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fru-gal

London Property Bubble Primed To Burst – Consequences For Uk Economy And Sterling

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Could be... but we've been saying this since 2007.

The counter argument is that lower oil prices will pump up growth in many places hit by the recession such as the US and Europe, and London may still be seen as a "safe" place to store wealth.

Hard to predict, but I have a small hunch that we will see big movements in 2015. No doubt the Roubinis, Keisers et al will then jump up and say "I told you so" but lets forget all the times they spoke "the end is nigh" and misjudged things.

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Could be... but we've been saying this since 2007.

The counter argument is that lower oil prices will pump up growth in many places hit by the recession such as the US and Europe, and London may still be seen as a "safe" place to store wealth.

Hard to predict, but I have a small hunch that we will see big movements in 2015. No doubt the Roubinis, Keisers et al will then jump up and say "I told you so" but lets forget all the times they spoke "the end is nigh" and misjudged things.

Agree. Max said he would eat his hat if London housing hadn't burst in 18 months and I think that was about 2 years ago. A clock is always right twice. Still, presumably at some point this house of cards will crumble, the question is will it be before the sun turns into a red giant?

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Andrew Neil said on Twitter that he rents.

Market participants have to make their own decisions on the information - and that ranges from people seeing forever hyperinflating hpi and champagne ripples from London, to big hpc / sterling crash.

My position is without exposure to housing/asset 'wealth' in the here and now - not HPI go-go as could be kept running severe imbalances for many years ahead, but simultaneously want victim support knowing the HPI could implode at any moment. We make our own decisions.

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Could be... but we've been saying this since 2007.

The counter argument is that lower oil prices will pump up growth in many places hit by the recession such as the US and Europe, and London may still be seen as a "safe" place to store wealth.

Hard to predict, but I have a small hunch that we will see big movements in 2015. No doubt the Roubinis, Keisers et al will then jump up and say "I told you so" but lets forget all the times they spoke "the end is nigh" and misjudged things.

Is there any hard data on this or is it just a meme? What I mean is, are these foreign "safe haven" seekers really just speculators. What proportion of the supposedly "cash" purchases are actually leveraged from foreign banks (e.g. shadow banks in China)? Surely UK property is only as safe as the UK economy but has inferior liquidity to UK government bonds. So aren't these people chasing returns rather than safety?

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Now the plummeting oil price is leading to a drop in demand from wealthy Middle Eastern elites. Many Gulf States are having difficulty financing their social programs due to the very low price of oil. Control over their countries restless populations is becoming more tenuous. So providing “bread and circuses” is a higher priority than pet investment projects in the UK.

Only seems like 12 months ago that all the major countries were sitting pretty after a few years very good run... Russia/Saudi on the oil/commodity take, UK with foreign investors buying house prices at ever higher prices. US QE-ing $trillions to expand Fed balance sheet to help VI companies.

Now the VI at the top are turning on each other, and negative economic feedback is coming back in with a vengeance for those at the top.

Hope it won't be long until those at upper ends of the housing market 'betray' each other, with some owners selling to buyers at much lower prices, setting lower prices for all owners at that level. That's how markets work. Prices paid by very few buyers to sellers, sets values for all the other owners in the vicinity.

Banks might awaken soon, and want volume lending on lower prices, after so much dumb money pushed in, whilst banks restructured.

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Putin offering amnesty on capital returning to Russia in attempt to stop the capital flight:

http://www.bbc.co.uk/news/world-europe-30322198

I know the point has been made here many times that your average wealthy Russian doesn't store his wealth in Rubles, but with London looking like its topping out, the Ruble having crashed, and now this amnesty, might it be a good opportunity for a few? It'd be a hell of a profit.

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Is there any hard data on this or is it just a meme? What I mean is, are these foreign "safe haven" seekers really just speculators. What proportion of the supposedly "cash" purchases are actually leveraged from foreign banks (e.g. shadow banks in China)? Surely UK property is only as safe as the UK economy but has inferior liquidity to UK government bonds. So aren't these people chasing returns rather than safety?

1. Many speculators I would suggest - but something in 'safe haven' vs Russian ruble right now. My view is London prices can't maintain these levels vs oil price slideback, Chinese reform crack-downs too, oil countries having to focus on domestic troubles from lower revenues. London prices floating in the air at the moment, with fewer wealthy outside buyers. Just needs a trigger. Later buyers may find they chose the wrong place for safety at these prices. The excuse givers say better than losing 50% in Cyprus... well there have been 90% HPCs in the past in prime and super-prime, in the 1930s. Now in the pincer of higher stamp duty and nondom fee increases and other.

