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Newsweek: Easy Money Is Gone - Global Sell Off Worsening

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http://msnbc.msn.com/id/13121960/site/newsweek/

Dump and Run

The easy money is gone. Goldilocks has vanished. And the result, a frenzied sell-off in global markets, may be the harbinger of something worse to come.

By Karen Lowry Miller

Newsweek International

June 12, 2006 issue - The United States had enjoyed a Goldilocks economy: not too hot, and not too cold, but just right. Growing, but not so fast as to spark inflation. Then the May mayhem ended that fairy tale. Emerging markets tanked, commodities plummeted and stocks in the United States and Europe gyrated on fear that central bankers may have to continue to raise interest rates to fight inflation. If rates go too high, the economy could cool off fast. "Goldilocks has gone missing," says London market strategist Pelham Smithers.
This turmoil also marks the end of another fantasy of sorts: the easy money created by years of historically low interest rates. After the dot-com bubble burst in 2000, the U.S. Federal Reserve cut rates to 1 percent by June 2003, unleashing a torrent of super
cheap loans
that sent money sloshing into one asset class after another—stocks, bonds,
real estate
, commodities.
"It is virtually impossible to correct the imbalances without a deep global recession," says Fels. "We are still prisoners of past deeds." Maybe the worst is yet to come.

The new era of popping asset bubbles and rising IR do not bode well for "Miracle Economies" where wealth has been based on borrowing.

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A lot of the building work that has been part of the HPI miracle has been funded by MEW at cheap rates. Talking to a bloke the other day at my son's cricket match who is a well known local builder (lived here all his life, knows half the people in the town). He was bemoaning the current lack of work - and said that a lot of people he knows (roofers, plumbers, landscapers, brickies etc etc) were experiencing the same thing. Funnily enough he used exactly the same expression as in the title of this thread - he said 'there's no more easy money about - I think we're in for a bit of a recession'.

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A lot of the building work that has been part of the HPI miracle has been funded by MEW at cheap rates. Talking to a bloke the other day at my son's cricket match who is a well known local builder (lived here all his life, knows half the people in the town). He was bemoaning the current lack of work - and said that a lot of people he knows (roofers, plumbers, landscapers, brickies etc etc) were experiencing the same thing. Funnily enough he used exactly the same expression as in the title of this thread - he said 'there's no more easy money about - I think we're in for a bit of a recession'.

and yet the bbc news this morning reported that there is a labour crisis in the building trade, with over 300k workers needed in order to complete all the necessary building projects which are required to meet the demand for, amongst other things affordable housing.

i'll admit that when i heard this i thought '********!' and couldn't decide whether it was spin for the benefit of house owners ('all is well in the housing market - demand is high') or to justify the next wave of european immigrants who will inevitably fill these building trade posts...

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and yet the bbc news this morning reported that there is a labour crisis in the building trade, with over 300k workers needed in order to complete all the necessary building projects which are required to meet the demand for, amongst other things affordable housing.

i'll admit that when i heard this i thought '********!' and couldn't decide whether it was spin for the benefit of house owners ('all is well in the housing market - demand is high') or to justify the next wave of european immigrants who will inevitably fill these building trade posts...

A little of both I expect.

One thing for sure though, we don't actually *need* those immigrants for the building trade. Everyone I know working in construction (except PFI contracts) seems to have seen work falling off.

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A little of both I expect.

One thing for sure though, we don't actually *need* those immigrants for the building trade. Everyone I know working in construction (except PFI contracts) seems to have seen work falling off.

Home building projects seem to be falling off also if the B & Q, MFI news is attributed to less spending on homes.

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and yet the bbc news this morning reported that there is a labour crisis in the building trade, with over 300k workers needed in order to complete all the necessary building projects which are required to meet the demand for, amongst other things affordable housing.

i'll admit that when i heard this i thought '********!' and couldn't decide whether it was spin for the benefit of house owners ('all is well in the housing market - demand is high') or to justify the next wave of european immigrants who will inevitably fill these building trade posts...

