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How Long Before Qe Will Lead To Bust For Uk Plc...


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It is impossible to prevent QE money from affecting the high street but don't forget the relative quantities of cash involved. According to some estimates the UK money supply is in excess of £3,000bn so the Government would need to print a significant quantity to have an impact on prices.

For example, let's say the housing market crashes by 40%, that means something like £800bn to £1,000bn currency has left the economy because loans have been paid down. If this money is permanently removed and not replaced by new lending, prices will fall by close to a third. If they print an extra £800bn to £1,000bn through Quantitative Easing prices would be restored to their previous level.

To have its desired effect QE money must feed into productivity ,wages and proper job creation not just copius amounts of new debt ... we would be back to square one in the blink of an eye.

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It's impossible for house prices to fall and for Sterling to continue to weaken. For any lengthy period of time, an economy can only have one or the other: Cheap houses or a weak currency.

Can you explain why it is impossible for both the currency and house prices to fall for lengthy periods of time? Is this because foreign investors would start buying property here?

I'm not having a go, I just didn't understand why.

Thanks

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Watching the unfolding news with great interest as I have to say that the more that Govs roll towards Printing money to stop the deflation, (Quantitative Easing they're calling it) then I can only see a huge pent up potential for a take off of inflation again to 'neutralise' all these stupid trillion's that we (Taxpayers) are putting up.

Seeing as we've absolutely no chance of ever getting the Banks / Motor co's, and all / any other tom dick and harrys bailed out monies back to Gov and therefore us, Hyper inflation will quickly reduce those debts to a manageable level to the serious detriment of actual $ / £ values of anyone holding actual 'dosh'. Must be time to try and borrow another trillion then while nobody wants to ???? Certainly not a time to have cash !!

I like the link to the newsletter below and must say that since we first started bailing out Banks, I can't see any difference at all with Communism and Capitalists systems as they are both run totally by the powers that be in a self interested way.

Is GB going bust? No it's technically bust already but you can bet your last breath that we won't go as my understanding of going bust means that you have nothing behind you to back you up and you start again a fresh.

Can you see any Government forgoing their incredible inflation incrementing index linked pensions bevcause they've allowed their country to bust.

We -

(us actual private economy workers and taxpayers and actual money generating people rather than Gov / civil service / public employees / non working benefit claimants)

- have got to somehow think of a way to join the 'Great plan' that is being schemed up by those we support so that we don't keep getting screwed. Any ideas ?

Here's the newsletter I like :

http://www.fleetstreetinvest.co.uk/daily-r...lyReckoningLink

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Can you explain why it is impossible for both the currency and house prices to fall for lengthy periods of time? Is this because foreign investors would start buying property here?

I'm not having a go, I just didn't understand why.

Thanks

How expensive is a 3-bedroom house in Zimbabwe?

The kind that a hard-working family would live in?

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Are you therefore favouring the beckett argument of another boom soon in the pipeline ? Really, not trying to put words in your mouth but what is the end game for the anticipatedQE/Bad Bank/Nationalisatin plan. Or do you think something entirely different would happen.

And are those falls of a third you mention in your example would that be in addition to the hypotheticla 40% crash.

I'm an economic dunce, seeing as this is hpc i'm trying to figure out what effects govt. policies for round 2 of bailouts will have on house prices in the near term.....i.e next 18-24 months.

Are you saying that the only way they can return us to a new housing bubble is to QE/Print 800-1000bn pounds ?

These questions are open to all btw, i notice a change in sentiment from disaster to 'yes it's bad, but we could actually get back to something resemble the trend line in lending for houses and house prices relative to incomes.

A Beckett boom 18-24 months from now is entirely likely but by then, if they haven't printed a significant amount with QE there will be serious doubts about the strength of Treasuries. If they do print significant QE that will restore "confidence" in the banking system and Government debt.

The falls of a third are not in addition to the 40% crash... the difference between the two figures is due to the housing market being slightly more exposed to credit conditions than the rest of the market.

The market wants to know how much money there is in the UK. The 2nd bailout of the banks has transferred the risk of a banking collapse into a risk of default on Government debt. We don't know if the Government will keep rolling-over the debt by issuing yet more Treasuries or if they will print. For as long as the question remains unanswered there is uncertainty surrounding the price of money. If they want to restore the price of money to present levels they will need to print in excess of £1,000bn.

