Next Month

[babesagainstmachines]

And the BoE will hold rates. And get more QE approved.

And the bears will still be holding devaluing cash.

Buy a property before its a stampede.

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

I suspect the markets will say no more QE sooner than people might think. Why would anybody buy a UK property at the moment when prices are still increasing strongly elsewhere? Why choose to invest in one of the Bubble 5?

http://www.knightfrank.com/press/Knight-Fr...1-2009-030.aspx

http://www.overseaspropertymall.com/trends...ice-index-2009/

Edited June 16, 2009 by gruffydd

[angrypirate]

And the BoE will hold rates. And get more QE approved.

And the bears will still be holding devaluing cash.

Buy a property before its a stampede.

Are you a complete retard?

The whole reason for printing money is to maintain inflation. When inflation increases the BoE will not print any more at all as they know they risk hyper-inflation and try and limit inflation by raising interest rates. They will not print more money because CPI increases. They would think about printing more money if CPI DECREASES

This is the banks own theory.

[Goat]

And the BoE will hold rates. And get more QE approved.

And the bears will still be holding devaluing cash.

Buy a property before its a stampede.

Then external investors refuse to buy UK govt. debt unless rates rise. HMG faces choice of either raising rates or sacking 50% of public sector workers.

Rates rise; HPC continues at 15% p/a and bulls get cut up into tasty steaks, barbequed and served on a toasted bun with some tomato relish - lovely.

[angrypirate]

Then external investors refuse to buy UK govt. debt unless rates rise. HMG faces choice of either raising rates or sacking 50% of public sector workers.

Rates rise; HPC continues at 15% p/a and bulls get cut up into tasty steaks, barbequed and served on a toasted bun with some tomato relish - lovely.

Medium-rare for me please....

[interestrateripoff]

So you advise holding more debt then?

[Property Owning Democracy]

Then external investors refuse to buy UK govt. debt unless rates rise. HMG faces choice of either raising rates or sacking 50% of public sector workers.

Rates rise; HPC continues at 15% p/a and bulls get cut up into tasty steaks, barbequed and served on a toasted bun with some tomato relish - lovely.

Maybe. Rates in the 70s rates were double digit - but was so inflation. If we get really rampant inflation my instinct is you're better off with a house and a fat debt. That was certainly the case back then. On the other hand in thelast crash you certainly were not better off holding a house…so it's hard to say. If we do have the mother of all inflation hold debt

Edited June 16, 2009 by Property Owning Democracy

[Dr Elk]

Maybe. Rates in the 70s rates were double digit - but was so inflation. If we get really rampant inflation my instinct is you're better off with a house and a fat debt. That was certainly the case back then. On the other hand in thelast crash you certainly were not better off holding a house…so it's hard to say. If we do have the mother of all inflation hold debt

I think you only want to hold debt if there is prolonged wage inflation, which seems unlikely looking at job losses and pay cuts being forced on people. So like you say, it seems more like the last crash than the 70's.

[spivT]

Maybe. Rates in the 70s were double digit - but was so inflation. If we get really rampant inflation my instinct is you're better off with a house and a fat debt. That was certainly the case back then. On the other hand in thelast crash you certainly were not better off holding a house…so it's hard to say. If we do have the mother of all inflation hold debt

what makes you think the central banks can't maintain their target inflation rates ?

perhaps i've been glossing over the minutia of the whole high inflation vs stagflation [nobody cares a fig for deflation now] debate.

ofcourse the fact housing costs still aren't in the official inflation measure used by the BoE could possible create some anomalies, but i'm trying to understand why the BoE can't just do what they've done countless times to put a lid on a remote risk of high inflation.

correct me if i'm wrong but surely rampant hpi was the godsend for those holding a lot of secured debt since the last crash, as genral inflation and wage inflation was modest ? We're not in the 70's and there is a very different dynamic to this downturn compared to the last housing crash of the late 80s.

Once again, i find the whole buy a house as inflation hedge idea perplexing. Surely over the last 10 years that's only worked because of specific house price inflation expectations, not high inflation in the real economy.

