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ravedave

Qe And Time To Get Out Of £

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Okay, this might seem like a novice question. I've been reading what they've been saying on the main board about this new wave of QE and how it's time for people to get out of cash.

I've got all my deposit for a house in cash - ISA, Index linked savings cert, and a saving acc. I distinctly remember a number of posters saying at the start of this (when the banks were failing every other day and Peston was on TV every 5 minutes...) saying that people should get out of the £.

Can someone provide me with the reason for this - as I thought we couldn't judge whether we're heading for hyperinflation or deflation. Do they both result in the same outcome - the downturn of the £?

If so, what have you all done with your cash deposits?

Or, are you of the opinion that the quality of posters on the main board has dropped now the HPC is not really the burning question anymore and the economy is - hence the knowledgeable have moved onto other sites?

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Okay, this might seem like a novice question. I've been reading what they've been saying on the main board about this new wave of QE and how it's time for people to get out of cash.

I've got all my deposit for a house in cash - ISA, Index linked savings cert, and a saving acc. I distinctly remember a number of posters saying at the start of this (when the banks were failing every other day and Peston was on TV every 5 minutes...) saying that people should get out of the £.

Can someone provide me with the reason for this - as I thought we couldn't judge whether we're heading for hyperinflation or deflation. Do they both result in the same outcome - the downturn of the £?

If so, what have you all done with your cash deposits?

Or, are you of the opinion that the quality of posters on the main board has dropped now the HPC is not really the burning question anymore and the economy is - hence the knowledgeable have moved onto other sites?

What I want to know is what are we going to do about all the tin foil, pasta, baked beans and shotgun shells we all bought the last time they went on about this.

Last week on the main board nobody predicted a black Wednesday. Got me all worried.

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What I want to know is what are we going to do about all the tin foil, pasta, baked beans and shotgun shells we all bought the last time they went on about this.

Last week on the main board nobody predicted a black Wednesday. Got me all worried.

:lol::lol:

Keep them handy , the double dips on its way :ph34r:

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Okay, devils advocate: are we seeing the the near bottom of the crisis? My worry is that we on here, might be so obsessed with where we think the bottom should be that we become as fixated with failing markets as the bulls were with HPI and miss the facts which may be pointing to a recovery.

Edited by ravedave

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Okay, devils advocate: are we seeing the the near bottom of the crisis? My worry is that we on here, might be so obsessed with where we think the bottom should be that we become as fixated with failing markets as the bulls were with HPI and miss the facts which may be pointing to a recovery.

Do you know how long I have been waiting to hear someone in here think/say that.

Truth is the bottom is 'a soft landing. Thats why it is so hard to pin. The crash at the top is always sudden and allot of sellers missed it.

I cant see prices suddenly turning. They will go up and down for the next number of years with one month a prediction of the next bubble, the next month someone also on about a double dip. There hasn't been any reports, that I am aware of that prices have risen in NI. Even if that appears the following report could show a fall back. We are caught inbetween 'good news' stories from the UK and 'bad news stories' from the ROI and that will confuse the market. Personally I had thought we would recover before the UK simply because we crashed harder and faster, we took the pain and reduced the prices. The UK seems to be showing a turnaround quicker than I though. Our higher drop is reflective to the fact we had a bigger bubble.

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Do you know how long I have been waiting to hear someone in here think/say that.

Truth is the bottom is 'a soft landing. Thats why it is so hard to pin. The crash at the top is always sudden and allot of sellers missed it.

I cant see prices suddenly turning. They will go up and down for the next number of years with one month a prediction of the next bubble, the next month someone also on about a double dip. There hasn't been any reports, that I am aware of that prices have risen in NI. Even if that appears the following report could show a fall back. We are caught inbetween 'good news' stories from the UK and 'bad news stories' from the ROI and that will confuse the market. Personally I had thought we would recover before the UK simply because we crashed harder and faster, we took the pain and reduced the prices. The UK seems to be showing a turnaround quicker than I though. Our higher drop is reflective to the fact we had a bigger bubble.

