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juvenal

Bacon On R5 Live Today

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Something coming up in next hour with a guest claiming a bust is on the way..

heads up.

Edited by juvenal

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Something coming up in next hour with a guest claiming a bust is on the way..

heads up.

Yeah, my 2 year old son is on....even he can see it.

The government owned bank though tells us house prices are soaring. rolleyes.gif

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Something coming up in next hour with a guest claiming a bust is on the way..

heads up.

Calling Killer Bunny.

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On now. Oxford academic with a book out.

Danny Dorling: All That Is Solid - The Great Housing Disaster. He sees housing as being the central issue of our time. Speaking a lot of sense, and for once pointing out that one in four MP's are landlords.

MP's aren't interested because they're either VI, or have houses provided for them. It's thus not on their radar. Help to Buy is all about the next Election, keeping house owners + Tory voters happy etc.

Low interest rates keeping prices up. Shapps talked nonsense about HPI and wages. The opposite of Shapp's prediction happened.

Bacon's letting Dorling have his say without too much interruption.

Parents may have to sign up to kid's mortgages in future. Or downsize to help kids with deposits. What if you have 3 kids?

Dorling wants "prices coming down". Extra council tax on expensive homes to encourage downsizing.

He sounds like one of us..

The later we wait to burst the bubble the bigger the pain is going to be.

"The prices are simply too high"

I shall read his book.

Edited by juvenal

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Excellent. He made perfect sense but will prices ever be reversed? I really hope Dorling is correct and that council tax goes massively up to encourage people to sell up rather than 'sit on' under-occupied large homes.

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On now. Oxford academic with a book out.

Danny Dorling: All That Is Solid - The Great Housing Disaster. He sees housing as being the central issue of our time. Speaking a lot of sense, and for once pointing out that one in four MP's are landlords.

MP's aren't interested because they're either VI, or have houses provided for them. It's thus not on their radar. Help to Buy is all about the next Election, keeping house owners + Tory voters happy etc.

Low interest rates keeping prices up. Shapps talked nonsense about HPI and wages. The opposite of Shapp's prediction happened.

Bacon's letting Dorling have his say without too much interruption.

Parents may have to sign up to kid's mortgages in future. Or downsize to help kids with deposits. What if you have 3 kids?

Dorling wants "prices coming down". Extra council tax on expensive homes to encourage downsizing.

He sounds like one of us..

The later we wait to burst the bubble the bigger the pain is going to be.

"The prices are simply too high"

I shall read his book.

I am coming round to just letting that happen, the bigger the bust, the bigger the impossibility of the banks ever reflating it again, decent flats would be going for 20 - 30k cash?

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Excellent. He made perfect sense but will prices ever be reversed? I really hope Dorling is correct and that council tax goes massively up to encourage people to sell up rather than 'sit on' under-occupied large homes.

Lots of "outside events" can upset the UK Debt Cart, Russia walking into Crimea wasn`t on my radar a few weeks ago, but if Russia pushes it`s hand too much, there could be a spiral of economic sanctions wreaking havoc in the financial/bond markets? I know the UK/EU don`t want to put sanctions in place that could upset their own markets, but how much will they take before they have to?

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I am coming round to just letting that happen, the bigger the bust, the bigger the impossibility of the banks ever reflating it again, decent flats would be going for 20 - 30k cash?

You'd better make sure that your 'cash' really is cash (ie paper notes) in that case, as a crash of that magnitude would take out a large part of the banking system and you might have real problems turning your bank credit into actual money.

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Lots of "outside events" can upset the UK Debt Cart, Russia walking into Crimea wasn`t on my radar a few weeks ago, but if Russia pushes it`s hand too much, there could be a spiral of economic sanctions wreaking havoc in the financial/bond markets? I know the UK/EU don`t want to put sanctions in place that could upset their own markets, but how much will they take before they have to?

What exactly are the EU and UK 'taking' at the moment? Ukraine has sweet FA to do with them.

For all the bluster about 'punishing' Russia for staging a bloodless incursion into a region where the vast majority of people already consider themselves culturally Russian and the West has absolutely no interests, they aren't dumb enough to do anything that might shatter their own fragile economies.

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You'd better make sure that your 'cash' really is cash (ie paper notes) in that case, as a crash of that magnitude would take out a large part of the banking system and you might have real problems turning your bank credit into actual money.

Never been convinced by that argument, they have kept the likes of RBS rumbling along for years, and they really are just a debt saturated burning Zeppelin?

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What exactly are the EU and UK 'taking' at the moment? Ukraine has sweet FA to do with them.

