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Ft Calls House Prices (and Whole Financial System)

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its about time the real reporters got their teeth into what could be the financial disaster of the millenium. sadly, they are too late to change the giant downswing thats now coming.........

trust me...its coming......and its going to be BAD.....

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When it comes down crashing the populace will learn in the hard way what financial risk is. It is like New Orleans: if the levees hold for many years and nothing happens does not mean that there is no risk of flooding. Ignore it, and when a storm hits you'll find yourself underwater.

It will start with one large bank, hedge fund or other financial institution collapsing under the weight of bad credit and excessive leverage.

A mad scramble for safety will begin. Everybody will try to liquidate their investments and withdraw their cash. But there will be no buyers nor liquidity. Even solid banks will be unable to pay their depositors as they are unable to liquidate even perfectly safe bonds. The Bank of England will react by imposing currency restrictions, Argentina style. Most will lose their life savings. Anyone with a mortgage will find it extremely difficult or impossible to pay their mortgages and will likely be repossessed.

The only safety will be in gold and silver, but the government will make their possession illegal. So make sure to hold most of your stash offshore in a safe country. Switzerland is best, Channel islands are OK.

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"Investors have come to believe that central banks will always ride to the rescue when prices dip, slashing interest rates to ease the pain. This has fuelled speculation by encouraging investors to bet on higher prices."

Indeed and the chances are that this is what will continue to happen for the forseeable future.

By the way Phillip Cogan, superb commentator though he is, is noted as erring on the side of caution in the majority of his articles.

Edited by ILBB

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It will start with one large bank, hedge fund or other financial institution collapsing under the weight of bad credit and excessive leverage.

A mad scramble for safety will begin.  Everybody will try to liquidate their investments and withdraw their cash. But there will be no buyers nor liquidity.  Even solid banks will be unable to pay their depositors as they are unable to liquidate even perfectly safe bonds.  The Bank of England will react by imposing currency restrictions, Argentina style.  Most will lose their life savings.  Anyone with a mortgage will find it extremely difficult or impossible to pay their mortgages and will likely be repossessed.

Can you explain why the above didn't happen in Japan even though the property market is some 80% down and the stock market some 70% down? [1]

So make sure to hold most of your stash offshore in a safe country.  Switzerland is best, Channel islands are OK.

How would that help? In the sort of scenarion you describe you will need your assets to exchange for bread, a gun and some ammo. It will be no good to have it in Switzerland if you have no way of getting it from there, except maybe if you have sufficient money to emigrate there.

Thanks,

MoD, who does not expect quite so much DOOOOM :D

[1] the percentages might be a bit off but they are in the right ballpark. Investors had certainly suffered a lot.

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Can you explain why the above didn't happen in Japan even though the property market is some 80% down and the stock market some 70% down? [1]

How would that help? In the sort of scenarion you describe you will need your assets to exchange for bread, a gun and some ammo. It will be no good to have it in Switzerland if you have no way of getting it from there, except maybe if you have sufficient money to emigrate there.

Thanks,

MoD, who does not expect quite so much DOOOOM  :D

[1] the percentages might be a bit off but they are in the right ballpark. Investors had certainly suffered a lot.

I can't believe you put footnotes in your posts. What next? Harvard referencing?

scary man! :(

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Guest Bart of Darkness
I can't believe you put footnotes in your posts. What next? Harvard referencing?

Isn't Chicago style currently in vogue anyway? ;)

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I've noticed Str's & those with a large sum of cash are advised to spread it about in approx £30,000 amounts in differennt banks as this figure is guaranteed to be paid back to the saver.

I wondered if things get particularly bad with banks going down, is that money at risk as well?

Is the £30K stashed somewhere, or does the Gov or other banks guarantee it & what would if the Gov/other bank couldn't cover it.

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Can you explain why the above didn't happen in Japan even though the property market is some 80% down and the stock market some 70% down?

I believe many Japanese banks were technically insolvent a few years ago: I'm not sure whether they still are.

I wondered if things get particularly bad with banks going down, is that money at risk as well?

If the whole banking system goes down, you'd better hope you have a nice pile of gold stashed away. I wouldn't expect to see anything from the 30k guarantee if a major British bank bites the dust... but then I think the government would do absolutely anything to prevent that, which is why the banks are so eager to lend money to people who can't pay it back: if that causes problems, the government will bail them out.

