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Captain Coma

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Posts posted by Captain Coma

  1. The FTSE at 2500 doesn't really seen unfeasible now.

    The FTSE at 2500 seems absolutely certain now. I've been saying it for months and it's right on schedule.

    Roubini said the other day that stockmarkets were as overvalued as property, and my opinion is that houses are going down 70% from peak (some maybe further) ...

  2. "Governments don't set interest rates, people with money do."

    It's really worthwhile reading in full the two threads over at Market Ticker listed below.

    They refer to the current disclocation (i.e. starting today) in the US Treasuries market, i.e. nobody wants to buy them, so they have suddenly been massively discounted, i.e. the US Gov isn't good for the money.

    What that means is the gov has to pay more to borrow, and that means much higher interest rates, which will destroy the housing market there (and it's coming here).

    Things haven't really started yet, but this could be the big one.

    UK in same (worse) position. Give it a couple of weeks, maybe less. Mortgage rates are going to get a LOT higher.

    The threads:

    http://www.tickerforum.org/cgi-ticker/akcs-www?post=66034

    http://www.tickerforum.org/cgi-ticker/akcs-www?post=66049

  3. Make him read this:

    Our shared ownership dream home turned into a disaster

    Mira Bar-Hillel, Property Correspondent

    08.08.08

    A couple who got on the property ladder through a shared ownership scheme have dismissed the concept as a disaster.

    Special needs teacher Andrew Howard, 29, and his partner purchased a 40 per cent share of a new flat in Leytonstone from Newlon Housing Trust less than two years ago.

    When he was offered a new job in Norfolk he thought it would be a straightforward process to sell the property and relocate.

    But their experience of ownership and trying to sell has left the couple, who have a two-year-old daughter, in despair.

    Mr Howard paid £79,000 for his share of the £195,000 two-bedroom flat, which carried a monthly rent and service charge of £347 until it shot up to £433 in April.

    The couple's problems began shortly after they moved in. They included:

    • Rubbish not collected for five weeks because of poor access to the bin sheds.

    • A lift out of service for 11 days.

    • A broken front door which had no handle and remained unsecured for nearly two weeks.

    Mr Howard said: "We could not do any repairs ourselves because we were mostly tenants. When we complained, Newlon were invariably rude and unhelpful and treated us as though we were the problem."

    Things became much worse when they asked about selling their share of the flat, thinking the trust would buy it.

    "When we suggested this, Newlon refused point blank, claiming they had no money to do so," said Mr Howard.

    He made a formal application to sell in April but discovered that under the terms of the lease he had to give the trust first option and up to eight weeks to resell the property, for which it would claim an agent's fee of 0.75 per cent.

    Mr Howard had the flat cleaned and painted ready for viewings but heard nothing from Newlon for two weeks.

    The couple were then contacted by valuers, to whom they were asked to pay £300 in addition to paying Newlon's £400 legal costs and for a home information pack.

    By early June the trust had still not put the flat on the market and told Mr Howard the eight-week period when it had sole agency rights would only begin when it appeared on a website marketing shared ownership homes. Newlon also said it had a list of interested buyers but these never materialised, claimed Mr Howard. He added: "In July, after many fraught phone conversations, Newlon finally allowed us to use our own estate agents, who at least tried to market the flat properly. "But by then the market had gone flat and the holiday season had started."

    The final blow came this week, when Newlon assistant director Sunita Parbhaka told Mr Howard she wanted to contact their mortgage lenders, Nationwide, to "find a way to help you".

    According to Mr Howard, she said she wanted to discuss repossession of the flat even though the couple had never been in arrears. Mr Howard said: "I am appalled a charity which is meant to help people like us would want to force us into repossession and extract money from us at every turn."

    He now considers shared ownership, the flagship of Labour and Tory affordable housing policies, a "scam". He said: "With shared ownership you have 100 per cent liability and zero per cent rights."

    A Newlon spokesman said it had tried to help the couple. He added: "We have not failed in our obligations to the owners of the flat, nor have we threatened them with repossession. We sympathise with people finding it hard to sell their homes in the current housing market."

    http://www.thisislondon.co.uk/standard/art...ster/article.do

    (from thread #1250617)

  4. This from the comments on the Telegraph article, by "Antoine", at 12:16 PM, if you think I'm pulling yer leg ...

    As the world now faces financial collapse, with millions about to become unemployed or lose their homes or indeed everything, let's reflect on the simple cause of the crunch, and the fact that many people wanted this to happen - through envy, greed or selfishness: the fall in house prices. It is as simple as that. The law of unintended consequences is being proved correct on a massive scale. Mr Bootle is one of the chief culprits in demanding that house prices fall. I hope that he is satisfied.
  5. The only "news" they can hit the markets with now is a rate cut.

