Optobear
-
Posts
2,112 -
Joined
-
Last visited
Content Type
Profiles
Forums
Events
Posts posted by Optobear
-
-
How about a retrospective tax on STR profits? STRs are selfishly failing to reinvest their gains into the housing market - increasing the chances of a fall that hurts the economy. Should a responsible government institute a retrospective wind-fall tax on STR profits? It would simultaneously help reduce the deficit and prop up house prices... for example the tax could hit if you don't buy a house within 24 months of selling - levy a tax of 40% on all of the profits of the housing transactions that led to the STR profit! That would help get things moving!
-
Yes, but each applicant could apply for up to 20 sessions on a single email address and visa card pairing (visa only), and multiple tickets for each session. So it'll be more like 1.8 million * 10 * 2 for the total number of tickets applied for. I read this morning that the opening ceremony is ten times oversubscribed and I believe the stadium holds 80,000 so that's around 800,000 tickets ordered for that session, with ~720,000 missing out.
Q
I can see some people finding themselves up against their visa credit limits, and some might go over (with penalties) that will be interesting!
-
Really? Do you have a source for this? 100,000 people exiting the mortgage market per month - that sounds like a lot.
From a bit of searching it seems that approx 500k people die each year in Britain, around 40k per month. At some point they will exit housing (either in a box, or to a nursing home), and that will free a home. Assume all are couples, then that halves the number, so 20k homes become free per month, and further that only 80% are home owners. That shifts it to 16,000 owned homes per month coming free due to death. So about half of the monthly mortgages.
-
Interesting that the monthly mortgage approvals are a bit less than the annual predicted repossessions from the CML linked from the front page. At this rate of there will be one repossession for every 10 or so mortgages granted... doesn't sound too healthy for house prices.
-
So why is the pound so strong? Anybody out there know?
Strong!!!! I've got a credit card statement here with 1.09 as the exchange rate with the euro, that isn't strong, that is Lira territory!
As to raising rates, doesn't matter in the slightest what the BoE say, it is down to the FED and ECB. When they start to make proper raises (ie back towards 5%+ then the BoE will follow.
Optobear
-
The real interesting point is that they are going to target the base rate on the affect it will have on mortgagees and their ability to pay. So sod inflation or savers or industry the number one group of people in this country that rank above all other are Mortgagees. Cheers bud.
He has little choice in the matter of rates. The UK just has to follow the FED and the ECB. They can plan what they like, but when the others move, then so will the BoE. The converse is true, they won't move significantly until the FED and ECB move.
-
http://www.guardian.co.uk/business/2011/mar/29/thomas-cook-uk-demand-foreign-holidays-slowing
No house to MEW now, people have to save but with costs going up that luxury is going to soon be beyond them as well. We appear to have reached the end of the debt expansion.
We may have reached a point where individuals can't (or won't) take on more debt. Fortunately we have a government and they will have to shoulder the whole burden of creating enough debt to keep the paper money system alive.
-
A downgrade will hike IR for Merv. I still do not believe Merv should or could do anything with IR as a hike will kill the housing market and with that engine of grwoth dead and buried its all over.
RB,
that is not very bearish, or are you turning into RealistBull?
Merv should stop interfering with the banking system by not lending money at effectively zero interest to banks. Stop interfering, let the markets decide rates (and the future of banks and saver) and it will work out better for all.
The thing that will hike IR will be a shift by the FEB and ECB. The idea that the MPC can set interest rates independent of the actions of the US and Europe is daft.
-
On this site, people are baying for interest rate rises.
But lets work through an simple scenario:
You could buy today at something like:
£150k mortgage at 4% interest = ~ £6000 interest per year.
But say you don't buy and staunchly hold on for the impending crash. We eventually get our own way and achieve a 33% fall in values as a result of a high interest rate environment. You decide to buy, leaving you paying:
£100k mortgage at 8% interest = ~ £8000 interest per year.
i.e. higher payments and a net loss for you over any reasonable mortgage term.
The true picture can be even worse with a large mortgage and also with how they front load interest on a mortgage.
At least in this low interest rate environment you can be hammering capital, even if's a larger principle.
The same arguments can be applied to some of the other HPC desirables. People on here talk about job losses, inflation, cuts in benefits as being drivers for the HPC, but again, the money you eventually save on your house purchase might be paid back twice over when it costs hundreds of pounds extra per month to feed yourself and get yourself to work, and when you don't have a job and receive terrible benefits as a result.
