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At 7.15 tonight, think I have got the time right, Bernanke is going to make his big speech shortly after the latest US Fed interest rate announcement comes out.

It may well turn out to be a big hoo-ah over nothing or even a damp squib... or should that be squid...

But it may have big ramifications for bonds, equities, commodities and, yes, house prices all dependent on what he says re QE2, QE3, etc, etc.

Some are talking about QE3 with regard to guaranteeing mortgages for banks in the US which lend on homes to try and kick-start the US housing market.

If the US Fed does the above then I think we will all have to sit down and seriously think about what the BOE may or may not do here.

Of course, Bernanke might be going to announce his resignation.

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QE 3 and raise the debt ceiling..........................Trash you cash and run for the hills, he wants to force China to revalue asap............

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At 7.15 tonight, think I have got the time right, Bernanke is going to make his big speech shortly after the latest US Fed interest rate announcement comes out.

It may well turn out to be a big hoo-ah over nothing or even a damp squib... or should that be squid...

But it may have big ramifications for bonds, equities, commodities and, yes, house prices all dependent on what he says re QE2, QE3, etc, etc.

Some are talking about QE3 with regard to guaranteeing mortgages for banks in the US which lend on homes to try and kick-start the US housing market.

If the US Fed does the above then I think we will all have to sit down and seriously think about what the BOE may or may not do here.

Of course, Bernanke might be going to announce his resignation.

If they QE again then it could be a disaster for the rest of the world with many countries lossing faith in the dollar as a reserve currency. I would imagine we can't QE due to our current inflation so watch our economy tank as the manufacturing starts moving to the US on the other hand we could QE and watch inflation go through the roof - damned if you do damned if you don't.

I don't think they will QE and I don't think they will raise rates - stand around watching the floor just like his mate merve the vigilant.

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FT Alphaville are running a 'markets live' during the press conf. with Gavyn Davies blogging as Ben's speaking.

There's a link in here to the FED website too if you're especially masochistic!

(Personally I think the Real/Barca game will be more fun)

http://ftalphaville....pm-est-7pm-gmt/

Edit: Oh, and they've said they're continuing with existing asset purchases/MBS reinvestments and not much else of note. No QE3m, sorry TMT

Edited by Red Karma

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Yup, so its all Bernanke's fault. Good job.

But wait, what does this little beauty tell us?

CaseShillerIndex.gif

Hmm, something was going on with house prices nearly 10 years before bernanke was born, and nearly 30 years before the gold standard was abandoned.

Never mind, bernanke should die for our sins. Grab a spear, line on the left, then join the queue up to give him a poke.

Edited by scepticus

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But wait, what does this little beauty tell us?

That on an inflation adjusted scale prices have always trended around 100ish, yet in around 2006/7 they peaked at over 200 for the first time ever on record?

Perhaps more Greenspan than Bernake.. but either way surely it's reason enough to sharpen the flint?

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Yup, so its all Bernanke's fault. Good job.

But wait, what does this little beauty tell us?

CaseShillerIndex.gif

Hmm, something was going on with house prices nearly 10 years before bernanke was born, and nearly 30 years before the gold standard was abandoned.

Never mind, bernanke should die for our sins. Grab a spear, line on the left, then join the queue up to give him a poke.

Bernanke is merely acting as dumb as his predecessor.

They both fuked the US economy.

I go with Marc Faber's view -

QE3, QE4, QE5, QE6, QE7........QE18:

Then WW3.

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That on an inflation adjusted scale prices have always trended around 100ish, yet in around 2006/7 they peaked at over 200 for the first time ever on record?

What it tells us is that something happened right after the war which set nominal prices on the rise. I see one smooth exponential curve that inflects right after 1945. I don't see in that curve any anomalies which we could put down to the different epochs of monetary policy between then and now, apart from what looks to be the 1987 crash.

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What it tells us is that something happened right after the war which set nominal prices on the rise. I see one smooth exponential curve that inflects right after 1945. I don't see in that curve any anomalies which we could put down to the different epochs of monetary policy between then and now, apart from what looks to be the 1987 crash.

A sort of financial "little boy"?

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FT Alphaville are running a 'markets live' during the press conf. with Gavyn Davies blogging as Ben's speaking.

Superbowl eat your heart out.

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Yup, so its all Bernanke's fault. Good job.

But wait, what does this little beauty tell us?

Hmm, something was going on with house prices nearly 10 years before bernanke was born, and nearly 30 years before the gold standard was abandoned.

Never mind, bernanke should die for our sins. Grab a spear, line on the left, then join the queue up to give him a poke.

May as well, while he didn't start the fire and the people wh did are dead he's still a thief.

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What it tells us is that something happened right after the war which set nominal prices on the rise. I see one smooth exponential curve that inflects right after 1945. I don't see in that curve any anomalies which we could put down to the different epochs of monetary policy between then and now, apart from what looks to be the 1987 crash.

You don't believe that do you?

The exponential means practically nothing.. most of that is monetary growth as evidenced in the relatively flat inflation adjusted line.

There is a bump in housing costs after the war from a little under 100 to a little over 100 on the index, but the single biggest real jump in housing cost has occurred in a bubble from about 1998 onwards.

