The Enormous Power Of Vi Spin

[VacantPossession]

Sometimes I think the housing market is dangling on the end of a very thin thread. At the top of that thread are the VI Spin puppet masters, who spend most days making the puppets dance to their tune. Underneath are those who take a cursory interest.

Take my brother for example: Chairman of a medium-sized PLC. Quite savvy about most things but absolutely follows VI spin without question. I have given up arguing the point because it spoils an otherwise pleasant relationship. He arrived here today and said, amongst other things: "Did you hear the news today?" "Apparently August was the beginning of the house price recovery...I heard it on the radio.... etc etc".

Where do I start? To head off the usual confrontation I say "oh really?" because I know he thinks that I am DYING to get back on to the housing ladder and he wants to encourage me to do so...and he also gets extremely annoyed if I dare to question what he's heard on the BBC. How can I explain to him that for every snippet of conventional news he hears I have delved much deeper and conclude that it's all a load of old usual spin?

What surprises me is that occasionally we get the same naivity here on this forum. I think his name is "Apollo" ...and he posted recently how he reckoned everything was on the up because (apparently) there was an increase in mortgage take up in August. Well I'm BLOWED!!! What a revelation! Yes folks.... one little piece of news about a few more mortgage APPROVALS......not SALES....NOT COMPLETIONS...is enough to counter all the enormity of evidence pointing to a well-overdue crash.

It is this kind of power of Media and Property professionals' spin which is delaying the inevitable. When we hear of Financial Advisors telling their own families not to buy, when we see the debt figures, the growing unemployment, the demise of fluffy enterprises predicated on the feel-good factor, the life-style businesses which are increasingly going under, the enormous reliance on un-earned profit from property sustaining people on a wing and a prayer, the houses STILL on sale at a price which no-one starting from scratch could possibly afford, we see a crystal clear indication that this cannot go on. AND YET the VI spin is still taking hold of people.

Why?

Because a huge proportion of the population ALSO has a vested interest in the myth they have subscribed to NOT falling like a pack of cards. Nearly everyone has a vested interest in talking up the market, and this goes far beyond the cliched pronouncements of a few EA's. The vested interests extend to every single person who has over-mortgaged, over-borrowed, over-indulged with paper money that they know could (and will) be called in at any time.

The power of Vested Interests is not just in the pro's gobbledigook......it resides in the minds of every mortgaged-to-the-hilt BTL'r, every overstretched MEW'er, every fantasy land "move to Spain and cash in two hundred grand" player all over the UK, and beyond.

This is what the REALITY is fighting against, and it will eventually make itself known. All the VI's are doing is delaying the inevitable. So be it. But if you are doubtful, if you question your own judgement, if you a swayed by any old **** and bull (the operative word) codswallop ask yourself this: "Who is saying this?" "Why are they saying it"? "What have they to personally lose or gain?" "What is the nature of their business"?

This has all happened before. What we are now reading and hearing, in the media and from those who should know better, has all been said before, almost exactly at the same period before the cards collapsed into a heap in the 1990's. What is happening now is a CARBON COPY of the same VI spin which belched forth before the 1990 Crash. The same excuses, the same talking up, the same desperation to hang on to a threads of "good news", the same appalling denial of reality, the same stubbornness and refusal to admit.

I am as certain of a house crash as I have been certain of anything. Interest rates are not going to save this, whatever they are. Things have gone too far, got too out of hand. You cannot run an economy based solely on the perceived value of property. Something REAL has to sustain an economy. Furthermore, the tide has turned where FTB's are concerned. No amount of Spin is convincing me that someone about to commit to several decades of repayments for the sake of climbing aboard the Pyramid is going to do so lightly. Too many key people now realise it is infinitely cheaper to rent than to buy. In a falling market it is suicide to buy when you are immediately in negative equity.

All it requires is the truth to filter through. It can take years, but the longer it takes the more painful it will be. For those who are wavering I can only say this. Do your research. Investigate the news and VI statements of 1989 then make your own judgement.