Be careful what you wish for....
Or buy at £150k then see rates rise to 8%??
-
its logical.
Inflation is NOT being caused by borrowing on the part of the public, QE is doing the job for us.
They really have run out of "tools"......
Bloo,
I think it goes further. Many people in society - pensioners, rich people, etc. want to have assets so they can be rich. The money they hold has to be someone else's debt. For a decade the mortgage bubble created lots of debt, and lots of wealth (positive savings balances for the rich). Recently that has stopped, people simply aren't willing to borrow enough moeny to create sufficent positive balances for those becoming richer. The government steps in and runs a deficit budget - creates gitls. They are borrowing on our behalf.
Very telling last week, chap from OECD talking about Japan on Today programme, said that Japan has lots of wealthy savers, and lots of government debt. Went on to say that given the money needs to be spent in Yen, then only Japanese savers can lend the money. Rather proves my point.
The purpose of government is to run a deficit budget to create debt (on our collective behalf)so that we can hold it as individual wealth. Of course it nets off to zero, but that doesn't matter so long as people want crisp £10 notes, or gilts, or premium bonds, etc.
The government have to pretend they can't just create the money, that the QE is temporary, that cuts are more important than jobs, anything to maintain the illusion that they aren't just printing the stuff.
Why do they get away with this appalling con? Simply because we (savers) have a demand for government and the government respond by expanding.
-
Quote:
The Budget will include a £250m package designed to help 10,000 first-time buyers to purchase a newly built flat or house, the BBC has learned.
This is small in the scheme of things, but sends a clear message about govt support for house prices.
Question is who pays (even in this tiny scheme).
FTB puts up 5%
Govt puts up 10%
Builder puts up 10% (but they can just increase the price that the buyer pays so it costs them nothing)
100% of the purchase price goes to the builder. Just a scheme to pass money to builders. Doesn't cost the builder anything because there is no "market" price for the homes - it is what they would have charged + 10%.
It seems to me that we are in a phony war on the economy. The BoE pretend they control interest rates - but in reality we can only mirror the FED and ECB. At the moment inflation is raging, and they can't raise rates without FED and ECB do so too, and they're not in the same situation. When the FED and ECB do raise then the UK will raise pushing us back into recession and toppling our house prices.
-
I do not understand, if the yen is strong, is that mean they could do a lot of QE without the worry of the yen being too weak?
So why the Japan bank just print money as USA do which help in pay their re-building cost and lower its yen.
I know there must be a reason they not printing, just not sure why.
They are just printing, that is what a liquidity injection means.
-
To be fair, the immediate problem is ensuring the people survive to summer, not future air con needs. In due course, agreed.
Looking at Japan it's such an awful situation I'm afraid the selfish gene turns on and my biggest thought is the fear of what things would be like on our own crowded island in the event of a disaster of similar magnitude
Prevailing winds are out to sea, the vast majority of the Japanese people live more than 50 miles from the reactors... this is a long term cancer risk not a large scale killer before the summer.
I don't think Brits would be so calm and stoical in the face of similar adversity. I am surprised at how easily situations in the UK could lead to major disruption. The fuel protests in 2000 showed how quickly the country can come to a stand still.
-
Just heard that the biggest concern for the automotive industry is steel
Due to Kashima steel mill halting operations and power cuts effecting Tokyo production.
Power loss in Japan is going to be a serious factor too. My experience of Japan is that in the winter there is a lot of use of gas for heating (it is very cold there), but in summer the energy use domestically switches to electricity for air-con. So I'd guess that shortages of power will only get worse when the weather improves...
-
Have a look at the vidsthat I posted - one of the problems they have with (4?) is they don;t have easy access to the pool becuase the roof has not blown off! Relying on getting water througha crack in the ceiling.
Still can't believe how little power there seems to be at this site. Why haven't multiple gensets, pump sets and fuel been heavy lifted by helictoper to the site (or close to it?). How many days is it now. A few large cranes wouldn't go amiss - you could run the hoses up those and into the building for colling the pools - just knock a hole in the cladding - might be multple layers to go through though?.
How much pay would you want to go there and install cranes?
Also, cracking through the roof might not be trivial, aren't they designed to resist aircraft crashing into the reactor (or is there an additional lower down layer of armoured roof?)
-
Affordable rents for all workers would mean paying far less out in HB. Welfare could be stripped back to what it was intended to do in the first place - i.e. a safety net for people who have lost their jobs and need a little help. It's possible for people to afford to live without benefits, even if they are on the minimum wage.
