U S Is Repatriating Funds Accelerating Worldwide Crashes

[Realistbear]

http://www.telegraph.co.uk/money/main.jhtm...5/16/cnus16.xml

US grabs its cash to make a run for it

By Ambrose Evans-Pritchard (Filed: 16/05/2006)

US investors are rushing for exits in risky markets across the world, accelerating an ugly sell-off in Turkey, Indonesia, India, Russia, and Brazil.

The sudden repatriation of funds back to America triggered a rebound in the dollar yesterday, halting the sharp slide that has transfixed financial markets over the past week.

"Risk aversion is taking over the show," said David Bloom, a currency expert at HSBC.

"Americans are pulling their money off the table and bringing it back home to mama. We saw the same repatriation after the 1987 crash

, causing the dollar to rally for two or three days."

Mr Bloom said fears of a dollar collapse had been the chief source of contagion spreading worldwide, compounded by an inflation scare hitting bonds. After rallying 1.03pc against the euro to $1.2807, the slide is likely to resume soon.

Analysts said the global sell-off was a repeat of the

"carry-trade"

unwinding that hit Iceland, New Zealand, and Hungary in April, but now seems to be spreading far wider.

Under the carry-trade, funds can borrow at near zero-rates in Japan to re-lend to double-digit hot-spots such as Brazil.

The lucrative bet can turn sour in a heart-beat

.

Looks like much more pain to come as funds dissappear from world markets and, perhaps, commodoties? Could we be setting up another 1929 scenario? This may account for the irrational spending of the last few months with people willing to borrow even more to fuel their addiction?

[sam]

Looks like much more pain to come as funds dissappear from world markets and, perhaps, commodoties? Could we be setting up another 1929 scenario? This may account for the irrational spending of the last few months with people willing to borrow even more to fuel their addiction?

Hi RB

I really like your posts, honestly

But can you stop constantly building up to a frenzy as if something is likely to happen soon that will bring the whole deck of cards collapsing, you are not the only one i might add.

I tell you what is going to happen with this story

NOTHING

just like the 100's that followed it, SORRY

this is going to be a long drawn out process, years, not months or days.

[Realistbear]

Looks like much more pain to come as funds dissappear from world markets and, perhaps, commodoties? Could we be setting up another 1929 scenario? This may account for the irrational spending of the last few months with people willing to borrow even more to fuel their addiction?

Hi RB

I really like your posts, honestly

But can you stop constantly building up to a frenzy as if something is likely to happen soon that will bring the whole deck of cards collapsing, you are not the only one i might add.

I tell you what is going to happen with this story

NOTHING

just like the 100's that followed it, SORRY

this is going to be a long drawn out process, years, not months or days.

I suggest you direct your complaint to the Telegraph as their article is, I admit, pretty scary! The wires are full of panic stories today and I am assuming you would prefer not to have more posted?

BTW. the Telegraph story is based on a lot more than "NOTHING" happening. Billions are being wiped off stock values worldwide--that's why the Telgraph are covering the story. Its better we know what is going on than to bury our heads in the sand and hope it all goes away. Knowing what is happening has helped me to take evasive action and divest investments into cash and other safe instruments during a time of great losses and turmoil.

[gfromls]

Good find rb, as per norm.

The Ft are running a similar story………but I don’t have the ability

To provide a link.

[Waiting Patiently]

..snip......

this is going to be a long drawn out process, years, not months or days.

Don't kid yourself.

It's happening now, right in front of us. The world will be a much different place by this time next year.

[Magpie]

This may account for the irrational spending of the last few months with people willing to borrow even more to fuel their addiction?

It's an interesting story - it might explain why the dollar bounced back slightly, and if so it implies that at some point the slide will probably continue.

Hard to tell how apocalytic it really is, but the state of the dollar and the US debt is one of the major issues in the world economy that has to unwind somehow over the next few years.

[Time to raise the rents.]

Oh the sqealing, the piggy pain you bears are going through.

Imagine being an STR now! You're watching HPI stats continue to come out & at the same time falling & panicing markets!

I love it!!!!

Muuuuuhhhhaaaahhhaaaa, muuuuuhhhhhaaaahhhhaaaa.........

[Magpie]

Oh the sqealing, the piggy pain you bears are going through.

Imagine being an STR now! You're watching HPI stats continue to come out & at the same time falling & panicing markets!

You're missing the point TTRTR. If markets rise then that proves that house prices are "falling in real terms". Whereas if markets are falling, that'll be the trigger for a house price crash. So the STRs win either way. Brilliant!

Although somehow it never quite seems to mean they can buy a nicer house...

[Time to raise the rents.]

You're missing the point TTRTR. If markets rise then that proves that house prices are "falling in real terms". Whereas if markets are falling, that'll be the trigger for a house price crash. So the STRs win either way. Brilliant!

Although somehow it never quite seems to mean they can buy a nicer house...

