining is at some level economic to recover (unlike deep mines) - the barrier is more likely to be planning permission, land ownership costs etc, closeness to towns etc etc. There are other problems I would have thought with UCG - what is the net energy output and what are the geological side effects - i.e what will happen to Lancaster if a significant proportion of the remaining coal seam below it is gassified?! There is another page on UCG on the ukcoal website - the NCB had it working in the 1950s - but abandoned it for... economic reasons.. http://www.coal.gov.uk/resources/cleanerco...es/ucgintro.cfm

Some interesting data from 2006 on UK coal which highlights the difference between coal in situ and extractable coal reserves http://www.coal.gov.uk/media//860AD/Respon...ppendix%202.pdf The UCG figures make for interesting reading at the end!

Getting back on thread! Its interesting to compare this with the British Banking Association (representing 12 out of the 15 largest lenders and responsible for 70% of mortgage lending) who conversely reported that they approved 51,233 mortgages for house purchase in December (down 20K on November?) http://www.bba.org.uk/content/1/c4/67/41/stats270106.pdf

You're right - repossessions from CML - note how slow they were to tail off, still 50K in 1995 1985 19,300 1986 24,090 1987 26,390 1988 18,510 1989 15,810 1990 43,890 1991 75,540 1992 68,540 1993 58,540 1994 49,210 1995 49,410 1996 42,560 1997 32,770 1998 33,870 1999 29,990 2000 22,870 2001 18,280 2002 11,970 2003 7,830 2004 6,230

So its No 52 Wxxxxxxxx Way:- But it seems to be listed on rightmove as for sale at £269,995 ?

Very interesting article - especially the quote on the fall off in BTL applications...

It worth pointing out that its a survey of pure valuers and also small independent estate agents... (read the comments at the end of the report) This doesnt make it wrong though.

I could just about follow this with a rare fine wine or a painting ... but a house?! How do you ever find a buyer that interested in a house in a specific enough area but who can't manage to find the house for themselves and also a seller who cant find a buyer despite the fact they are prepared to acccept an offer 1/3 under what other houses on the same street sell for... and you have to find them both at the same time? ..

.... "It blamed a 'very tough' year when buyers were unnerved by doom merchants. " .... like the OECD?

Err - I was checking in on line - so not quite so difficult Here's the graph - I dont understand it but it seems odd Shows (non seasonally adjusted) Mortgage lending numbers for house purchase from CML Land Registry sales Gov Stat sales Note that the CML figures are bigger than the land registry figures in a fairly consistent way. They follow each other fairly well. The GovStat figures are bigger than CML - which makes sense - not all purchases involve a mortgage but since the start of 2004 they seem to suddenly have increased and diverged - surely it isnt true that in Q1 2005 120K out of 320K were purchases for cash??

Hi there! I'm still not convinced - if you compare these stats with say the CML mortgage lending figures on the CML website it would appear that more that a third of purchases are cash sales...?! I'll try and post a graph showing this but I'm in the middle of checking in for a BA flight at the mo.

Can anyone make sense of these figures? They are indeed what are on the gov web site but they dont seem to relate to either mortgage approvals and lending from CML or the land registry figures on the graphs page of this site. For example the land registry Q3 figure for house sales is 261K. I don't get it. Plotting mortgage approvals against the land registry sales shows a reasonable fit but these figures don't seem to show the same pattern. Am I being dim somehow? - do these figures include other land transactions?? Notice that the Q3 figure is the second highest ever...?

A bit off topic but you might be interested to note that the halifax web site contains historic statistics on house prices broken down into new and existing. Cannot make anything useful of it though! http://www.hbosplc.com/economy/includes/

The CML data makes the point that the 50% figure was distorted by right to buy. Adjusting for this there has been less of a decline (from about 40%). This makes some sense if each FTB is the start of a chain and they represented 1/2 of all purchases then the average chain can only be two houses. I think I have convinced myself that BTL was about 10% last year making up the shortfall. Number of BTL mortgages outstanding increased by 111K and there were 1.2M house sales again from CML stats.

Its true that if as a sole trader you borrow money to buy a fish & chip van you can offset loan interest against taxable profit on the business. However my question remains whether BTL is closer in form to an investment on the stock market than that sort of trading?

Well they need nerves of iron and it goes like this. They must assume that o We are in a new paridigm of low interest rates (nominal and real) o The volatility of interest rates has also decreased o Rents will in the long term increase in line with wage inflation o The favourable tax treatment of loans to invest in property continues o NOTHING will change this in the future! On this basis they can make a (long term) profit as long as the rental yield more than covers o the real interest measured over wage inflation o voids o maintenance o insurance o agent fees A (tax free) 5% yield is probably sufficient. Note that the only way to make it work is to keep MEWing whenever the rent rises above the nominal interest rate on the mortgage. However this requires a further assumption o House prices have recently adjusted to the new paridgm and will now increase at the long term average (in line with wage inflation) and the new adjusted rate .... and there isnt a HPC The other problem is that in the initial years they have to invest money into the project each year to cover the shortfall until such time as the rent rises to cover this. Of course if we get deflation or extreme interest rates then they go bankrupt. Thats true if you create a company vehicle (with associated costs) and use commercial loans. My question relates to investment as an individual without those costs and tax treatment. If you think about it what we have is an accidental hang over from MIRAS. It also makes sense on a small scale if for instance I own a house and move abroad for a couple of years that I can offset my mortgage against rental income. If you cut the earnings from BTL it would make sense if the yields were higher.... and houses cost less!!