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All Change: Bond Market Says No Recovereh

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http://www.bloomberg.com/news/2010-08-21/u-k-10-year-gilts-post-biggest-weekly-gain-since-june-pound-declines.html

U.K. 10-Year Gilts Post Biggest Weekly Gain Since June on Recovery Concern
By Anchalee "Anch" Worrachate - Aug 21, 2010 7:30 AM GMT+0100
U.K. 10-year government bonds posted their best weekly gains since June and the pound fell versus the dollar as concern that the global economic recovery is faltering boosted demand for the safest assets.
Two-year note yields fell to record low as European Central Bank council member Axel Weber said the ECBs emergency lending should last through the end of the year. U.S. data showed the number of people claiming unemployment benefits rose and a manufacturing gauge declined. Minutes of this months Bank of Englands meeting published Aug. 18 showed the Monetary Policy Committee considered further stimulus measures.
Theres still a lot of uncertainty in the market, and gilt bond yields are suggesting that the official interest rate is not going to rise anytime soon, said Mohit Kumar, a fixed- income strategist at Deutsche Bank AG in London. The Bank of England will do all they can to avoid
the Japanese-style deflation
house prices falling further.

My strikethrough.

Without HPI our economy is doomed--at least in the short and medium term. But it is better to break the habit than to allow it to destroy the entire country once and for all. Our dependence on house inflation is the cause of boom and bust and each time the extremes of high and lows get larger and more threatening to our infrastructure and viability as a nation. IMO, the Brown boom and bust was a boom and bust too far. All we can do is pull the plug on the supply (HPI) and allow our economy to realign itself naturally without Merv's vigilance (inaction) which continues to try to fuel the remnants of the Brown HPI boom.

Bottom line: we need to go cold turkey and allow the housing market to find its level naturally. This will mean a drop of between 40% and 50% to align prices with incomes and rentable value.

Edited by Realistbear

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...

Without HPI our economy is doomed--at least in the short and medium term. But it is better to break the habit than to allow it to destroy the entire country once and for all. Our dependence on house inflation is the cause of boom and bust and each time the extremes of high and lows get larger and more threatening to our infrastructure and viability as a nation. IMO, the Brown boom and bust was a boom and bust too far. All we can do is pull the plug on the supply (HPI) and allow our economy to realign itself naturally without Merv's vigilance (inaction) which continues to try to fuel the remnants of the Brown HPI boom.

Bottom line: we need to go cold turkey and allow the housing market to find its level naturally. This will mean a drop of between 40% and 50% to align prices with incomes and rentable value.

You're right, of course, but it is that dependence on HPI that I fear will make declines in prices sticky going down, with the majority of people, from the media to Jo Public, fighting tooth and nail to preserve the value of their most expensive (overpriced) asset.

Unless we see a significant catalyst (IR rises, mass unemployment) I fear there won't be enough forced sellers to drive falls.

We'll just have to see what effect the forthcoming cuts make and how much sentiment swings.

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Without HPI our economy is doomed--at least in the short and medium term. But it is better to break the habit than to allow it to destroy the entire country once and for all. Our dependence on house inflation is the cause of boom and bust and each time the extremes of high and lows get larger and more threatening to our infrastructure and viability as a nation. IMO, the Brown boom and bust was a boom and bust too far. All we can do is pull the plug on the supply (HPI) and allow our economy to realign itself naturally without Merv's vigilance (inaction) which continues to try to fuel the remnants of the Brown HPI boom.

Bottom line: we need to go cold turkey and allow the housing market to find its level naturally. This will mean a drop of between 40% and 50% to align prices with incomes and rentable value.

If house prices fall by this much the banks are going to be bust again. Too much money has been sucked out of (borrowed from) the future economy on the belief that house prices can continue to go up all the way to infinity. The hpi problem is now too big to be solved, much like our £5tn debt problem. All we can now do is tread water in the hope the whole thing doesn't blow up in our face. I suspect the end game will be a total collapse in the currency, followed by the IMF and interest rate circa 20%.

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Bolux. Gilt yields are following market expectations of there being no default. That improved radically when we got a working government and yields fell hard, and further falls reflect improving market confidence, together with the regular fear over other assets.

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Bolux. Gilt yields are following market expectations of there being no default. That improved radically when we got a working government and yields fell hard, and further falls reflect improving market confidence, together with the regular fear over other assets.

You jest surely?

Edited by MrFlibble

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Bolux. Gilt yields are following market expectations of there being no default. That improved radically when we got a working government and yields fell hard, and further falls reflect improving market confidence, together with the regular fear over other assets.