I've made mine.

VacantPossession

Edited September 29, 2005 by VacantPossession

[2005]

Thanks we need to see that sort of argument in writing every so often to keep on track.

Cheers

[Warwickshire Lad]

You're right, the whole economy is out of kilter, because house prices have been propping it up since around 2001.

Flat prices now means a flat economy, which we're now seeing.

The question that's on my mind is to what extent this slower economy will create a downward spiral which will drag the economy to recession and house prices with it.

Is that guaranteed ? Can anyone stick their neck out and say a recession is guaranteed ?

Because to my mind, only a full-blown recession is really going to result in serious action on nominal house price falls.

Some say we're definitely heading to the recession, and other's don't - I'm not enough of an expert to judge.

But without a doubt the VI spin remains powerful to this day, and I often feel a lonely voice.

[boom_and_bust]

You're right, the whole economy is out of kilter, because house prices have been propping it up since around 2001.

Flat prices now means a flat economy, which we're now seeing.

The question that's on my mind is to what extent this slower economy will create a downward spiral which will drag the economy to recession and house prices with it.

Is that guaranteed ? Can anyone stick their neck out and say a recession is guaranteed ?

Because to my mind, only a full-blown recession is really going to result in serious action on nominal house price falls.

Some say we're definitely heading to the recession, and other's don't - I'm not enough of an expert to judge.

But without a doubt the VI spin remains powerful to this day, and I often feel a lonely voice.

Hi,

Yes this type of commentary is good to be repeated every so often. And also the threads about recent economic think tanks (like IMF just the past few weeks) who site the unsustainability of current UK housing prices on a consumption based economy. Yes, without some major trigger event or other we will most likely not see rapid, deep price drops in the space of several months, perhaps more likely a protracted process like Japan. But lets be clear, some of these thinks tanks have presented the reverse argument - at current levels, in the event of no other external factors like a major manufacturing recovery, productivity breakthroughs, major service sector expansions, the future level of house pricing will stagnate the entire economy as well. The past two decades of massive price hikes (despite two crashes inbetween) were against a backdrop of the UK as a major oil exporter and with the mass sale of public held assests and industry during privatisations. Those windfalls and currency inflows that pushed sterling to a strong currency status are passed now. Public sector expansion and reforms do not appear to be yeilding the gains expected. Manufacturing has been devasted, the service sector has increasingly been priced-out overseas. Without major economic growth engines appearing now, debt servicing will all but snuff out the engine of the wider economy. We have lived thorugh the past five years or so on little more than printing press money in the form a massive mortgage and credit card debt orgy. One of the biggest worldwide for an individual nation. A self fulfilling prophecy eventually, house prices will have to give in the absence of this, so stagnation is just not a viable option with the levels of UK debt now, and more so in the future, unless a bull out there can identify how these issues will be addressed soon. From the avaiable commentary we have seen in the past few months on the UK economy, it really is not clear. High street sales are slumping as have house transactions and industry is in dire straights, on top of a massive breach of EU budget limits, trade defecits and unprecented hikes in fuel prices. We have yet to hit the winter yet when fuel costs will become ever clearer to people's wallets and the engine of the economy. At a very simple level, the great depression came about because people stopped spending. And less spending means less tax receipts, means less public investment, means cutbacks in health care provision, schooling, roads, policing, etc., You may think unsustainable house prices don't affect you but history shows that to be wrong.

In modern, mass-consumption economies, things don't happen in isolation. The action of other people have an effect on you. What goes around comes around. Just where are these fundementals coming from? How is it 'different this time' that this can all be side stepped? The recent commentary on the chancellors precarious position show how we are cornered. In the past, maybe you could side step fundementals by fiscal and monetary trade shenangans. Inflation to wipe out debt, currency appreciations or devaluations, trade restrictions. All of these will have some very nasty consequences given the current world ecomonic factors.