For all the bluster about 'punishing' Russia for staging a bloodless incursion into a region where the vast majority of people already consider themselves culturally Russian and the West has absolutely no interests, they aren't dumb enough to do anything that might shatter their own fragile economies.

They are "taking" watching Russia walk into another country and partition it (or try to) This is against everything that they pretend to stand for (regime change doesn't count, because that was ragheads) They have strong political interest in that part of the world as they want to push the EZ borders further towards Russia, not have them coming closer, and they have to look "strong" globally. This is pretty serious, and the Western powers won`t be able to resist trying to hurt Russia financially, leading to tit for tat, gas off, trade sanctions etc. etc. IMO.

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Never been convinced by that argument, they have kept the likes of RBS rumbling along for years, and they really are just a debt saturated burning Zeppelin?

They achieve propping the system up with ultra-lax fiscal policy, financial repression and money printing (all linked).

The only way you are going to get a housing crash of the magnitude you speculated on is to take that supporting crutch away - exposing most of the banking system as insolvent and illiquid.

Somehow I doubt that the FSCS scheme is going to cover the liabilities unless the BoE outright prints the money to cover the debt obligations of the now bankrupt banks. In which case you have massive inflation and you might as well have continued with the printing and fiscal repression in the first place and kept the plates spinning.

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They are "taking" watching Russia walk into another country and partition it (or try to) This is against everything that they pretend to stand for (regime change doesn't count, because that was ragheads) They have strong political interest in that part of the world as they want to push the EZ borders further towards Russia, not have them coming closer, and they have to look "strong" globally. This is pretty serious, and the Western powers won`t be able to resist trying to hurt Russia financially, leading to tit for tat, gas off, trade sanctions etc. etc. IMO.

The only way you'll see meaningful sanctions is if the City/Wall St. spivs can figure out a way to turn a fast buck from them.

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They achieve propping the system up with ultra-lax fiscal policy, financial repression and money printing (all linked).

The only way you are going to get a housing crash of the magnitude you speculated on is to take that supporting crutch away - exposing most of the banking system as insolvent and illiquid.

Somehow I doubt that the FSCS scheme is going to cover the liabilities unless the BoE outright prints the money to cover the debt obligations of the now bankrupt banks. In which case you have massive inflation and you might as well have continued with the printing and fiscal repression in the first place and kept the plates spinning.

Already starting to happen http://www.rightmove.co.uk/property-for-sale/property-28511745.html. Houses in these areas will drop further, 20k would be about right for the income level there, "better" areas will start to suffer when RBS starts really shedding jobs, and sentiment will shift as this all happens. Councils are going to make council tax grabs on 2nd/empty homes, and it all spirals as BTL`ers are forced to sell because they can`t keep their tenantless properties afloat. The crutch for the banks will remain in place, but the banks will employ much less people, and banks may be slowly broken up. The PTB can`t control all aspects of the situation, they have just created the environment for the banks to trade through the mess?

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You'd better make sure that your 'cash' really is cash (ie paper notes) in that case, as a crash of that magnitude would take out a large part of the banking system and you might have real problems turning your bank credit into actual money.

I'd really like to see some hard evidence for this assertion. Let's say property prices fall by 50% over the next few years. (Unlikely, but we can hope.) What % of mortgages would actually be in negative equity?

I'd suggest that the majority of mortgages would be fine, and only the more recent ones would be in negative equity. But then, all the mortgage holders need to do is pay the monthly payments. As long as they can keep doing that, banks don't care whether your home is worth £200k or £20k.

I don't buy this argument that large parts of the banking system would be taken out by a moderate fall in property prices. (And yes, given prices have increased by 300%, a 50% fall is "moderate" in my opinion).

But anyway, governments have now demonstrated that they'll just backstop failing banks. If even Northern Rock wasn't allowed to just "fail", then no bank of significance will be allowed to fail either.

And I don't buy the argument that the govt wouldn't be able to "afford" it. If that institution is *really* about to fail, the govt will simply pick up their shares for PENNIES :)

Bottom line, they've already set precedents for what they'd do in a future bank crisis. Despite all the talk, they'd do exactly the same as they've already done. And yes, they could afford it.

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I'd really like to see some hard evidence for this assertion. Let's say property prices fall by 50% over the next few years. (Unlikely, but we can hope.) What % of mortgages would actually be in negative equity?

I'd suggest that the majority of mortgages would be fine, and only the more recent ones would be in negative equity. But then, all the mortgage holders need to do is pay the monthly payments. As long as they can keep doing that, banks don't care whether your home is worth £200k or £20k.

