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** Has A Former Times Economics Editor Predicted


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Did anyone see this "Daily Quote" which allegedly is by a former economics editor of The Times, and non-executive director of the BoE ?

http://forums.ft.com/2/OpenTopic?a=tpc&s=6...01561#650101561

"My own prognostication a year ago of a possible 50% crash in house prices over the next 2 or 3 years, which now seems to me firmly on track inspite of all the huffing and puffing of those whose interests oblige them daily to pretend that all will somehow end well." Peter Jay who for over 20 years was economics editor of the The Times and is a non-executive director of the BoE.
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http://www.internetional.se/freshstart.htm

Samuel Brittan happened, prompted by Professor Charles Goodhart, to read Professor Milton Friedman’s seminal presidential address to the American Economic Association in 1967 somewhat sooner than any other prominent commentator in Britain at that time

About "Against the Flow" by Samuel Brittan, Atlantic Books £25, 385 pages

Peter Jay 12/2 2005

Peter Jay was for more than 20 years economics editor of The Times and later of the BBC. He is a non-executive director of the Bank of England.

It contained the “thunderbolt” thought that the Phillips curve (the supposed trade-off between inflation and unemployment) is vertical; that is, that however high inflation goes unemployment will in the long term always be the same - and therefore all attempts to achieve full employment by fiscal and/or monetary demand management were doomed.

The price of any unemployment below the “natural” level set by the structure of the labour market could only lead, not as postwar British policy had supposed, to faster but possibly acceptable inflation, but to geometrically accelerating inflation, a self-evidently unacceptable consequence. The recognition of this truth transformed British economic policy-making over the next 10 years, chiefly under a Labour government. Brittan’s role in this was central. He changed the intellectual climate by the power, lucidity and topicality of his writing.

But we must return to the economics. It is typical that in the new volume Brittan is challenging the conventional wisdom of current economic management with as much freshness and recalcitrance as he once applied to the dismal agonies of Chancellors such as Selwyn Lloyd and Tony Barber. Only missing now is the intense official disapproval that attended his refusal 40 years ago to accept that £1 did, should, must always and most certainly would always equal $2.80, since when its market price has fluctuated between $2.81 and just over $1.

It is, incidentally, good to see in his latest book that his passionate hostility to fixed exchange rates almost anywhere at almost any time - spelt out most persuasively in his third book, The Price of Economic Freedom (1970), - is restored to its rightful place in his pantheon of economic ideas.

A slump without falling consumer prices might, Brittan argues, require official corrective action. This would not necessarily be forthcoming from the MPC, either because the inflation prospect did not require it or because the kind of action available to the MPC, for example zero interest rates, was not sufficient to the needs of the situation. The economic sin against the Holy Ghost of heavy government deficit spending financed by the central bank might be required; and this ugly situation, Brittan speculates, could be triggered by a boom-bust collapse of some major category of asset prices. An example would be my own prognostication a year ago of a possible 50 per cent crash in house prices over the next two or three years, which now seems to me firmly on track in spite of all the huffing and puffing of those whose interests oblige them daily to pretend that all will somehow end well.

Edited by zzg113
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I was eating in restaurant two years ago and Peter Jay sat at the table next to mine. He was eating alone - although he had a lot of papers with him which he looked at. Obviously takes his research very seriously if he takes it to lunch with him was my conclusion. (I was a bit embarassed because my sister kept swearing - she had never heard of him).

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Wow 50% crash prediction and from another highly credible source.

Can you imagine the devastation that will cause.

Mmm so I borrow 120K now and get saddled with repaying that huge debt plus the interest over the next 25 years

or

I wait until post property chaos to get the same property but only have to repay half the amount of debt i.e. 60k plus the interest.

Tough decision!

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Wow 50% crash prediction and from another highly credible source.

Can you imagine the devastation that will cause.

Mmm so I borrow 120K now and get saddled with repaying that huge debt plus the interest over the next 25 years

or

I wait until post property chaos to get the same property but only have to repay half the amount of debt i.e. 60k plus the interest.

Tough decision!

I believe prices will continue to fall. I think those that predict fall of over 30% on average will be wrong. (Though some new build/ ex-council/ poor areas may do worse than 30%).