They're just trigger happy!

The sound of diarrhoea squelching down their inner legs every time the wind changes springs to mind!

[aussieboy]

This is actually quite interesting... add this to the effects of the Patriot Act on corporations and there's been a signficant inward flow of capital into the US. Not sure how this will affect HPI, though: this may be one of those "mussels in a quarry" tertiary factors.

[Bear Goggles]

They're just trigger happy!

The sound of diarrhoea squelching down their inner legs every time the wind changes springs to mind!

Nooo. You don't get it TTRTR. They're "in it for the long term"

[geneer]

They're just trigger happy!

The sound of diarrhoea squelching down their inner legs every time the wind changes springs to mind!

oh really....i wonder how high rents will be if the economy goes F*ck0.

Edited May 16, 2006 by geneer

[Duplex]

The fan is spinning at maximum, various piles of sh1t are arranged in close proximity to it, no longer if, but when.

Edited May 16, 2006 by Duplex

[Realistbear]

Oh the sqealing, the piggy pain you bears are going through.

Imagine being an STR now! You're watching HPI stats continue to come out & at the same time falling & panicing markets!

I love it!!!!

Muuuuuhhhhaaaahhhaaaa, muuuuuhhhhhaaaahhhhaaaa.........

I am loving the stats for my area: down 8.2% according to the LR--government figures on actual sales!

Papers full of "no upward chain" "price reduced" "new price" "unexpectedly back on the market".

Its a Teddy bears picnic and I just sit back and watch thousand of pounds drop off the price of nice detached homes while my STM funds pay all the bills (80% cash now!).

Soon the panic selling will set in as all those cheap mortgages begin to dissappear and the debt mountain comes home to roost. Maybe pick up some distressed BTLs at the bottom in 2010?

[BandWagon]

I am loving the stats for my area: down 8.2% according to the LR--government figures on actual sales!

RB, can you post a link for using land registry data?

I need to look up some areas.

[Realistbear]

RB, can you post a link for using land registry data?

I need to look up some areas.

http://news.bbc.co.uk/1/shared/spl/hi/in_d...html/houses.stm

[Magpie]

http://news.bbc.co.uk/1/shared/spl/hi/in_d...html/houses.stm

You may like to note how tremendously selective RB's use of the data is, given the terribly small sample sizes and wide variation in results in the surrounding areas. I've just about given up pointing this out, but I might make the odd exception.

It's ironic because he is actually in an area where prices really are falling slightly, but he overspins it to a degree that makes it appear to be untrue.

[BoredTrainBuilder]

You may like to note how tremendously selective RB's use of the data is, given the terribly small sample sizes and wide variation in results in the surrounding areas. I've just about given up pointing this out, but I might make the odd exception.

It's ironic because he is actually in an area where prices really are falling slightly, but he overspins it to a degree that makes it appear to be untrue.

RealistBear is no doubt performing some sort of service: the converted need preachers. I'm sure he or she would accept that the excerpts posted are selective, and therefore a fuller picture requires wider reading and research. And a degree of scepticism. But, a service of sorts no doubt.

I'm impressed at the diligence that goes into this web scouring, and wonder if it wouldn't perhaps be better directed as a means to populate the news blog thing?

[Justice]

Sam

You could be right about "Nothing" but i think RB is right on this one but lets be honest !

No of us knows for sure do we.

TTRTR was right for much longer than any of us had been when it came to timing but even he knows you can not be right all the time.

[Realistbear]

You may like to note how tremendously selective RB's use of the data is, given the terribly small sample sizes and wide variation in results in the surrounding areas. I've just about given up pointing this out, but I might make the odd exception.

It's ironic because he is actually in an area where prices really are falling slightly, but he overspins it to a degree that makes it appear to be untrue.

Falling "slightly?" Come on now that is blatant spin. Down 8.2% is not a slight drop for a single Q.

Deny that the market is chnaging if you like but the figures speak for themselves. BTW I am also watching Waverley in Surrey where I used to live and may move back to--its off 6.4%.

http://news.bbc.co.uk/1/shared/spl/hi/in_d...html/43ul.stm?d

Edited May 17, 2006 by Realistbear

[Magpie]

Falling "slightly?" Come on now that is blatant spin. Down 8.2% is not a slight drop for a single Q.

On a small sample in detached houses only. I think the whole area was down 1 or 2% on the quarter - significant but a lot less dramatic. As I said, I believe there are genuine falls in your area but by cherrypicking one favourable statistic you're discrediting the information.

BTW I am also watching Waverley in Surrey where I used to live and may move back to--its off 6.4%.

On a sample of 173 houses in an area where a wider sample gives 2.2% growth for the quarter. The same page gives 10.3% growth for Epsom, 21.8% for Spelthorne, both on similarly small samples of detached houses! I'm certainly not going to claim that Surrey is up 21.8% on the quarter based on Spelthorne detached, so I don't see any reason to put any weight on the figures for Waverley detached either.

