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gruffydd

Wowww - Fed Reserve Will Sit Back & Watch

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All you Bulls out there - read this and shudder!

Fed's Kohn says Fed won't act to preserve high home prices

WASHINGTON (AFX) - The Federal Reserve has no intention of preserving all of

the recent gains in home price values, said Federal Reserve board governor

Donald Kohn on Thursday. "If real estate prices begin to erode, homeowners

should not expect to see all the gains of recent years preserved by monetary

policy actions,' Kohn said in a speech prepared for delivery to a European

Central Bank forum in Frankfurt, Germany. In his remarks, Kohn attacked the

popular 'Greenspan put' theory that Fed policy would always protect investors

from sharp asset market drops while doing nothing to restrain these markets when

prices. "This argument strikes me as a misreading of history," Kohn said.

"Conventional policy as practiced by the Federal Reserve has not insulated

investors from downside risk," he said.

This story was supplied by MarketWatch. For further information see

www.marketwatch.com.

Edited by gruffydd

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You are talking to someone who has lived through the last recession.

I am amazed that anyone would think anything else.

Inflation is the target, house prices are irrelevent.

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You are talking to someone who has lived through the last recession.

I am amazed that anyone would think anything else.

Inflation is the target, house prices are irrelevent.

So prices are going to come down more and for a sustained period.

I think we will mirror that here. The money masters video covering the Wall Street Crash and discussing credit crunching related to business cycles helps to understand these things.

It's a sure fire way that the banks can control ownership of industry when it gets booming by creating a no credit situation and we percieve that 'the banks' take ownership without understanding that these people are actually robbing us.

Do not buy now.

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Dependent on your circumstances property is a sell today. The market is there, and it wont last for much longer.

But I would agree, dont buy yet. The time is arriving, maybe late 2007 we will see rates go up and thats gonna hurt.

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Do you think that's a good timescale, I guess that would cover my 30% deposit and 3.5x salary if things pan out.

A slight redcution in prices, like 20% would be nice before late 2007.

And it could happen, that's the interesting thing, much of what is preached on this site has been shown to be true.

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I think rates will rise late 2007, but it will take a while for property to fall after the rise as people will hang on.

And two thirds are now on fixed rates, but they are short term as in less than five years.

I would guess that 2010 will be the bottom of the cycle.

I also think that property will rise 5% this year, and around 4% to third quarter 2007.

At best I think in reality the lows in 2010 will see 35% falls,cant see it dropping 50%.

We will have to see, nearly there now and its hard to believe that people are throwing in the towel after waiting during the last five years which were the best years.

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I think rates will rise late 2007, but it will take a while for property to fall after the rise as people will hang on.

And two thirds are now on fixed rates, but they are short term as in less than five years.

I would guess that 2010 will be the bottom of the cycle.

I also think that property will rise 5% this year, and around 4% to third quarter 2007.

At best I think in reality the lows in 2010 will see 35% falls,cant see it dropping 50%.

We will have to see, nearly there now and its hard to believe that people are throwing in the towel after waiting during the last five years which were the best years.

I think you have the predicted the market correctly.

I too see the bottom of this cycle occurring around 2010 with falls (real not nominal) of around 30%. That would be achieved with nominal falls of around 5% per annum with inflation doing the rest. I disagree with you, however, when you say there will be interim rises in 2006/7; I think we will see a modest Spring bounce this year which will be cancelled out by falls later in the year. 2007 will mark the start of the slide.

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Yep, it will take time but how can you say prices will rise when rightmove say £200K ave. asking price and nationwide say less than £160K ave sale price.

We can smell it here. So great points fella's but realise that prices are going south now.

Fact, unless you spin the figures.

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You are talking to someone who has lived through the last recession.

I am amazed that anyone would think anything else.

Inflation is the target, house prices are irrelevent.

It is true that in the UK, the BoE MPC remit is to control inflation as measured by the British Government and to keep to the target set by the chancellor. Gordon Brown and Mervyn King may well think that house prices are a sacred cow which cannot be touched.

