Jump to content
House Price Crash Forum
Sign in to follow this  
Yankee

Check This Out This Very Bearish Web Site

Recommended Posts

I apologize if someone has already posted a link to this Web site, but I just came across it as I was reading the NY Times today:

www.itulip.com

Here's a snippet from the main article (a mea culpa about not predicting the housing bubble) on the site:

"...Not only did we fail to predict the housing bubble as the Fed's answer to the stock market bubble collapse, we argued that the Fed would never allow one to develop.

Wrong.

Our thinking was that in the past the Fed has been very quick to stop speculation in real estate, much more quickly than stock market speculation. Why? Real estate involves the banking system much more than does the stock market and looking after the banking system is Job One for the Fed. Letting millions of homeowners buy real estate they can't afford with mortgages they can never pay back is a surefire road to mass defaults that can cripple the banking system. When a little housing bubble declined in the early 1990s, the U.S. banking system seized up. That response to the downside of that minor real estate cycle was a Gran Mal seizure compared to the massive stoke that the banking system is likely to suffer on the back end of this wild real estate freak show. More importantly, the political aftermath of a real estate bubble is economic devastation of the host country's economy. Lots of unemployment and negative wealth effects that keep consumers home sulking and saving, not out at the mall buying goods from Asia that keep Asian central banks inspired to lend, and the virtuous cycle of lending, borrowing, importing and exporting going. Not good for recessionary, inflationary and other re-election sensitive economic matters. So why take the chance? Because it looked better, at the time, than the obvious alternative: massive recession and unemployment before the 2004 elections. Never good for anyone's re-election bid...."

Also, check out all the articles on the right hand side of the page, especially "Leaking Bubble" from last week's issue of The Nation magazine.

Share this post


Link to post
Share on other sites

Good finds IMO.

But would a HPC necessarily result in the collapse of the banking system.

Given banks' huge profits isn't a collapse highly unlikley?

Share this post


Link to post
Share on other sites

Good finds IMO.

But would a HPC necessarily result in the collapse of the banking system.

Given banks' huge profits isn't a collapse highly unlikley?

There was a post about a month ago showing Barclays Bank bad debts rose 44%. This makes Barclays bad debt more than their profit for last year.

I think you need to watch the video on fractional reserve banking, I think there is a link somewhere on the front page.

Saying that though, the banks are not stupid. Bad debt is not the same as unrecoverable debt.

Most houses are secured by more than 10% of the house's value. BTL have secured houses against existing houses, FTB have secured houses against their parent's house.

If there is a very sudden drop in house prices, which I don't think will happen, the banks could end up reposessing more properties - hence a higher percentage of real wealth than before the crash. A slow drop in house prices and the banks will just tighten credit lending and raise the interest rates of loans like a noose.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.