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House Price Crash Forum


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  1. I don't want to put words in to RB's mouth but I suspect he is making an ironic point about the positive spin in the media by doing the same thing in reverse. Thats all.
  2. Hang on how the fvck will he be getting £22k per annum in benefits?
  3. Depends what you do! If you are an out of work real estate lawyer, or structure CDO's for a living then you are fvcked. A few things are sheltering people this time: 1. Dual income. Lots of people "getting by" on one salary 2. More generious benefits (particularly mortgage support) 3. Very low interest rates (for some) 4. Savings/Credit cards. Most professional people (and in some respects they are the hardest hit this time around) have substantial savings or if not savings at least big pre-approved limits on credit cards. This enables them to keep "getting by" for a few months. They also tend to get bigger severance packages. As I have said before on here. The government has gone "all in" with the stimulus package. If they can get growth going again within the next 6 months we might just get away with a lucky escape (albeit many years of weird, patchy, subdued growth are ahead of us until the debt comes down and the fiscal drag can come out of the system). If they can't turn it around then we are seriously, utterly, cap in hand to the IMF level fecked.
  4. Two words "government stimulus" puts off the day of reckoning but only puts it off. Real economy is only just starting to feel the pain. There is worse to come.
  5. Yes, yes. I have lived there and what you say is true up to a point BUT: 1. Those who get pregnant out of wedlock are sent to prison meanwhile prostitution on a scale and level of openness I have seen few places except vegas is tolerated. 2. The conditions of the labourers are truly appalling. 3. It is no sense a democracy and abuse of power and corruption is incredibly rife. There is no free press and censorship is severe. 4. Its safe but its not as safe as people make out (particularly if you happen to be a grain merchant from Afghanistan but that is another story). Rape and murder do happen. Not necessarily reported widely (see 3 above) but they do happen. Graffiti is quite common in places where there isn't the cash to fund a ready supply of cheap labour to clean it off again. It has its plus points (mainly to do with low tax and cheap domestic help) but it also has huge flaws. As I said above it is at a cross roads it either properly opens to the west (with all that entails) and hopes to take its place as a true world city or it withers into the shadow of its oil rich neighbours.
  6. Dubai is a city of contradictions. Its at a turning point right now. Ex-pats are leaving and lots of locals and ex-pat muslims (particularly those who didn't get filthy rich in the upswing) seem to think that it is retribution for a failure to comply with Islamic teachings. It has a choice it can continue to be outward looking, increase tolerance and learn some humility in which case it might just have an independent future or it can merge in with AD and rely on the oil wealth. Either way things have to change.
  7. Which folks is why the european economies have yet to REALLY tank. High unemployment benefit and high levels of employee protection effectively slow the deflationary cycle taking hold. Of course they also utterly feck up the government's balance sheet and are unsustainable at high levels of unemployment without representing a serious drag on growth. Flattens the fall and flattens the rise (whether that is a good or bad thing I don't know).
  8. As I said its a confidence game and the BoE is basically overpaying for the gilts so its easy money for the banks to buy up gilts and sell on to the BofE (BofE is already sitting on a circa £10bio loss by some estimates and all that money is in the pockets of the banks). Plus the markets are only just waking up to the fact that quantative tightening is probably just a pipe dream. Although sterling has recovered from its lows its a long way off its peaks so in that sense there is a bit of a risk premium in there.
  9. £100k in the city is not massively big wage. In the top flight firms of all the major "professions" (i.e. accountants, lawyers, management consultants, bankers) you hit it at about 30 years old (i.e. just pre-partner/principal) The big ceiling is at about £150k Outside the banks you pretty much need to be a partner to top that and its not THAT common even in the banks.