Do not assume the views you (want to) hear are true, any more than you should assume prices will always rise because an estate agent told you so!

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I believe prices will continue to fall.  I think those that predict fall of over 30% on average will be wrong.  (Though some new build/ ex-council/ poor areas may do worse than 30%).

Do not assume the views you (want to) hear are true, any more than you should assume prices will always rise because an estate agent told you so!

I agree 50% sounds very pessimistic.

But then I'm not a non-exec director of the bank of England.

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And once UK Ambassador to the US if I recall correctly?

I think it helped that his father in law was James Callaghan, who was responsible for appointing the US ambassador... and concluded his (journalist) son-in-law was definitely the best man for the job!

It was a big controversy at the time, I believe.

Incidentally, I think a 50% correction in REAL terms is entirely possible. Time will tell how much of this will be accounted for by inflation/income growth.

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I believe prices will continue to fall.  I think those that predict fall of over 30% on average will be wrong.  (Though some new build/ ex-council/ poor areas may do worse than 30%).

Do not assume the views you (want to) hear are true, any more than you should assume prices will always rise because an estate agent told you so!

And yet those 'huge' falls of 50% bring us back to 1999. Which was 4 years AFTER the boom started here in London. By 1999, house prices had near doubled from 1995 valuations. So you still think 50% is unreasonable?

Nomadd

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50% Fall, not science fiction (IMO)

I believe a parabola could be plotted.

If prices went crazy up, they can go crazy down!

Limiting predictions to 30% falls max.

Are based on the economic landscape of today.

Tomorrow’s economic landscape will slide with

house prices, no one knows for sure how low

they will go. I have always believed they will be

HISTORIC !

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I believe prices will continue to fall. I think those that predict fall of over 30% on average will be wrong. (Though some new build/ ex-council/ poor areas may do worse than 30%).

FF ,

I am one of those who believes that a 30% fall is more than realistic, I can see nothing that can stop that being fact. The question for me is how much more they will fall and therefore when I should re enter the market.

You are an EA I understand?

You presumably have an idea of what % reduction is required to get a sale at present. I look around and see boards which are at a guess at a ratio of 8:1 ie 8 for sale and one sold.

That being the case those who have to sell must be taking 10-15%drops now. Things have not got going yet, there is a hell of a lot of fall left in the market.

Listening and reading economic news make sme feel that I have been wrong about 30%.

Could you provide an honest assessment of the real current market level, not asking prices that noone will pay, but actual prices that are being offered.

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Yes but it depends on how you count it.

I don't have time to explain it now (and others can do it better) but some areas and types of places will fall lower than others so that when you look for a place in Chiswick for example and it is only 20% below market peak, the national drop could be expected to be much higher.

Secondly, it depends on what the starting point is because there were many people who said that their house is worth X because it must have gone up by Y% each year for the last 10 years. They then use that figure to extrapolate down to the then market value. [Of course, that valuation system is rubbish but it is the measure that most people work by when valuing their home] On that basis we could already be at 10% down from the peak and most people who be clear in their own mind that prices are not yet dropping never mind crashing.

So yes, the "crash" could exceed 50% on that basis.

50% in real terms is unlikely (I would say) but I live in hope...

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And once UK Ambassador to the US if I recall correctly?

Strange but true: It was whilst this man Peter Jay was UK Ambassador in the US that his wife, Margaret Jay, nee Callaghan, daughter of British PM at the time Jim Callaghan, who died a few weeks ago - & she is known to us today as 'Baroness Jay' - Leader of the House of Lords in Blair's Govt. for several years, don't know reason she isn't now] - well she ran off with EITHER Bernstein or Woodward - the 2 journalists of the Washington Post who exposed the Watergate Cover-up which brought down Nixon! She ran off with one of them and - well, poor old Peter Jay, our Ambassador was left in the lurch!!

see - http://www.washingtonian.com/people/woodward_bernstein.html

In 1976 Bernstein married New York-based writer Nora Ephron, and in 1977 he left the Post. She filed for divorce in 1980 after his affair with Margaret Jay, wife of former British ambassador Peter Jay.

