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Everything posted by saderic

  1. Thank you for taking the time to post Skepticus.
  2. Agree the density argument is simplistic. In central Stockholm there may be a shortage argument but the key point is that the Swedish bubble stretches across the country. I'm from a less than popular part of the south and house prices have more than doubled in the last 5-10 years. Land is not that expensive in my parts and some of the more savy people I know have self built at a reasonable cost. But the majority is drawn to fancy developments, bit of a prestige thing, and renting from the bank is cheaper than ever so who cares about the ticket price. I think there are some good lessons to
  3. Hi, Swedish person here. The telegraph article is dodgy and this was discussed at the time. It's all about banning interest-only and making 'partial repayment' mortgages mandatory. Some quack went for a headline based on an obscure average repayment time. Positive news that falls are finally being noticed - as we know on this forum it is all about lending. The same lack of housing supply nonsense was being spouted back home. Not sure if you've noticed but Sweden is hardly the densest populated country in the world...
  4. Just had an email about a new 1.29% five year fix. So someone is betting against sterling... or banks are taking losses on mortgage lending in order to keep the bubble alive. The broker also kindly pointed out that 'now is a good time to buy as house prices actually fell last month'. And proceeded to give a numerical example of how repayments were unnecessary if house prices rise another 30% in the next four years.
  5. Also reported in today's City AM. Once again they rotate out a potential hawk and will no doubt replace with another money printer to nod along with Carney. Same happened when David Miles started making noises and was replaced by that clueless Dutch fella. And of course they got rid of the only true hawk in Martin Weale. Luckily Ian McAfferty has fallen back in line otherwise he would be a goner too. One theory is that they are all spineless creatures and like King and Sentance only become outspoken critics of the prevailing policy once they have safely pocketed their salaries and left. B
  6. I stand corrected... They've weaseled out and the white paper will be the usual smoke and mirror promises. http://www.cityam.com/258554/green-belt-reform-drops-off-agenda-ministers-issue-long
  7. It will be baby steps as they will struggle getting it past nimby MPs but I think it's a move in the right direction. They won't have the balls or brains to do anything truly impactful... like changing the BoE remit (eg away from bank stability and toward something like preserving purchasing power of the population).
  8. Heard that the white paper will outline supply-side solutions like relaxing planning restrictions and freeing up some of the green belt for building.
  9. It sounds like some people here think Bitcoin can replace fiat. I'm not an 'expert' but I see some obvious obstacles which makes me think this is extremely unlikely. Please feel free to point out flaws in my arguments, have not had time to research any of this in detail. Fundamental view: Like it or not, but most people believe in government as their ultimate authority. Anti-establishment sentiment has a long way to go before it becomes anti-government. I'm sure anarchy appeals to some but it has proven quite difficult to run a successful society that way. I'm therefore not going to try t
  10. Let me then try to explain why I see linkers as a bad idea in the context of an actual index-linked bond. In today's City AM there was a note (don't think I can post links yet) explaining that the latest linker issue by the Treasury was at a record negative rate, yielding -1.77%. Sold for 870m, it will return investors an inflation-protected 855m in 2052 (these linkers tend to have extreme durations, not sure how short you can find them for a realistic 'holding to maturity' strategy). Let's assume we made this investment and look at the possible scenarios of how the world will turn o
  11. Your portfolio seems balanced by conventional standards and has clearly done you very well (congrats on FI by the way, hoping to get there soon too). Personally I question the rationale for any form of fixed income investment, when 'risk free' cash essentially yields the same, but perhaps I'm missing a trick. More interestingly, how do you think your portfolio will perform if we see gradually increasing yields over the next few years, across all major economies? Some of your equities may hold up (perhaps financials such as insurers) but generally my guess is that it would be red across the b
  12. Thank you for the link by the way. Sadly this is exactly the kind of analysis I question the validity of in our extreme low yield environment. Rising inflation expectations would hit the yield curve and destroy linkers, so I find that a very poor recommendation. In the past bond prices would survive yields going from 4 to 5% but what happens when they go from 0.nothing to 1%? Isn't that just maths? Inflation protection won't be much consolation when new investors are buying the index at a fraction of what you did.
