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Posts posted by ezekiel

  1. America, F*ck yeah! Greatest country in the world (NOT!)

    Well, the US is a big place and it can be very different as you move around.

    I was in Maryland last week and the local restaurants were very busy even on weeknights.

    On saturday I went to a restaurant (not a cheap one either) at 6pm to beat the rush and there was a 45 minute wait! That was after coming from Best Buy which was heaving with people buying stuff (including me making my bi-annual splurge).

    I can only deduce from this that some areas have not been touched by poverty or cut-backs very much at all.

  2. This all seems like complete sense to me.

    Money supply (not the monetary base) in the UK is negative and the velocity of money (GDP) was negative last quarter and probably won't be going great guns when they report the latest quarter. So there is little evidence for inflation to be driven internally in the UK. So IMHO its all external cost-push driven.

    Given this, I personally don't think the small advantages (that an increase in the base rates would make to the trading value of sterling) would have come close to outweighing the massive deflationary pressure that would come from the problems companies, the govt and the public would have from the increased debt-servicing costs.

  3. What the BOE and many others are trying to do is to deflate the bubble gradually so the critical bust is minimised. Unfortunately things rarely happen that way and, at some stage, a bust is almost certain and deflation will follow this.

    Not sure you can deflate away a debt bubble. I thought you can inflate it away but deflation means the debt gets harder to pay off.

    Anyway, I believe deflation is the underlying condition within the UK (M4 money supply is going down gently at -1.5% I believe). Obviously the BoE have devalued (at the behest of the new govt) and this has caused externally-driven price rises. However, to push IR up would have little effect on this as at the same time we're seeing massive competition for the same resources and consequently increases in prices. I can't see that pushing IRs up by 1% (I doubt the UK economy would sustain any more than this) would lessen the desire of the chinese to be buying commodities like crazy. Will an interest rate rise of 1% make the dollar-sterling rate change sufficiently for our imported oil to get cheaper while there is increasing demand for oil around the world????

    Personally I doubt it. On balance its probably best to keep IR low (and accept the inevitable external cost inflation) and keep more people in jobs paying back the debt they owe. This will run on for 5-10 years. We have to swallow the reality of paying back 10 years worth of debt IMHO. I think this is what Ken Clarke was getting at.

  4. Hi

    I have tried and failed to successfully find a decent graph for M4 money supply on the BoE website. There are too many types and I am not sure which is which. Can someone provide a link please? I wanted to see UK money supply including bank lending over the past 5-20 years.



  5. Hi

    I found a website which I think is very interesting. http://www.measuringworth.com/index.php

    It has a lot of data tools on it but what caught my eye was the comparison of real/nominal GDP histories. On his website, Cynicus used to make the point that GDP is not worth discussing unless you net for inflation. So this website makes looking at this data quite easy.

    What I found interesting is when you look back across previous recessions (I went back to 1971 because that's when I was born) there hasn't been a "real" drop in GDP anything like as fast or as much. For example:

    Real GDP

    2008 2009 % less

    1330088 1264646 95.1%

    1990 1992 % less

    863019 852250 98.8%

    1979 1981 % less

    674110 651345 96.6%

    1973 1975 % less

    617164 605277 98.1%

    (edited for table formatting)

    So in 1 year we've dropped considerably further and faster than before, draw your own conclusions......

    I've attached some screenshots of the graphs on the website.

    My question is, how is that such a steep drop can seem so relatively painless? My recollection of other recessions was that unemployment, inflation etc were worse (I will be looking these up later) and the general mood was awful - the general public (by that I mean that those that don't read the finincial papers) don't seem that worried.



  6. Wow - most on this liat have calendar year end to post interim or ye bumbers.

    Does anyone know if they Need to have a deal signed (deposit down) or delivered (constructed and moved in) to write to their P&L?

    I assume the latter but since this would restrict their ability to report I also assume that wip inventory that is sold or under contract in some form is still important to them?

    Any insiders out there who can comment?

    • [*]Coventry University hospital cost £380m to build, but taxpayers will pay £3,300m by the time it's paid off in 2041

    My understanding (from a friend who is a finance manager of a well known german corporation that does many/most of the UK's hospital PFI contracts is that.......

    after the 32-odd years that a PFI contract typically normally runs for.......

    the hospital is NOT PAID OFF

    Think of PFI as a lease, rather than hp. So at the end of the term, you can enter a new agreement and keep paying (maybe for a whole new building or overhaul) or, errrm, not have the hospital anymore. Personally I think there'll be a riot if the latter happens so I guess we'll keep on paying for ever.

    BTW one of the reasons for the high cost is that all the kit in the hospital is replaced 3 times during the life of the agreement.

  7. Hi

    I passed this place at the weekend on my way back from the in-laws and thought I'd look it up on rightmove. I just love it, not just the outrageous price but also the hideous photo and the floor plan which shows a "Family Room". Given there is no space for raising a family its incredible anyone has the cojones to call it this.