+1

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If you were to listen to some who post on hpc, you'd never leave the door without a collander taped to your head for fear of the lizardmen penetrating your mind.

If you deem hyperinflation to be a significant risk, then put 10% of your wealth into physical gold. On the off-chance that we actually see hyperinflation or an apocalyptic event, you'll be better off than 99% of the population anyway. With only 10% of your wealth in gold, at least if it plummets in value, you won't be losing that much.

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What I want to know is what are we going to do about all the tin foil, pasta, baked beans and shotgun shells we all bought the last time they went on about this.

Last week on the main board nobody predicted a black Wednesday. Got me all worried.

LOL

I've been stock piling wood.

Planted half my garden in veg.

Built 2 large green houses.

Bought another rottweiler and removed all my money from the banks (I can't sleep at night because the mattress is to lumpy because of it).

The wifes been buying tinned food like theres no tomorrow.

All I'm waiting for is Obama to come on the telly telling us a meteors on its way and its lights out.

This bloody crash better be big. :blink:

Edited by statinstoinker

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Okay, devils advocate: are we seeing the the near bottom of the crisis? My worry is that we on here, might be so obsessed with where we think the bottom should be that we become as fixated with failing markets as the bulls were with HPI and miss the facts which may be pointing to a recovery.

So it's official then - one of the biggest housing bubbles in history... and the crash is over after just 2 years? Economic miracles do happen then :blink:

The recovery has started without house prices ever reaching fundamentals and stagnating there for a few years. Another economic miracle :blink:

What does history show us? Has any housing bubble in history ever recovered after just 2 years? None that I know of. Can anyone show me an example please?

I think we are only going through a temporary upward phase in a downward trend. Of course I could be wrong, but it makes sense for me to wait, just another 14 months, to see if I am right.

I just don't buy all this green shoots rubbish. Good luck to those who do. They will need it.

Edited by Belfast Boy

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If this is the end of the crash, then fine - I won't be buying a house. Not in this country anyway.

Ditto. If we can only afford a house with less than 1000 sq ft on the outskirts of the city with a 40% deposit and a salary 50% more than the average, and we can afford to rent something much much better, then I think I'll stay out of the market.

Let the fools rush in now. It'll clear the stale rubbish from the market.

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If this is the end of the crash, then fine - I won't be buying a house. Not in this country anyway.

Yup, that sums it up for me too. I simply refuse to be suckered into the madness.

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Okay, devils advocate: are we seeing the the near bottom of the crisis? My worry is that we on here, might be so obsessed with where we think the bottom should be that we become as fixated with failing markets as the bulls were with HPI and miss the facts which may be pointing to a recovery.

I think that is a fair point, and perhaps this might be true for some people. I don't spend too much time on the main board these days. There are alot of mouth pieces on there who have jumped on the bandwagon as it seems to be "cool" or something.

I m still a firm believer that many peoples time horizons are too short. There some very longterm structural problems in the economy that have not been cured, and infact have been made worse. So one announcement today on QE and a new post on the topic doesn't really change the longer term outlook. I think the reason might be the number of news items and the volume of new information that we are bombarded with each day perhaps leads to myopia. It is only a theory or my opinion. However if we take it that the tendency of the human mind is to gain instant sense gratification from actions then it is a "natural" state to look for results right now, to take a new piece of information and make instant speculations and postulations based on limited information. So I wouldnt get too worried about day to day things like this...

There may be some tentative signs of a recovery, but you must ask yourself some questions...

Have the underlaying problems in the economy been cleaned up and fixed?

Are we starting from a firm base?

IS the debt burden now larger or smaller?

What will the driver of jobs be? How productive will these jobs be?

If interest rates stay at 0.5% for another year what will that say about the state of the economy? Some think that low interest rates will be a good thing. I think that if interest rates are still at 0.5% in 12 months from now it will be a symptom of a very weak economy, a contracting, stagnating economy, would also expect to see a tightening of credit markets in these conditions, with interest rates tightening, mortgages becoming more expensive... putting downard pressure on houses and assets.