  10. That is what they are doing now but they can't keep doing it forever. QE is premised on the idea (which looks increasingly far fetched) that the bank will tighten again (i.e. sell the bonds back) at some stage. That is the only reason the market keeps buying gilts at the inflated prices (i.e. suppressed yield) that QE produces. They are treating that bank as a "true" buyer. To give you an indication of how much of an impact the BofE has a few weeks ago they announced that they would stop buying a particular type of gilt and the yield shot up 60 basis points in under a minute (that a truly huge move in gilt terms). However, once the market decides that the BofE isn't a true buyer because its not paying with future cash (which is what it claims now) but is rather paying with newly printed cash it has no intention of taking back out of the system then it looks rather more like a Zimbabwe exercise rather than something a legitimate western government ought to be doing. At that stage you get a gilt strike and no amount of printing by the BofE will stop it because by that stage the market has stopped believing the QE story and doesn't want to buy debt in a currency that is being devalued by a printing exercise. That's when the picture changes and it stops being a worry about the credit worthiness of the UK government and starts being a worry about sterling as hard currency (i.e. a currency crisis). At that stage international investors stop wanting to hold sterling (i.e. demand for the currency falls). The only way to stop sterling from falling in the face of shrinking demand for it is to stop increasing the supply of it (i.e. stop QE and maybe even reverse some of it) and/or to jack up interest rates so it yields enough to cover the inflation effect. Thats when it gets messy and at that stage there is no easy way out. Interest rates HAVE to go up or inflation will get out of control and the government can no longer fund itself through printing money (which indirectly is what QE is all about) so it has to cut spending radically and raise taxes. As the meercats might say "simples". We have basically gone "all in" to get one more double of quits spin of the wheel IF the economy can pick up before the markets revolt it will have been a great victory (of sorts) although our structural imbalances will remain (particularly insanely high debt levels). If it can't then we are basically fecked. Either way we are probably only deferring the pain. The question is whether it is deferred by 6 months or 5 years.
  11. Basically all of QE is being used to buy government bonds. There is no limit to how much they can hold (at least no legal limit or anything like that) eventually the market is going to see this for the monetisation of the debt it is however and rebel. How close they are to that limit is anyone's guess. Pretty well informed sources tell me there is a way to go but its not limitless. The markets are starting to realise the BofE will never be able to tighten as it would through out gilt yields a mile. Its a confidence game. No one knows when confidence will break (or even if it will break) but if it does it will likely come quickly and be very messy indeed. Much depends on whether the tax take comes back up. You can forget about any public spending reductions for another 12 months (even if the tories get in next year they won't do anything for the first few months and rising unemployment will continue to take its toll). If it doesn't come back up or gets worse then confidence could easily flow away and then you have a proper currency with the emergency interest rate hikes that implies.
  12. BUT Minimum wage is (considerably) above benefit levels. Who is going to pay them the minimum wage? Answer = us! And we, as you may or may not have noticed don't have the cash. Minimum wage is £200 a week. Now we could, I suppose, print a pile more cash to pay the wages and there may be a case for it from a Keynesian perspective if you believe the deflation story but personally I don't and the last thing we need is any more government debt. If you only pay them what they would have got on benefits then you get back to the crowding out problems I talked about earlier and also take up so much of their time that they are less likely to get into a "real" job as they will have less time to apply.
  13. What is the "basic" wage though. What do they get? If its minimum wage then fine but that is expensive and we don't have the cash to pay it. It has been demonstrated time and time again "workfare" schemes where people are forced to work for their benefits are counter productive (since the people have much less time to apply for jobs) and tend to crowd out private enterprise and drive down wages at the lower end (why employ someone on minimum wage to stack your shelves if you can have a benefit slave free from the local authority).
  14. Bottom line is Britain is no place to be if you are in your 20s Take your university education and move abroad with it. That way you don't have to pay the student loans until you come back in say 10 years (by which time all being well you will earn enough that they seem like small beer). Go somewhere cheaper, with lower taxes and a better standard of living (middle east if you can stick the Islam bit, Hong Kong or china if you can't). Fvck 'em. See how the boomers like retirement without the slaves to keep paying for it.
  15. I agree there are precious few people in middle office earning more than £200k HEH @ people not getting in on parents connections though. A mate of mine (with a very well connected dad) recently took voluntary redundancy from a city professional services. Within a WEEK at the height of the credit crunch and on the strength of a 30 minute "chat" with a senior bloke he was offered a VP job at a bulge bracket bank (despite having no specific banking experience). The "old boys" network is different (and smaller) than it was 30 years ago but for those who are very well connected it is still incredibly powerful.
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