zugzwang

Summarising the above.

A Fed rate hike + a sovereign debt downgrade for the Japanese on the same day? Kyle Bass must be rubbing his hands with glee!

US murder rates are rocketing again for the first time in a generation. The socioeconomic parallels with late 70s and early 80s seem obvious, when cities like Chicago and New York were bankrupt and falling to pieces.

Someday you can tell your grandchildren you were alive when the Fed funds rate was 0.14% and grown men were terrified of it going up to 0.39%.

It's get the f**k out time!

Try $10 trillion in offshore, non-bank borrowing instead.

They know, as we know, that the racket is unsustainable. It doesn't matter whether you believe the market to be inventory constrained or affordability constrained, or a mixture of both, the steep decline in transactions since Q1 2014 is the tell. Transaction volumes drive prices, in both directions. This ONS chart suggests to me that nominal falls aren't far off. Before the end of the year quite possibly, unless the oaf in No.11 intervenes again on a similar scale to 2013.

You can't see the emerging markets complaining? They're screaming bloody murder!

Hey guys, what's really changed since 2006? Oh yeah, there's an additional $13 trillion of debt outstanding...

'Demand' is a two way street. There has to be both a pool of qualified and willing buyers but also a pool of qualified and willing vendors. Low interest rates suppress inventory because older homeowners who would either sell and downsize, or sell and rent, have no incentive to do so. Rather than cashing out and using savings accounts for yield as they have done in the past, older homeowners have instead been opting to hold on to property as a rental investment. The conundrum for the BoE is that were they to raise rates sufficiently to entice homeowners to cash out then not only would this bring additional supply to the market it would also stretch affordability, in a market where price to income ratios are already stretched to their limits. The pool of qualified and willing buyers would thus be reduced until prices were significantly lowered. Nor is the status quo sustainable. As UK housing sales dwindle to nothing there is less and less need for new home development and construction. An industry that was once a driver of UK economic growth when the housing market was bubbling will cease to have any relevance at all. Bleak news for the broader economy and at some point bad news for the stock market too.

It's not as if they're not trying. Opening a door and climbing a flight of stairs is harder than it looks.

Looks like I was a week early with my sub-6K call.

The Shanghai stockmarket has crashed apocalyptically since that newsweek puff piece was written. The pai gow gamblers don't have a tin cup to piss in. Same goes for the Chinese govt.

£423k for a one bedder? When pigs fly!

"It is the first virgin crisis in history conceived without sin in the executive ranks... while lions are roaming the camp-site the FBI is chasing mice."

All housing markets follow the same pattern: sales volumes drive prices, in both directions. Run a moving average over the transaction numbers to smooth out the seasonality and that relationship is obvious even on the Count's chart. Transactions peaked in the first half of 2014 and have declined steadily ever since, yoy -15% by May 2015 according to Land Registry. Unless Mr Austerity conjures up a plethora of fresh subsidies (unlikely but not impossible, I'll concede) then UK house prices will inevitably follow suit.

Zero percent interest rates are the problem! Flat yields equal dwindling returns from those lucrative carry trades and swaps. Pretty soon you've got to leverage a billion just to make a buck.

"The Federal Reserve is not currently forecasting a recession." Ben Bernanke, January 2008

There's nothing to explain. Prices always peak a few months after transactions peak. It's the decline in demand which sets the trend and leads the market down. The only thing that could reverse the trend would be a massive upswing in sales.

Ah. Makes sense now.

Probably because they're always miles behind the bloody curve before they do the first one.

The rhs of that chart has a familiar look about it.

'Born in the UAE' is one of my favourite Springsteen songs.

The BIS issues a 'five-alarm' fire warning over impending US rate rise. http://www.telegraph.co.uk/finance/economics/11858952/BIS-fears-emerging-market-maelstrom-as-Fed-tightens.html

AFAIK, neither Morgan Stanley or Goldmans were technically qualified to receive their bailout lucre prior to September 2008. No problem, just let them become traditional bank holding companies overnight, and viola! They can help themselves to a fat wodge of the TARP and buy up a clutch of fellow Wall Street bankrupts at cents to the dollar with whatever they've got left to spare. Brown performed a similar shotgun manouvre, of course, with Lloyds and RBS. I guess the moral is that too big to fail almost never equals too big to bail. The legal obstacles will be simply thrown aside. I understand the anti-fiat arguments and consider them to have some merit but unless the shadow banking system is effectively regulated they're irrelevant. Offshored non-banks and financial intermediaries will continue to use derivatives and synthetic loans to inflate the money supply outside the authority of the currency issuer, this artificial surplus will continue to feed back into the real economy creating demand for traditional loans that otherwise would not have existed, in turn enabling a further expansion of the derivatives trade. A continuous, pro-cyclical hyperinflation of broad money is the most likely result - pretty much what we've witnessed since the late 50s when the so-called Eurodollar deposit markets first became established in Europe and London. Central banks have played their part too, of course. A reluctance to let financial excesses work themselves out via creative destruction is archly hypocritical given their ideological attachment to the free market in just about everything else. All they've done is prolong the crisis and make the inevitable collapse 10x worse. 'The Long Emergency' is a phrase of Kunstler's that I like a lot. This mess has got years and years to run.