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House Price Crash Forum

DrBob

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Everything posted by DrBob

  1. Banning short selling on financial stocks is useless, though. There are many ways to go 'short' a stock rather than short sell it. An investment bank or hedge fund that wants to exploit legitimate or insider knowledge to go short on a financial firm has many options, other than short selling: - buy put options on the share - sell call options on the share - buy credit default swaps on the company - go short on the whole index, and then go long on the companies it doesn't want to short (I'm sure there are many other possible methods, but I don't work in the industry) The problem in financial markets goes much further than short selling. There is terrible assymmetry of information, with no way for small share investors to gain access to prices or volume in the much larger derivatives market. In my view, the share market is a 'false market', hopelessly distorted by private derivatives trades between investment banks, hedge funds and other large financial companies. The whole derivatives market needs reform. All derivatives trading needs to be forced onto open exchanges, to bring transparency and to reduce counterparty risk. This would be an absolutely massive undertaking, but is required. Short selling bans are an arbitrary and politically-motivated move which completely fail to address the real problems.
  2. Please, please, please let Starbucks go bust! I used to hate those b*stards who live abroad and sing the praises of their priveleged environs, but now I'm one of them. After many years putting up with coffee chains in London, I'm now living in Wellington, New Zealand*, where the Baristas put considerable time and effort into making 'proper' coffees like this: Perhaps these coffees are 'unproductive' and time-consuming, but you know what? They're fun! You chat with your Barista and with the other people in the queue about coffee, and that's what it's about! I hate the fact that Starbucks come along, saturate the market, and put these sort of coffee joints out of business. . The way I see it, there are two ways to drink coffee. Ideally I'd live somewhere where I could experience both: 1. The Italian Espresso way: a fine, strong espresso or capuccino, drunk al banco with a copy of the local paper 2. The 'Wellington' way: a spectacular, artistic milk/soy coffee, drunk at a table with a copy of the local paper * And if Wellington is so great, why am I online at HPC.co.uk? Because house prices here in NZ are at least as overvalued as in the UK, and I'm p*ssed off about it! Only a matter of time before common sense reigns, though...
  3. This is just appalling! Story one: £167,000 mortgage given to an unemployed couple Story two: £150,000 mortgage given to couple on <£30k/year Story three: Accountant on £20k/year gets £580,000 worth of mortgages for five city-centre buy to lets when he already has two BTL properties in London None of these people should ever have been given mortgages. There's just no way that any government scheme to help 'struggling homebuyers' can or should try to help stave off repossession for these three. They should all be repossessed, go bankrupt and start again on a more sensible footing. Surely this sort of dreadful lending practice is worse than that in the late 80's?
  4. Yet more council housing for the Thamesmead flood plain (the estate featured in Stanley Kubrick's Clockwork Orange). Glass of moloko anyone?
  5. Just to note that I still cannot access my Cahoot account. There are only a few explanations, none of which enhance my faith in Cahoot: 1. Santander are telling the truth. This really is due to a power cut, and back-up systems are woefully inadequate. 2. Santander is lying. The site is down because a contractor or service provider has not been paid, due either to a failure of corporate governance or a lack of funds. 3. Santander is lying. The site is down because there has been a flight of deposits, and Santander's capital adequacy is at risk. Internet banks are the easiest target for shutdowns because there is no physical presence, and vapid explanations like 'technical problems' are accepted by many.
  6. British Bounce Brigade... Sounds like a Benny Hill sketch: http://www.youtube.com/watch?v=rw4oSqcggD4...feature=related
  7. I don't buy this. I have an uneasy feeling that there are just too many imbalances in the system. Government guarantees in many countries are now so vast that they cannot possibly be honoured without devaluing the currency. Failing institutions are being propped up (ala Japan in the 1990s). Many of the trappings of recession (job losses, foreclosures, consumer loan default) have not yet taken place, and will hammer fiscal and bank balance sheets when they do. I hope that we see a deflationary recession, during which the debts from the years of excess are slowly repaid. I suspect that many countries will demur and choose (either explicitly or implicitly) the inflationary option.
  8. I agree. This graph is utterly meaningless unless either adjusted for inflation, or plotted on a logarithmic y axis (especially with linear trend lines).
  9. No they're not. Woolworths in Australia is part of Woolworths Limited, which owns lots of supermarket chains and liquor stores in Australia and New Zealand. Woolworths in the UK is part of Woolworths Group PLC, which operates British Woolworths stores and some entertainment companies. Different companies, same name. I know which one I'd rather hold shares in at the moment, and it's not the British PLC.
  10. List of largest foreign owners of US treasury debt is here: http://www.ustreas.gov/tic/mfh.txt 1. Japan 2. China 3. UK 4. 'Oil exporters' 5. Brazil Looks like we've reserved a berth on the sinking ship. Can anyone tell me why the UK has quadrupled its holdings of US treasuries in the past year? Edit: typo
  11. Uh oh. Sounds like China are pulling the plug on the US. Cue collapse of the US dollar. Other over-borrowed Anglo-Saxon countries to follow...
  12. Demand destruction, credit contraction and a shrinking money supply... Has to be a vote for deflation from me. But who knows what a desperate government might do...