During the last recession, my (step)father worked for £30-40 per day...

Now, he wont get out of bed for less than 200 per day... which means, it must be different this time... is it?

Supply and demand will force down these wages, and where does that leave the bills? who is gonna pay them?

no building jobs in Germany anymore....any one remember "auf weidersein pet", earning a £1k + week.

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You lot must live in a different world to me - in the North, there is building going on everywhere, whether it be factories, offices, houses, roads etc.

Then we'll talk about the Thames gateway, Olympics etc etc - you see, there is an enormous boom going on and it isn't going to stop. Net 250,000 immigrants a year.

Last year our delightful Government granted 1,000,000 people British citizenship ..... all those illegals, over stayers who have been here for years. Well once its legal for you to be here, then you might as well go and buy a house.

Now, I detest all this as it is the road to self destruction in my opinion (yes, I know, I'm about the only person who believes this), but it underpins the growth of the economy and HOUSE PRICES. You lot might not like it, but its booming out there.

Sorry to say this yet again, (the honest ones on here will know I'm telling the truth) but asking prices are rising rapidly round here. There have been many many properties coming on and selling for even higher prices. There have been very, very few drops and several where properties have had their asking prices hiked.

...... and still not an IR rise in sight.

HPC - not a snowballs chance in hell of a HPC.

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Guest The_Oldie

HPC - not a snowballs chance in hell of a HPC.

Brave words, time will tell though <_<.

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Guest Alright Jack

"It is virtually impossible to correct the imbalances without a deep global recession," says Fels. "We are still prisoners of past deeds." Maybe the worst is yet to come. [/indent]

The new era of popping asset bubbles and rising IR do not bode well for "Miracle Economies" where wealth has been based on borrowing.

Well, I have been learning a little about the stuff you people have been talking about and from what I can make out the situation is this,

There are three broad groups of people in this world.

A) Those who are in debt.

B) Those who hold the notes of A

C) Those with the wealth. i.e the industrial capitol and or tangible assets including real estate and precious metals.

The problem: It is blatently clear that A are already bankrupt and thus a huge default is on its way (it is already playing out at the moment behind fraudulent government figures such as the CPI) This means that both groups A, and B - which account for an awful large proportion, perhaps 50% or more - are monumentally f**ked, leaving group C sat on the beach laughing.

This default will occur in one of two ways, 1) RUN on the banking system leading to deflationary implosion or, most probably, as the result of officials to attempt to prevent [1] 2) a RUN against the banking system itself, i.e a RUN on the dollar and effectively the others given the never ending cycle of competitive devaluation in the name of export led growth.

Is this pretty much the way you guys see it?

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Well, I have been learning a little about the stuff you people have been talking about and from what I can make out the situation is this,

There are three broad groups of people in this world.

A) Those who are in debt.

B) Those who hold the notes of A

C) Those with the wealth. i.e the industrial capitol and or tangible assets including real estate and precious metals.

...Is this pretty much the way you guys see it?

its a scenario, sure, and one that works for those of us with rapidly accumulating piles of cash.

If it topples over into hyperinflation and currency devaluation though, it aint so rosy.

Either way, the UK economy if fcuked - its just that in one of the possible outcomes, WE get to benefit at last, in the other, we get punished along with (and indeed because of) the profligate amatuer entrepreneurs such as TTRTR, property gnu etc.

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During the last recession, my (step)father worked for £30-40 per day...

Now, he wont get out of bed for less than 200 per day... which means, it must be different this time... is it?

Supply and demand will force down these wages, and where does that leave the bills? who is gonna pay them?

no building jobs in Germany anymore....any one remember "auf weidersein pet", earning a £1k + week.

In the last recession I was a project manager in construction. I observed brickies wages go from £80 a day 'any chancer can have a start because I can't get any trowels' to £40 a day 'if you don't like it you can do something rude - there's plenty more lined up willing to work for that money.' This occurred over about a 6 month to 12 month period. I remember being on one job and the brickwork was almost finished. The subby, for the first time in years, was having to lay the lads off rather than move them on to the next job. So the lads were nipping out from time to time to sniff out the next bit of work. I remember one of them, nice steady bloke, had him on my jobs on and off for about 10 years, 3 kids ... saying '£40 a day he offered me. I told him I'm on £80 at the moment and he told me if I don't like it ... ' He then went on to say 'I can't even pay my mortgage on that.'

