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Realistbear

Falling House Prices + Rising Unemployment To Bring 2Nd Dip

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http://www.bloomberg.com/news/2010-08-01/greenspan-says-decline-in-u-s-home-prices-might-bring-back-the-recession.html

Greenspan Says Decline in U.S. Home Prices Might Bring Return of Recession
By Joshua Zumbrun - Aug 1, 2010 2:58 PM GMT
“We’re in a pause in a recovery, a modest recovery, but a pause in the modest recovery feels like a quasi-recession," former Fed Chairman Alan Greenspan said on NBC's "Meet the Press." Photographer: Andrew Harrer/Bloomberg
Former Federal Reserve Chairman Alan Greenspan said the slowing economic recovery in the U.S. feels like a “quasi-recession” and the economy might contract again if home prices decline.

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http://www.bloomberg.com/news/2010-08-01/unemployment-rate-in-u-s-probably-rose-raising-risk-of-slower-spending.html

Unemployment Rate in U.S. Probably Rose, Raising Risk of Slower Spending
By Timothy R. Homan - Aug 1, 2010 5:01 AM GMT
Email Share Print
Federal Reserve Chairman Ben S. Bernanke last month said joblessness is “the most important” problem facing the economy. Photographer: Joshua Roberts/Bloomberg
Unemployment probably climbed in July, raising the risk American households will keep a lid on spending for the rest of the year, economists said before a government report this week.
The jobless rate rose to 9.6 percent last month from 9.5 percent in June, according to the median estimate of 57 economists surveyed by Bloomberg News ahead of a Labor Department report Aug. 6. A drop in federal census workers as the population count wound down depressed payrolls by 60,000, the data may also show.

=

Recession

This no doubt explains why Sterling is rising vs. the $ as neither conditions apply here where we are insulated against problems elsewhere due to pent up demand for houses and a strong banking sector.

http://www.bloomberg.com/news/2010-07-31/u-k-house-price-recovery-will-continue-through-2014-cebr-says-in-report.html

U.K. House Price Recovery Will Continue Through 2014, CEBR Says in Report

By Jennifer Ryan - Aug 1, 2010 12:05 AM GMT

The U.K. house-price recovery will continue through 2014 as low interest rates and a shortage of supply buoy the market, the Centre for Economics and Business Research said.

Edited by Realistbear

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RB

Might want to go to:-

Itulip.com

& read up Janzen talking about inflation.

As for UK?..................we are normal 12 months behind US.

Mike

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Former Federal Reserve Chairman Alan Greenspan said the slowing economic recovery in the U.S. feels like a “quasi-recession” and the economy might contract again if home prices decline.[/indent]

This is not good at all, from the guy who gave a 1/3 chance in late 2007 of the US falling into any type of recession let alone the worst since the great depression. Describing the current situation as a 'quasi-recession' means we are in the depression we have all feared.

Edited by Confounded

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I think Greenspan overemphasises the centrality of the housing market and mistakes it for the horse rather than the cart, which is what the housing market is, a cart.

It was the failure of regulation to prevent mal practice in the financial services industry that caused this thing. Greenspan's failure.

I don't think Greenspan understands it at all.

There isn't going to be a double dip in the housing market because the first dip never ended.

Talk of prices moving north/stabilising in the months pre-April 2010 was a mirage. It was just price headed south but not in a straight line.

The false contribution to the US economy made by a dysfunctional housing market is gone for this part of the cycle. The rot within the housing market will just have to be scraped away bit by bit. There is nothing anyone can do about that.

Whether the US economy enters a double dip will depend on the strength of other sectors.

The abject failure of such influential commentators as Greenspan to grasp this does not give cause for optimism.

But it does help explain why we are in this sorry pass to begin with.

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Greenspan is on record as saying that if he had regulated the financial services industry diligently in the ten years prior to 2007 the US economy would have underperformed stagnantly in that period. Was it in that documentary "house of cards"?

Rubbish.