To sum up: The money supply is made up of around £2,000bn bank credit and £1,000bn Government credit, plus a small amount of notes and coins. The 2nd bank bail out has transferred the bank credit into Government credit so now it is entirely Treasuries. They can keep rolling the Treasuries and we can continue to use them as currency or they can replace them with banknotes.

If people worry the Treasuries are not going to be replaced with banknotes they (the Treasuries) will trade at a discount...

To have its desired effect QE money must feed into productivity ,wages and proper job creation not just copius amounts of new debt ... we would be back to square one in the blink of an eye.

QE is different to copious amounts of new debt, it is permanent money that does not leave the economy and has no default risk. We would be back to square one, which is what they would most like to achieve...

Can you explain why it is impossible for both the currency and house prices to fall for lengthy periods of time? Is this because foreign investors would start buying property here?

I'm not having a go, I just didn't understand why.

Thanks

As GregG says, the value of a currency is measured against other countries... If the pound is weakening against the Euro it must also be weakening against UK real estate, leading to house price inflation. A European would pay the same quantity of Euros for a house (in the UK) because the exchange rate would be better for them.

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A Beckett boom 18-24 months from now is entirely likely but by then, if they haven't printed a significant amount with QE there will be serious doubts about the strength of Treasuries. If they do print significant QE that will restore "confidence" in the banking system and Government debt.

As GregG says, the value of a currency is measured against other countries... If the pound is weakening against the Euro it must also be weakening against UK real estate, leading to house price inflation. A European would pay the same quantity of Euros for a house (in the UK) because the exchange rate would be better for them.

+1.

The currency WILL devalue further. And this WILL provide significant pricing support. At the end of the day, houses are a commodity. When they get cheap enough to look like a complete and utter steal, and provide high enough yields, someone will buy. Right now, it looks like that someone will be Johnny Foreigner, in a big way, at least at first. The devaluation is making UK property look stupidly cheap, and yields for many rentals and commercial are already crossing 8%+, I'd predict 10% soon. All it takes is one small segment of proerty to boom (London, commercial, rentals, etc), and confidence will turn quickly to the rest of the market.

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The QE is not getting spent on tangible assets. its stopping banks collapsing.

Interesting concept. Are you saying that the money the government are investing in these banks is money that was previously wiped out (and hence deflationary) that is being replaced? If so how do we know when they cross the line into adding more money to the money supply.

Or perhaps the money that previously existed was of artificial value hence by perpetuating it's existence in the money supply it actually makes inflation worse.

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+1.

The currency WILL devalue further. And this WILL provide significant pricing support. At the end of the day, houses are a commodity. When they get cheap enough to look like a complete and utter steal, and provide high enough yields, someone will buy. Right now, it looks like that someone will be Johnny Foreigner, in a big way, at least at first. The devaluation is making UK property look stupidly cheap, and yields for many rentals and commercial are already crossing 8%+, I'd predict 10% soon. All it takes is one small segment of proerty to boom (London, commercial, rentals, etc), and confidence will turn quickly to the rest of the market.

all i have to say is london commercial rentals at the moment are being hit hard by the down turn,many people are not able to pay the rent i know one mate who hasen't taken the lease back as he would have to pay the rates. he will leave the same company in the shop untill things pick up or he can be sure of getting someone to rent it at the old market rate.i think it will take a year or two for any pick up for london commercial's to pick up, as for office space for rent it's as cheap as 2005 now...still no takers.it will get really bad in london as for johnny foreigner he will run away if things get much worse.

any buyer is looking for returns for commercial property,their is very little chance to make money in that game for a long while now.if you hold empty property the costs mount rates,insurance otheir costs. johnny foreigner will need really deep pockets to keep paying the costs and get no rent in return how long will he do that for, and if the pound keeps going down his investment is also going down with the pound you think they will keep buying i think a lot of them will get cold feet and run the experts have told a lot of people things will get better at the end of this year :unsure: .i think it will take till 2011 before we see any green shoots :lol:

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Even the smug and glib commentators on the mainstream media are admitting things are getting terrifying.

