Trigger For The Next Downleg?

[IMHAL]

Well it appears that the bull trap (if it is that) is still in train.

Cash buyers seem to be out in force blowing their wad on overpriced pwoperty in a market that consists of less that half the supply that existed at the peak. To compound the matter, the stock on the market is, 'how you say' rubbish!

So we have less supply, scared cash holders buying sh1t, which is stabilising the market at somewhere between the low point and the high peak of 2007.

The dilema is that I cannot see how this situation will change? The Bankrupt of England is intent on destroying the currency and doing diddly squat about inflation - so no interest rate rises in the near future. The gubmint of corrupt folk are happy to pay mortgages for the redundant so long as they have a chance of getting their vote. The banks are happy to either delay repossession or to keep reposessed properties so long as they are allowed to mark to model.

In short everyone that matters is behind the ponzi scheme now. So excepting for a real hum dinger of a currency event (and even MysticMerv is seems to be egging this on) that demands instant defending of the currency what else can happen to destabilise this ponzi scheme?

On the other side of the coin we are unlikely to have large wage inflation and inflation is eating up peoples disposable incomes.

So we are stuck in an uncomfortable place - Are we stuck here for the next decade a la Japan?

[Topher Bear]

Well it appears that the bull trap (if it is that) is still in train.

Cash buyers seem to be out in force blowing their wad on overpriced pwoperty in a market that consists of less that half the supply that existed at the peak. To compound the matter, the stock on the market is, 'how you say' rubbish!

So we have less supply, scared cash holders buying sh1t, which is stabilising the market at somewhere between the low point and the high peak of 2007.

The dilema is that I cannot see how this situation will change? The Bankrupt of England is intent on destroying the currency and doing diddly squat about inflation - so no interest rate rises in the near future. The gubmint of corrupt folk are happy to pay mortgages for the redundant so long as they have a chance of getting their vote. The banks are happy to either delay repossession or to keep reposessed properties so long as they are allowed to mark to model.

In short everyone that matters is behind the ponzi scheme now. So excepting for a real hum dinger of a currency event (and even MysticMerv is seems to be egging this on) that demands instant defending of the currency what else can happen to destabilise this ponzi scheme?

On the other side of the coin we are unlikely to have large wage inflation and inflation is eating up peoples disposable incomes.

So we are stuck in an uncomfortable place - Are we stuck here for the next decade a la Japan?

I wouldn't be so sure that its not reached and end. I know its anecdotal, but on our house hunt I am now seeing more and more properties being reduced in price. I've seen 4 in the last week (out of about 65 properties coming up on our search criteria), only about 3 or 4 thousand each at around the 170K mark. I've been watching the market a since the beginning of April, and I don't remember seeing as many reductions as this in such a short time. Maybe sellers are beginning to get desperate to sell, don't know what the trigger is, but it might be starting to turn back down again.

[_w_]

Well it appears that the bull trap (if it is that) is still in train.

Cash buyers seem to be out in force blowing their wad on overpriced pwoperty in a market that consists of less that half the supply that existed at the peak. To compound the matter, the stock on the market is, 'how you say' rubbish!

So we have less supply, scared cash holders buying sh1t, which is stabilising the market at somewhere between the low point and the high peak of 2007.

The dilema is that I cannot see how this situation will change? The Bankrupt of England is intent on destroying the currency and doing diddly squat about inflation - so no interest rate rises in the near future. The gubmint of corrupt folk are happy to pay mortgages for the redundant so long as they have a chance of getting their vote. The banks are happy to either delay repossession or to keep reposessed properties so long as they are allowed to mark to model.

In short everyone that matters is behind the ponzi scheme now. So excepting for a real hum dinger of a currency event (and even MysticMerv is seems to be egging this on) that demands instant defending of the currency what else can happen to destabilise this ponzi scheme?

On the other side of the coin we are unlikely to have large wage inflation and inflation is eating up peoples disposable incomes.

So we are stuck in an uncomfortable place - Are we stuck here for the next decade a la Japan?

I see the most likely trigger as a run on the pound.

It could happen anytime, but just about now sounds right.

[zebbedee]

Tin foil hat firmly in place. Right I'll plump for a nuclear attack by Israel on Iran, oil $100000pbbl, mass panic on global stock markets and financial collapse. That should about do I think. Ofcourse I wouldn't be so interested in house prices then though.

Edited September 25, 2009 by zebbedee

[_w_]

Actually, I was browsing the web and found out it may have already happened.

Nadir Of Western Civilization To Be Reached This Friday At 3:32 P.M.

My favourite bit.

Experts predict that the penultimate catastrophe will occur at approximately 7:15 p.m. Thursday night, when the social networking tool Twitter will be used to communicate a series of ideas so banal they will instantaneously negate the three centuries of the Renaissance.