There is nothing new under the sun - apart from the huge dis-information service now provided by the media. It really is hard to know what or who to believe. But people thinking this is just going to carry on forever and ever with ever-increasing debt are fooling themselves.

When it collapses, it will be more catastrophic than the early 90s.

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I was talking to a couple mates over the weekend.

One has just bought a new off plan house, having traded in his current place, the other works in the 'trade'.

To listen to the one who had bought you would have thought the market was booming, the other stated he had no work for months to come.

It is all starting sound very familier

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A lot of the building work that has been part of the HPI miracle has been funded by MEW at cheap rates. Talking to a bloke the other day at my son's cricket match who is a well known local builder (lived here all his life, knows half the people in the town). He was bemoaning the current lack of work - and said that a lot of people he knows (roofers, plumbers, landscapers, brickies etc etc) were experiencing the same thing. Funnily enough he used exactly the same expression as in the title of this thread - he said 'there's no more easy money about - I think we're in for a bit of a recession'.

As a suveyor Marina, I can confirm everything you have said, things have gone quiet, it's always the first to go the building industry, first to pick up as well

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I find it quite profound when some statistician says we need 'x' construction workers. Let's take plumbers for example. A few years ago it seemed that we were short of 40,000 plumbers give or take a couple of hundred thousand. Fast-forward to today and there's a glut of poorly paid apprentices knocking about.

We are also told that there is a shortage of houses in this country. Really? How did we manage to house 330,000 Polish workers then?

With ever-increasing taxation, a volatile stockmarket, bad-debts hitting bank profits and oil increases hitting growth things are not going to get better.

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The industry puts these figures out every now and again, of course it's all BS, like the millionaire plumber stories, in the 80's it was millionaire hod carriers, and when it gone pear shaped, they go and hide their embarrassment, as there is no work for anyone

The building industry is a very good barometer of the prevailing economic sentiments, a couple of years ago, I was earning a very good part time income drawing up extensions etc, for people who had re-mortgaged their houses. There is nothing about now

Edited by Robbrent

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I still personally believe there will be a big bounce in shares this Summer - the World Cup affect - and all the pundits will be looking back at the recent falls and laughing at them.... then, as in 1929, the BIG crash will come sometime in late October to November.

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You lot must live in a different world to me - in the North, there is building going on everywhere, whether it be factories, offices, houses, roads etc.

Then we'll talk about the Thames gateway, Olympics etc etc - you see, there is an enormous boom going on and it isn't going to stop. Net 250,000 immigrants a year.

Last year our delightful Government granted 1,000,000 people British citizenship ..... all those illegals, over stayers who have been here for years. Well once its legal for you to be here, then you might as well go and buy a house.

Now, I detest all this as it is the road to self destruction in my opinion (yes, I know, I'm about the only person who believes this), but it underpins the growth of the economy and HOUSE PRICES. You lot might not like it, but its booming out there.

Sorry to say this yet again, (the honest ones on here will know I'm telling the truth) but asking prices are rising rapidly round here. There have been many many properties coming on and selling for even higher prices. There have been very, very few drops and several where properties have had their asking prices hiked.

...... and still not an IR rise in sight.

HPC - not a snowballs chance in hell of a HPC.

Some would wish that it were so. Sadly, house prices up north are coming down dramatically according to the Land Registry figures. A sample of homes accross the North demonstrates that some (some) areas are already in a crash trend:

http://news.bbc.co.uk/1/shared/spl/hi/in_d...l/region2.stm?d

York £146,152 -5.0%

Warrington £261,344 -9.4%

Halton £222,722 -3.9%

East Riding Of Yorkshire £154,431 -4.5%

North Lincolnshire £122,869 -2.7%

Blackburn With Darwen £187,902 -9.4%

North East Lincolnshire £72,734 -10.2%

Northumberland £149,225 -8.8%

Redcar And Cleveland £109,289 -11.2%

Hartlepool £98,770 -5.2%

Darlington £201,247 -8.7%

On the basis of the above it seems that its grim up north.