If you are saying this would have been the same even if housing costs had been properly weighted in inflation measures, even if interest rates had been higher and even if risk had been properly factored in rather than underwritten by the US government then perhaps there would be a case to say it was not Greenspan's (and to a lesser extent 'fall guy' Bernanke's) fault.

It may not have been just their faults.. but as you said yourself, the US effectively sets the interest rate for the world. Who else would you blame for the global debt bubble?

Edited by libspero

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What it tells us is that something happened right after the war which set nominal prices on the rise. I see one smooth exponential curve that inflects right after 1945. I don't see in that curve any anomalies which we could put down to the different epochs of monetary policy between then and now, apart from what looks to be the 1987 crash.

Bretton Woods 1944.

IMF and World Bank 1946

Nixons closing the Gold window in 1971 was only in response to the fraud that had been going on since the end of the second world war.

Thats why your chart is at it is, because 1971 was never the start of the paper money system it was merely the end of the pretence of a peper money system.

Move along absolutely nothing to see here.

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You don't believe that do you?

The exponential means practically nothing.. most of that is monetary growth as evidenced in the relatively flat inflation adjusted line.

Because it is a relatively clean exponential it suggests to me that the nominal house price action is not connected to individual experiments in monetary policy, but to a more fundamental variable.

There is a bump in housing costs after the war from a little under 100 to a little over 100 on the index, but the single biggest real jump in housing cost has occurred in a bubble from about 1998 onwards.

With a positive exponential, that is what one would expect, the greatest change in the most recent periods. But given the exponential seems to have been established at the end of the war, we need to look to then for the reasons why, not 1998.

If you are saying this would have been the same even if housing costs had been properly weighted in inflation measures, even if interest rates had been higher and even if risk had been properly factored in rather than underwritten by the US government then perhaps there would be a case to say it was not Greenspan's (and to a lesser extent 'fall guy' Bernanke's) fault.

Short interest rates were extremely high in the 70s, its hard to think how they could have been higher! In fact for much of the period since the end of the war right up until the 21st century they have been a good deal higher that in the period over the 18th and 18th century when the gold standard proper was in place.

It may not have been just their faults.. but as you said yourself, the US effectively sets the interest rate for the world. Who else would you blame for the global debt bubble?

Oh, the US is at the root of this, no doubt and yes they do set world interest rates in the long run as long as a sufficient number of other nations on the dollar standard continue to play ball.

We can certainly blame the US policy directly post war for establishing that exponential, more than we can blame bernanke or greenspan. The post war policy was bretton woods in which the whole world took part and agreed to the dollar, not gold, being the global reserve currency. This was then followed by bretton woods 2, in which the chinese and other asian nations (especially the carry trade from japan) acted to further cement dollar hegemony.

The exponential above fits nicely on the exponential below, which is not surprising since government debt is money, regardless of what interest rate or maturity it has.

usdebt18bk.gif

And going back before that, although we were in theory on the gold standard, this was supplemented by debt issuance from leading nations like Britain. Although british debt as a %age of GDP was constant-ish, nominal GDP was shooting up so even back then, the gold standard was an illusion, hidden by growth.

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??

Musing on Grantham's assertion that we saw a change in 2002 from a century of commodity price deflation to what he now calls a 'new paradigm'.

(was responding to recent price changes not to any post war event)

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With a positive exponential, that is what one would expect, the greatest change in the most recent periods. But given the exponential seems to have been established at the end of the war, we need to look to then for the reasons why, not 1998.

Not sure I'm buying that. If you look at the inflation adjusted data (allowing for whatever rate of monetary expansion) then we don't need to look after the war, the biggest bubble is clearly 1998 onwards..

Short interest rates were extremely high in the 70s, its hard to think how they could have been higher! In fact for much of the period since the end of the war right up until the 21st century they have been a good deal higher that in the period over the 18th and 18th century when the gold standard proper was in place.

Agreed.. and that period corresponds to no significant inflation adjusted real estate bubble. then we look at 2000 onwards and.. low interest rates, run away housing bubble...

Oh, the US is at the root of this, no doubt and yes they do set world interest rates in the long run as long as a sufficient number of other nations on the dollar standard continue to play ball.

We can certainly blame the US policy directly post war for establishing that exponential, more than we can blame bernanke or greenspan. The post war policy was bretton woods in which the whole world took part and agreed to the dollar, not gold, being the global reserve currency. This was then followed by bretton woods 2, in which the chinese and other asian nations (especially the carry trade from japan) acted to further cement dollar hegemony.

If you take the stance that the Fed should only be concerned about expansion of the money supply, and that the housing bubble / economic stability is not part of their remit then I could agree with you that it was not their fault.

If you take the view (which I do), that they ARE responsible for economic stability, then they should have seen the HPI problem growing in their own economy, factored it into their inflation measure properly, raised interest rates higher and popped the bubble before it became large enough to destabilise the world economy. Part of the reason they probably didn't (if you don't mind the slightly conspiratorial slant) was that around 2001 they had reason to drop interest rates for geopolitical reasons.

But either way, the buck stops at the top IMO.. and in this case Bernake is in the driving seat (even if he is just Greenspan's fall guy).

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  • 312 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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