    It will have to be big and before the meeting otherwise it won't have any impact.

    I'll go for this afternoon before the US market open.

    Before a slump appears imminent and unavoidable, interest rates positively affect stock prices, but later, projections of growth influence sentiment negatively, so it's doubtful a dramatic lowering of interest rates would do anything but lead to a run on Sterling now, and LIBOR would ignore it under present conditions. As Nouriel Roubini put it last November:

    "To take a longer term perspective it is well known – from basic macro theory – that the equity market reaction to poor growth news is ambiguous. Lower than expected growth lead to a higher stock market value via the “interest rate channel” and to a lower stock market value via the “profits/earnings channel”. The former effect derives from the fact that bad economic news increase the probability that the Fed will ease monetary policy and thus stimulate the economy, demand and profits. The latter channel derives from the fact that slower growth – or even worse an outright recession – will lead to lower demand, lower revenues and lower profits. Indeed, as stock prices are forwards looking and equal to the discounted value of dividends where the discount rate is related to an appropriate measure of interest rates, bad growth news affect the numerator and denominator of the ratio of dividends to the appropriate discount rate. Usually, the first effect dominates at the beginning of an economic slowdown – when the likelihood of a slowdown is high but the likelihood of a true hard landing or recession is still low and unclear: then the interest rate channel dominates the profits channel. But once the signal of a hard landing or recession become clearer and the likelihood of such hard landing much higher the profits channel dominates the interest rate channel.

    http://www.rgemonitor.com/blog/

    He also said last week that stocks are as over-priced as houses, so another 30-50% to go?

    FTSE at 2500? You may laugh ...

    PS I know you were referring to the USA

  6. Is that true? If so why did Hank 'make up' such a large number? Couldnt he have asked for 1/3 the amount, and still got what he needs. It would have seemed more palatable to the public....

    My guess is that it had to be large enough and dramatic enough to be plausible as a one-off hit. That was the disguise. The way the media have utterly missed the fact that it is a credit facility and not a single lump is beyond belief.

    Those that describe the bailout as treason are saying that the way forward is for the USA to default on its debt - in other words, to call China's bluff and say that they are not going to pony up a single plug nickel. There is virtue in this to the extent that, if China, Saudi, etc, did carry out the threat to dump their increasingly worthless T-Bills, it would not only destroy the dollar but their own economies as well.

    So bluff should be called by double bluff. What is annoying the folks at Market Ticker (who, it should be said, have howled at the whole bubble all along and can't be blamed as going along with the debt catastrophe: they are almost all fiscal conservatives from what I gather), is that in this game of Prisoner's Dilemma, the US is blinking first and rapidly. They want to say to the foreign debt holders, "Do your worst and see what happens". That Bush and the Fed (and now the Senate) are such cowering wimps is excruciating to them. We'll see if Congress can stand up and say "War? You want War? OK then ..." tomorrow.

  7. They're having kittens about this over at Market Ticker.

    Point 1 (correct as I understand it) is that the $700bn is not a fixed amount but a credit line, the key phrase being $700bn "at any one time". In other words, a money-laundering operation for the banks (or select banks of Paulson's close acquaintance). It works as follows: Fed buys toxic bonds above market price, say at 50% of "maturity", then resells them at say 30%. On a $1m bond a bank launders $200k. Rinse and repeat ad infinitum at taxpayers' expense.

    Point 2 is the kicker: foreign countries have the right to sell toxic debt to the Fed. They don't even have to have a company with an office in the USA. That means all the underwater worthless CDOs etc held abroad can be sold to the US for real money, so the US gets gang-banged indefinitely.

    Why the hell would Paulson insist (and insist is the word - he has threatened to veto the whole thing if this isn't allowed) on this rape of America?

    The belief is that the entire rescue package constitutes a huge "margin call" on US foreign debt. They've sold crap to the Chinese and Arabs, who now hold it on their balance sheets, and therefore hold the US to ransom: were they to divest it, the dollar would be history. Solution? Buy our crap and suffer. Or else.