Small samples + Not mix-adjusted = Meaningless.

Edited May 17, 2006 by Magpie

[Realistbear]

On a small sample in detached houses only. I think the whole area was down 1 or 2% on the quarter - significant but a lot less dramatic. As I said, I believe there are genuine falls in your area but by cherrypicking one favourable statistic you're discrediting the information.

On a sample of 173 houses in an area where a wider sample gives 2.2% growth for the quarter. The same page gives 10.3% growth for Epsom, 21.8% for Spelthorne, both on similarly small samples of detached houses! I'm certainly not going to claim that Surrey is up 21.8% on the quarter based on Spelthorne detached, so I don't see any reason to put any weight on the figures for Waverley detached either.

Small samples + Not mix-adjusted = Meaningless.

If you look at the largest samples: Woking (-2.6%), Waverley(-6.4%), Mole Valley(-4.8%), Elmbridge (-1.1%), Reigate (-1.1%) and Surrey Heath (-0.8%) you see a pattern: Prices are falling in nearly all of the larger sample areas of Surrey and higher priced houses are leading the way down.

Cheaper Terraced properties seem to be doing a little better with smaller drops:

Waverley £214,394 -2.9% 106

Woking £204,486 -0.6% 88

Surrey Heath £204,036 -2.7% 57

Spelthorne £202,322 -4.7%

The only thing we can conclude is that there is some price falls at both ends of the market in some of the larger sample areas. Affordability, a softening employment trend and higher IR may continue to undermine the market as the cycle progresses.

Edited May 17, 2006 by Realistbear

[Magpie]

The only thing we can conclude is that there is some price falls at both ends of the market in some of the larger sample areas. Affordability, a softening employment trend and higher IR may continue to undermine the market as the cycle progresses.

You should spin for New Labour, they need someone of your indefatigable ability right now.

The sample sizes are all small, the difference between 85 and 210 is not enough to turn the latter into a significant sample. And I see you've missed out Guildford because it doesn't fit your thesis (rising 3.7% on one of the largest samples).

You only need to look at the wide variation of results to see how meaningless these samples are. They are half positive, half negative with results ranging from over 20% +ve to 6.4% -ve. In a sample of a couple of hundred, one £2 million house sale more or less can swing the results by several per cent, which is why the lack of mix-adjustment is such a problem here.

You can't really draw any conclusion from these figures, except maybe that there is fractionally more stagnation and downward movement in the higher price brackets. The overall Surrey picture (which is a big enough sample to be significant) is a quartely rise of 2%. Poring over the town figures for further enlightenment is pretty much a complete waste of time.

[Realistbear]

You should spin for New Labour, they need someone of your indefatigable ability right now.

The sample sizes are all small, the difference between 85 and 210 is not enough to turn the latter into a significant sample. And I see you've missed out Guildford because it doesn't fit your thesis (rising 3.7% on one of the largest samples).

You only need to look at the wide variation of results to see how meaningless these samples are. They are half positive, half negative with results ranging from over 20% +ve to 6.4% -ve. In a sample of a couple of hundred, one £2 million house sale more or less can swing the results by several per cent, which is why the lack of mix-adjustment is such a problem here.

You can't really draw any conclusion from these figures, except maybe that there is fractionally more stagnation and downward movement in the higher price brackets. The overall Surrey picture (which is a big enough sample to be significant) is a quartely rise of 2%. Poring over the town figures for further enlightenment is pretty much a complete waste of time.

The significance is, IMO, that the most expensive areas are dropping by the highest amounts. Waverley encompasses some of the biggest and wealthiest homes in England which suggests that the big money may not be buying into the top of the market. Guildford is the only large area that showed a gain and 2% is not that strong given the double digit rises of the HPI years. The majority of the areas show falls and it is difficult to spin this around to show an overall rise for detached in this part of Surrey--possibly the most exoensive property in England outside London.

During the Great Crash (late 1990) I bought a house in Waverley District for 189k. It had sold to the previous owners in about 1986 for around 260k. These areas sustain some considerable damage in HPCs and my guess is that the 8.2% fall last quarter may be just the beginning of another in a long history of price drops following a bubble. IF you take the average house in an upscale area at about 600k a 8.2% drop represents a large loss of equity at around 50k. A 35% correction at the same magnitude of the Great Crash will see 210k wiped of a 600k house.

[Magpie]

The significance is, IMO, that the most expensive areas are dropping by the highest amounts.

Not really borne out by the figures. Of the six most expensive towns for detached 3 are moving up, 3 are moving down by similar degrees.

I'll try to stop going on about it now as I'm getting boring, but I think you could find evidence to support pretty much any argument in those figures because they are so utterly random and insignificant.

The original thread was more interesting anyway. If the US is bringing a load of cash home, I wonder how long the process will last and what will happen to the dollar once that prop is taken away...