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I find it quite profound when some statistician says we need 'x' construction workers. Let's take plumbers for example. A few years ago it seemed that we were short of 40,000 plumbers give or take a couple of hundred thousand. Fast-forward to today and there's a glut of poorly paid apprentices knocking about.

We are also told that there is a shortage of houses in this country. Really? How did we manage to house 330,000 Polish workers then?

With ever-increasing taxation, a volatile stockmarket, bad-debts hitting bank profits and oil increases hitting growth things are not going to get better.

Some thoughts:

- We probably did need plumbers, but the market overcompensated in its usual rabbits and foxes way.

- The forecast shortage of housing figures assumeds that people live like, er, people with a bedroom each, single family residence etc. Many of the Polish builders economise on accommodation and live in less than palacial circumstances.

- The economy is actually going quite well... hence everyone's excitement re interest rate rises.

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You lot must live in a different world to me - in the North, there is building going on everywhere, whether it be factories, offices, houses, roads etc.

Then we'll talk about the Thames gateway, Olympics etc etc - you see, there is an enormous boom going on and it isn't going to stop. Net 250,000 immigrants a year.

Last year our delightful Government granted 1,000,000 people British citizenship ..... all those illegals, over stayers who have been here for years. Well once its legal for you to be here, then you might as well go and buy a house.

Now, I detest all this as it is the road to self destruction in my opinion (yes, I know, I'm about the only person who believes this), but it underpins the growth of the economy and HOUSE PRICES. You lot might not like it, but its booming out there.

Sorry to say this yet again, (the honest ones on here will know I'm telling the truth) but asking prices are rising rapidly round here. There have been many many properties coming on and selling for even higher prices. There have been very, very few drops and several where properties have had their asking prices hiked.

...... and still not an IR rise in sight.

HPC - not a snowballs chance in hell of a HPC.

Just how far up north are you?

I live between the yorkshire dales national park and north york moors national park, the supposed boom areas. House prices here are way above most of the places on here that people state, 3 bed houses around £185,000 - £210,000 but the market is stagnant and prices are dropping everywhere not by much but by enough to make noticeable my friends mother is desperate to emigrate so has knocked £20k off a £185,000 valuation over the last 6 months and no ones looked for the past 2 months. I work in the construction industry and can see what is going on behind the scenes its not a good sign, the industry is quiet just because things are being built it doesnt mean there busy. How many workers do you see? a lot? if so that means they are quiet as usually companys use minimal man power to keep jobs moving and the customers happy, whilst doing a lot of other work. There is no skills shortage at the moment!

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You lot must live in a different world to me - in the North, there is building going on everywhere, whether it be factories, offices, houses, roads etc.

Then we'll talk about the Thames gateway, Olympics etc etc - you see, there is an enormous boom going on and it isn't going to stop. Net 250,000 immigrants a year.

Last year our delightful Government granted 1,000,000 people British citizenship ..... all those illegals, over stayers who have been here for years. Well once its legal for you to be here, then you might as well go and buy a house.

Now, I detest all this as it is the road to self destruction in my opinion (yes, I know, I'm about the only person who believes this), but it underpins the growth of the economy and HOUSE PRICES. You lot might not like it, but its booming out there.

Sorry to say this yet again, (the honest ones on here will know I'm telling the truth) but asking prices are rising rapidly round here. There have been many many properties coming on and selling for even higher prices. There have been very, very few drops and several where properties have had their asking prices hiked.

...... and still not an IR rise in sight.

HPC - not a snowballs chance in hell of a HPC.

It was booming, as some one who works in the industry I can tell you that it has died down a lot of late, many of th ebig public projects are coming to an end, and yes i do live in the north

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  • 302 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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