[IMHAL]

Still waiting for someone who will come out with the knockout blow that kills this ponzi scheme.

[Guest The Relaxation Suite]

Bull run is over. Markets are slowing. Negative breakouts imminent. Money is about to flood out of equities and back into cash all over the world. IMHO FTSE will lose significant value before Christmas. Then and only then will the masses work out what's going on and stop paying 100% more for properties than they need to.

[IMHAL]

Bull run is over. Markets are slowing. Negative breakouts imminent. Money is about to flood out of equities and back into cash all over the world. IMHO FTSE will lose significant value before Christmas. Then and only then will the masses work out what's going on and stop paying 100% more for properties than they need to.

I like what I'm hearing, more more!- I do agree with you about a sense of reality hitting sometime soon. I don't really know why it will hit but hit it will - and it will create the next down leg IF and only if the policy makers don't decide to go even larger on the stimulus packages. If they do then I will concede that we have entered the Zimbabwe zone.

[The Masked Tulip]

Asking prices are going up in Swansea by as much as 50K. I was looking at a house in 2007 for 185, been painted on the outside in the past month and now on for 215K asking price.

At the same time prices are also falling so the market is very confused, very greedy, very stupid and soon to be desperate IMPO.

[Guest The Relaxation Suite]

I don't really know why it will hit

There are some technical indicators IMO pointing to a major drawdown of equities, but these could easily be just another retracement on the way to more insanity. Masked Tulip provides part of the answer when he refers to people falling over each other to make ludicrous offers on property. Remember - there is no more credit, banks are not lending, unemployment is skyrocketing, Britain's national debt is unrepayable, welfare is being cut, and taxes are going to Pluto, yet in all this there is a bidding war for overpriced properties. We are witnessing mob hysteria induced by government propaganda.

I'm sitting it out and watching. No way am I going in yet.

Edited September 25, 2009 by D-503

[The Masked Tulip]

There are some technical indicators IMO pointing to a major drawdown of equities, but these could easily be just another retracement on the way to more insanity. Masked Tulip provides part of the answer when he refers to people falling over each other to make ludicrous offers on property. Remember - there is no more credit, banks are not lending, unemployment is skyrocketing, Britain's national debt is unrepayable, welfare is being cut, and taxes are going to Pluto, yet in all this there is a bidding war for overpriced properties. We are witnessing mob hysteria induced by government propaganda.

I'm sitting it out and watching. No way am I going in yet.

In Swansea West there is a type of madness going on. The predominantly Public Sector workforce in this part of the World are oblivious to a recession and do not think they will be affected.

At the same time loads of people from the SE of England are putting in stupid offers on the cr*appiest of properties - you have terraced cottages in Mumbles in which you literally cannot swing a cat going for around 230K. Ten years ago they would have gone for about 60K.

I am just watching and waiting. I think it will be another 12 to 18 months but I can see there being a bloodbath in local house prices. Cash buyers is not a bottomless pit, IRs will be rising next year and so will unemploymeent. It makes me think of the last dance on the Titanic - people convincing themselves that the worst is over when it quite clearly is not.

[nobody777]

China aggresivly dumps US treasuries buys things like mining rights gold etc causing problems for the US 5%

Major trade wars. 5%

Collapse of a few big banks 10%

Soverign default Ireland Spain etc and a break up of Europe. 5%

High inflation causing strikes and civil unrest. 20%

Soros or his type shorting GBP 10%

Sharp and deep currency movements. 20%

Hedge funds shorting too much and the markets over react. 5%

Wars and terrorist acts. 5%

Black swan event 10%

Oh the government stops printing and supporting banks too soon 0.00000000000000000000000000000001%

The government prints spends and borrows too much. 99.999999999999999999999999999999999999999999999999%

For me these things kind of offer chances to spoil the party I hope things will pan out ok but risk is high.

Each day anyone is possible and a few more black swans but things usually go well when you think they are bad.

For me much more devaluation of the GBP is inevitable and the Euro too times running out prepare yourself for inflation anyway.

[R K]

Well, it would appear (counterintuitively perhaps) that QE (and the other bank saving measures) gave the banksters a boost, leading to support for asset prices (equities/houses) and helping sterling to strengthen.

If that is the case then it may follow that the prospect, or actual end, of QE will lead to a relapse in sterling, a correction in stocks and a resumption of house price falls. Judging by the performance of sterling and equities this week that may already have begun. If not, I guess we will have to wait a few more months.

I'm afraid I don't see any imminent significant threats from inflation. I think another deflationary/deleveraging leg down is more likely into/during next year. If instead we get oil prices etc rising strongly here then I would have thought that simply adds weight to the argument for a significant double dipper. So, I think much higher interest rates/inflation are probably years away yet, despite the obsession with it on here.