[Guest DissipatedYouthIsValuable]

And the BoE will hold rates. And get more QE approved.

And the bears will still be holding devaluing cash.

Buy a property before its a stampede.

But I like my cash.

And there's no 70s style wage inflation here.

Edited June 16, 2009 by DissipatedYouthIsValuable

[the flying pig]

And the BoE will hold rates. And get more QE approved.

And the bears will still be holding devaluing cash.

Buy a property before its a stampede.

by my approximate reckoning, even if employment were not falling [which, of course, it is], we'd need:

(1) around a 10% increase in wages across the board to make holding property even halfway as attractive than cash;

(2) around a 20% increase in wages to make property modestly preferable to cash;

(3) around a 25% increase in wages to make property noticably preferable to cash; and

(4) probably about a 30%+ increase in wages to enable a "stampede" towards property.

even [with respect] an imbecile like yourself surely can't think that 3% annual increases in people's food/energy/etc bills can somehow induce them to spend so much more on houses as to generate a "stampede"?

[MinceBalls]

Are you a complete retard?

The whole reason for printing money is to maintain inflation. When inflation increases the BoE will not print any more at all as they know they risk hyper-inflation and try and limit inflation by raising interest rates. They will not print more money because CPI increases. They would think about printing more money if CPI DECREASES

This is the banks own theory.

ABSOLUTELY!

The only 'known' or at least widely agreed result of QE was to raise inflation the reason being to avoid a 'deflationary spiral' (in the words of the BoE) and probably also to manufacture some devaluation of the £ over a number of years. All other effects of QE are theoretical! The BoE is playing a dangerous game as they think they can manage the devaluation of debt over a number of years without entering double-digit + inflation (anything below they will probably live with).

dazednconfused doesn't understand economics

[TheCountOfNowhere]

There's only one reason why they (the government et al ) want inflation...it's to take house prices back to normal levels without causing a revolution.

When inflation takes off make suire your cash is like to inflation, then you may well be buying a loaf for 2 quid and a house for half the price

Edited June 16, 2009 by TheCountOfNowhere

[Flat Bear]

And the BoE will hold rates. And get more QE approved.

And the bears will still be holding devaluing cash.

Buy a property before its a stampede.

Hmm

I think you are right in that the ONS figures will show inflation going up again but they will again ignore this trend and as always stick to the inflationary policies for too long. This is likely to be repeated over the next few months.

It is very likely interest rates will then have to go up quicker and much higher than ever expected. QEing will become an historically silly idea.

[angrypirate]

Dazedandconfused's sig says it all really - "Talking Bull"

[RufflesTheGuineaPig]

CPI and RPi will both rise next month.

It's nt something that "might" happen it mathematically WILL happen.

The reason CPI/RPI have been so low is that OIL PRICES peaked in June 2008 at $149 a barrel.

RPI/CPI are prices versus 12 months ago. With oil at $79 a barrel, almost half the price 12 month ago, this on it own is holding down CPI/RPI. Following the June 2008 peak, prices oil dropped off pretty sharply.

In a few months oil will probably still be around $70-80 dollars a barrel, but for inflation purposes will be compared t $80-100 a barrel form 12 months earlier, and it will no longer be holiding down RPI/CPI.

As it stands, if oil prices remain about $70 as barrel, by the end of the year, inflation will be 10%+

[seriousz]

dazednconfused doesn't understand economics

dazednconfused is a bull.

Is there a connection between these two statements?

[angrypirate]

CPI and RPi will both rise next month.

It's nt something that "might" happen it mathematically WILL happen.

The reason CPI/RPI have been so low is that OIL PRICES peaked in June 2008 at $149 a barrel.

RPI/CPI are prices versus 12 months ago. With oil at $79 a barrel, almost half the price 12 month ago, this on it own is holding down CPI/RPI. Following the June 2008 peak, prices oil dropped off pretty sharply.