Now ask, if interest rates are still 0.5% in 18 to 24 months from now? Low interest rates are touted as being good by the housing bulls? However, if they are still at 0.5% 18 months from now, this will again be symptomatic of a contracting economy. It is possible rates could be down that low for quite some time, much longer than many predict. However, far from being a positive, if they are then it will because there is no recovery.

J Bond 10 year Gov

This chart shows a 10 year Japanese Gov bond...Interest rates were cut to near zero around the turn of the century. So Japan were creating new money to keep interest rates down, yet bond yields continued down for 3 years, as bond prices went up. Japan have been at near zero for nearly a decade now.

The way I look at this situation is this. Japanese bond yields and interest rates were a feedback loop to the state of the economy. They were the result rather than the cause...the symptom so to speak. 0.5% interest rates were symptomatic of a weak economy with falling house prices and a stock market than ended up over 80% down from its all time highs. Japanese land prices in real terms had fallen 50-70%, yet with very low interest rates...

So my view is this, if interest rates are low, it is not bullish on the housing market, or asset market or credit markets. Low interest rates ( as according to the type of economic policys we follow) are the result not the cause of a stagnating economy.

Again, as far as QE goes. If we get more QE, then again this will be symptomatic of falling asset prices, a protracted contraction and a weak economy. If the recovery is coming why have more QE? So I would say that if you are worried about QE, then rest assured that means that house prices will be falling, mortgages rates will be moving higher and credit will be tightening...Again QE will be the result of a weak economy not the cause.

Now to turn this whole argument and flip it over...Lets say the recovery is underway, that shall mean interest rates will move higher in 6 months, 12 months and 18-24 months...And this is the crux of my point in that the first question I asked was, has the system been cleaned out and fixed? Have the underlaying problems been solved? They have not been, the deficits and debt is now huge, we are propping up asset prices of insolvent institutions, taxes will be higher, unemployment is still rising with no driver for jobs, personal debt is still at all time highs, house prices are well priced above the fundamentals historically, stocks will have bottomed out for the first time in 140 years at PE's and dividend yields which are much higher than previous market bottoms. In other words they are still expensive. So are these conditions for a sustained recovery, a firm base? Are the banks capitalised sufficiently? IS there a high deposit of savings in banks now which means they can start to lend money? Can people really save at 1-3% returns and pay down record debt levels at interest rates of above 5% at the same time? Is it really saving to put away money each month at 1% and pay down a larger amount of debt at probably over 5%? Is this not a real negative savings rate? To have a firm recovery would it not be necessary or at least favourable to have low debt levels, and high savings, as deposits to create new lending? Do we have these conditions? Rather than high debt and low savings?

So if it is believed we have a recovery, then interest rates will rise in time? Then it has to asked what effect will rising interest rates have under the conditions we have now? If a recovery is undwerway then we should get rising prices, expansion, rising employment...what happens when then if prices start rising...can interest rates stay low? Interest rates will rise of course, and with the debt levels bigger now than before the recession (which is what shouldnt happen, a recession should reduce debt, and increase savings)what will the outcome be? What will happen is that they will pop the very bubble they are trying to reinflate, and we ll be into another protracted recession. It is going to be extremely difficult to raise rates in this economy...

These are my two thoughts at this time...

1. Zero interest rates, more QE will be a symptom of falling house prices and stagnation, and not a bullish indicator.

2. A recovery will mean rising interest rates over the next 6-12-24 months, will this be favourable for an over indebted government who need to raise taxes, will this be favourable to mortgage rates and an over leveraged consumer.

The other scenario I think could happen is a currency event in the next 5 years how soon no one knows. Where they stop buying UK debt. This could result in wild gyrations in sterling in the magnitude of 10% a day, and rapidly rising interest rates...

