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Barb E Dahl

Coming Out Of The Bull Trap?

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Anyone else starting to feel the chill of a very dark winter coming?

I've toyed with the idea of buying and been ready to sign on the dotted line many times, but today after a nice 'clearing my head' holiday away with family, friends and my very healthy debit card, I've decided to sign another 12 month lease.

Maybe it was a case of listening to everyone else's problems whilst away that really clicked a switch in my head and made me realise the only thing that matters is family, health and happiness - not a house.

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Anyone else starting to feel the chill of a very dark winter coming?

I've toyed with the idea of buying and been ready to sign on the dotted line many times, but today after a nice 'clearing my head' holiday away with family, friends and my very healthy debit card, I've decided to sign another 12 month lease.

Maybe it was a case of listening to everyone else's problems whilst away that really clicked a switch in my head and made me realise the only thing that matters is family, health and happiness - not a house.

Not sure there ever was a bull trap.

I believe now's the time to buy.

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Not sure there ever was a bull trap.

I believe now's the time to buy.

Time2Buy

Posts: 1

Bull or Bear? Bull

Trapped on your first post, good work.

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Anyone else starting to feel the chill of a very dark winter coming?

I've toyed with the idea of buying and been ready to sign on the dotted line many times, but today after a nice 'clearing my head' holiday away with family, friends and my very healthy debit card, I've decided to sign another 12 month lease.

Maybe it was a case of listening to everyone else's problems whilst away that really clicked a switch in my head and made me realise the only thing that matters is family, health and happiness - not a house.

You feel the same as I do. Years of unknowingly stressing about my "biggest investment" when my biggest investment should have been my family and our lives. Now is obviously a better time to buy than say late 2007, but I too am going to take a little more time out of anchor ownership. Another plus is that since i became an accidental STR I have not set foot in B and Q - bliss ! I sleep better too.

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Nice house next door to me in leafy Dulwich went under offer about 3 weeks ago after several months on the market.

Uh oh, I thought to myself, are we heading into another frenzy or is this just evidence of a bull trap?

Anyway, today it went back on for sale, seems it didn't work out.

A tiny anecdote but...hmmmm....I'd vote for the activity we've just seen as being classic bull trap.

GT

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Not sure there ever was a bull trap.

I believe now's the time to buy.

You could well end up on Bruce Banner's sig before the sun sets with a name like that. You might just be the fastest one to go on his list ever.

You should be very proud.

Edited by MOP

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Not sure there ever was a bull trap.

I believe now's the time to buy.

Buy a UK house and your'e fooked. If prices go up you'll be living in a crime ridden hellhole if they go down you'll lose money. Well done.

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Not sure there ever was a bull trap.

I believe now's the time to buy.

Welcome to the forum. That's probably the only welcome you'll get, apart from one from Sibbers.

Perhaps you could elucidate why you don't think we are in a bull trap?

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Welcome to the forum. That's probably the only welcome you'll get, apart from one from Sibbers.

Perhaps you could elucidate why you don't think we are in a bull trap?

Unlikely.

If he really thinks that now is the time to buy then he doesn`t know his @rse from his elbow.

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Not sure there ever was a bull trap.

I believe now's the time to buy.

excellent. welcome to the forum.

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Anyone else starting to feel the chill of a very dark winter coming?

I've toyed with the idea of buying and been ready to sign on the dotted line many times, but today after a nice 'clearing my head' holiday away with family, friends and my very healthy debit card, I've decided to sign another 12 month lease.

Maybe it was a case of listening to everyone else's problems whilst away that really clicked a switch in my head and made me realise the only thing that matters is family, health and happiness - not a house.

Well done Crimson - you've made a damned clever decision. The best the bulls have is house prices staying the same and the best for you is that they go down. Either way you win.

And no, bulls, they aren't going up. I check postcodes all around me and all I see are drops and now - not a single sale for over a fortnight.

Bounce over me old mates - suck it up.

So, to recap - good work Crims me old mate - rent and relax!

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excellent. welcome to the forum.

Thanks.

You could well end up on Bruce Banner's sig before the sun sets with a name like that. You might just be the fastest one to go on his list ever.

You should be very proud.

I'll look out for him. Thanks, forewarned is forearmed.

Welcome to the forum. That's probably the only welcome you'll get, apart from one from Sibbers.

Perhaps you could elucidate why you don't think we are in a bull trap?

Thanks for the welcome. I'll elucidate later.

Unlikely.

If he really thinks that now is the time to buy then he doesn`t know his @rse from his elbow.

More Doberman than Bilko.

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Coming Out Of The Bull Trap?

I had believed the "Bull trap" was finishing a few weeks ago but whilst more money is being pumped into the banks and interest rates are left so low and whilst there is significant amounts of capital available amongst the general populas there will be significant upward pressure on prices.