But there is no such narrow inflation target in the US. The Fed is more or less free to set whatever monetary policy it thinks is good for the US. If it wants to pop the US housing bubble it may do so if it thinks propping up the dollar is more important. If UK and other international interest rates get dragged up in the process, the Fed does not care.

frugalista

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You forumites don't seem to be aware that the MAJOR remit of all central banks is to maintain the stability of their local banking systems. What does that mean I hear some ask? Amoung other things, it means that debtors should be relatively in a position to repay creditors, that credit crunches and splurges should be frowned upon. Inflation should be targeted, but not at the cost of disrupting the banking system.

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You forumites don't seem to be aware that the MAJOR remit of all central banks is to maintain the stability of their local banking systems. What does that mean I hear some ask? Amoung other things, it means that debtors should be relatively in a position to repay creditors, that credit crunches and splurges should be frowned upon. Inflation should be targeted, but not at the cost of disrupting the banking system.

Major comes after primary :) which is why with

debtors should be relativly in a position to repay creditors - insolvencies/bankruptcy seem to be rising.

They can disrupt a little the banking system they just can't break it, you can shake a tree to get an apple off it with no permenant harm, you can't chop it down though. Primary goal is inflation secondary goal would be stability because without it theres no way of controling the circumstances which will lead them to the primary goal.

oh and forumites :lol:

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You forumites don't seem to be aware that the MAJOR remit of all central banks is to maintain the stability of their local banking systems. What does that mean I hear some ask? Amoung other things, it means that debtors should be relatively in a position to repay creditors, that credit crunches and splurges should be frowned upon. Inflation should be targeted, but not at the cost of disrupting the banking system.

Credit crunches may be frowned upon but they are a necessary and inevitable part of the economic cycle:

The Kondratieff Cycle: Real or Fabricated?

..Inflation and the inflationary boom are caused by bank credit expansion generated by governments. In fact, government's central banking system provides the key causal element for all business cycles, a cause exogenous to the market economy. Continuing government intervention sets in motion business cycles by generating inflationary booms. Because these booms distort the signals of the market place in interest rates and in relative prices they bring about grave distortions of production and prices, which must be corrected by recessions and depressions.

In short, government intervention cripples the market economy, and recession or depression is the painful but necessary adjustment by which the market reasserts itself, and liquidates the distortions committed by the government's inflationary boom. After each depression, the government generates inflation once again, because it is the government's natural tendency to inflate. Why? Quite simply, whoever is granted a monopoly of printing money (e.g., the Fed, the Bank of England) will use that monopoly and print – to finance government deficits, or to subsidize favored economic groups. Power will tend to be used, and the power to create money out of thin air is no exception to the rule....

Also interesting link from Moneyweek Yesterday:

Do rising commodity prices cause wars?

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Hi all

Thatcher broke the Unions.

Leaving the ERM

Brown gave BoE control of interest rates.

Three of the best things to happen to this country. It has created a GREAT British economy and people have felt wealthy especially as on paper they see themselves as having Hundreds of thousands to their name. Unfortunately on the back of this feel good factor it appears that the masses have over indulged to the tune of one trillion pounds.

Interest rate rises ARE in the pipeline to protect the 'holy grail' of low inflation. When this happens some people will struggle, the already struggling housing market will look even more overpriced and the slide will begin.

What surprises me is that some people fail to see that the top of the market has already gone.

Killerbee

Up the bees

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Yep, it will take time but how can you say prices will rise when rightmove say £200K ave. asking price and nationwide say less than £160K ave sale price.

We can smell it here. So great points fella's but realise that prices are going south now.

Fact, unless you spin the figures.

It becomes ever clearer - people believe what they want to believe. I am STR. I want to believe prices are going down. I believe prices went down between mid 2003 to the end of 2005. I observe that they are going up again and that things are selling as soon as they hit the market - at the moment - in my little corner of the world.

Prices here are going North.

Hi all

Thatcher broke the Unions.

Leaving the ERM

Brown gave BoE control of interest rates.

Three of the best things to happen to this country. It has created a GREAT British economy and people have felt wealthy especially as on paper they see themselves as having Hundreds of thousands to their name. Unfortunately on the back of this feel good factor it appears that the masses have over indulged to the tune of one trillion pounds.

Interest rate rises ARE in the pipeline to protect the 'holy grail' of low inflation. When this happens some people will struggle, the already struggling housing market will look even more overpriced and the slide will begin.

What surprises me is that some people fail to see that the top of the market has already gone.

