U S Inflation Figures Worse Than Expected--up Go Ir

[Realistbear]

http://uk.biz.yahoo.com/21032006/94/wall-s...data-drags.html

Tuesday March 21, 03:30 PM

Wall St loses ground as inflsation data drags

Shares on Wall Street moved into negative territory on Tuesday after data revealed

higher-than-expected inflationary pressure

in the world’s largest economy.

Inflation data pointed to a

higher peak in the US interest cycle

as core inflation for February rose more than expected.

TTRTRates and unload BTLs and leveraged houses. Window for sell opportunity is closing fast.

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

This week just keeps getting better..................

[CrashIsUnderWay]

that's fab news. We can expect 5.5% or maybe even 6% here by next spring

:-)

[Panda]

Realsitic Bear

You are on the ball, great reporting, who need the media hey

that's fab news. We can expect 5.5% or maybe even 6% here by next spring

Edited March 21, 2006 by Panda

[Realistbear]

that's fab news. We can expect 5.5% or maybe even 6% here by next spring

:-)

5% looks certain. However, I think we could see a recession as spending on houses comes to a dramatic halt due to fears that the top of the market is behind us:

http://wireservice.wired.com/wired/story.a...storyId=1176819

Tuesday, March 21, 2006 12:27 p.m. ET

NEW YORK (AP) -- Bond prices fell midday Tuesday, as traders interpreted Federal Reserve Chairman Ben Bernanke's comments the night before as signaling further interest-rate hikes.

The price of the Treasury's 10-year note was down 15/32 point, or $4.69 per $1,000 in face value, around midday Tuesday, while its yield rose to 4.72 percent from 4.66 percent late Monday. Prices and yields move in opposite directions.

Edited March 21, 2006 by Realistbear

[nodumsunreader]

that's fab news. We can expect 5.5% or maybe even 6% here by next spring

:-)

OK MORON, i'll try to debate with you - tell me what good will 6% UK interest rates do you?

Presumably you need to work? What will higher IR's do for your job prospects and for that matter anyone else who needs a job to pay rent/mortgage? What good will it do you if IR's double and HP's drop by 50% and at the same time you become unemployed or employed on a much lower salary as a result of a recession.

And PLEASE try and reply in joined up thinking.

[keepwatching]

touched a nerve ?

[Badlad1967]

OK MORON, i'll try to debate with you - tell me what good will 6% UK interest rates do you?

Presumably you need to work? What will higher IR's do for your job prospects and for that matter anyone else who needs a job to pay rent/mortgage? What good will it do you if IR's double and HP's drop by 50% and at the same time you become unemployed or employed on a much lower salary as a result of a recession.

And PLEASE try and reply in joined up thinking.

Over stretched a bit are we dear?

[look to the past]

Seems pretty dim to me as well to expect that the UK have to follow the US just because they have in the past – the UK will not risk recession just so it can match US rates- if that was the case Europe would not be at 2%

nodumsunreader -You can talk about joined up – your thinking is too joined if you ask me

[Panda]

OK MORON, Very touchy, not nice, i bet you would not call someone that to their face

Presumably you need to work? So whats your point

And PLEASE try and reply in joined up thinking.

[Levy process]

OK MORON, i'll try to debate with you - tell me what good will 6% UK interest rates do you?

Presumably you need to work? What will higher IR's do for your job prospects and for that matter anyone else who needs a job to pay rent/mortgage? What good will it do you if IR's double and HP's drop by 50% and at the same time you become unemployed or employed on a much lower salary as a result of a recession.

And PLEASE try and reply in joined up thinking.

Recession is coming anyway, due to the increase in tax burden, increased business regulation, public sector expansion and public sector pension costs. 6% interest rates would pop the housing bubble, and make it more affordable for the people who don't lose their jobs. It might even focus people's minds on making money out of actually doing something, rather than moronically sitting on a house investment and expecting it to inflate automagically forever.

By the way, do I detect a quiver of fear in your writing? Are you perhaps, a tad over dependant on borrowed money perhaps? It's coming home to roost for the big borrowers now...

Edited March 21, 2006 by Levy process

[nodumsunreader]

Seems pretty dim to me as well to expect that the UK have to follow the US just because they have in the past – the UK will not risk recession just so it can match US rates- if that was the case Europe would not be at 2%

nodumsunreader -You can talk about joined up – your thinking is too joined if you ask me

House prices halved, IR's doubled and less jobs = good news then?

[Realistbear]

The surge in IR this year will not be bad news for everyone. Those on fixed incomes will benefit from higher returns on savings. STMs and STRs will do well assuming they have deposited their sale proceeds in a safe interest bearing account. If they sold well, a job will not be necessary as a healthy return on a large sum should cover things nicely for several years. FTBs who have secure employment will benefit from sharply lower house prices when they are ready to buy and higher returns on their deposit money while they wait for the market to bottom.

However, most people will indeed suffer given the amount of debt in the economy. As house prices react to sharply lower affordability many who bought in the last 3 years will see negative equity within a very short period of time. Mortgage rates will probably rise by 30% or more and some will have to default and lose their home. BTLers who can weather several years of higher mortgages and lower rents (recession will remove many renters from the available pool) will be few and far between.

What to do? If I owned BTLs with outstanding mortgages I would sell immediately and even accept a loss if I felt that the downside was greater the longer I waited. If I owned a home that was mortgaged by more than 80% of current value I would sell.

Higher IR will not, therefore, be bad news for everyone. 6% could trigger a nasty recession and such a rate will not happen, IMHO, as we are already in mild recession and house prices are already falling. A modest rise of 1% to keep up with other world rates will simply speed the downside along.