The long term economic situation in the uk is a lot worse than most people realize and that includes many on this forum.

We have factors which are deteriorating such as rising unemployment, lower governmental revenues which is creating higher and higher governmental debt, rising company insolvancies, shrinking bank saving deposites as alternative wealth holding vechicles are used, growing personal debts and insolvancies as well as an increasingly bad balance of payment situation.

But what has got me thinking very recently was why this QE is being continued in such a massive and panic stricken way?

I first thought that money so far was being hoarded by the banks etc to balance books so more is being introduced to get to the probably very close tipping point were all the excess money will be used for lending.

I think I had already realised that this was not the case but had to think it out properly.

If the banks were solvent they would be lending money now. There are enough good business risks and there are enough people still willing to take on mortgages with relatively low LTV and good enough spreads to show decent margins so if they were going to lend they would do so now.

What if the banks are still in a very poor state and the QE introduced is not enough to keep them afloat? What if the government and BOE know this and are using this QE as a reason knowing that a straight forward bail out would be seen as political suicide being totally unpalatable by the electorate? What if they feel it is a neccesity to do this as they see the banking system as too interdependant to see even a single failure? What if they have underestimated the total QE that would really be needed and that in reality the bail out requirement would be impossible to fund even at the point of bankrupting the country.

If this is correct this extra "stimulous" or bail out money will not release any new money into the real economy. It will help to show slightly better bank balance sheets. It will mean the banks are in a very bad state of affairs. It will mean the banks will need more money again or there will a reoccurance of last years callapses.

It may be that without this QE the banks will collapse and even with it will collapse eventually. But when?

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What if the banks are still in a very poor state and the QE introduced is not enough to keep them afloat? What if the government and BOE know this and are using this QE as a reason knowing that a straight forward bail out would be seen as political suicide being totally unpalatable by the electorate? What if they feel it is a neccesity to do this as they see the banking system as too interdependant to see even a single failure? What if they have underestimated the total QE that would really be needed and that in reality the bail out requirement would be impossible to fund even at the point of bankrupting the country.

If this is correct this extra "stimulous" or bail out money will not release any new money into the real economy. It will help to show slightly better bank balance sheets. It will mean the banks are in a very bad state of affairs. It will mean the banks will need more money again or there will a reoccurance of last years callapses.

It may be that without this QE the banks will collapse and even with it will collapse eventually. But when?

Yep. It's a back door bailout for our insolvent banks.

I reckon the banks are in some seriously deep shit but they can't tell the public that for fear of bank runs. It'll be hard to keep this charade going though. They will be praying that it can be held together until some sort of real economic recovery comes along to shore it up again.

Edited by MOP

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Yep. It's a back door bailout for our insolvent banks.

I reckon the banks are in some seriously deep shit but they can't tell the public that for fear of bank runs. It'll be hard to keep this facade going though.

Multiple bank runs in October anyone?

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Multiple bank runs in October anyone?

A trigger could come from anywhere I suppose. There are so many plates spinning in the air now, probably only a matter of time before one falls.

Just wait until the commercial real estate collpase gathers pace. It's just getting started in the US (check out the pinned charts thread).

Throw in the Option ARM/Alt-A resets next year and the banks must be shitting themselves.

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Bear trap or sustained rises? One reason for the recent uk price rises was the lack of property available. Looking at Leamington Spa (cv32) and areas around for some time has lean pickings since march. Very few new properties have been listed. This supported prices. Lower mortgage availability was balanced by less property for sale.

This was at a worrying tipping point as if the mortgages taps were turned on prices would seriously rise. However there seems to have been a shift in supply of new properties onto the market - I'm getting daily updates from rightmove of new listings.

Any source of hard numbers e.g. Properties for sale per agent to support this anecdote generally?

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Coming Out Of The Bull Trap?

I had believed the "Bull trap" was finishing a few weeks ago but whilst more money is being pumped into the banks and interest rates are left so low and whilst there is significant amounts of capital available amongst the general populas there will be significant upward pressure on prices.

The long term economic situation in the uk is a lot worse than most people realize and that includes many on this forum.

We have factors which are deteriorating such as rising unemployment, lower governmental revenues which is creating higher and higher governmental debt, rising company insolvancies, shrinking bank saving deposites as alternative wealth holding vechicles are used, growing personal debts and insolvancies as well as an increasingly bad balance of payment situation.

But what has got me thinking very recently was why this QE is being continued in such a massive and panic stricken way?

I first thought that money so far was being hoarded by the banks etc to balance books so more is being introduced to get to the probably very close tipping point were all the excess money will be used for lending.

I think I had already realised that this was not the case but had to think it out properly.