Quite the opposite. Rents are high because of housing benefit. Cut housing benefit to £100 per month and watch the rents plunge. Will the landlords have the property sit empty?
-
http://www.eaem.co.uk/news/japan-quake-triggers-nuclear-power-reappraisal
Seems the General Electric BWR Mk 1 has a major design flaw looking at the google results.
It reads
"An NRC analysis of the potential failure of the Mark I under accident conditions concluded in a 1985 report that Mark I failure within the first few hours following core melt would appear rather likely."
Jeez, this says there are 192 of such reactors worldwide...
It also says
"Hirokawa said measurements taken near the high school at Futaba were higher than when he had taken measurements approximately 200 meters from unit 4 at Chernobyl shortly after that explosion.
He added: "At the front of the Futaba Town Hall, all our three radiation monitors went off scale and became inoperable (we could not take measurements). At the entrance of the hospital, stretchers were turned over, many things were scattered, a feeling that evacuation had been undertaken in a very rushed way."
-
You would think they would have invented one with an off switch by now. Serious design flaw.
All the details are here:
http://www.nrc.gov/reading-rm/basic-ref/teachers/03.pdf
staggering diagrams - engineering drawings from before the use of computers - all explained.
-
The Japanese have lots of dollar assets. How about a selloff to pay for reconstruction, triggering a US bond Market rout?
I understood lots of it was Carry trade. IE borrow Yen from Japanese depositors at low rates, exchange for sterling or dollars, take to UK or US, lend to mortgages. If the Japanese depositors want to take out their cash, then the loans in the west need to be repaid, the dollars and sterling converted back to Yen, and then they can take out their deposits in Tokyo. Or am I being a bit simplistic?
-
Can anyone advise on the significance of them using seawater? I thought the problem was that they didn't have the power to pump any type of water around the cooling circuit rather than they were short of water.
It is odd isn't it, must be last resort. We're used to water being pretty innocuous stuff (we evolved that way), but it is a very agressive chemical especially at high temperature. So for example, if you heat silicon wafers in oxygen it forms an oxide layer, but only slowly, if you add some steam then the rate of oxide growth is considerably increased...
So hot water is pretty agressive, and hot water with salt added sounds very nasty in a system made of steel.
-
Yes I was trying to think through the implications for interest rates - not just in Japan. If repatriation occurs, you would think that rates would rise in the West but it could trigger earlier adoption of qe3 instead to maintain demand for Treasuries.
After Kobe, the Japanese increased liquidity, pressed down on rates and stimulated spending. The interesting thing here is the much larger fiscal debt. It is more likely that that they will have to offset re-building against expenditure and/or taxes elsewhere. They could resort to qe too.
But I think the most interestig potential consequence is the end of the 'bridges to nowhere' type of spending. Where things were done just for the sake of it despite the fact they would never make sense or a return. Now there exist many worthwhile projects and that if there is a shortage of finance, they would still make sense if an interest yield were due.
The repatriation could be huge. Presumably a lot of Japanese insurance companies have investments in the West.
There seem to be two interest rates at the moment for government - the first is the coupon yield on recent bonds (is that the right term? I mean the rate quoted per annum for the gilt issue to get it away successfully - around 4%), and the base rate (the rate that allows the government to pass money to the banks without the sheeple realising =0.5%). The real rate that the UK needs to pay is already at 4%, so if money starts to leave the UK the government will find itself paying 5% or more, and that will become the real interest rate on mortgages too.
You make a good point about the bridge to nowhere, the Japanese government have been trying to reinflate for a decade or more, but with no impact, this event will allow them to borrow to spend on reconstruction, and that will mean a fully employed Japanese work force for 5 years or more...
-
I know there are separate threads on all these (although some have degenerated into WW2 history), seems useful to try to pick out the likely economic impacts. I know it seems rather callous to look at the economic impact of a major humanitarian disaster, but things are going to be different.
The key question is what happens now economically ? My thoughts...
1) Japanese government now have to spend vast amounts of money on recovery
2) Expenditure acts to jump start Japanese economy,
3) Extra expenditure has major benefits elsewhere (esp. German engineering companies)
4) Lots of Yen gets repatriated as Japanese savers have to spend to recover -
5) Yen carry trade unwinds so much less money available in West for mortgages.
6) Increased distrust of nuclear driving demand for coal and oil
7) Major pick-up in demand for steel and other building staples
8) Oil prices further icnrease from middle-east unrest.