    Karl Denninger calls it economic war (by China).

    Some on Market Ticker reasonably point out that it was the US that sold all the toxic crap and destroyed the dollar themselves, so how can they complain? Nevertheless, such a move marks the beginning of the end for the US and they ain't liking it!

  8. Boris didn't fire him, Blair "resigned".

    That was exactly my point. But Blair could have refused to go and he didn't. Neither did Smith back him up at the Home Office. Ergo there was some bad stuff which meant he had to go or have something very nasty revealed. Otherwise there would have been plenty of mileage in it for NuLab Blair to stand up to the "Tory toff", correcto?

  9. NO PEOPLE!!!!!!!!!!!!!!!!!

    EVENTUALLY -- BECAUSE OF THIS ---

    THE PRICES WILL HAVE TO COME DOWN!!!!!!!!!!!!!!!

    Yes Eric, and considering the fact that even a 50% deposit gives a lender little security against capital erosion, that means that prices are going to come down so quickly even us bears on this site might be unprepared for the shock of it.

    Hurrah!

  10. What's interesting is that Boris had no powers to fire Blair; only the Home Secretary can do that.

    Therfore Blair knew that Boris had the goods on him and had to resign - wouldn't have done so otherwise. Smith had to accept the resignation ("with regret") because she knew the political sh*tstorm that would have come out if Blair had made a stand.

    Whether it was the £15k to Blair's pal to "improve his image" or some other bung is not clear (I love Boris's line that it was no single transgression that tipped the balance, as if there were so many instances to choose from!), but it was more worthwhile for Blair to throw in the towel than defend himself and see his reputation ruined.

    That's the hard, cruel math of the case.

    Oh, happy day - the true beginning of the end of New Labour and a decade of the rule of the sociology lecturers' theory of the universe!

    Ahoy hoy.

  11. You want to try part-exing a Porsche to them.

    If you look at their range

    Boxster - affordableish to the middle earners - a lot went to baby boomers in their retirement - it was the MGB from their youth that did not rust and mostly did not break down. Also sold to 20 somethings who were borrowing to buy it on the way up. And it's a sodding excellent car. Old now - revised version came in 2005. Not the trinket it once was but still a great driver's car.

    Cayman - more expensive Boxster that was cheaper to make - sublime handling but you explain the logic other than lining the pockets of Porsche AG - does not seem to have sold all that well - just too expensive.

    Cayenne - soddingly ugly, petrol only (till 2011 I gather) - caught the zeitgeist and loaded their coffers for 3 or 4 years so they could afford to develop new cars. Great to drive - terrrible image and horrifically expensive to own and run (especially a Turbo). Sales were flagging anyway but fuel cost against it mostly - well that and middle class retarded women campaigning outside schools.

    911 - everyone has to own one at some point - the icon - for the right and wrong reasons. But massively oversupplied and a favourite of the midlife crisis - and affordable for those who had their mortgage paid off or who felt comfortable or took money out of their house. But facelift due (just arrived), lots of people trying to get out of 3 year old ones, depreciation is savage on them at the moment (£100K 997 Turbo in late 2006 - try getting more than £60K for any of them from a dealer now)

    Panamera - odd, very odd, supposedly cheap from £35K upwards, but who knows yet - speculators (except the earliest speculators) got done over on the 911 Turbo R8 and the M3 - (whatever dealers tell you they are proving very hard to shift without making a big loss now).

    And the used buyers with cash are not buying - because they can easily fall another 10K in the next 6 months... much like houses..... (why catch a falling knife).

    You are Richard Hammond and I claim my £5!

  12. So your bill was only £90 for a new bulb......MOT usually costs about £50 for the ticket, so even if that was included you paid £40 for a bulb.

    I am not convinced about your large IQ possibly large BS.

    My MOT was £80 last year with almost nothing done to the car, and I'd expect it to be about £90 this year under the same circumstances, so it sounds about right.

    Let you know in a couple of days ...

  13. Since we're on the subject, here's some advice from Lorna Bourke in yesterday's Evening Standard property supplement (I normally try to avoid it - "one-bedroom flat Belsize Park, superb potential for refurbishment [!], only £490,000", etc), but for hilarity it takes some beating.