If the banks were solvent they would be lending money now. There are enough good business risks and there are enough people still willing to take on mortgages with relatively low LTV and good enough spreads to show decent margins so if they were going to lend they would do so now.

What if the banks are still in a very poor state and the QE introduced is not enough to keep them afloat? What if the government and BOE know this and are using this QE as a reason knowing that a straight forward bail out would be seen as political suicide being totally unpalatable by the electorate? What if they feel it is a neccesity to do this as they see the banking system as too interdependant to see even a single failure? What if they have underestimated the total QE that would really be needed and that in reality the bail out requirement would be impossible to fund even at the point of bankrupting the country.

If this is correct this extra "stimulous" or bail out money will not release any new money into the real economy. It will help to show slightly better bank balance sheets. It will mean the banks are in a very bad state of affairs. It will mean the banks will need more money again or there will a reoccurance of last years callapses.

It may be that without this QE the banks will collapse and even with it will collapse eventually. But when?

Robert Peston has something to say about QE -

Let's assume, which isn't necessarily the case, that when the Bank of England buys gilts from investors the cash ends up in the British banking system.

Well, if the cash is classified by the banks as a customer deposit, which it might be if the investor that has sold gilts to the Bank of England happens to be a relatively small and unsophisticated institution, then the banks say "yippee".

Because that deposit increases the ratio of supposedly stable customer deposits to loans and advances: it reduces the banks' dangerous dependence on flighty, unreliable wholesale funds.

Which genuinely matters, because - as you'll recall - one of the reasons our banking system came so close to collapse last autumn is that our banks had become too dependent on wholesale sources of funds, which dried up after the collapse of Lehman Brothers when investors took fright and took flight.

Take Royal Bank of Scotland. Today, its chief executive has set a target to reduce its ratio of loans to deposits from 156% to around 100% by 2013.

That will require it to reduce its dependence on wholesale sources of funds by not far off £200bn over the same time period.

So when cash deposits come in, the instinct of Royal Bank of Scotland - and of other banks - is to say "thank you very much" and just sit on the cash, rather than lend it out.

And there's a similar story for Lloyds. In the six months from 31 December to 30 June, its ratio of loans to customer deposits has fallen from 166% to 152%, as it has simultaneously increased deposits by £20bn and reduced loans and advances by £25bn.

To reiterate, that reduction in these banks' respective ratios of loans to customer deposits is a deliberate policy.

Why? Well, when Lloyds and RBS increase their customer deposits and don't lend out the cash, they becomes a much safer place for their other depositors.

So a benign effect of QE may have been to increase the security of our banks for savers - even if that's not what the policy was intended to achieve.

But actually much of the cash raised by institutions from selling gilts almost certainly isn't converted into customer deposits at banks.

More likely is that institutions have lent it to banks and other financial companies in the form of wholesale market loans - the kind which the banks are supposed to be weaning themselves off.

If that is the case, then there is absolutely no chance that banks - already too dependent on wholesale funding - will lend the money out.

What's more, some of this money raised by institutions from gilt sales may have been lent to the banks in the form of short-term debt securities underwritten by the Treasury via the credit guarantee scheme.

In effect, there will have been a double public-sector subsidy for fund-raising by the banks, with little apparent consequential benefit in the form of lending into the real economy.

There is a final paradox in this tale of where all the Bank of England's money has leaked.

The banks may have used the additional cash deposits to purchase gilts, as they've been instructed to do by the regulator, the Financial Services Authority, which wants to see them holding much greater reserves of genuinely liquid, high-quality assets.

Let's look at Royal Bank of Scotland again. It has a new target to increase its "liquidity reserve" from £90bn to around £150bn. And that means it may well buy an additional £60bn or so of gilts.

So one lot of gilt purchases, by the Bank of England, is simply spurring a separate lot of gilt purchases by the commercial banks - for which the government should be profoundly grateful, because it helps finance the humongous public-sector deficit, but prevents any of the cash being lent to businesses and households that may need it.

Does that mean QE has been a waste of time?

Probably not.

Without it, there might have been even less lending into the real economy.

But unless and until the banks' ratios of customer deposits to loans and advances have returned significantly nearer to parity, QE is almost certainly not going to spark much in the way of incremental lending to non-financial companies and personal customers.

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I believe now's the time to buy.

No, Oct. 2007 was the time to buy. Especially flats. Excellent BTL investment. Guaranteed pension for the rest of your life. Easy money.

Unfortunately, I missed the boat. :(

Nomadd

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You could well end up on Bruce Banner's sig before the sun sets with a name like that. You might just be the fastest one to go on his list ever.

You should be very proud.

He's already on there as Morgs :rolleyes:.

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He's already on there as Morgs :rolleyes:.

Oh FFS don't tell me it's Rinoa again? <_<

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