9) Some insurance companies in major trouble (particularly marine)
10) Shortages of some key components that are made in Japan - bits of specialist electronics, etc.
11) China, Taiwan and Korea get major boost as Japanese competition reduces in sectors where Japanese capacity damaged.
12) Yen falls, Euro rises, dollar rises, sterling rises (oil currency effect)
13) Saudi unrest appears to being contained, not clear how sustainable though.
14) Other middle eastern countries see unrest and that reduces oil output
15) BRICS countries do well out of increased demand for raw materials and oil.
16) Shipping volumes pick-up considerably.
17) Automotive in Japan picks-up, but also Japanese exports drop
Looking at that overall, it seems that this will see rises in most stock-markets, will see increases in fuel prices, from a UK perspective, sterling will appreciate (helping to reduce inflation), funding available for mortgages will drop further. Key question is around interest rates, and I think UK rates are actually just a mirror of US and European rates, and so the carry of funds back to Japan will mean that Europe and and US will mean they will need to raise their rates, and we'll follow suit.
Okay, lots of thoughts and speculation there, what do you all think?
Optobear
-
Optobear
We are getting closer to one of the major culprits here - the ideational notion of what constitutes the "good life" in conjunction with the material determinant of security in old age is what is driving the UK prices. Germany apparently, or we can cpeculate, places much less emphasis on homeownership as a means of gaining respect, and therefore we see lower HO rates there because of lower stigma attached to renting. The conclusion is that anything based on ideas can be changed with the introduction of a new orthodoxy, i.e., no stigma in renting.
Good point. I for one don't see any stigma in renting - and having someone else to sort out the leaking gutters rather than my having to climb a ladder is great!
As to a new orthodoxy - I think that can come - lots of very "nice" by modern taste houses become very unfashionable in the 1920s and 1930s (see large parts of South London for example). Ditto in the 1970s.
We've seen a great growth in home ownership that coincided with a fundamental lack of understanding by the banking regulators and politicians regarding the creation of money via securitisation of mortgages. My feeling is that we've seen a once in a lifetime scale housing bubble. Sadly people are prone to cargo-cult behaviours - and wish for a return of the supposed good times... they often don't recur!
-
Let's simplify the claim somewhat ?
Renting would be the better choice, if investing the difference between rent and mortgage payments for the same property would return the new higher price of the property to the investor. That way he could rent rather than buy, invest the difference between the two payments and at the end of the process have more than the house to show for it.
Well, this is not the case, In fact, nothing like it.
Pretending that property doesn't create the giant advantage it does seems to be a part of trying to fit it into a reasonably equitable moral framework. I have a shortcut - real estate property doesn't fit into any reasonably equitable moral framework.
Simplifying doesn't help unless you're clear in what you mean.
When you say mortgage payment - do you mean the interest part of the mortgage payment or the capital part of the mortgage payment, or are you confusing the two?
To refute your second point. I sold a house at the end of last year and am receiving about 2%pa on average on the capital after tax. If I were still owning I'd have suffered a loss due to the fall in house price of approx 2% of taht amount over the last two months. So I'm better off than if I owned?
The way in which property made a massive advantage over certain periods relates to the massive leverage in buying a house relative to the size of deposit. If you'd taken a massively leveraged loan and invested in the stock market you'd have made a much bigger gain. Similarly if you'd bought a house outright (ie without a mortgage) then the returns don't look particularly special compared to say gold, or the stock market. Just compare the average house price graph over 40 years to the Dow or FTSE over the same period.
Bitcoins Going To The Moon?
in House prices and the economy
Posted
I think that is a fallacy. The key question is whether you can create a separate contract to lend them to someone at interest independent of bitcoin. So someone with bitcoins offers to lend them to someone, and the borrower agrees that they will pay them back with interest. Unless the bitcoin system prevents that process usury exists and you get inevitable inflation. With currencies that are regulated by government that process is limited by government regulation (requirements to be a licensed bank, hold reserves with central banks). Without those limitations on usury the bitcoins will simply inflate in the same way as money as debt, but with no regulation the inflation would go Weimar...
Bitcoins are a clever idea but without an understanding of the money multiplier of usury they will be worthless. Set aside that they won't be adopted, and even if they were they'd be regulated.
Another obvious point, although maybe not to bitcoin fans, is we've already got loads of currencies, eg sterling, dollars, gold, picasso painting, model T fords, BP shares, or myriad others, so why bother with bitcoins?