If the big fish had not been making sour easy money in finance and the minnows in real estate, the energy and resources expended in those follies would have found more legitimate outlets elsewhere and the US would be in less mess.

Greenspan just won't admit his failure, which is, I suppose, only human.

Edited by indirectapproach

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I can't say for sure of course, but it does seem that for the ordinary working person, no matter which country they happen to live in (with maybe one or two exceptions) life is getting harder and harder. They are being weighed down with personal debt. They cannot afford to house themselves in a way that they find acceptable. Their living costs are escalating. They are heavily taxed, and look likely to be even more burdened by taxation. Increasingly, they cannot afford the basics of life without struggling.

Are these the people upon which the hopes of a consumer led, or (even greater) debt led recovery are pinned? Oh dear, It looks like the gasket in the factory fodders engine has well and truly blown.

Second dip? no... I think it will be a plummet.

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RB

Might want to go to:-

Itulip.com

& read up Janzen talking about inflation.

As for UK?..................we are normal 12 months behind US.

Mike

Agree. With our debt somewhere north of 100% of GDP compared with the US at 90% it is really hard to see how we are insulated from the same problems that beset our partners in the great HPI bust.

If the lag is 12 months Sterling is in for a good ride for the next 6 months or so. The higher it goes the faster it will bring on recession as our export market cannot stand an over valued pound. In a world of shrinking demand (China too) those with the most competitive prices win.

A couple of months of > -1% drops in house prices will settle Sterling back down below 1.50 IMO. October perhaps.

Edited by Realistbear

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http://www.bloomberg.com/news/2010-08-02/time-to-buy-dollars-again-as-euro-economies-hit-limits-of-fiscal-austerity.html

Time to Buy Dollars as Euro Economies Reach Limits of Austerity

By Liz "Elizabeth" Capo McCormick and Anchalee "Anchie" Worrachate - Aug 2, 2010 3:19 AM GMT
July 23 (Bloomberg) -- Ray Attrill, global research director at Forecast Ltd. in Sydney, talks with Bloomberg's Linzie Janis about the European Union's bank stress tests and his forecast for the euro. The euro headed for a weekly decline against the dollar on speculation stress-test results today will reveal loan losses at European banks, reducing demand for the region’s assets. (Source: Bloomberg)
FX Concepts LLC,
the hedge fund that bought the euro in June just as it began a 9.7 percent surge
against the dollar, now says it’s almost time to get out of the currency.
The firm, which manages $8 billion in assets, expects the euro’s advance from a four-year low on June 7 to come
undone by September,
partly because European austerity programs will start to weigh on growth. Reports last week that showed Spanish consumer confidence falling to the lowest level this year and banks tightening credit standards in the region suggest the budget measures may already be undermining the recovery.

We have not seen much in the way of consequences following the bursting bubble and austerity programs. Few jobs lost so far. All the banks have been passed on the stress tests and all is quiet on the Western Front. But the Elephant is still there. IMO, this article is about right for an Autumn dose of reality in the EZ with us to follow a month or two later. After all, they called the surge in the Euro right--possibly seeing the inevitable euphoria that would surround the passing of the stress tests--a foregone conclusion whether they were solvent or not.

ITMT we might see the Pound touch the 1.60s as exports take the hit and job losses begin to accelerate. At the moment, everything is too good to be true.

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This no doubt explains why Sterling is rising vs. the $ as neither conditions apply here where we are insulated against problems elsewhere due to pent up demand for houses and a strong banking sector.

Now the reality:

£ is rising not because of US but because of ConLib cuts.

If recession were here (which it is but the markets are playing short term games right now) $ will soar v all other currencies. Thus $ will soar as stock markets crash anytime soon (they're already down over 10% from April highs).

Finally RB has his gold crash. It ought to go back to c $1000, which will be yet another amazing buy. Gold will fall in deflation and soar in (and in advance of) inflation - which we will have from 2012 or onwards.

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FTSE 100 5309.35+0.98%

Massive opening surge--must be based on China's slowing economy? Or perhaps "good news" in the banking pit.