  13. Art prices are in a huge bubble at the moment, and are on the cusp of a dramatic fall. Just look at the prices paid for Damien Hirst's work last week. This will go down as one of the best-timed sales in history (along with Jon Hunt's sale of Foxtons in May 2007). Similarly, vintage wine prices will plummet as fewer of the rich are able to pay for this luxury. We are heading for a prolonged period of deflation (shrinking money supply). You need to have most of your savings in secure institutions in cash. Go for boring, AAA-rated institutions such as NS&I, Co-op and government bonds. Physical gold is reasonable insurance against total financial meltdown, but gold can be difficult to buy and sell, so don't rely on it too much. If deflation is on the cards, keeping a pile of cash at home (well-hidden, of course) could be a really good idea in case mistrust in financial institutions becomes widespread. Compared to gold, cash is much easier to exchange for goods, as everyone recognises it and is happy to 'buy' it.
  14. Cahoot working again. Panic over until the next counterparty fails.
  15. Fidelity's funds might well lose money, but I'd have thought this will just reduce returns for fundholders rather than impair Fidelity per se (provided Fidelity haven't offered too many guaranteed-return funds).
  16. Which makes it all the worse that they're now taking on all of HBOS' debts, and paying for the privilege! I'd be really p**sed off if I was a LloydsTSB shareholder or customer.
  17. I don't think this is bad news for Deutsche per se - this just sounds like a prudent step to protect them from counterparty risk.
  18. I'd also like to see this, but as they're traded over the counter, I don't think CDS prices are freely available. Markit & other companies provide the data to subscribers. Having said that, CDS prices are often quoted in financial news articles, so you can go to news.google.com and search for "credit default swaps" and the name of a bank. You might find recent CDS prices. Here's what a quick search came up with (riskiest UK banks*): http://www.efinancialnews.com/privateequit...tent/2450948813 Bradford & Bingley 209 points Alliance & Leicester 162 points HBOS 122 points For comparison, here are recent CDS prices for the Icelandic banks: http://www.markit.com/information/news/commentary/cds.html Kaupthing 753 points Glitnir 743 points Landsbanki 502 points * of course, there might be many smaller banks/building societies at higher risk, but for which there is no quoted CDS market
  19. Ah! I'm also a Wellingtonian, but I don't own a house. Instead, I rent one for 55% of the cost of an interest only mortgage for a similar property. I'm confident that NZ will see similar house price falls to the UK and US, although the causes will be slightly different. Here in NZ the causes of the house price crash will be: 1. Net emigration (already happening as Kiwis move to Australia for better wages) 2. Soaring food, electricity and fuel costs (yes, we grow more than enough food here, but there are no tariffs or subsidies, so local food prices are determined by international food prices - if the farmer can make more money by exporting, he'll export) 3. Buy-to-letters selling up (buy to let amongst baby boomers is huge here due to the favourable tax rules - many will want to sell as they reach retirement) 3. Dramatic fall in tourism (caused by rising international flight costs) 4. Failing finance firms leading to lost deposits and fewer mortgage/finance options (20 have failed already, and unlike the UK or US, there's no deposit protection scheme for investors) 5. Falling employment due to recession (factories are already being hit, banks and estate agents will be next) I agree with you one one point, though - I'd rather ride out the recession here in NZ than in the UK. It's just nicer!
  20. I think the most inappropriate item so far was a large golden device perched on a toilet, posted here in July 2007. The photo on the EA website has long since been removed, but I uploaded the picture to the HPC site for a day like this: Original topic is here: http://www.housepricecrash.co.uk/forum/ind...=50603&st=0
  21. We're a few months behind the UK, but GC2 is definitely about to hit NZ! I'm in Wellington & have noticed several furniture shops go bust in the last few months (early recession sign). So far, the local property papers show small but consistent drops in asking prices ($10 - $50,000). Moreover, quite a few of the listed properties say 'owner must sell' and many more prices are for 'negotiation' rather than 'tender'. Big falls are on the cards here, where thanks to >9% mortgage interest rates, affordability is even worse than in the UK!
  22. I posted on this topic in July 2007 "Personal Hedging". The obvious choice would be an exchange traded fund (ETF) in crude oil. You can buy and sell these like any share on the LSE *. As you can imagine, this strategy has served me very well over the past 9 months. Unfortunately, as I now live in New Zealand I had to sacrifice my UK trading account a couple of months ago. I can't find any similar ETFs here in the Australasian market, so I hold share certificates in medium-sized oil companies, a uranium miner and an agricultural services firm. * Remember that ETFs rely on derivatives trading. If you believe a major collapse of the financial system, this might not be ideal. I suppose holding share certificates (i.e. not through a nominee account) would be an even safer strategy from this perspective.
  23. Hmmm... Were they 'luxury' or 'executive' flats? Not only will new-build flat buyers spend the next decade or two in negative equity, they'll also find themselves living in a de facto council block! Still, the Neff oven and laminate floor must make up for it, eh?
  24. I'm usually quite contained, but not today! I'm visiting the UK later this week, and can't wait to see the weekend papers! I first looked at buying a London home in 2004 and held off because houses seemed grossly overvalued (I did my sums - homes were overvalued by all of rental yield, salary multiple and affordability). I started reading the HPC forum in 2005, and joined this site in 2006. It's been a long game, but we're finally here: The Telegraph: UK house prices have steepest drop since 1992 http://www.telegraph.co.uk/money/main.jhtm...bcnhouse208.xml The Guardian: House prices 'take biggest fall since 1992' http://www.guardian.co.uk/money/2008/apr/0...prices.property The Times: Biggest house price plunge for 15 years http://business.timesonline.co.uk/tol/busi...icle3704088.ece Daily Mail: House prices fell by £5,000 in March http://www.thisismoney.co.uk/mortgages/hou..._id=57&ct=5 The Sun: Now we're all being crunched http://thesun.co.uk/sol/homepage/news/mone...ticle997122.ece The best bit is that the crash seems to be happening quite quickly. Could this be an internet effect? For personal and professional reasons I hope to buy in 2011 or 2012, so I would love prices to be at or near the bottom then. I'm so excited - crash, prices, CRASH!
  25. Can I suggest turnips? Think Germany during 1916-17. Pretty bloody depressing.
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