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El_Pirata

Conspiracy Theory

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My conspiracy theory goes like this:

Many in the government are BTL-ers, as are their mates. Around spring 2005 they finally realise that the market has reached its peak and is starting to slip lower, and it's time to cash in. But what they don't want to do is dump a load of property in an illiquid market - it will sit there for months and months unless they slash prices.

SO...

They get their mates at the BoE to cut interest rates in August - going against all economic sense - and feed the press the line that it's probably the first in a series of cuts. The press (esp the BBC) repeat this like a mantra all summer. A whole host of FTBs that had been on the sidelines because they were worried about month to month affordability (rather than the ridiculous outright prices) dive back into the market, confident that interest rates have peaked. Transactions pick up, prices hold firm, and the powers that be offload their portfolios before the inevitable property armageddon, which will be prompted by the BoE having to keep step with US interest rate rises up to 5%.

Am I just a paranoid nutter?

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Well if we can just adjust the end of the story a little, it would be easier to swallow:

After the first batch of sideliners buy in, causing the market to strengthen (as it has despite the HPC protests), the market becomes uncertain for a moment on the direction of rates. This causes the current sideliners to hold, because the direction of rates is no longer certain to them.

This in turn causes the need for another rate drop to nudge these fine people.

The story goes on, until something else causes the economy to pick up on its own when rates can be raised again. What are those things I hear you ask? Rampant HPI, a gold rush of some sort into a new business yet to be started, massive pay inflation etc etc.

:D

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My conspiracy theory goes like this:

Many in the government are BTL-ers, as are their mates. Around spring 2005 they finally realise that the market has reached its peak and is starting to slip lower, and it's time to cash in. But what they don't want to do is dump a load of property in an illiquid market - it will sit there for months and months unless they slash prices.

Am I just a paranoid nutter?

Yes, in short :) Even if each MP and minister had a blinging BTL portfolio it would only account for a few thousand properties in its own right, significant not exactly enough to influence an entire market, much like MP's pensions, lavish in their own right but only a drop in the ocean in the grand scheme of things.

TV Centre is full of BTL'ers however, as is most of the media, no doubt this impacts reporting above and beyond their usual level of simplistic ignorance, however if you try and fight a market it will crush you, this applies to the BoE and they're very much aware of it post-ERM, they may be mere puppets of HM Treasury but ultimately both are a bi-atch of the market.

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Well if we can just adjust the end of the story a little, it would be easier to swallow:

After the first batch of sideliners buy in, causing the market to strengthen (as it has despite the HPC protests), the market becomes uncertain for a moment on the direction of rates. This causes the current sideliners to hold, because the direction of rates is no longer certain to them.

This in turn causes the need for another rate drop to nudge these fine people.

The story goes on, until something else causes the economy to pick up on its own when rates can be raised again. What are those things I hear you ask? Rampant HPI, a gold rush of some sort into a new business yet to be started, massive pay inflation etc etc.

:D

OK so interest rates can be cut regardless of what is happening to inflation and the value of sterling, can they? In fact they are just a tool to manage the housing market, right?

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My conspiracy theory goes like this:

Many in the government are BTL-ers, as are their mates. Around spring 2005 they finally realise that the market has reached its peak and is starting to slip lower, and it's time to cash in. But what they don't want to do is dump a load of property in an illiquid market - it will sit there for months and months unless they slash prices.

SO...

They get their mates at the BoE to cut interest rates in August - going against all economic sense - and feed the press the line that it's probably the first in a series of cuts. The press (esp the BBC) repeat this like a mantra all summer. A whole host of FTBs that had been on the sidelines because they were worried about month to month affordability (rather than the ridiculous outright prices) dive back into the market, confident that interest rates have peaked. Transactions pick up, prices hold firm, and the powers that be offload their portfolios before the inevitable property armageddon, which will be prompted by the BoE having to keep step with US interest rate rises up to 5%.

Am I just a paranoid nutter?

Stranger things have happened....I don't think you are a nutter to explore or even just think about the possibilities. Strange things that have happened recently include:

Going to war on th basis of "we KNOW they have WMD's".

Someone being elected president of the most powerful country in the world, who then has to go and apply for a passport, cos he's never left the country before. (Yes this is true!!!)

The world being told that a commercial airliner crashed into the Pentagon, when all (even official) photographc evidence proves this was not the case.

George Best still being alive.

All of the Stones still alive.

James.

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Interst rates have been used as a tool to manipulate the housing market and cunsumer demand.

For that reason there is more likelihood that inflation and sterling problems will bite back at some point in time (if it hasn't started already).

The BOE's second remit - financial stability I'd say has been totally ignored - the reason I think for the early departure of Andrew Large. There is nothing financially stable about encouraging outright speculation or indeed panicking a proportion of the population into debt which in a lot of cases they will never be able to afford or repay.

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Well if we can just adjust the end of the story a little, it would be easier to swallow:

After the first batch of sideliners buy in, causing the market to strengthen (as it has despite the HPC protests), the market becomes uncertain for a moment on the direction of rates. This causes the current sideliners to hold, because the direction of rates is no longer certain to them.

This in turn causes the need for another rate drop to nudge these fine people.

The story goes on, until something else causes the economy to pick up on its own when rates can be raised again. What are those things I hear you ask? Rampant HPI, a gold rush of some sort into a new business yet to be started, massive pay inflation etc etc.

:D

and we'll find out on thursday wether your cast iron prediction of a rate cut will prove correct.

or do you want to change your mind.......again :lol:

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Stranger things have happened....I don't think you are a nutter to explore or even just think about the possibilities.

During the South Seas bubble most of Parliament, royal family and wider establishment were complicit to a degree and no doubt did their fair share of manipulation, the South Seas company was tasked with taking over the entire British national debt at one point, however the MP's and noble Lords couldn't have been that clever because quite a few lost the shirts in the process.

For them to operate perfectly as a block all those involved would have to be equally clever, entirely rational and of the same mind but greed or stupidly, or both, will ensure that can never happen even if this grand conspiracy could be contructed in the first place.

It's not he fire that hurts them, it's getting stamped on in the rush for the exit.

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TTRTR why don't you vote for a 0.25% cut in interest rates this month in my poll of HPC?

You always sees to be going on about it, but I can't see that ANYONE has voted that way.

:lol::lol::lol::lol:

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TTRTR why don't you vote for a 0.25% cut in interest rates this month in my poll of HPC?

You always sees to be going on about it, but I can't see that ANYONE has voted that way.

:lol::lol::lol::lol:

Because we're all victims of the media machine. The papers say it won't be done, so I also believe that the MPC read the papers too.

Unfortunate though, because if they don't, they may need to go further down later on.

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Because we're all victims of the media machine. The papers say it won't be done, so I also believe that the MPC read the papers too.

Unfortunate though, because if they don't, they may need to go further down later on.

Same applies on the upside, unless they act decisively expectations of higher inflation will feed into the system along with settlements and secondary effects, which would mean higher rates in the future.

Anyway, why would the MPC care about housing, they're concerned with inflation remember, that is their legal mandate and doesn't include housing or projected growth figures.

One could argue that they didn't control or stop a housing bubble on the way up so there is no expectation they will mop up or bail out those on the way down.

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  • 301 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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