Bad Debt, Unemployment, Oil $80+, Boj, Infaltion Concerns

[sam]

Pick up a newspaper these days and it is full of articles about Debt, rising energy costs, a weakening economy.

Today the BoJ have started raising rates(the rest of the world already doing so, figures show unemployment rising again, tensions in the middle East now have oil chasing $80 a barrel, who knows it could go $90 or even $100 in the next few weeks.

We have no stability with the present Government, it is just a pantomine with the likes of Prescott clinging on, we have T.Howell dumping her dodgy husband who is facing trial(loyal woman), Lord Levy arrested, and Tony Blair himself hoping to cling on for the magic 10 years in power, and WHY, because 10 years looks good in the history bookes and is better than Maggie Thatcher, the Labour party stinks to high heaven.

The Banks are starting to panic about bad loans, some could even have their profits wiped out by them, some could even be finished off completely. There just is no good news at all for the Great Miracle economy, SO WHY is this f***ing property market holding up so well, No seriously, it's resilience is amazing.

I can understand private property owners sat there with their heads stuck in the sand, but i see no signs whatsoever that BTL are starting to panic.

It will happen, it has to happen, but just do'nt tell me that everyone is not supprised that this has gone on for so long when the rest of the economy is going ti*s up.

Sam

[HovelinHove]

BTL, immigration, loose lending policies are all responsible. If most BTL investors are boomers who can afford to subsidise a period of low yields, then there won't be a crash in this sector of the market, but if the majority are like the woman on the BBC debt diary site, then there will be a massive crash in the BTL market. Where I live is a prime example of somewhere that could really suffer. Recently there was a massive buy up of all the apartments for sale, within a few months all the sold boards have been replaced by To Let boards. If these boards are still there in six months, then we'll know whether these people can afford to have long voids, but if we start seeing lots of for sale boards, then we'll know they can't. If they all get let, then the chances of a crash recede IMO, and we will have seen a permanent change in the market from young owner occupiers, to Landlord owned property and our generation will have been robbed by a bunch of greedy old ******* who want it all and I'm leaving this country. Instead of their own children they'll have Poles and Bulgarians as neighbours.

Edited July 14, 2006 by HovelinHove

[Jason]

"God this property market is resilient"

I'd say it's 'laggy'

[Realistbear]

We have a chancellor whose rise to fame has been based on creating a sense of wealth through HPI and MEW. He has fostered a booming market by taking advanatge of a very unique period in the history of economics when money was incredibly cheap. The Japanese have been flooding the world with cheap money for several years and the UK, the US and a few others have been taking full advantage of it through reflating economies with cheap credit.

It is taking a LONG TIME for the process to reverse itself. The Fed has been hiking steadily for several years and the effects only started to impact the hot property markets in early 2005 (California only just registered its first negative YoY figures in a DECADE). Gordon has been hiking also but reversed himself last year which has given the housing market fresh legs to press on for awhile longer. His appoinment of 2 doves on the MPC may buy him another 6 months or so--who really knows.

War, Oil, unemployment, inflation are all factors that SHOULD be causing HPI to reverse itslef but they are not impacting house prices much all the time the cheap credit tap is flowing. People can just borrow themselves out of trouble as they are doing in N Ireland (see thread). The Panorama programme highlighted the extent of the problem--the worse your debt the more the banks will loan you. Thus consumers can stay one step ahead of the bankruptcy court because there are no limits on what they can borrow. Yet.

Can it continue? The market always wins and an economy based on HPI and MEW is headed for a disaster the size of which we have never seen in this country.

[Clouseau]

We have a chancellor whose rise to fame has been based on creating a sense of wealth through HPI and MEW. He has fostered a booming market by taking advanatge of a very unique period in the history of economics when money was incredibly cheap. The Japanese have been flooding the world with cheap money for several years and the UK, the US and a few others have been taking full advantage of it through reflating economies with cheap credit.

It is taking a LONG TIME for the process to reverse itself. The Fed has been hiking steadily for several years and the effects only started to impact the hot property markets in early 2005 (California only just registered its first negative YoY figures in a DECADE). Gordon has been hiking also but reversed himself last year which has given the housing market fresh legs to press on for awhile longer. His appoinment of 2 doves on the MPC may buy him another 6 months or so--who really knows.

War, Oil, unemployment, inflation are all factors that SHOULD be causing HPI to reverse itslef but they are not impacting house prices much all the time the cheap credit tap is flowing. People can just borrow themselves out of trouble as they are doing in N Ireland (see thread). The Panorama programme highlighted the extent of the problem--the worse your debt the more the banks will loan you. Thus consumers can stay one step ahead of the bankruptcy court because there are no limits on what they can borrow. Yet.