Sorry but you forget that bond yields are being driven down by bank arbitrage as I would call it. Free CB money (virtually) reinvested in trasuries/gilts. Why lend in risky assets/business's when you can make a decent spread on virtual "risk free" stuff? Confidence returning? Not in my book.

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http://www.bloomberg.com/news/2010-08-21/u-k-10-year-gilts-post-biggest-weekly-gain-since-june-pound-declines.html

U.K. 10-Year Gilts Post Biggest Weekly Gain Since June on Recovery Concern
By Anchalee "Anch" Worrachate - Aug 21, 2010 7:30 AM GMT+0100
U.K. 10-year government bonds posted their best weekly gains since June and the pound fell versus the dollar as concern that the global economic recovery is faltering boosted demand for the safest assets.
Two-year note yields fell to record low as European Central Bank council member Axel Weber said the ECB’s emergency lending should last through the end of the year. U.S. data showed the number of people claiming unemployment benefits rose and a manufacturing gauge declined. Minutes of this month’s Bank of England’s meeting published Aug. 18 showed the Monetary Policy Committee considered further stimulus measures.
“There’s still a lot of uncertainty in the market, and gilt bond yields are suggesting that the official interest rate is not going to rise anytime soon,” said Mohit Kumar, a fixed- income strategist at Deutsche Bank AG in London. “The Bank of England will do all they can to avoid
the Japanese-style deflation
house prices falling further.”

My strikethrough.

Without HPI our economy is doomed--at least in the short and medium term. But it is better to break the habit than to allow it to destroy the entire country once and for all. Our dependence on house inflation is the cause of boom and bust and each time the extremes of high and lows get larger and more threatening to our infrastructure and viability as a nation. IMO, the Brown boom and bust was a boom and bust too far. All we can do is pull the plug on the supply (HPI) and allow our economy to realign itself naturally without Merv's vigilance (inaction) which continues to try to fuel the remnants of the Brown HPI boom.

Bottom line: we need to go cold turkey and allow the housing market to find its level naturally. This will mean a drop of between 40% and 50% to align prices with incomes and rentable value.

What a load of rubbish. When will you bears realise house's are not going to fall 40-50%.

Notice that your 2009 Christmas predications seem to be coming good :D:D Especially the HPC fall of between 15-20%. As houses are up between 5-10% do you think you got the sign round the wrong way :lol:

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Sorry but you forget that bond yields are being driven down by bank arbitrage as I would call it. Free CB money (virtually) reinvested in trasuries/gilts. Why lend in risky assets/business's when you can make a decent spread on virtual "risk free" stuff? Confidence returning? Not in my book.

Evidently I wasn't clear enough. I was talking about confidence in the government (backed by the economy), not confidence in the economy itself. The latter remains shaky and is pulled both ways by each breeze that blows.

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What a load of rubbish. When will you bears realise house's are not going to fall 40-50%.

Notice that your 2009 Christmas predications seem to be coming good :D:D Especially the HPC fall of between 15-20%. As houses are up between 5-10% do you think you got the sign round the wrong way :lol:

That is because transactions are now happening at the margin. So if a thinly traded stock goes up by 20% because of somebody's fat finger, it doesn't mean the 'share' is now worth 20% more.

Mean reversion happens nearly everytime and we are going to get that 3.5x ish in the end, either a quick way (crash), or a slow way (Japan). Either way, it is not going to be fun.

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What a load of rubbish. When will you bears realise house's are not going to fall 40-50%.

Notice that your 2009 Christmas predications seem to be coming good :D:D Especially the HPC fall of between 15-20%. As houses are up between 5-10% do you think you got the sign round the wrong way :lol:

ZIRP, causing paradoxically saving to rise,

200bn deficit, national debt 900bn about 90% of GDP, austerity planned

What is going to sustain the malinvestment , house prices are more likely to crash

than not IMHO.

[ all figures approx ]

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What a load of rubbish. When will you bears realise house's are not going to fall 40-50%.

Notice that your 2009 Christmas predications seem to be coming good :D:D Especially the HPC fall of between 15-20%. As houses are up between 5-10% do you think you got the sign round the wrong way :lol:

Gosh a stray bull has wandered in! Not been too much bullishness round here of late - don't know why??

Perhaps you'd like to share your HPI predictions then?

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That is because transactions are now happening at the margin. So if a thinly traded stock goes up by 20% because of somebody's fat finger, it doesn't mean the 'share' is now worth 20% more.