The word on the street is the clearly slowing manufacturing in China will convince the Chinese leaders to stop tightening, and possibly even loosen up their credit system.

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FTSE 100 5309.35+0.98%

Massive opening surge--must be based on China's slowing economy? Or perhaps "good news" in the banking pit.

Markets are up because they know that more printy printy is now virtually assured. Expect the double dip to be be talked up quite a bit in the coming weeks (not that it needs talking up).

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Markets are up because they know that more printy printy is now virtually assured. Expect the double dip to be be talked up quite a bit in the coming weeks (not that it needs talking up).

The day QE 2.0 is announced, the markets will be a rocketship upwards.

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Agree. With our debt somewhere north of 100% of GDP compared with the US at 90% it is really hard to see how we are insulated from the same problems that beset our partners in the great HPI bust.

If the lag is 12 months Sterling is in for a good ride for the next 6 months or so. The higher it goes the faster it will bring on recession as our export market cannot stand an over valued pound. In a world of shrinking demand (China too) those with the most competitive prices win.

A couple of months of > -1% drops in house prices will settle Sterling back down below 1.50 IMO. October perhaps.

We seem to be replaying the last Sterling rally (doomed Dollar) which went up to 1.70, not sure if this one will go to the same level or not. I'm convinced people are buying our currency instead of the Euro as they feel the need to buy something that is weak against the Dollar now the Dollar sentiment is changing. With the Euro looking tarnished they have opted to buy our shambles of a currency instead. Best 'o' luck there :P

It will be interesting to see how badly we hobble ourselves with a strong Pound. $1.70 and I'll be shorting again, just like last time ;)

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We seem to be replaying the last Sterling rally (doomed Dollar) which went up to 1.70, not sure if this one will go to the same level or not. I'm convinced people are buying our currency instead of the Euro as they feel the need to buy something that is weak against the Dollar now the Dollar sentiment is changing. With the Euro looking tarnished they have opted to buy our shambles of a currency instead. Best 'o' luck there :P

It will be interesting to see how badly we hobble ourselves with a strong Pound. $1.70 and I'll be shorting again, just like last time ;)

My worst trade ever was shorting the pound at about $1.65 before that rise to $1.70, 'should have stuck to my guns and stayed in. I reckon it's gonna go there again. Back in January Goldman Sachs predicted $1.85 within 3 months!!

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My worst trade ever was shorting the pound at about $1.65 before that rise to $1.70, 'should have stuck to my guns and stayed in. I reckon it's gonna go there again. Back in January Goldman Sachs predicted $1.85 within 3 months!!

Not sure about the $1.85 level as I suspect Merv will step in are try talk us down long before then, but the market will go where it wants to go at the end of the day and right now people are tripping over themselves to buy Sterling against the Dollar.

Last time $1.70 struck me as good value looking over the range of the past few years, 1.35 - 2.15. I try look past the short term moves and toward the long term fundamentals while factoring in what I deem a good price. My issue with Sterling is buying power, it has very little, mainly due to the price of things in the UK, predominantly housing, although food and fuel are getting silly too.

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Not sure about the $1.85 level as I suspect Merv will step in are try talk us down long before then, but the market will go where it wants to go at the end of the day and right now people are tripping over themselves to buy Sterling against the Dollar.

Last time $1.70 struck me as good value looking over the range of the past few years, 1.35 - 2.15. I try look past the short term moves and toward the long term fundamentals while factoring in what I deem a good price. My issue with Sterling is buying power, it has very little, mainly due to the price of things in the UK, predominantly housing, although food and fuel are getting silly too.

I sold on the fundamentals too, but trying to pick the top or bottom of markets is a mugs game and that's exactly what I did. Not sure I'd want to sell again though as the dollar has too many issues and the safe haven status won't last forever. I think buying sterling on any dips against the $ seems to be a reasonable short term trade for now, but I'm gonna leave it alone this time.

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  • 140 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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