bluenun

http://news.bbc.co.uk/1/hi/business/4795033.stm

2007 will be the year main-stream attitude changes. By the end of 2007, more than 50% of the population will react in a disapproving way when you mention the word "property". That's it!. Roll on 2008, 2009 and 2010... AF

Worcester's image is improving then! Do they still have women-of-the-night hanging round Northleach Close?

Okay, here's a serious question then. It's looking like bad debts are getting on for a third of total profits for the last half year for most of the big commercial banks. At what point do they throw in the towel and stop lending? Let's say there's no lag in the system first of all. Do they stop when bad debts = profit and they are providing jobs simply so they can stand still ? Or do they stop when bad debts = profit / 2 because 100% markup on "investment" (bad debts written off) is a rule of thumb most healthy "value adding" businesses would use. If they try and take account of rising trends in bad debts, do they stop lending now to try and prevent bad debts > profit? Genuinely interested in answers as this may be the ultimate credit tightening we're looking for... BN.

Debt, debt, debt and more debt. You know, for the first time in 3 years, I'm thinking inflation followed by deflation followed by re-inflation. Anyone care to hazard a time frame?

Precisely. But they don't really "accept" them any more anyway, do they? They're straight out, shopping with dollars for US and UK industries and property. You can't lose accepting "rubbish" currencies if you buy assets denominated in those currencies... they're hard, tangible, and you can rest assured you own a little more of the world than you did before.

I agree with that as well. Manufacturing, exportable service, whatever. As long as we can be competitive globally and "add value", that's all that matters. And unfortunately, in the last decade, the East has been much more capable of being all those things than the West has.

I believe that too. More £'s = lower currency value = massive shift of wealth from West to East = Increase in the West's competitiveness in manufacturing = New economic balance. DELIBERATE. You just have to live with the inflation and asset bubbles that manifest themselves during the transition.

A gem of an article in the original post. At least the in-fighting bumps it to the top of the forum every so often. Even so, it's a shame a gift of a story like this one isn't backed up by intelligent debate on the thread...

Click on the "about" link. Their main source of income seems to be loans against property. Good job they are part of the FSC scheme... Wouldn't touch them myself...

Interesting conclusion. Most people have the opinion that either record public-sector hiring was to keep unemployment artificially low or so that no-one would dare vote them out as the Tories would cull most of them if they ever got back in. Now it seems that another interpretation is that he wanted to be able to manipulate wages en masse. And I suppose it all falls under the general theme of proleteriat control...

But no scope for tax cuts according to Cameron. Sounded like they were DEFENDING their record on the economy last night... Cameron repeatedly saying that tories would safeguard people's housing wealth. Makes me SICK. How bizarre that this much spin can be put on the situation. The pre-emptive strike that caused this will see NuLab eating more than humble pie when the walls cave in. They'll regret ever raising the subject.

Interesting that yet again the FTSE is DOWN and pressure is OFF oil at the moment, yet the price of gold is rising again. Whereas a couple of weeks ago it seemed to be moving with oil and stocks in a rather traditional way, now it seems to have broken free. Maybe this is the behaviour Cgnao and others have been predicting for years...

When and if house prices fall back to the "50k" line, any idea what that price will be in nominal terms, i.e. at todays GBP ?

But what's the effect of having rampant inflation but no acknowledgement of it? As a saver, or indeed an investor, what can I do to peg my money against something safe? This is a PATHETIC period in economic history to try and be sensible with money when everyone else is in complete and utter denial. Inflation isn't dead! So what do we do, just sit here, suffer its effects, watch mounting debt, exponentially increasing bankruptcies and grow gradually poorer year by year?

Yields are low - people are looking for more than they'd get in interest from a bank. One or two more quarter percentage point rises and if the BTLetters aren't seeing capital appreciation over a year, they'll bail. That'll bring down the market - for a great many suckered into it over the last 3 year plateau it'll mean -ve equity. It'll be "rent or die". However, in exactly the same way as the current economy is a game of bluff between all VI property investors and owners and savers in the minority, so too are rents. It's as likely that, given a failing market that no-one wants to get into, there will be demand for rental property and rents can be manipulated up to sustain yields. It's all a huge bluff - and right on a knife edge.

But on news of an expected inflation spike and China buying the equivalent of 9 months of the worl'd supply of Gold ??? Is it going to get crazy all of a sudden? As Cgnao, trying to pour an ocean of demand into a bathtub of supply? Oh dear... what to do...

Yes BUT... high interest rates favour SAVERS not borrowers. I'd rather have 12% savings and 10% inflation and a housing market in severe recession than 4.5% savings and 2% inflation and runaway HPI. Come on...

No - but you can see it. No-one will allow asset prices to fall more than a few percent. Think of the millions and millions of people up to their ears in debt - and think what would happen if defaulting caught on - banks would go bankrupt. They honestly would. They've only got a 3% protection margin (or is it 7% now). So it's going to be INFLATION by increased money supply, to dilute people's debt. But that can't be sustained either. There will be a bigger and bigger credit binge... and if houses aren't increasing in value due to higher interest rates, where will all the extra money go? Everywhere else, that's where. Think about it for a few moments and try and get your head around the size of the numbers involved.

Cgnao's conviction is so strong that I want to put more of my savings in. At nearly $700 an anounce, I'm loathed to... but I may have to bite the bullet. Those silly borrowers have borrowed too much, and those even more silly central bankers are going to bail them out by printing even more money. I'm really really scared that everything I've worked for will be completely lost...

IIRC, there was a 15% step first. I still have copies of "Sinclair User" showing 15% VAT rates...

Nope, I don't get those options. I'm obviously not one of the chosen few...

Longest running "guess" thread ever. FFS tell us all now... you've had your fun...

Basic lending rates on mortgages up to 6.5% !!!!!! 30% more homes for sale this month compared to last month !!!!!! Their "financial expert" predicted: Slower economy in second half of the year as: MEW has so far financed spending and holidays. Now it is far less likely people can go on using their homes as ATMs !!!!! No $H1T.

Thought I'd post in this thread as it appears to still have some life in it. Was on the train today out of London, "up north" via Birmingham. Granny, mum and young son sat at the 4-seater table infront of me. You could see (hear) the parent and grandparent trying to impart wisdom on the child... They had given him a whole pound coin to save in a little pot. Talking aloud they mentioned "gold coins" in his colouring book and how he'd have to use his pound to buy the toy spaceship they'd bought him sooner rather than later because the price would go up - and that's called inflation !!! You could easily detect what was on both of their minds. Does EVERYONE know about Gold now and are we in danger of participating in the late stages of a speculative bubble? I just thought this was too much of a coincidence... or am I just being paranoid ?