  13. I take your point that portfolios measured in other currencies have not seen quite as dramatic of a rise. Still, the basic argument I'm making is that the asset classes listed all show uncomfortably high correlation as of late. If Janet emerged from her Jackson Hole (pun intended) and surprised markets with a rate rise, Equity/Bond/Property/Gold indices would all fall. The permanent portfolio does not look like such a good bet then. When I say that portfolios look 'unbalanced' I mean they are highly exposed to systematic risk. Sure, trackers can remove specific risk, you don't need many shar
  14. Hi WICAO and others, Thought I would dip into this thread as I've started to take more of an active interest in passive investments. I've skimmed through a lot of your blog as well as Monevator etc but one thing that strikes me is that very few seem to have a genuinely balanced/diversified portfolio, reflecting the extreme low yield environment we are in. I think the YTD investment performance says it all - a balanced portfolio isn't meant to grow at such ferocious pace. As background, I have a strong view that the low yield environment is here to stay, partly because of market forces (hat
  15. Thank you for calling my post 'problematic', it has given me the impetus to respond. No, I don't think anyone is saying that. But I agree with Skepticus that the problem at its root is the monetary system and that we are witnessing the tragic consequences of banks (and others) trying to operate within that system. I'm merely pointing out that if we cannot get to the bottom of how we got here, we will struggle to see where we are going and how to best change that. Having said that, I am not infinitely patient, and would be all for fundamental reform, be it of the monetary or banking syst
  16. Many thanks for the very interesting discussion, to all involved. This is why I lurk on this forum. For what it's worth, what skepticus says makes an awful lot of sense to me. I've yet to hear a convincing argument on why he/she is wrong on why rates are the way they are, which after all was the topic of this thread. Let's leave idealism out of this one thread and focus on understanding the world as it is. Surely it's only then one can have a sensible debate on how to fix it?
  17. Nobody is sure how it will work, but to me the logic is there and it can't really be any worse can it? Inflation is debt forgiveness, not deflation. If 0% nominal is considered a good return people would pay back those mortgages quick snap. I would. As was pointed out upthread, mortgage rates are unlikely to ever hit or go below 0%, so they would become fundamentally unattractive. And banks would want to eliminate the reserves and capital incurring charges, BoE would just delete the receipts. What's to fear? Lower prices, stickyish wages, productive investment maintained, the UK might actual
  18. Zugzwang indeed. So what would you all do if you were BoE governor? As much as I would like to see rates go up that's just not going to ever be considered acceptable in a deflationary environment. I would go to negative interest, but at the same time stop all forms of QE and monetary easing and allow natural deflation to occur. Anyone who understand basic mathematics (i.e not economists) can see that negative rates can be a sensible response to a deflationary economy. Maintaining a small but positive real rate should allow the market to operate and negative rates should help psychologically t
  19. Only a matter of time before they started using the Fed's techniques... http://m.youtube.com/watch?v=wz-PtEJEaqY Sorry probably been posted a million times. It's good though.
  20. There's both good and bad permanent employees, just like there are good and bad contractors. I agree that lending to a good contractor is in many ways a sensible thing to do, they will find another job (or go permanent if roles dry up). I just don't trust the people on sales commissions to be able to - or want to - identify the good ones. I suppose if I was a bank, and could identify that I am a safe long term bet, I probably would have given my contracting self a mortgage despite my short term contract. Probably not a £1m+ one but one based on the salary equivalent in the most similar perman
  21. Scanned through a few other emails. Nationwide offers 90% LTV. Help to Buy London is also available to contractors, meaning 5% mortgages can be had everywhere with taxpayer backing 40%.
  22. Not anymore. I was sent this by a mortgage broker. Lender is Buckinghamshire Building Society."Under the exclusive arrangement contractors purchasing their first or next home will require just a 5% deposit and will only need to demonstrate a 6 month track record of contracting with no requirement to meet a minimum income threshold. As with all good contractor lenders income will be assessed based on a multiple of the daily rate over a 48 week year, representing a substantial increase in borrowing power when compared to using company accounts or umbrella payslips, which will reflect any tax sa
  23. I think they refer to limited company published accounts. My guess is that they still verify the dayrate and deposit by looking at the company and personal bank accounts. It's not really the potential for liar loans that worry me, most contractors get paid handsomely and under this ridiculous 230 x dayrate x 5 rule they don't need to lie to get the loan they want. I can see these interest-only products becoming popular in London. Limited company contractors often pay minimal salary/dividends to duck the higher income tax rate, instead boosting the company cash balance for capital release upon
  24. Got another contractor mortgage update today, looks like we are loosening up further. Hope the BoE remain vigilant.
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