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Lifecycle of the bubble, where are we?

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25 minutes ago, TheCountOfNowhere said:

I'll post it in the morning...

I reckon first Bear trap, measured purely in nominal terms.  

But Bull trap if talking real values.

Edited by Mikhail Liebenstein

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I don't think any chart applies to "where we're at". The chart implies that it's simply a free market mixed with human sentiment and psychology.  That graph applies to many markets, but so much of the wider economy and housing market is manipulated to the point that human psychology no longer even matters.  If the housing market were merely subject to human psychology, we'd be looking at a lot lower house prices today.  Instead, TBTB will do everything in their power to prop up prices.  There is no lifecycle here.  It's unprecedented. 

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Absolutely.  We should have had some creative destruction between 2008 to 2010.  Some blood-letting. We needed to get to down to that despair level.  Good for the soul.   IRs should have been lowered no more than to 2% (keeping with historical precedents).  It would have been tough, but at least it would have been clearly defined, and with clear goals to a clear and REAL recovery.   What we have now is something far worse. Now we've blown any chance of a recovery, so policy makers continue to double-down on bad decisions.  This is going to end up with civil unrest and complete anarchy.

 

Edited by canbuywontbuy

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9 hours ago, Eddie_George said:

The Count has the proper chart, he'll be along in a minute.

 

The "new paradigm" version of that graph.

 

Cy-txa0W8AAEgB9.jpg

Edited by TheCountOfNowhere

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3 minutes ago, RickyD said:

Looking at that graph, I would put 2007 at 'New Paradigm III', and 2016 at the 'Insane Money Printing' stage.

Oh, me thinks the fear stage is well and truly underway.

 

The angry BTLers should tell you all you need to know.

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Based upon the original graph, I think we are about to enter Fear having had an extended false plateau at 'return to normal'.

Personally, having never taken on any debt and saving for a rainy day etc, I'm already at fear and I am anticipating despair.

It's certainly made me give up working for anyone other than myself.

Edited by LiveinHope

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3 minutes ago, TheCountOfNowhere said:

Oh, me thinks the fear stage is well and truly underway.

 

The angry BTLers should tell you all you need to know.

 

I'd agree about the BTLers fear, but I think it has yet to roll out to the masses. Currently, I'd say that the masses are 'confused', a new stage perhaps


Return to normal

Confusion

Fear

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Looking at the Nationwide 'real house prices' (what ever that is) I would say we are at return to normal.

homepage.png

Cy-txa0W8AAEgB9.jpg

I think we are more likely at the media attention stage. Having been wrong about the market for 15 years, this is the exact opposite of where it should be - therefore it is probably the most accurate!

Edited by GrizzlyDave

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My over-simplified definition of a bubble would be a scenario in which prices of a limited asset are inflated by the ability and desire of the wider population to buy exceeding their desire to sell. Obviously the peak of a bubble is the point at which sentiment shifts the other way or people can no longer buy assets at the price commanded eg. due to shortage of credit.

Lifecycle: the Period of this cycle.

Which asset? Houses :)

 

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4 hours ago, GrizzlyDave said:

Looking at the Nationwide 'real house prices' (what ever that is) I would say we are at return to normal.

homepage.png

Cy-txa0W8AAEgB9.jpg

I think we are more likely at the media attention stage. Having been wrong about the market for 15 years, this is the exact opposite of where it should be - therefore it is probably the most accurate!

We've returned to normal sometime ago ( 2012 ).

The insane money printing filtered through and pushed prices to levels no one other than  the pyramid dwellers can even dream of affording.

Fear is next.  Pure and simple.

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36 minutes ago, btd1981 said:

My over-simplified definition of a bubble would be a scenario in which prices of a limited asset are inflated by the ability and desire of the wider population to buy exceeding their desire to sell. Obviously the peak of a bubble is the point at which sentiment shifts the other way or people can no longer buy assets at the price commanded eg. due to shortage of credit.

Lifecycle: the Period of this cycle.

Which asset? Houses :)

 

Which houses? 

Where? 

What metrics?

What is the period of this cycle? 

The entire point of Rodriguez original chart is the 'mean' line. All points are relative to the mean. By which it is clear he means the long run trend. 

It's also clear that real house prices are currently below their long run real trend, as shown on the above chart. 

Might the real long run trend change at some future point? It might. But that is a different chart entirely & has nothing to do with Rodriguez sentiment bubble paradigm

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35 minutes ago, Little Frank said:

Which houses? 

Where? 

What metrics?

What is the period of this cycle? 

The entire point of Rodriguez original chart is the 'mean' line. All points are relative to the mean. By which it is clear he means the long run trend. 

It's also clear that real house prices are currently below their long run real trend, as shown on the above chart. 

Might the real long run trend change at some future point? It might. But that is a different chart entirely & has nothing to do with Rodriguez sentiment bubble paradigm

Okay, in that case I think the house prices should be normalised against 'real' wages. I do not believe they have much scope for increases (in most parts of the country) without blowing ability to pay for them out of the water, even at these low interest rates.

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The key determinant of recovery is private sector debt/GDP.

Until that figure is brought back <100% there's simply no room for the economy to grow productively.

Public sector investment is a hopelessly inefficient substitute.

 

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If the bottom end are growing poorer as both individuals and numbers how can they create growth?.....why would the rich invest into a place knowing there is no spare money to spend.....what lender would lend unsecured to a business or person with no collateral no security......no accountability. ;)

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37 minutes ago, winkie said:

If the bottom end are growing poorer as both individuals and numbers how can they create growth?.....why would the rich invest into a place knowing there is no spare money to spend.....what lender would lend unsecured to a business or person with no collateral no security......no accountability. ;)

The British government back BoE with their magic QE free cash button.


Which is known as stealth theft of the masses.

 

 

 

 

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