I think patience is the name of the game. This will unfold over months and years not days and weeks.

Edited by VedantaTrader

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thanks VT. awesome as always - never thought about trading as a job?

markets are strange at the moment . summer season.

the points you make are the points ive made in the main forums.

IF this really is the start of a recovery then we may get inflationary pressures = rising rates. If the markets hold up to years end I'll start to believe that maybe meltdown was avoided.

(at the mo ive a few longer term short positions on the S+P.)

IF it aint then we are back in the wealth destruction deflationary spiral we were heading into until the recent bounce.

either way aint going to be good for houses

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thanks VT. awesome as always - never thought about trading as a job?

markets are strange at the moment . summer season.

the points you make are the points ive made in the main forums.

IF this really is the start of a recovery then we may get inflationary pressures = rising rates. If the markets hold up to years end I'll start to believe that maybe meltdown was avoided.

(at the mo ive a few longer term short positions on the S+P.)

IF it aint then we are back in the wealth destruction deflationary spiral we were heading into until the recent bounce.

either way aint going to be good for houses

Thanks WeeBobby. It makes sense really, in that we can't predict or see the future, so we deal in some sort of probabilities and possible outcomes...As you say, these two outcomes are not bullish for assets as in stocks and real estate.

As for the trading...I have no formal education in that area and don't work to a company unlike yourself...I pay for a real time data feed for some CBOT futures, mostly eminis in commodities and metals and indexes and the London Stock Exchange real time data also for stocks. And I have a currency data feed for quite a selection of currencys. And end of day data just for about every market...

I have a couple of trading systems I use which are based on finding entry's on shorter term charts, but the indicators on the shorter term charts reference data from higher timeframe charts,so I can look at only the shorter term charts and get a full picture of what is happening in the primary, intermediate and shorter term trend. I like to have the primary trend and intermediate term trend in agreement, but I like the shorter term trend to be the opposite the primary and intermediate to take an entry...But I havent quite found my niche yet, as in what timeframe peference I prefer. I understand you spread trade? And know this method really well...I think my timeframe is something like, if using leverage, hourly, 4 hourly, daily charts...and money from this will then go into longer term non leveraged products with a longer holding period, months to years.

I m really focusing on currencys (and from a non modest point of view think I know quite abit abt this area) as I think there are going to be huge chances and swings in the coming years that could make fortunes. Time will tell I guess.

I also like the fundamentals to be in agreement with the trend in price...At the moment, just building up my bank. It seems to work well enough and catches all the major moves and keeps me in, but I m always looking for ways to improve the system and make it more organic...

Do you have a degree weebobby in something related to trading or is something you enjoy and happen to have a natural flare at...or maybe both. Cheers.

Edited by VedantaTrader

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Okay, this might seem like a novice question. I've been reading what they've been saying on the main board about this new wave of QE and how it's time for people to get out of cash.

I've got all my deposit for a house in cash - ISA, Index linked savings cert, and a saving acc. I distinctly remember a number of posters saying at the start of this (when the banks were failing every other day and Peston was on TV every 5 minutes...) saying that people should get out of the £.

Can someone provide me with the reason for this - as I thought we couldn't judge whether we're heading for hyperinflation or deflation. Do they both result in the same outcome - the downturn of the £?

If so, what have you all done with your cash deposits?

Or, are you of the opinion that the quality of posters on the main board has dropped now the HPC is not really the burning question anymore and the economy is - hence the knowledgeable have moved onto other sites?