Stagnation? Dream on! Come up with something constructive, please. That is pure bulls***.

[El_Pirata]

You want a seismic event - well the oil spike proper is about to kick in.

The extent of the hurricane damage to the US oil industry is only just becoming apparent. Rigs are floating around 100s of miles from their original location, underwater pipelines are damaged...oil product stocks are dwindling...

I expect a sustained breach of $70/bl in October, driven by global shortages of diesel and heating oil, and $80/bl by the end of the year.

[teddyboy]

I have not got an issue with the housing market and the rate at which it is declining/rising. I would love to see the housing market healthy again - BUT AT SENSIBLE PRICES. These prices are putting on 'hold' the lives of hundreds of thousands of people.

If the prices pummetted 50% at 12 O'clock tonight it will affect quite a few people but I believe it would help A LOT more. We dont really WANT this scenario.

Reading BULL**** websites, sorry BULL websites - The BTL brigade are waiting for the prices to drop and buy up all the rest of the stock so as far as I see it we need consistent drops. If BTL was BANNED then I think we can get it healthy again but Investors are buying all the cheap stock. We need a massive flood of cheap housing, consistently dropping so as to scare off a percentage of the BTL vultures.

The positive side to a massive drop is that it will then be CHEAPER to buy than rent - therefore getting rid of most of the vultures. But this AINT gonna happen.

IT IS HAPPENING! I JUST HOPE THAT THE PUBLIC STOP BELIEVING THE VI HYPE!

[bob monkhouse]

Sometimes I think the housing market is dangling on the end of a very thin thread. At the top of that thread are the VI Spin puppet masters, who spend most days making the puppets dance to their tune. Underneath are those who take a cursory interest.

Take my brother for example: Chairman of a medium-sized PLC. Quite savvy about most things but absolutely follows VI spin without question. I have given up arguing the point because it spoils an otherwise pleasant relationship. He arrived here today and said, amongst other things: "Did you hear the news today?" "Apparently August was the beginning of the house price recovery...I heard it on the radio.... etc etc".

Where do I start? To head off the usual confrontation I say "oh really?" because I know he thinks that I am DYING to get back on to the housing ladder and he wants to encourage me to do so...and he also gets extremely annoyed if I dare to question what he's heard on the BBC. How can I explain to him that for every snippet of conventional news he hears I have delved much deeper and conclude that it's all a load of old usual spin?

What surprises me is that occasionally we get the same naivity here on this forum. I think his name is "Apollo" ...and he posted recently how he reckoned everything was on the up because (apparently) there was an increase in mortgage take up in August. Well I'm BLOWED!!! What a revelation! Yes folks.... one little piece of news about a few more mortgage APPROVALS......not SALES....NOT COMPLETIONS...is enough to counter all the enormity of evidence pointing to a well-overdue crash.

It is this kind of power of Media and Property professionals' spin which is delaying the inevitable. When we hear of Financial Advisors telling their own families not to buy, when we see the debt figures, the growing unemployment, the demise of fluffy enterprises predicated on the feel-good factor, the life-style businesses which are increasingly going under, the enormous reliance on un-earned profit from property sustaining people on a wing and a prayer, the houses STILL on sale at a price which no-one starting from scratch could possibly afford, we see a crystal clear indication that this cannot go on. AND YET the VI spin is still taking hold of people.

Why?

Because a huge proportion of the population ALSO has a vested interest in the myth they have subscribed to NOT falling like a pack of cards. Nearly everyone has a vested interest in talking up the market, and this goes far beyond the cliched pronouncements of a few EA's. The vested interests extend to every single person who has over-mortgaged, over-borrowed, over-indulged with paper money that they know could (and will) be called in at any time.

The power of Vested Interests is not just in the pro's gobbledigook......it resides in the minds of every mortgaged-to-the-hilt BTL'r, every overstretched MEW'er, every fantasy land "move to Spain and cash in two hundred grand" player all over the UK, and beyond.