    Bearing in mind my first place (1 bedder in Guildford) cost £45k (17 years ago), nothing further illustrates the divorce between the housing market and reality than this place.

  8. the simple thing to do is to create a bottom to the pricing. Get someone else to put in a cash offer that is a way below yours. This sets a mark of the market valuation (or at least "your" market valuation). If the EA is telling the truth that there are higher offers then they will come back to you if yours is acceptable (manageable to the seller). If not, they will either come back to you or your friend (in which case they pull out).

    This is simple to do, gives you confidence in what you're being told and entirely legal.

    When I bought my house (8 years ago), its what I did and it worked well.

  9. Sorry, to be clear what you say is correct but I meant how many votes do they lose or how connected are they in the public consciousness to it. They have always been able to say that they were misled. Yes, they miss out on the credit the LibDems get for opposing it. I think for the Tories reputation, Iraq kind of doesn't exist in electoral terms.

    In the end the government takes responsibility for what happens, which is how it really should be, and that's how I think it would play out if the Tories supported a Lib/Lab governments cuts.

    Dear Bogbrush

    You talk a lot of sense, very pragmatic. Most of your posts cut through the waffle and get to the heart of it (like your post on interest rates staying down long term to aid long-term inflation - this was subsequently proven to be spot-on by Merv's quote).

    Keep up the good work.


  10. hi

    the UK GDP figures are made up of different components (manufacutring, service etc.). Anyone know where to find them? I'm interested to see how much of the numbers are made up of government spending and to see what the rest of the economy is doing - I suspect things are much worse than they seem.

  11. I work in communications, (technical not media) only have an HNC and get a little over 40K though admittedly I do work some unsociable hours. Probably won't earn anymore than that though apart from indexed increases. If I were a graduate I'd have no glass ceiling and probably be nudging 50k ( or just doing 9-5).

    I have an ONC and a few other bits and pieces. I earn £61k + bonus and think I'm short changed. The point is that qualifications are not a guarantee of anything, for me it was always about ambition, ability and working hard. I would expect to be on £80k within 10 years viathe same route. All those with good technical qualifications need to take on more responsibility, or make themselves more indispensible to their employers, or leave, or a bit of all of the above. If you're worth it then push for more - the guys in the sales and marketing and accounts will!

  12. hmmmm, really?

    I would have thought that the inflation deflation arguement was kind of sorted for now. They've been pushing QE (and other stimuli) for a quite a few quarters now and they can barely hold prices positive. Bearing in mind this has been done internationally I think you have to admit there has been huge and historically unprecedented government intervention - and with this they are only just keeping economies on the inflation side of the balance. It seems clear to me that without all of this money being pumped in then most and maybe if not all of the OECD economies would be in deflation.

    So, I personally don't think there is any chance, at all of hyper inflation appearing anywhere in the immediate future.

    I admit the author is much better versed in this subject so maybe I'm wrong and arrogant to disagree. But I doubt that inflation will show any signs of getting high (+4% for CPI) in the G7 for at least another year, maybe 2. And when it does, it will head off to 4-5% in the UK, US and a few other places as a result of implicit or explicit central bank (government) policy when they decide to inflate away some of the debt.

    Just my opinion (also the opinion of the super-nutter over at market ticker who has been right about some of these things).

  13. yeah sure, GDP may well go positive this year (more likely next year). But will it last?? Find me a pundit who can credibly tie their shoelaces who says the recovery will not be weak and protracted (and feel like an ongoing recession). Then once you've found that rare pundit, slap him sharply round the face (using the back of the hand) and tell him not to be such a c**t.

  14. What gets me is that the govt are going to fund some of this. It staggers me that somewhere in the civil service, someone is being targeted, managed and rewarded based on paying out highly stretched taxes to fund kids to see the effing world.

    How does this make sense to anyone???

    And in answer to the question - no, we don't have enough plumbers to export.

  15. the last graph indicates prices levelling. I find this hard to believe for any significant period as the market always (I think) is either heading north or south, rarely treading water in the UK.

    I can't see much upward growth though with negative equity, lending restrictions, unemployment increases, govt. spending etc etc all heading the wrong way.

    So I assume its going to be a double-dip. Any forecasts on how long 'till the next slide down?

  16. Part of me thinks 9 months before the BoE base rate goes up. When it does I expect it will be relatively steep, taking 12 -24 months to reach +4%. Take a look at the BoE's website on yield curves which (apparently) foretell the future on this.

    The bond auction thing may be a red-herring. I understand (read somewhere) that Japan have been flogging their debt (admittedly much less of it) for the last couple of decades without any problems from their ZIRP and zombie banks. I know little about this topic but assume that large institutional investors will take more than the current incompetents (Labour) to put them off buying debt from a G8 nation - even one as screwed up as ours.

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