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Red Baron

'suspended Disbelief'

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I remember, as a potential investor, being invited to one of those drinks parties where they tried to match investors with dot.com company start-ups looking for venture capital.

This was around 1999/2000 and I remember one aspirant saying he needed to raise finance quickly 'before the bubble burst'. Everyone knew dot.com was a bubble, talked about it as a bubble, and knew that it would ultimately burst, but the charade continued for some time; it was if everyone was in a state of 'suspended disbelief'. It was a curious time.

We have now reached that same stage with the current property bubble - the similarities with the dot.com era are quite remarkable. People are now recognising the property bubble for what it patently is, but how long will it be before 'that damned apple drops'?

Edited by Red Baron

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Guest muttley

I personally think it is a mistake to compare the two.Whilst both might be described as bubbles,shares and property are different.The HPC wil happen in slow motion.

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I personally think it is a mistake to compare the two.Whilst both might be described as bubbles,shares and property are different.The HPC wil happen in slow motion.

I agree, and I have posted many times to that effect; we are in for slow drops over 3-5 years because of 'price entrenchment' and vendor denial. Nevertheless we will see real house price drops of 30-40% over that period.

The point I was trying to make is how long will it be before the man in the street publicly acknowledges that the Emperor is bollock naked?

Edited by Red Baron

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Or not at all outside of 2BCCNB as people will always want a new property.

Dot com had no history. Paperboy rounds being sold for £10 billion. My cat saw the inherant problems.

Property is different. If not, when it falls 60%, the UK is FUC**D

The UK is well and truly fuc**d anyway, and the main cause has been property hyperinflation.

Goon Brown and Tony Bliar should have done something about it ages ago.

I just wish when the crash does happen that it is fast, like shares, but I know that probably will not be the case. All the denial will prolong the agony before normality is restored. i.e. sensible prices that bare some relation to sensible multiples of take home pay.

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I remember, as a potential investor, being invited to one of those drinks parties where they tried to match investors with dot.com company start-ups looking for venture capital.

This was around 1999/2000 and I remember one aspirant saying he needed to raise finance quickly 'before the bubble burst'. Everyone knew dot.com was a bubble, talked about it as a bubble, and knew that it would ultimately burst, but the charade continued for some time; it was if everyone was in a state of 'suspended disbelief'. It was a curious time.

We have now reached that same stage with the current property bubble - the similarities with the dot.com era are quite remarkable. People are now recognising the property bubble for what it patently is, but how long will it be before 'that damned apple drops'?

Do you think there's a possibility 'suspended disbelief' could be otherwise described as a soft landing? My husband and I have been waiting for a long time for house prices to fall and thought last year that something was finally happening. But it seems as though things are picking up according to recent news reports.

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And remember one of it's knock-ons was this housing bubble. Will we see political cowardice, (hyper?)inflation and the total erosion of trust in paper currency, or political iron will, a massive depression/deflation, biting the bullet and bringing the world economy back to solid ground, with the world's financial system cleansed and intact? Looking at most politicians my money is currently on option 1.

This is the question I am asking myself every day at the moment. Currently tending towards 2.

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option 1 (hyper)inflation

option 2 deflation

which will it be

i think it will be 1 and then 2.

option 1 hold gold, commodities, other assets (including property?)

option 2 cash and gold?

I think the BOE independence and inflation target has put too much of a straitjacket on monetary policy for 1 to happen. If the set-up were changed or the target abandoned, the currency markets would go beserk and there would be a massive outflow of capital (mine for a start). Even so I'm very nervous about the situation. I'm thinking of putting some of my savings in euros (or maybe swiss francs), I see that as more of a safe haven than gold. If option 2 happens then I lose out with gold. But I think with the eurozone economies recovering and the ECB under less political pressure then the BOE, the euro will hold its value whatever scenario unfolds in the UK.

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I think the BOE independence and inflation target has put too much of a straitjacket on monetary policy for 1 to happen. If the set-up were changed or the target abandoned, the currency markets would go beserk and there would be a massive outflow of capital (mine for a start). Even so I'm very nervous about the situation. I'm thinking of putting some of my savings in euros (or maybe swiss francs), I see that as more of a safe haven than gold. If option 2 happens then I lose out with gold. But I think with the eurozone economies recovering and the ECB under less political pressure then the BOE, the euro will hold its value whatever scenario unfolds in the UK.

yes but there are rumours that Italy may bail out of the Euro and that will damage the currency. Still probably do better than Sterling though.

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I remember, as a potential investor, being invited to one of those drinks parties where they tried to match investors with dot.com company start-ups looking for venture capital.

This was around 1999/2000...

I was working for a large VC startup - on a weekly paid contract basis - in early 2000. Everyone in the company seemed to think they'd be millionaires within 12 months. They'd all got their friends, parents and grandparents to invest. Utter madness - sailing not just yourself, but generations of your own family down the river. And this was the second such company I'd worked for.

Needless to say, 12 months later the 'shares' in the company lost 99% of their value. This really devastated some of the families involved.

I remember those days everytime someone tells me property is such a 'sound' investment. How can it be when so few FTBs can enter the market to sustain it?