If you have all your assets in £ bank deposits/ISAs etc it makes sense to diversify a bit to protect from inflation and sterling falling

The £ has rebounded against the US dollar and most other currencies very well, but a lot of observers (including the IMF) think its overvalued right now

Things you might consider are:

- a US dollar or Euro bank account (a high street bank can prob give you one but it will pay little/no interest)

- some index linked UK gilts (which protect you from inflation, like your savings cert)

- some commodity funds (which should protect against inflation, but are affected by other factors, like world demand for the commodities themselves)

- some gold (ditto commodities)

If you spread your money around that lot you should reduce the risk of a big loss in value of your deposit, but if the £ gets stronger you might lose a bit

That's a less risky version of what I've done with my money - hope it helps ;)

Edited by Neverland

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Posted this b4 but anyway:

I bought into physically allocated silver via an exchange traded fund (in $`s) cos silver is in my view fundamentally undervalued.I believe this will provide

some protection from currency failure.There is a growing shortage of above ground silver and growing investment demand from a largely ignorant investment community-so a good time to get in imho.Industrial demand remains strong if somewhat weaker than when world economy was stronger.

All that coupled with suspected massive shorting by commercial banks (currently being looked at by reg auth in US) MEANS ITS AN INT PLAY.

Jim Rogers was asked recently if he had to put all his savings into 1 commodity what would it be and he answered silver!

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VT - what do you do then? Or has your hobby become a fulltime affair? I love reading these threads, I never did economics at school and I regret that. I bought the intelligent investor and have just started it. Do you think its possible to make significant money just as a part-time hobby around a fulltime job?

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Jim Rogers was asked recently if he had to put all his savings into 1 commodity what would it be and he answered silver!
Not attacking you, but what a moronic question. By sinking all your eggs into the one basket you're no better than the property pontifficators who loaded up on buy-to-let's.

Maybe there is a place for silver in an investment portfolio, but only a fool would put all their net worth in it.

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Not attacking you, but what a moronic question. By sinking all your eggs into the one basket you're no better than the property pontifficators who loaded up on buy-to-let's.

Maybe there is a place for silver in an investment portfolio, but only a fool would put all their net worth in it.

Nu-Brit-he was asked if he HAD to put all his savings into one thing,what would it be.You have missed the point,namely he is picking silver above anything else.He never did nor would suggest putting all his wonga on one commodity of course that would be crazy.

You might do better to find out why he is so bullish on silver and ignore the rather unfair question.

No offence intended or taken.

Edited by redprince

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Personally I had thought we would recover before the UK simply because we crashed harder and faster, we took the pain and reduced the prices. The UK seems to be showing a turnaround quicker than I though. Our higher drop is reflective to the fact we had a bigger bubble.

I don't believe it. Reckon the UK is living in fool's paradise, and the current measures will cost dearly long term.

Check back in 10 years! Ireland will have adapted very nicely under € discipline, with houses as investment a distant dream except for professional landlords. The £ will have turned in to the curse of a generation, with zombie banks and a twilight zone of social housing.

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By sinking all your eggs into the one basket you're no better than the property pontifficators who loaded up on buy-to-let's.

Not quite - they did it on borrowed money. Pouring your savings into something only carries a risk of being left with zero, rather than "underwater".

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http://cynicuseconomicus.blogspot.com/2009...very-in-uk.html

A good summary of why nothing is fixed and we are playing for time.

IMO, jobs will continue to go and there may still be big moves in the gilts markets and/or exchange rates. The problems with massive debt are still with us, along with all the inherent flaws with the monetary system.

Even if we delay more pain for a year or more, it is still coming... it is inevitable, imo.

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http://cynicuseconomicus.blogspot.com/2009...very-in-uk.html

A good summary of why nothing is fixed and we are playing for time.

IMO, jobs will continue to go and there may still be big moves in the gilts markets and/or exchange rates. The problems with massive debt are still with us, along with all the inherent flaws with the monetary system.

Even if we delay more pain for a year or more, it is still coming... it is inevitable, imo.

after this election if they dont implement massive spending cuts + tax increases then the gilt/exchange rate moves which follow will ensure they are forced to implement massive spending cuts + tax increases.

not good for houses but annoying that the market might rest here for a while

good article on why we will not see govts inflating away the debt

http://ftalphaville.ft.com/blog/2009/08/04...ebunked-by-ubs/

Edited by getdoon_weebobby

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