It must be really so.

yes i reckon a lot of people are in tune now ,,even in the mainstream media that things will not be ok for a long while...it's taken them a longtime to come around to this way of thinking.. :(

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The faster Sterling drops, the more competitive UK plc gets and the faster we can get out of recession. This may of course be government policy, being like protectionism but without the tax collectors at the ports :) It can be blamed on the market instead of the politicians.

I work in a company in a specialist field with only 3 or 4 competitors on other continents. Our Sterling prices are helping us win sales all over the world, exceeding targets for 2008. We have so much room for discounting since the wage bill is in £ but income is in various currencies, we can out price competitors.

VMR.

there's still some good news still out there nice to hear that there is !!!

the thing is, what you have said shocks me uk £ wages are low from what you say, so your company can out price competitors,so you can cut prices on the back of low uk wages due to the pound...

is this true even against china or india ? :unsure:

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yes i reckon a lot of people are in tune now ,,even in the mainstream media that things will not be ok for a long while...it's taken them a longtime to come around to this way of thinking.. :(

Still predicting pairty with the Euro on 14/1? When was 1.30 again? 5 weeks from now?

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Still predicting pairty with the Euro on 14/1? When was 1.30 again? 5 weeks from now?

i have said since the start by the end of march or before ,,however as things seemed to have changed that the pound seemed to go down faster then i expected yes i thought it would happen by 14/1 it will happen pretty soon, i have already done very well...

you need to take note i said by the end of march or before at the start of oct 2008 when no one was saying that, many if not all on HPC thought i was crazy.

now by the end of march you will see a real run on the pound.. :lol::lol::lol: i will jump in to buy property in london with my euros it will be all repo's !!!! that will make a few people on HPC very happy... ;)

by the end of march you will see one euro=£1.25 or more....or even £1.30 to one euro..no way will the pound do well !!!

the news coming out in march will bring the pound down !!! you can :lol: as much as you like,,march will be here soon...i will say my goodbyes to you at the end of march with a smile on my face when you will see what i said was true....yes i am sure of what i said in early oct 2008 i have staked a lot on this....

you will call it lucky i don't care what you call it 1=1 is 100% and the run that is to come on the pound is also 100%....so you will get a great chance to have a :lol: at me very soon !!!

i know who will be having the last :lol:;):P ....

i staked my money on the euro in 2007 for 1=1 with the pound by end of march 2009 what luck... :unsure:

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The faster Sterling drops, the more competitive UK plc gets and the faster we can get out of recession. This may of course be government policy, being like protectionism but without the tax collectors at the ports :) It can be blamed on the market instead of the politicians.

I work in a company in a specialist field with only 3 or 4 competitors on other continents. Our Sterling prices are helping us win sales all over the world, exceeding targets for 2008. We have so much room for discounting since the wage bill is in £ but income is in various currencies, we can out price competitors.

VMR.

Can I ask, VMR, do you work in manufacturing?

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Ok bignose, what counter effect will a global depression have on asset values?

Its common sense. Give everyone on the planet a 10K credit card. Get them all to go out and spend. When is the inflationary phase? When they go and spend the cash, or afterwards when they are paying off the debt?

The QE is not getting spent on tangible assets. its stopping banks collapsing.

bump !!

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i have said since the start by the end of march or before ,,however as things seemed to have changed that the pound seemed to go down faster then i expected yes i thought it would happen by 14/1 it will happen pretty soon, i have already done very well...

you need to take note i said by the end of march or before at the start of oct 2008 when no one was saying that, many if not all on HPC thought i was crazy.

now by the end of march you will see a real run on the pound.. :lol::lol::lol: i will jump in to buy property in london with my euros it will be all repo's !!!! that will make a few people on HPC very happy... ;)

by the end of march you will see one euro=£1.25 or more....or even £1.30 to one euro..no way will the pound do well !!!

the news coming out in march will bring the pound down !!! you can :lol: as much as you like,,march will be here soon...i will say my goodbyes to you at the end of march with a smile on my face when you will see what i said was true....yes i am sure of what i said in early oct 2008 i have staked a lot on this....

you will call it lucky i don't care what you call it 1=1 is 100% and the run that is to come on the pound is also 100%....so you will get a great chance to have a :lol: at me very soon !!!

i know who will be having the last :lol:;):P ....

i staked my money on the euro in 2007 for 1=1 with the pound by end of march 2009 what luck... :unsure:

BXLONDONMAN - What is the significance of March and it's effect on Sterling???