Edited by MarkG

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Guest Bart of Darkness

Forgive me if this question has been covered before, but I was intrigued by cgnao's reference to Channel Island banks. This is something I had never thought of before.

Does the UK government have little or no control over these banks (could they perhaps "lean" on them in times of crisis?).

I'm tempted to get my money off-shore, but like the idea of the Channel Islands (easier to get to if need be).

The only safety will be in gold and silver, but the government will make their possession illegal.

In such circumstances, I would imagine the only thing to do would be to hold physical gold (coins) and lie about their existance?

Any thoughts?

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I've noticed Str's & those with a large sum of cash are advised to spread it about in approx £30,000 amounts in differennt banks as this figure is guaranteed to be paid back to the saver.

I wondered if things get particularly bad with banks going down, is that money at risk as well?

Is the £30K stashed somewhere, or does the Gov or other banks guarantee it & what would if the Gov/other bank couldn't cover it.

The gov. would just print the cash, or credit it to you. It would probably be worthless though!

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Does the UK government have little or no control over these banks (could they perhaps "lean" on them in times of crisis?).

That used to be the case. Now in the last few years they've forced 'know your customers' crap on the banks in the name of 'stopping money laundering' (translation: stopping the hard-working taxpayers from getting their money out of Gordon Brown's clutches).

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What the FT article didn't mention was that Mr Ponzi also took part in the Florida real estate boom of the 1920's:-

that famous crook, Charles Ponzi, scammed more than a few poor souls himself selling underwater, mosquito infested lots in Florida in the 1920s, all while on bail pending appeal of his Ponzi scheme.

see

http://www.buyandhold.com/bh/en/education/..._land_boom.html

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If the whole banking system goes down, you'd better hope you have a nice pile of gold stashed away.

Possibly a silly question, but could someone please tell me what it is about gold that gives it its value, and makes it crash proof. Is it an essential substance for future survival. Why would gold remain valuable in the midst of a financial crisis. It has no utility value. In New Orleans, how useful would a block of gold have been. I don't get it.

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Why would gold remain valuable in the midst of a financial crisis.

Because it's been considered to be valuable for thousands of years. Maybe all of a sudden people will come to imagine that gold has no value, but it's far less likely than them deciding that pound coins have no value.

Sure, if one person has a loaf of bread to eat and you have a gold coin, they probably won't sell it to you. But if they have ten loaves, they'll sell one to you before they'll sell it to someone with a fifty pound note.

In New Orleans, how useful would a block of gold have been.

Very.

Suppose you were in New Orleans, had no car and had no way of getting out of town before the hurricane. If you stood at the side of the road offering a bar of gold to the first person to give you a lift, do you really think you'd be waiting long?

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Gold is also heavily in the human subconscious (gold standard, gold medals, a golden touch, Brown's golden rule, Halifax liquid gold, a golden age, heart of gold, he's hit gold, that moment was pure gold, etc. ad nauseaum), and I'd like a pouch of it along with my axe, woman, shotgun, oil and land more than I'd like a handful of Roman, I mean US banknotes.

Also a couple of gold coins are known to be worth a few hundred dollars, and would probably have got you the last taxi out of New Orleans.

So based on all the replies, including the one above, I'm getting the impression that the reason why gold is valuable is because people believe it is valuable.

In that respect how it is different to house prices ?

If a financal/banking crisis was looming, and I was able to see it coming before the masses (same as the on-coming HPC), I would take my STR cash and not buy gold, but buy a freehold place to live in (based on whatever my money could get me), clothes, a reliable car etc - all the useful stuff. Surely that would be a better buy than gold ?

Regarding the New Orleans example, the only reason a bar of gold would be successfully exchanged for a ride out of the city, would be the driver's belief that he could exchange it for something else in the next city.

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Gold is valuable because it can be used as a good proxy for exchange for goods and services.

It is immutable, and unlike paper money, it's value cannot be debauched by profligate governments printing fiat money.

Gold purity can be established easily, so dilution with other metals can be easily detected.

It is in short supply, (unlike tree leaves), and new supplies are difficult to find.

Due to its chemical properties, it was probably the first metal known to mankind,

and , given the utility of metals to humans, probably became the impetus for its

establishment as an item of percieved value.

imo :D

ABB

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  • 302 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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