I don't buy this argument that large parts of the banking system would be taken out by a moderate fall in property prices. (And yes, given prices have increased by 300%, a 50% fall is "moderate" in my opinion).

But anyway, governments have now demonstrated that they'll just backstop failing banks. If even Northern Rock wasn't allowed to just "fail", then no bank of significance will be allowed to fail either.

And I don't buy the argument that the govt wouldn't be able to "afford" it. If that institution is *really* about to fail, the govt will simply pick up their shares for PENNIES :)

Bottom line, they've already set precedents for what they'd do in a future bank crisis. Despite all the talk, they'd do exactly the same as they've already done. And yes, they could afford it.

Yep, the biggest problem would be that large numbers of people would just realise they were actually a lot poorer than they thought, and they may consume less, but people are cutting back anyway so no real difference?

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I'd really like to see some hard evidence for this assertion. Let's say property prices fall by 50% over the next few years. (Unlikely, but we can hope.) What % of mortgages would actually be in negative equity?

I'd suggest that the majority of mortgages would be fine, and only the more recent ones would be in negative equity. But then, all the mortgage holders need to do is pay the monthly payments. As long as they can keep doing that, banks don't care whether your home is worth £200k or £20k.

I don't buy this argument that large parts of the banking system would be taken out by a moderate fall in property prices. (And yes, given prices have increased by 300%, a 50% fall is "moderate" in my opinion).

But anyway, governments have now demonstrated that they'll just backstop failing banks. If even Northern Rock wasn't allowed to just "fail", then no bank of significance will be allowed to fail either.

And I don't buy the argument that the govt wouldn't be able to "afford" it. If that institution is *really* about to fail, the govt will simply pick up their shares for PENNIES :)

Bottom line, they've already set precedents for what they'd do in a future bank crisis. Despite all the talk, they'd do exactly the same as they've already done. And yes, they could afford it.

The Help to Buy schemes mean that banks have got taxpayer bailouts promised in advance, if house prices were to fall. Despite all the talk of banks not going to be bailed out again, that's what those schemes are. Though due to the media and estate agent adverts, it seems some buyers think they have some sort of guarantee on their mortgage payments.

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He stuck his finger in air and said the peak would be after next year's election. Could be. Though IMHO it'll be an external shock that does it. Nothing internal.

He also said rates will rise. I'm not so sure. Evidence is building we're #TurningJapanese

Of course the R5 shill couldn't see prices ever falling. Aw that's nice

I've been using the shill word a lot recently. It's amazing how apt it is for so many people

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I don't buy this argument that large parts of the banking system would be taken out by a moderate fall in property prices. (And yes, given prices have increased by 300%, a 50% fall is "moderate" in my opinion).

You missed the credit crunch of 2008: banks couldn't roll their borrowing requirements because nobody believed they were good for repayment.

If you are unable to pay your debts as they fall due you are insolvent. If even one creditor does something to recover what he can, you are bankrupt.

A bank with a mortgage portfolio secured on deficient assets is insolvent going on bankrupt.

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You missed the credit crunch of 2008: banks couldn't roll their borrowing requirements because nobody believed they were good for repayment.

If you are unable to pay your debts as they fall due you are insolvent. If even one creditor does something to recover what he can, you are bankrupt.

A bank with a mortgage portfolio secured on deficient assets is insolvent going on bankrupt.

Until the central bank steps in, fulfills its responsibilties as lender of last resort, and starts buying MBS again with both hands.

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I don't buy this argument that large parts of the banking system would be taken out by a moderate fall in property prices. (And yes, given prices have increased by 300%, a 50% fall is "moderate" in my opinion).

Then, IMHO, you don't have a real understanding of how leveraged banks are. I have no idea what the current stats are, but even moderate rates of price-falls and defaults would kill them... and they've got your money.

I'm always amazed by the number of posters who seem to imagine that the crash, when it comes, is going to be an orderly occurrence, with one set of people moving out of the nice houses and another set moving in.

Edited by tomandlu

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He stuck his finger in air and said the peak would be after next year's election. Could be. Though IMHO it'll be an external shock that does it. Nothing internal.

He also said rates will rise. I'm not so sure. Evidence is building we're #TurningJapanese

Of course the R5 shill couldn't see prices ever falling. Aw that's nice

I've been using the shill word a lot recently. It's amazing how apt it is for so many people

They can't go up now, can they? Not at all. Even a token 0.25 would probably crash the London superbubble.

Gilt yields and sterling, on the other hand.

Squueeeze...

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