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+1.

The currency WILL devalue further. And this WILL provide significant pricing support. At the end of the day, houses are a commodity. When they get cheap enough to look like a complete and utter steal, and provide high enough yields, someone will buy. Right now, it looks like that someone will be Johnny Foreigner, in a big way, at least at first. The devaluation is making UK property look stupidly cheap, and yields for many rentals and commercial are already crossing 8%+, I'd predict 10% soon. All it takes is one small segment of proerty to boom (London, commercial, rentals, etc), and confidence will turn quickly to the rest of the market.

UK property yields are the same for foreign entrants as the natives. In addition, why would further devaluation of the pound make Stirling purchases a good idea for foreigners. Your post makes no sense!

Jim

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UK property yields are the same for foreign entrants as the natives. In addition, why would further devaluation of the pound make Stirling purchases a good idea for foreigners. Your post makes no sense!

Jim

i thought that also, it's even worse for foreign entrants as the value of the pound keeps falling...so their purchases are a waste of money for them !!!

it will cost them if they can't let out their propertys, at the moment their are not many takers for property in cent london loss x loss for them if they invest here for the short term,they will need very deep pockets...how many foreign investers will stay long term ...just look at british investers in spain as things have gone bad for them they are selling at very big losses to get out of the property market there...this won't happen here :unsure::unsure::unsure:

oh yeh it's differnt here ... :lol: offcourse it is !!! :lol::lol:

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you will see in march !!! it's not far away..maybe the news will come out sooner but by the end of march or before you will see a real run on the pound...what you have seen so far is very tame.

BX, just out of curiosity: where do you see £/$ at the end of march?

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BX, just out of curiosity: where do you see £/$ at the end of march?

for the doller i have no idea,,all my bet's are on the pound.the info i was given was on the pound as i wanted to change my money over to pounds in 2007 was told not to,saw something the person who gave me the info which led me to believe he knew what he was talking about..so i diden't had a few very nice bet's on the euro against the pound,will cash in half at the end of this month will leave the rest till march...i don't need to worry about the doller as i am coming home i will need pounds...

people say the doller will get stronger maybe against the pound it will, but it will go down again...the doller it will fall against the euro in march too.i feel strange saying this but you will see it will be true call it luck or whatever..it will come true !!!!

the pound will be around £1.25 to £1.30 or more against the pound by the end of march it's not a small move... the worst case it may even go to £1.50....that's my feeling ,,,the1=1 was what i was told by march 2009 in 2007 lucky huh.. :lol: the person who told me will be leaving a very well paid job on the back of what he will make never needs to work again..i asked him where he was going to put his money he said gold..and property...all the gold nut's on HPC will be happy that people with money think just like them.

the gold nut's on HPC have a point in these times gold will hold it's value compared to paper money.

i will be buying a few repo's in feb in london...i will not bet on the doller it's a bet in the dark for me,when you know who has passed the post first why come off a good thing..the euro will be better then 1=1 by the end of march...that's 100%,, you know the crap i have been saying so you can laugh as much as you like...after march what i said will come true i will not be on this site anymore...you will think he was lucky in what he said and i will be.. :lol::lol::lol: to myself...with my profit's in my pocket.

i hope by then a few on this site would have made some money, i did say all this stuff in early oct 2008 on this site,,there has been a nice change since then !!!

Edited by BXLONDONMAN
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people say the doller will get stronger maybe against the pound it will, but it will go down again...the doller it will fall against the euro in march too.i feel strange saying this but you will see it will be true call it luck or whatever..it will come true !!!!

Why is the euro going to rally aginst both £ and $ by the end of march?

Is something going to happen in the US and UK, but not in the Eurozone? Or maybe the other way round?

Do tell <_<

Also, forgive me if I'm nosy, but you are not British, are you?

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