Anyway, last year was the year the brakes were finally applied; the next two years should see some steep falls and some commonsense return.

Nomadd

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And remember one of its knock-ons was this housing bubble. Will we see political cowardice, (hyper?)inflation and the total erosion of trust in paper currency, or political iron will, a massive depression/deflation, biting the bullet and bringing the world economy back to solid ground, with the world's financial system cleansed and intact? Looking at most politicians my money is currently on option 1.

to my mind, this is the single most crucial question that we have to ask in all this... I understand why Durch feels this way, but I actually tend toward 2 - not because our "leaders" have any inate sense of responsible long-term stewardship, but because any debasement of Sterling or the Dollar would only accentuate the competitive advantage of the east.

we simply cannot afford to inflate our way out of this - unless peak oil happens and we start de-globalising. Whichever way you look at it though, living standards will probably be going in the opposite direction of up for a while.

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Guest Bart of Darkness
or political iron will, a massive depression/deflation, biting the bullet

I must confess that I would be astonished to see these qualities from a modern UK government, of any political persuasion.

At least until it was far too late.

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option 1 (hyper)inflation

option 2 deflation

which will it be

i think it will be 1 and then 2.

option 1 hold gold, commodities, other assets (including property?)

option 2 cash and gold?

yup I think this is the play.

...but hyperinflation I think not....inflation will be curbed by hyper IR rises and hyper-outsourcing.....either way that doesn't bode well for property.

....either way the wealthy populations are going to become a lot less wealthy rather quickly.....apart from the folks who run them.

Edited by oracle

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The UK is well and truly fuc**d anyway, and the main cause has been property hyperinflation.

Goon Brown and Tony Bliar should have done something about it ages ago.

Tony Blair will be ******ed, doesn't he own a £3.6million house in London?

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I remember, as a potential investor, being invited to one of those drinks parties where they tried to match investors with dot.com company start-ups looking for venture capital.

This was around 1999/2000 and I remember one aspirant saying he needed to raise finance quickly 'before the bubble burst'. Everyone knew dot.com was a bubble, talked about it as a bubble, and knew that it would ultimately burst, but the charade continued for some time; it was if everyone was in a state of 'suspended disbelief'. It was a curious time.

We have now reached that same stage with the current property bubble - the similarities with the dot.com era are quite remarkable. People are now recognising the property bubble for what it patently is, but how long will it be before 'that damned apple drops'?

I find the clearest signal in the fact that people stopped asking simple questions, like "where is the money coming from, and where is it coming out?", and "at what point will money stop rolling in?"

With the dotcom boom it was obvious - when these businesses continued to lose money, the plug would be pulled. It's similar with property - as soon as prices demonstrably stop rising, the plug will be pulled, and confidence in asset growth will vanish.

I remember those days everytime someone tells me property is such a 'sound' investment. How can it be when so few FTBs can enter the market to sustain it?

7% at the moment, apparently, down from 50% in 1999.

And of that 7%, a significant number (25% I think I read?) get "help" from their family, and others still get 100% interest only mortgages.

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Tony Blair will be ******ed, doesn't he own a £3.6million house in London?

I suspect he's borrowing some of that in the hope that, if he keeps up the payments, he will ultimately be in possession of the deeds.

When you mix with the really wealthy you gotta try to keep up appearances.

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yup I think this is the play.

...but hyperinflation I think not....inflation will be curbed by hyper IR rises and hyper-outsourcing.....either way that doesn't bode well for property.

....either way the wealthy populations are going to become a lot less wealthy rather quickly.....apart from the folks who run them.

i just cant see them allowing hyper interest rates - thats why they are giving us low inflation figures.

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i just cant see them allowing hyper interest rates - thats why they are giving us low inflation figures.

the low inflation figures are temporary...china is due to reach critical mass in a couple of years,if revaluation happens along with chinese consumer-led inflation then the west will be hiking rates.

...don't forget about india or japan either,and add an odd oil-shock into the mix as well.

...(the oil shock one is the least of the worries as alternatives become more viable with higher prices)

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the low inflation figures are temporary...china is due to reach critical mass in a couple of years,if revaluation happens along with chinese consumer-led inflation then the west will be hiking rates.

...don't forget about india or japan either,and add an odd oil-shock into the mix as well.

...(the oil shock one is the least of the worries as alternatives become more viable with higher prices)

I keep going over this inflation/deflation thing and i just think its gonna be inflation(hyper) i just dont think anyone in charge has got the bls to get inflation under control.

after (hyper)inflation i think we may get deflation though

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I keep going over this inflation/deflation thing and i just think its gonna be inflation(hyper) i just dont think anyone in charge has got the bls to get inflation under control.

after (hyper)inflation i think we may get deflation though

Agreed although it may take a while to really take off. Look what happened when we relaxed currency rules, came of gold standard, left true reserve banking for fractional reserve fiat banking and added a population boom into the melting pot. The Asian's have all this or are heading this way depending on the country. Eventually (and much quicker than ours given the pace of modern technology/business) their standard of living will rise with wages and so with it our prices and inflation.

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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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