[frozen_out]

The next election. We're in the eye of the storm.

[Simples]

In Swansea West there is a type of madness going on. The predominantly Public Sector workforce in this part of the World are oblivious to a recession and do not think they will be affected.

Trigger you say? Well, public sector jobs and pensions are a ticking time-bomb for a start. Staying 'oblivious' will not remain an option. But trigger could be anything - it's the background state of things that counts IMHO - like an overly dry forest. BDI is down recently for eg.

[huw]

Actually, I was browsing the web and found out it may have already happened.

Nadir Of Western Civilization To Be Reached This Friday At 3:32 P.M.

[Joey Buttafueco Jr]

IRs will be rising next year

Allegedly

[Bloo Loo]

Allegedly

real rates already have.

[jimmylad]

classic bull trap IMO.................................

in stocks & housing............................................

they have quantitatively eased the situation for the time being but most of the smart money will be quietly exiting whilst the greater fool is left holding the debt

it can only work for so long

the last 10 years was never sustainable & the measures now are unsustainable

something will give as the PTB do not give a fook about you or I. They own all the pieces on the monopoly board & the banker has all money.

Edited September 26, 2009 by jimmylad

[munimula]

In short everyone that matters is behind the ponzi scheme now. So excepting for a real hum dinger of a currency event (and even MysticMerv is seems to be egging this on) that demands instant defending of the currency what else can happen to destabilise this ponzi scheme?

20% government cuts

All parties are acknowledging cuts required, figure of 10% being banded around quite comfortably now so you can be sure that greater cuts than that will be required.

Just remember one figure - £16bn borrowing per month

The clock on this debt bomb is ticking

[munimula]

In short everyone that matters is behind the ponzi scheme now. So excepting for a real hum dinger of a currency event (and even MysticMerv is seems to be egging this on) that demands instant defending of the currency what else can happen to destabilise this ponzi scheme?

Also, what about a big increase in properties for sale? My sister has decided to sell in the spring, doesn't really make much sense but when you consider she bought at the peak in 2007 she could be a good barometer for what the sheeple are planning to do. Having seen prices stabilise, and many been rescued from NE by rising prices, there could be a lot of pent up supply about to hit the market - in 2008 she was definitely in NE but now has equity again

Edited September 26, 2009 by munimula

[IMHAL]

The next election. We're in the eye of the storm.

This is the one I personally hold out most hope for........

The tories will almost certainly scale back support for mortgage payment of those made redundant - that will bring in more desparate supply. They will also be looking to scale back support for unsustainable businesses/try to rebalance what is there - more redundancies in the short term = more supply.

And the biggy - they will cut back the bloated public sector by at least 10% which and cut any prospect of wage push inflation in the short and medium term - this will deal a killer blow.

Unfortunatley the current madness can go on for at least another year in which case HPI could easilly exceed the highs of 2007 - in which case it is not a bull trap but the winners curse.

Edited September 26, 2009 by IMHAL

[munimula]

and taxes are going to Pluto,

Not necessarily true. There is a phenomenon known as the 'Laffer' curve where an increase in tax rates does not result in an increase in tax take after a certain level as people basically decide not to work or try harder to avoid taxes. This is why the only real way out of the problem for the governemnt is considerable spending cuts. The tax level in Britain is already about as far as it can go.

[AndyAndy]

Next trigger - as the estate agents run out of cash.

Don't believe the hype - the volumes of sales are rubbish. I've got free access to all statutory accounts for UK companies and LLPs and estate agents are ususally one or the other. They are broadly filing their 2008 accounts now (different year ends but generally filling now for sept - dec year ends). Often filing late too.

And no wonder they are late - on 2007/8 volumes the picture isn't pretty. Take a typical regional or city wide agent with 22 branches or so and 190 employees. Cost of Sales and overheads for an agent of this size are typically £6m or so. Now in 2006/7 accounting periods turnover might have been (say) 8.5m meaning the 10 or so senior executives of the business were averaging £250k each before tax. Now for 2007/8 ie after NR but factoring in little of post sept 08, turnover typically falls to £5m. Cash resources have dwindled on a loss of £1.5m. Now looking ahead volumes have fallen dramatically. Turnover must be down at £2.5 - 3.5m. Banks, knowing the truth in their hearts are not going to extend in excess of £1m of unsecured credit to a business that is wobbly to say the least to fund the ensuing loss.

Yeah - they will cut their costs but you cannot cut millions without closing the business. A few more estate agents closing will spook people.

[Barb E Dahl]

The next election.

+1

We are just about commencing the (real) downward spiral now... I suspect after christmas the sh!t will really hit the fan, all the way to the election. You just know it's gonna happen, don't ya!

Edited September 26, 2009 by Borden Grown