    This is from an article titled "Positive thinking" on how falling equity is just fab:

    Looking on the bright side, it was time for a correction in the market; first-time buyers can now enter the market if they have access to a deposit. Even those who need to move house are not trapped, as long as they still have equity of about 10 per cent. If their home, formerly worth £200,000, is now worth only £150,000, the property they want to buy, formerly worth, say, £300,000, is probably now worth only £225,000. So they lose £50,000, but save £75,000 on the new property leaving them £25,000 better off.

    (not yet up on the interwebulator, so no linky)

    I don't quite know where to start with this! If they still have 10% equity left (i.e. £15,000 on a house now worth 150K, having lost, I suppose, £50,000 of equity already), it constitutes under 7% of a deposit for the more expensive place they now want. How does that work?

    Or am I missing something?

    Anyway, get out of trouble by trading up! Housing market saved!

  14. There was a very good thread started by ExtraDry Martini the other day when the bailout (bale out?) was first mooted, and he did a good job of both explaining and defending it, I thought.

    But that was before these damning details came to light (and if you haven't yet, then do read Karl Denninger's line-by-line analysis of the proposed Act). I wonder, if he is out there, whether EDM would change his opinion now we've all had a chance to look at what really does seem to be, right now, an attempt at a coup d'état by the banks, with GS at the head of the gang.

  15. The people on this site were dismissed until recently as "doom-mongering amateur economists".

    Posts on the site were ahead of the game in terms of commenting on and predicting the downturn of house prices as well as the consequences for the wider economy and society. You couldn't read or watch anything in traditional media to rival what was on HPC.

    The wider media and population have been catching up recently and newspapers and TV have been carrying bearish reports to rival many appearing on this site.

    So it's time to highlight some of the site's recent doom-laden predictions that the media are still unwilling to buy into:

    1. The US will be bankrupt ie default on its debt, within the next 12 months

    2. House prices in the UK will fall by 70% from the peak reaching bottom by 2012-13

    3. The Labour Party will be wiped out (ie. less than 80 seats) after the next General Election

    4. Mortgage rates will rise to 8-10% by the end of 2009

    5. The FTSE to fall below 4000 and the DOW below 8000 in the next six months

    Are these too bearish or not bearish enough? What other doom-laden predictions from HPC posters set this site apart from those in the mainstream press?

    FTSE to 2500. Equities not hit yet.

  16. The very act of buying HBOS means that LloydsTSB has taken a massive bet that house prices can only go up by a hell of a lot over the next 12 months. Because if they don't, the collapsing assets against which HBOS has lent will mean that LloydsTSB has just signed its own death warrant.

    Unless, of course, Gordon has guaranteed all possible losses with taxpayers' money ... (If I was Lloyds I wouldn't have gone near the deal otherwise).

    So if it's tax payers' money that they'll be p*ssing up the wall then there is of course nothing wrong with 95% mortgages.

  17. The question is are we surprised by recent events. I feel as if I'm not, and checking back over old posts I found this, from precisely a year and a day ago, where I wrote (re Lehman Bros):

    Okay, correct me if I'm wrong (I'm sure you will), but re: the mystery of A&L ...

    Q What connects NR and A&L?

    A Lehman Bros (they both originate subprime loans for- e.i. supply CDOs for - the brokerage).

    Now, Lehman Bros are the first of the big brokerage forms having to report 3rd quarter results on Wall Street this week. Tomorrow morning, in fact.

    Perhaps someone has seen Lehman's figures and decided that A&L are toast.

    That might mean Lehman Bros are toast.

    And as the man said,

    "If one big brokerage goes there is a very significant risk that they all will."

    (http://www.tickerforum.org/cgi-ticker/akcs-www?post=4669&page=15)

    Well, Lehman has now gone, only GS and MS left standing, the latter tottering as we speak, and I wouldn't trust GS further than I could throw them.

    My thoughts were nothing special at all - they were informed by Karl Denninger ("If one big brokerage goes there is a very significant risk that they all will."), and lots of us did think all this would happen. We think this is still only the beginning in fact.

    More prosaically, concerning house prices ... 70% down now looks cautious.

    Yeah, ban short sellers, that'll fix everything.

    Yeah, set up a big dump for all the toxic balance sheet debt - the new strategy: debt is no longer debt!!! (Like Lehman's desperate "Good Bank/Bad Bank" idea of last week, ha ha.) That'll work for sure.

    Pillocks.

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