[keepwatching]

yes

[Levy process]

House prices halved, IR's doubled and less jobs = good news then?

House prices halved = good news.

IR's doubled = good news for savers.

Fewer jobs = good, if we're talking tax payer funded ones.

[look to the past]

House prices halved, IR's doubled and less jobs = good news then?

Nope you have lost me – I was agreeing with you – not arguing with you

Seen high interest rates- seen lack of jobs – not as bad as you would have thought – if you are a hard worker you will hardly notice

Not good for the UK though and would not wish it again

In conclusion I am agreeing with you

[the_duke_of_hazzard]

House prices halved, IR's doubled and less jobs = good news then?

I dream of this every night. It would be good news, yes. My only concern is for my brother-in-law who's in a precarious job.

[nodumsunreader]

Nope you have lost me – I was agreeing with you – not arguing with you

Seen high interest rates- seen lack of jobs – not as bad as you would have thought – if you are a hard worker you will hardly notice

Not good for the UK though and would not wish it again

In conclusion I am agreeing with you

Apologies LTTP my reply was aimed at the previous posters. Regarding your point about 'hard workers'. This site wants a HPC - not sure what the definition of crash is but I am guessing at least 30%. If that were to happen, it is my view that we will not be talking of recession but depression. Hard workers (I would prefer the term clued up workers) as you put them would struggle to find employment in those circumstances, not to mention some of the dross who post on here.

Edited March 21, 2006 by nodumsunreader

[Realistbear]

Reality and a story to be repeated in the UK very soon:

http://abcnews.go.com/Business/story?id=17...TC-RSSFeeds0312

By CHARLIE HERMAN

March 21, 2006 — Heidi never imagined that she could lose her home outside Dallas. But rising interest rates and skyrocketing monthly mortgage payments have left her staring at foreclosure. She's just one of many Americans who might be forced to move as the housing market cools.

[nodumsunreader]

Reality and a story to be repeated in the UK very soon:

http://abcnews.go.com/Business/story?id=17...TC-RSSFeeds0312

By CHARLIE HERMAN

March 21, 2006 — Heidi never imagined that she could lose her home outside Dallas. But rising interest rates and skyrocketing monthly mortgage payments have left her staring at foreclosure. She's just one of many Americans who might be forced to move as the housing market cools.

Do you think there will be more UK house repossessions or more UK job losses?

[Culpability Brown]

OK MORON, i'll try to debate with you - tell me what good will 6% UK interest rates do you?

Presumably you need to work? What will higher IR's do for your job prospects and for that matter anyone else who needs a job to pay rent/mortgage? What good will it do you if IR's double and HP's drop by 50% and at the same time you become unemployed or employed on a much lower salary as a result of a recession.

And PLEASE try and reply in joined up thinking.

The sooner the cheap credit, high debt, Estate agent driven, economically insane UK housing market returns to a semblance of sound normality - the better for all. Especially for young hard working professionals both now and in the future.

6% IR's are low but would reverse the pathetic greed of recent years at a stroke.

Read it & weep. The day is approaching.

[Realistbear]

Do you think there will be more UK house repossessions or more UK job losses?

Both--they are symptoms of the same disease--debt driven hpi/mew.

[look to the past]

Apologies LTTP my reply was aimed at the previous posters. Regarding your point about 'hard workers'. This site wants a HPC - not sure what the definition of crash is but I am guessing at least 30%. If that were to happen, it is my view that we will not be talking of recession but depression. Hard workers (I would prefer the term clued up workers) as you put them would struggle to find employment in those circumstances, not to mention some of the dross who post on here.

I think the real losers are going to be everyone who missed the last recession – knowing what to expect helps –

Being in debt was a real problem last time – but this time it is different – high IR’s are not going to happen in the short term (I believe) but there is still a balancing act and something will pay for having low IR’s –

I repeat this time it is different (not that it won’t happen)

The only winners this time will be the hard workers who have nothing to lose

[Pablo-silver or lead?]

nodumsunreader

after 911 the US reduced IR's to support the growth of their economy and keep the people happy during the comming war on terror. Bush thought a couple of quick wars in Afganistan and Iraq (in and out 3 years tops) would do the trick, nice and clean with good headlines for home consumption. However the war on global terror will not be large set piece battle/invasions. It will be inteligence led, low intensity and take 30 years +.

Any way back to UK IR. The Fed lowered inerest rates too quick, too low (1%) and for too long. The UK followed suit. This resulted in an unsustainable asset bubble developing in property prices both in the US and the UK. This cant be undone now and as a result IR need to go up higher than would have been the case if monatary/IR rate policy had not been so loose. The Fed, BOE MPC and Euro zone must pre empt general inflation picking up (as it is) so interest rates go up. Its going to be messy but not as messy as what will happen if interest rates are reduced. So people should have expected and prepared for higher interest rates. Not 9 or 10% but certainly 5.5 to 7.5% in the next 3 years as the 2 billion new consumers in Indo/China drive inflation.

We've all been riding high on the hog, now the hangover, there is nothing anyone can do to change what is comming.

Pablo Silver or Lead?

Edited March 21, 2006 by Pablo-silver or lead?

[nodumsunreader]

Both--they are symptoms of the same disease--debt driven hpi/mew.

OK so lets look at the likely scenario. Millions of job losses and house repo's. House prices fall but IR's higher. Some STR's and FTB's who manage to keep their jobs cash in. They are replaced by some ex homeowners and other FTB's who become unemployed. Social division continues albeit with some people in different places. As IR's fall again the economy recovers and HP's rise again. In a few years we are back to square one. In reality, what seems to be the aims of this site and it's posters is not to reform the housing market but to replace one set of inequality with another.