In a few months oil will probably still be around $70-80 dollars a barrel, but for inflation purposes will be compared t $80-100 a barrel form 12 months earlier, and it will no longer be holiding down RPI/CPI.

As it stands, if oil prices remain about $70 as barrel, by the end of the year, inflation will be 10%+

Where do you see inflation if oil prices fall again - to say $40 a barrel in August - September time?

[bobthe~]

dazednconfused is a bull.

Is there a connection between these two statements?

Nah. He's just a bear in Bull's clothing, having a bit of a laff by caricaturing Bulls.

BoomMonkey. Now he is a bull I can really respect.

[richcrashman]

If we get a period of serious inflation say 10-15% (not a hyperflation nightmare), will we see wage inflation and house price inflation?

If the west is going to loose some of its standard of living to become closer to that of the east. Will we see price inflation mainly in products from food to tv's and computers? A general large rise in the cost of living if you like. Perhaps little in the way of asset price inflation. People go on about the seventies bla bla bla. But think what life was like back then and what the average person owned. What was the average car per household number back then. Remember when a video was a real "thing" to own. I think its peoples disposible income thats going to get sucked away leaving most with the mortgage and the cost of the basics. Lets face it a lot of this spend has been credit derived (mewing etc) for years and this has now dried up.

For years we've been buying in cheap chinese goods at subsidised prices, this has driven down price inflation for years and killed our manufacturing. I think the tidal wave of negative price inflation is about to turn direction and no longer hold our prices down. I feel we have to give the ground back we have taken over the years as regards prices.

If all the new QE money (or that thats not abroad) is charging around the economy buying essential goods and a few luxuries (without the old credit money as it should be dead for years) will it be able to get sucked into assets like houses?

If we have wage inflation that matches price or money inflation we would be exactly where we are now, spending more than we earn. Surely its this ratio of earn / spend that has to change. Will the inflation be all in the spend??

Would this blow a hole in the so called affordabillity of houses as more take home income goes on lifes core basics.

In my thoughts are for the next few years are

Rising interest rates.

Increased taxes.

increases in unemployment

Big cuts in public payroll (lots more of the above)

Rising cost of virtually everything you buy (not just hi input costs but companies clawing back current losses)

Banks not lending at any where near 2007 levels

Personal debt levels (what are the latest figures on credit cards?)

I think to sum it up i think Gordo has managed to stop the balloon from going bang. Instead we're going to have to watch a slow wet fart.

I'm sure there must be a better asset type than cash or housing in the next few years or so.

[CHF]

"I'm sure there must be a better asset type than cash or housing in the next few years or so. "

and maybe even shinier?

[neil324]

I'd say inflation has reached its bottom now. Only 1 way for it now, just depends how fast it will rise. The BOE will of course do nothing. The only thing that matters is the markets reaction though. Now you could say Sterling was already in a bull run before today, but its seems to have had a positive reaction on Sterling today maybe they see rates going up from here.

[ingermany]

And the BoE will hold rates. And get more QE approved.

And the bears will still be holding devaluing cash.

Buy a property before its a stampede.

and your property doubles in value.................which allows you to buy 3 extra tins of vegetables at Aldi.

[spivT]

If all the new QE money (or that thats not abroad) is charging around the economy buying essential goods and a few luxuries (without the old credit money as it should be dead for years) will it be able to get sucked into assets like houses?

i heard a guy on tv today say that the QE 'money' hadn't gone anywhere [i took anywhere to mean the real economy]........that the banks were just sitting on it. I had a vision of gooses and golden eggs and the ghost of a well respected economist from the 30' saying 'i told you so'......but then i've an overactive imagination......and the bubble blowers king and bernanke know much more about this queasing stuff than i do.

Maybe they'll appear on tv some time soon in a coordinated attempt to calm us all down. And not explain why they need to continue to inject all this liquidity that doesn't go anywhere.

This is what happens when you put economists in charge of running the world.......turns out the bankers were the least of our problems. Bearded/bespectacled keynesian clowns are the greatest threat to world stability.