Killerbee

Up the bees

What surprises me is that people discount we now live in a global economy with few barriers to trade and in a ruthlessly efficient capitalist economy. Ruthlessly efficient in that most companies are lucky to keep their prices steady - and the idea of trying to increase your prices is almost unthinkable - someone, somewhere is competing for your business. For a while a few years ago DEflation was the big worry. The inflation we have had is down to utilities, local government and oil. We seem to absorbed the massive oil hike without too much pain.

If you are waiting for high interest rates to arrive to control inflation - you might wait a very long time.

If you are waiting for high interest rates to support the currency - because our ever increasing money supply (caused by our ongoing borrowing against meaningless asset prices) causes nations we import from to regard our currency as having less value - then you might have a shorter wait.

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Gordon Brown and Mervyn King may well think that house prices are a sacred cow which cannot be touched.

Merv is a switched-on guy. Listen when he speaks.

You forumites don't seem to be aware that the MAJOR remit of all central banks is to maintain the stability of their local banking systems. What does that mean I hear some ask? Amoung other things, it means that debtors should be relatively in a position to repay creditors, that credit crunches and splurges should be frowned upon. Inflation should be targeted, but not at the cost of disrupting the banking system.

You are absolutely right. I believe this comes under the remit for maintaining monetary stability. This is why the Bank Of England, acting alone in 2004, raise interest rates to "cool off" the house party before debtors became relatively out of a position to pay creditors, a splurge that was indeed frowned upon.

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I observe that they are going up again and that things are selling as soon as they hit the market - at the moment - in my little corner of the world.

Not in my corner of world

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You are talking to someone who has lived through the last recession.

I am amazed that anyone would think anything else.

Inflation is the target, house prices are irrelevent.

It is one of many instruments of "Wealth Trasfer" And social order. That is the target

http://www.mises.org/mysteryofbanking/mysteryofbanking.pdf

http://www.housepricecrash.co.uk/forum/ind...l=money+masters

http://www.amazon.com/gp/product/096408481...5Fencoding=UTF8

Edited by sp1

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It becomes ever clearer - people believe what they want to believe. I am STR. I want to believe prices are going down. I believe prices went down between mid 2003 to the end of 2005. I observe that they are going up again and that things are selling as soon as they hit the market - at the moment - in my little corner of the world.

Prices here are going North.

What surprises me is that people discount we now live in a global economy with few barriers to trade and in a ruthlessly efficient capitalist economy. Ruthlessly efficient in that most companies are lucky to keep their prices steady - and the idea of trying to increase your prices is almost unthinkable - someone, somewhere is competing for your business. For a while a few years ago DEflation was the big worry. The inflation we have had is down to utilities, local government and oil. We seem to absorbed the massive oil hike without too much pain.

If you are waiting for high interest rates to arrive to control inflation - you might wait a very long time.

If you are waiting for high interest rates to support the currency - because our ever increasing money supply (caused by our ongoing borrowing against meaningless asset prices) causes nations we import from to regard our currency as having less value - then you might have a shorter wait.

I beg to differ marina,high interest rates are on the way!!!!

what other ammunition do you give to fuel a massive demand inpension funds(which are mainly bonds) in a few years?????

tax cuts...not too many to be had in the states,it's pretty devoid of tax anyway.....we might get lucky here,but at the expense of the welfare state.

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In my neck of the woods on the South Coast propety is selling inside three weeks, or rather buyers are putting in accepted offers within three weeks.

Not that is hot cakes in my books.

It is true that in the UK, the BoE MPC remit is to control inflation as measured by the British Government and to keep to the target set by the chancellor. Gordon Brown and Mervyn King may well think that house prices are a sacred cow which cannot be touched.

But there is no such narrow inflation target in the US. The Fed is more or less free to set whatever monetary policy it thinks is good for the US. If it wants to pop the US housing bubble it may do so if it thinks propping up the dollar is more important. If UK and other international interest rates get dragged up in the process, the Fed does not care.

At 23 yrs old, and a partner in a property development company I owed 450k in the last recession. Now 450k is a lot now, but it was a very big lot then.

And I too thought that Thatcher would never ever put up interest rates and destroy the homes for all policy.

How wrong was I.

The banking system would collapse if Governments did not control inflation (Labour are synonomous with inflation, and deflation).

So belts and braces, fixed rate mortgage for at least 15yrs, or sell up and rent before its too late.

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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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