2. That's a question I've grappled with many times. Real money wealth, or borrowed/mortgages, from shadow bank lending? Perhaps some will be under some margin call pressures in future. When real market variables impinge (fewer buyers willing to meet high prices) sentiment turns... bring out other sellers. The main focus is what buyers can and will pay, imo. Buyers are the main group which set prices/values.

Edited by Venger

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Putin offering amnesty on capital returning to Russia in attempt to stop the capital flight:

http://www.bbc.co.uk/news/world-europe-30322198

I know the point has been made here many times that your average wealthy Russian doesn't store his wealth in Rubles, but with London looking like its topping out, the Ruble having crashed, and now this amnesty, might it be a good opportunity for a few? It'd be a hell of a profit.

Moving on to the economy, Mr Putin pledged that Russia would be open to the world - to foreign investment and joint projects. But he warned that it faced a "hard time ahead: much depends on each of us at our workplace". Western sanctions should be seen as a stimulus, he argued.

"We have a huge internal market and resources... capable, intelligent people," he said. The key was to give people the chance to flourish.

Can't see Putin overseeing such a change - but everything about their internal market, huge resources, capable and intelligent people is very true.

Lot of the boom money should have gone into seeing major reforms many years ago, seeding internal investments away from just energy, coming down hard on corruption, and creating solid law/legal system and rights. If there were new dependable people coming through, I might be interested with investment in Russia.

UK hasn't been able to talk hard-times to the electorate for many many years. ConDems still following the trait of Grinning Tony; when they realised in all his speeches you can't get elected against Labour promising to spend billions and billions more on everything from educationx3, NHS and everything else.

Still trapped in trying to be smiley grin vote for me, we redistribute money to the VIs and here's some HTB to make things worse for others but please believe it's to help yuo. None of them willing or able to talk tough... this is the financial position, it has to rebalance, £90Bn compounding deficits, you can't defeat math via spending even more when you're massively overdrawn.

post-date 2010.

Absolutely right. Why are people earning well in excess of £50,000 a year able to claim family tax credit? So that more people feel beholden to the State for their income.

Thatcher's failure was that she never broke that mindset despite never standing on a platform of buying millions of votes by increasing spending. Every election since has been won by the party prepared to offer the most outlandish promises.

There was a very good article in the FT a few days ago saying that in the past 2 weeks, Labour MPs had promised to spend £7,000,000,000 on community projects. The politics of the UK are such that the Tories can't stand on a platform that says, "We'll not buikd a new village hall" (or whatever).

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The Russian valuations are breathtaking. At some point Ruble will stop falling (already started?...) and then with appreciation in R and money flowing in the rise in Russian/Easter Europe shares will be superb.

Political risk already priced in

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The Russian valuations are breathtaking. At some point Ruble will stop falling (already started?...) and then with appreciation in R and money flowing in the rise in Russian/Easter Europe shares will be superb.

Political risk already priced in

I am interested but think there is a lot more 'fear / restructuring' downside risks, before some excellent opportunities come along.

post-date 2010.

Absolutely right. Why are people earning well in excess of £50,000 a year able to claim family tax credit? So that more people feel beholden to the State for their income.

Thatcher's failure was that she never broke that mindset despite never standing on a platform of buying millions of votes by increasing spending. Every election since has been won by the party prepared to offer the most outlandish promises.

There was a very good article in the FT a few days ago saying that in the past 2 weeks, Labour MPs had promised to spend £7,000,000,000 on community projects. The politics of the UK are such that the Tories can't stand on a platform that says, "We'll not buikd a new village hall" (or whatever).

Just occurred to me that this claim is wrong. How can blame be attributed here to Thatcher/Conservatives of old, when you have a political party who tightens... if it's not hurting it's not working, doesn't promise too much apart from war on inflation. The voters going to vote what is best for them, when a Nu-party comes along with the vote buying spend galore promises, including older owners who will see more hpi on back of spending galore on other taxpayers/the unborn.

... When another Nu- political party and within a few years is promising to spend the ars£ of it, year after year, against political rivals. Non means tested Winter fuel allowance, tax-credit abomination, FSA/BoE/Treasury regulation stripping, free bus/rail/tram/tube passes, NMW meaning gap widens as others award themselves much bigger pay rises.

Year 2000

William Hague

They clearly can be delivered. When we say that we will run Whitehall and the whole machinery of government for £1.8bn less - we were doing it three years ago - you don't have to look into a crystal ball - you can read the book. Things don't change. Are people receiving a better service from Government departments today than three and a half years ago? No of course they're not, but there are thousands of more civil servants and the cost has gone up by nearly £2bn.

1 October 2005

Departing Tory leader Michael Howard said he believes only an economic slump can return the Conservatives to power. He told the paper: "When most people are relatively content with their economic lot, it is very hard for an opposition to win elections.

"I don't want the economy to go down the pan - I care about the country and I don't want anybody to go through any economic difficulties.

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