This is what the REALITY is fighting against, and it will eventually make itself known. All the VI's are doing is delaying the inevitable. So be it. But if you are doubtful, if you question your own judgement, if you a swayed by any old **** and bull (the operative word) codswallop ask yourself this: "Who is saying this?" "Why are they saying it"? "What have they to personally lose or gain?" "What is the nature of their business"?

This has all happened before. What we are now reading and hearing, in the media and from those who should know better, has all been said before, almost exactly at the same period before the cards collapsed into a heap in the 1990's. What is happening now is a CARBON COPY of the same VI spin which belched forth before the 1990 Crash. The same excuses, the same talking up, the same desperation to hang on to a threads of "good news", the same appalling denial of reality, the same stubbornness and refusal to admit.

I am as certain of a house crash as I have been certain of anything. Interest rates are not going to save this, whatever they are. Things have gone too far, got too out of hand. You cannot run an economy based solely on the perceived value of property. Something REAL has to sustain an economy. Furthermore, the tide has turned where FTB's are concerned. No amount of Spin is convincing me that someone about to commit to several decades of repayments for the sake of climbing aboard the Pyramid is going to do so lightly. Too many key people now realise it is infinitely cheaper to rent than to buy. In a falling market it is suicide to buy when you are immediately in negative equity.

All it requires is the truth to filter through. It can take years, but the longer it takes the more painful it will be. For those who are wavering I can only say this. Do your research. Investigate the news and VI statements of 1989 then make your own judgement.

I've made mine.

VacantPossession

Excellent post. However, I can provide plenty of anecdotes regarding friends/colleauges in my grouping (young/ftb/prof) who are 'chomping at the bit' to get on the ladder. I feel like a real killjoy countering their arguments regarding the 'solid gold investment'. Two have recently bought. IFingers crossed, they are happy in the property, as they will be there for quite a while. I hope the media do more to filter the reality of the situation to the man on the street.

[unamerican]

there are some VIs on this board too. at least they seem to have a VI in the labour party, whenever i make a post criticising the labour party as authoritarian stalinists who are creating a police state my account gets suspended and the posts get deleted.

can someone please tell me who has admin powers on here ?

[DonnieDarker]

VI like a Sipps promotion appearing on the front-page of The Times and talked up by Saville Esate Agents. I wonder how much advertising revenue Saville contribute to The Times...?

[patientFTB]

As for trying to convince others - I've long since given up.

Seems people will do almost anything to avoid taking the trouble to think for themselves. Everybody loves a tip, a snippet of advice. They don't question the source or the competency of the analysis.

And for those thinking that come the crash people will be stoning the windows of building societies and burning Kirstie at the stake, you will be dissapointed. They won't do this for fear that they won't receive any more advice.

[stillill]

there are some VIs on this board too. at least they seem to have a VI in the labour party, whenever i make a post criticising the labour party as authoritarian stalinists who are creating a police state my account gets suspended and the posts get deleted.

can someone please tell me who has admin powers on here ?

**Paging Tony. Paging Tony.

Yeah, we've got another live one, boss. You want him huckled out onto the street like that OAP at the conference? What's that? Boots to the face? Wilko...

[VacantPossession]

**Paging Tony. Paging Tony.

Yeah, we've got another live one, boss. You want him huckled out onto the street like that OAP at the conference? What's that? Boots to the face? Wilko...

Tony replies: "No we don't do that in the NEW labour party. Certainly not a survivor of Nazis. If it's just an ordinary English bloke though, put the boot in as hard as you like....I'm looking the other way".

T. Blair ...as told to VP

[Levy process]

You want a seismic event - well the oil spike proper is about to kick in.

The extent of the hurricane damage to the US oil industry is only just becoming apparent. Rigs are floating around 100s of miles from their original location, underwater pipelines are damaged...oil product stocks are dwindling...

I expect a sustained breach of $70/bl in October, driven by global shortages of diesel and heating oil, and $80/bl by the end of the year.

Bring it on!