Weird world!! Poor old Jay

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Strange but true:  It was whilst this man Peter Jay was UK Ambassador in the US that his wife, Margaret Jay, nee Callaghan, daughter of British PM at the time Jim Callaghan, who died a few weeks ago  -    & she is known to us today as 'Baroness Jay' - Leader of the House of Lords in Blair's Govt. for several years, don't know reason she isn't now] - well she ran off with EITHER Bernstein or Woodward - the 2 journalists of the Washington Post who exposed the Watergate Cover-up which brought down Nixon!  She ran off with one of them and - well, poor old Peter Jay, our Ambassador was left in the lurch!! 

see - http://www.washingtonian.com/people/woodward_bernstein.html

In 1976 Bernstein married New York-based writer Nora Ephron, and in 1977 he left the Post. She filed for divorce in 1980 after his affair with Margaret Jay, wife of former British ambassador Peter Jay.

Weird world!! Poor old Jay

More here: - http://www.answers.com/topic/margaret-jay-...rl&hl=bernstein

Margaret Jay, Baroness Jay of Paddington

-------------------------------------------------------------------------------

Margaret Jay, Baroness Jay of Paddington

Margaret Jay, Baroness Jay of Paddington, PC, is a British politician for the Labour Party.

Her father was former Labour Prime Minister James Callaghan, and she was educated at Blackheath High School. In 1969, she married fellow-journalist, Peter Jay, who was later appointed ambassador to the United States of America by Callaghan. While in the USA, she met Carl Bernstein, with whom she had a much-publicised relationship in 1979 -- with the result that she was unflatteringly depicted in a novel by Bernstein's wife, Nora Ephron. She and Jay were divorced in 1986, after eighteen years of marriage.

She was a journalist with the BBC before her creation as a Baroness in 1992. She was an opposition Whip, and after her party's election victory was made Minister for Women and later Leader of the House of Lords. She retired from politics in 2001.

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The average property currently costs six times the average salary, and would require a 40% fall to bring back in line with the long term trend of 3.5 times. But the price / earnings graphs tend to hit three times salary after a crash, so a 50% fall would be possible.

The average price in London is eight times the average salary, which would need a 55% fall to return to trend, and almost 65% if they dropped to a three times salary level.

I don't know if there will be falls of this magnitude, but I wouldn't discount them out of hand.

Graeme

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Guest Charlie The Tramp
And once UK Ambassador to the US if I recall correctly?

What an uproar that created at the time, his father in law being Jim Callaghan then Labour Prime Minister. Compared with today that was nothing with the favours shown to failed and discredited politicians. Poor old Peter dallied around and ended up with a surprise which finished his marriage to Margaret. The Cecil Parkinson of his day. :D

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I was eating in restaurant two years ago and Peter Jay sat at the table next to mine. He was eating alone - although he had a lot of papers with him which he looked at. Obviously takes his research very seriously if he takes it to lunch with him was my conclusion. (I was a bit embarassed because my sister kept swearing - she had never heard of him).

Peter Jay! Funny fat northern bloke. He is brilliant in Phoenix Nights. Got all his DVD's. :blink::blink::blink::blink:

Edited by shakerbaby
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And yet those 'huge' falls of 50% bring us back to 1999. Which was 4 years AFTER the boom started here in London. By 1999, house prices had near doubled from 1995 valuations. So you still think 50% is unreasonable?

Nomadd

Yes, but the boom that started in 1995 started at a much lower (than average trend) level than previous booms, so the dramatic rises in those first 3 or 4 years only brought the level back up to trend...it could be said that the last bust was overdone, so we have less to pay back for on this one. Another thing to consider is that because Londons boom started much earlier than elsewhere, it also faltered much earlier too, so it has had longer for Inflation to catch up (I know its not going very fast, but fast enough to account for an extra 10% in respect to London and the south east).

As I put in another post tonight, my calculations suggest a 50% real terms fall nationally from top-to-bottom, and unless inflation turns around (and is fueled by wage inflation) then the 4 years of inflation during the falls will only account for about 10-15% of that 50%.

However, it really HAS to start this summer, otherwise history is gonna prove a difficult guide to use for this bust.

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  • 441 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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