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U S Warning To Those Who Bought Into Bubble Recently

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http://www.iht.com/articles/2006/04/14/business/bonds.php

Treasury rate signals burdens for borrowers

By Vikas Bajaj

The New York Times

FRIDAY, APRIL 14, 2006

NEW YORK Interest rates are on the rise in the United States, a trend that could come back to haunt the economy. Investors this week pushed up the yield on the government's benchmark note to over 5 percent, its highest point in nearly four years. The move is a signal that many borrowers will soon be paying more on mortgages and home equity loans.
Driven by a stronger economy and a nearly two-year money-tightening campaign by the Federal Reserve, the rising level of interest rates across the board is expected to have the
biggest impact on people who took out home loans with low introductory interest rates that are set to adjust in line with market rates.
The 10-year Treasury note, which crossed the 5 percent threshold on Thursday for the first time since June 2002, serves as a touchstone for a variety of borrowers, from consumers to corporations and governments. But it is most closely tied to mortgages and is likely to play a role in slowing home price increases and curbing the home-buying frenzy in many parts of the country.
"Where you are going to feel the pain the most is on the housing market," said Brian Carlin, a vice president at J.P. Morgan Private Bank.
In a speech Thursday, Donald Kohn, a
Fed governor, said that rising interest rates were likely to slow the economy later this year, primarily by deflating the once-robust housing market
. He indicated that he would favor increasing short-term rates further if the economy sharply accelerated or energy prices shot up.

The UK is in a worse position than the US as UK borrowers do not have the protection of 30 year fixed rate loans. Those who bought into the UK bubble recently using IO loans and low intro rates will be in grave difficulty soon as the IR march upwards on onwards.

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As usual from a US publication it is US centric.

"Interest rates are on the rise in the US" should read "Interest rates are on the rise around the globe".

Its all being driven by Japan.

At long last they are completing the long recovery from their bubble. Their Washington inspired and utterly failed Keynsian onslaught of newly printed Yen will come to a halt.

This onslaught is what has kept global interest rates far below the free market rate for 10 years at least.

Now we in the Western world can have our own recovery.

Here is the most important financial price in the world (after the US$ price of gold of course)

fsspon.png

and here is a closer look

fsspon_1.png

Its all panning out as expected

Regards for now

BAB

post-697-1145024795.png

post-697-1145024829.png

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As usual from a US publication it is US centric.

"Interest rates are on the rise in the US" should read "Interest rates are on the rise around the globe".

Its all being driven by Japan.

At long last they are completing the long recovery from their bubble. Their Washington inspired and utterly failed Keynsian onslaught of newly printed Yen will come to a halt.

This onslaught is what has kept global interest rates far below the free market rate for 10 years at least.

Now we in the Western world can have our own recovery.

Here is the most important financial price in the world (after the US$ price of gold of course)

fsspon.png

and here is a closer look

fsspon_1.png

Its all panning out as expected

Regards for now

BAB

Hi BaB.

Here is the latest from my old home area, San Diego, the epicenter of the US bubble:

http://www.signonsandiego.com/news/busines...b14housing.html

Market 'ratcheted itself back a notch' with single-digit price gain, fewer sales

By Lori Weisberg and Emmet Pierce

UNION-TRIBUNE STAFF WRITERS

April 14, 2006

No longer steaming, the San Diego region's housing market continued a slow cooling trend in March, which marked the 11th month in a row of single-digit year-over-year price gains.
Kenneth Rosen, chairman of the Fisher Center for Real Estate at UC Berkeley, maintains that the market's future is uncertain.
“Prices are actually starting to decline in San Diego because of the inventory of unsold units, both single-family and condos,” he said.
“San Diego has had the biggest price increase of a major metro area in the last five years,”
he continued.
“You have the cash-out sellers now. You have investors trying to sell
, and you have an affordability crisis for first-time buyers. We will probably have a soft landing, but if interest rates go much higher it will be a more difficult situation.”
Clearly influencing the slowdown in price escalation is the growing inventory of homes on the market. In June 2004, when the market was at its peak,
the number of homes listed for sale was 6,657, according to the San Diego Association of Realtors. Yesterday, there were 17,010 listings
.
The trend is reflected in DataQuick's survey. Last month's overall sales totaled 4,146, a
decline of 17 percent from March 2005
. That was the lowest count for March since 1998, when 4,016 homes sold. An average March for the past 19 years has had sales of 4,029, Karevoll said.

Headed toward the usual crash down South? And the IR party is just beginning with the B o J due to push some sharp rises onto the market anytime now. With over 80% of the SD buyers using creastive loans in the last couple of years the "cash out" rush is going to be pandamonium. Only those willing to undersell the rush will get out.

In the UK the bubble seems to be wobbling and the VIs are ramping wildly with statistics of past glories and frenzied headlines that the press publish without discretion or research. I admire the SD Union--they have some good people on their reporting staff.

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Am reading an excellent book about the miseries of white-collar America by the wonderful Barbara Ehrenreich - 'Bait and Switch: The Futile Pursuit of the Corporate Dream' (2005). At one of the numerous executive workshops she attends:

"After lunch, it's Cynthia's turn. She describes herself as 'living on the edge ... seeing life as an adventure,' but there's more defensiveness than bravado in this, as if she's anticipating a rebuke. The problem is she's burned out on real estate; the market has collapsed, and she can't break even. She's putting longer and longer hours into the company but finding herself losing ground financially every month. 'What should I do with my life?' is the question that has brough her here."

Pity for Cynthia aside for a moment, what I like about this is the same thing as the radio clip I posted a couple of weeks back about the US market - it's the casualness of the references to the bubble bursting, the market collapsing and so on. It is increasingly a commonplace - doesn't raise eyebrows. People know that it's happening there - they don't seem to be so head in the sand about it. Strange, for a culture that in many other ways seems to have left reality behind a long time ago.

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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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