Mean reversion happens nearly everytime and we are going to get that 3.5x ish in the end, either a quick way (crash), or a slow way (Japan). Either way, it is not going to be fun.

Not sure how you can get transactions traded at the margins when they are a lot higher than a year or even two years ago.

The only way we will get to 3.5x ish is a high level of wage inflation. Possible, although I think unlikely given government cutbacks. Also the 3.5x ish that you bears go on about takes no account of interest rates which are at 0.5% and likely to stay so for a few years yet!

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Gosh a stray bull has wandered in! Not been too much bullishness round here of late - don't know why??

Perhaps you'd like to share your HPI predictions then?

No problems

House prices to end the year flat to up 2% on a YOY basis. 2011-12 flat to small rise 2% ish at most . However inflation running at 5% will mean a real reduction in House prices and therefore see them fall 10% in real terms. By end of 2012 will be In line then with the long term trend and representing good value.

However this is the bit that you Bears don't get "THEY WILL NOT FALL A FURTHER 40-50-60%" in nominal or real terms.

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Not sure how you can get transactions traded at the margins when they are a lot higher than a year or even two years ago.

The only way we will get to 3.5x ish is a high level of wage inflation. Possible, although I think unlikely given government cutbacks. Also the 3.5x ish that you bears go on about takes no account of interest rates which are at 0.5% and likely to stay so for a few years yet!

Incorrect, all that needs to happen is for people's currency, earnings and savings being unnecessarily devalued to the point where their expenditure shifts to other items rather than accumulating more debt (even at low interst rates).

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Not sure how you can get transactions traded at the margins when they are a lot higher than a year or even two years ago.

The only way we will get to 3.5x ish is a high level of wage inflation. Possible, although I think unlikely given government cutbacks. Also the 3.5x ish that you bears go on about takes no account of interest rates which are at 0.5% and likely to stay so for a few years yet!

Transaction at the margin means only the force sellers/buyers(seemed more of them) are participating in the market. It was like when the hedge fund was short VW, then had to buy it back at any cost, regardless of the actual value/utility value of the item they buy. In fact, looks like the first casulties of the HP Staticness will be the estate agents who needs volume more than high prices. Pick any area which still transact at higher prices and you can almost be sure that the volume is around <1/2 of 2007.

Of course... thers is the question of why interest is at 0.5%, that is because the economy is pretty weak and when that happen, people's income reduce (or drops to zero + JSA). At the same time, rising living cost acts like an extra tax to cancel out stimulas offered by the 0.5% interest. There is a limit how much BoE can manipulate the economy as well (otherwise of course, boom and bust would have been eliminated).

I once thought Real Estate is a good hedge for inflation - apparently not. In very high inflation situation, one cannot even turn the house into food (no one will bother buying them). In Weimar, the cost of rent fell from around 33% of income to 0.1% of the income in a few years while essentials jumps from 20% or so to 99%.

And I refer you to this very good thread AvidFan Started:

http://www.housepricecrash.co.uk/forum/index.php?showtopic=149772

Edited by easybetman

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I once thought Real Estate is a good hedge for inflation - apparently not. In very high inflation situation, one cannot even turn the house into food (no one will bother buying them). In Weimar, the cost of rent fell from around 33% of income to 0.1% of the income in a few years while essentials jumps from 20% or so to 99%.

And I refer you to this very good thread AvidFan Started:

http://www.housepricecrash.co.uk/forum/index.php?showtopic=149772

Duh of course rents would drop to 0.1% in hyperinflation seeing as rents are fixed for a period of 1 to 2 years whilst everything else is hyperinflating.

If rents remained at 0.1% after contracts expired landlords would just leave their properites empty.

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Duh of course rents would drop to 0.1% in hyperinflation seeing as rents are fixed for a period of 1 to 2 years whilst everything else is hyperinflating.

If rents remained at 0.1% after contracts expired landlords would just leave their properites empty.

:lol: , do you think landlords or renters would give much of a sh!t about property or who owns what after hyperinflating

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:lol: , do you think landlords or renters would give much of a sh!t about property or who owns what after hyperinflating

That is right - they have their next meal to worry about.

The store of value in Zim was OldMutual (A big financial group co-listed in Zimbabwe, London and South africa) Stock

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with banks providing mortgages at 2.5% there will be no further crash until that changes, if that changes.

Jobs are the key factor. If there are cuts this year and people lose jobs the housing market is toast. Burnt melba toast at that.

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  • 261 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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