Can it continue? The market always wins and an economy based on HPI and MEW is headed for a disaster the size of which we have never seen in this country.

Fine post - ie, what we have is LEVITATION - you DO believe in levitation?..

[zag2me]

Sure its resiliant, thats because:

- Low interest rates

- Massive Demand

- Unlimited immegration

- Increase in 2nd Homes

- Huge rise in divorce rates

- Strong Economy

- Nearly full employment

Those are some pretty fundemental factors you have to consider.

[Broken Fan]

Sure its resiliant, thats because:

- Low interest rates

- Massive Demand

- Unlimited immegration

- Increase in 2nd Homes

- Huge rise in divorce rates

- Strong Economy

- Nearly full employment

Those are some pretty fundemental factors you have to consider.

They dont look like fundamentals to me. The only fundamental thing in our economy is debt, and at the moment low interest rates. Take away the debt and see how strong our economy is, how many jobs depend on that debt, how many second homes have to be sold to pay that debt.. Effectively from today Japan is asking for its money back.

[OzzMosiz]

Sure its resiliant, thats because:

- Unlimited immegration

load of tosh! Everything has a limit

- Huge rise in divorce rates

bullsh** its no different than 10 years ago!!!

- Strong Economy

based on debt and borrowing

- Nearly full employment

Those are some pretty fundemental factors you have to consider.

[dogbox]

SO WHY is this f***ing property market holding up so well, No seriously, it's resilience is amazing.

Sam

Sam, another factor the old fashioned bears have'nt grasped yet is this:

Bad debt is no longer a stigma.

Nowadays, loosing £20000 is nothing, just one of those things.

The new RISK TAKING CULTURE (RTC - REMEMBER YOU HEARD THIS PHRASE HERE FIRST FOLKS) is here to stay.

One of my Brothers is totaly risk averse. He is approaching 40 and very unhappy as he sees another 25 years of wage slaving ahead.

Edited July 14, 2006 by dogbox

[HovelinHove]

Risk culture won't last when banks see their profits wiped out. Whose money can people risk then? Not their own as they don't have any.

[Marina]

I was in a little group of parents at a school play last night - and one of them was quizzing another up on where she was living now - knowing that she had moved recently.

In fact it turns out she has moved twice recently. The first time I reckon she added 100k to the mortgage. I didn't know she had moved since and she revealed that they had spent £325k on the 'first move' - it would be about a year ago and, when she moved again recently, got 350k for it, without lifting a paintbrush which, as she said, was 'okay' as it covered the estate agent's fees and stamp duty. They have moved up again, to just under 400k, so in the last year have added a total of 150k to their mortgage.

I was on the verge of saying 'wow, do you think that's a good idea in this present climate? but watching her face as she was telling her friends about the 5 beds and this room and that room .... I realised she would simply think I was nuts if I mentioned the potential for property to come down etc.

Anyway, they've bougth the house to put a roof over their heads and, if the economy goes tits up, they won't be bothered unless they can't earn enough money to pay the mortgage. Otherwise, they'll just hang on until it turns around again.

Oddly, her husband runs his own building business - yet they cannot see bad times ahead even though about a year ago things did quieten. Now they are buzzing again. The borrowing spree continues.

SO WHY is this f***ing property market holding up so well, No seriously, it's resilience is amazing.

Sam

Sam, another factor the old fashioned bears have'nt grasped yet is this:

Bad debt is no longer a stigma.

Nowadays, loosing £20000 is nothing, just one of those things.

The new RISK TAKING CULTURE (RTC - REMEMBER YOU HEARD THIS PHRASE HERE FIRST FOLKS) is here to stay.

One of my Brothers is totaly risk averse. He is approaching 40 and very unhappy as he sees another 25 years of wage slaving ahead.

Isn't that woman writing a debt diary on the BBC a good example of the new Risk Taking Culture? I think people like her actually see themselves as entrepreneurs - but that is another argument. They took risks, they borrowed big to buy a few BTLs and now she is pregnant and lost her job, the house of cards built on risk is about to come tumbling down. She took a risk and it looks like it will cost her dearly.

It's more about luck than risk. People who bought some BTLs in 2000 got lucky. If 9/11 had never happened, credit would never have become so cheap and the housing boom would, to some extent, not have happened. I think for property owners in general, 9/11 was the best bit of luck they've ever had.

Edit: Actually, when I think about it - it is also about greed and desperation. Some people are just plain greedy - they don't want to work for a living so they think they can take a 'risk-free' risk (as it were) by buying property. Others realize their pension plans are non-existent and, again, think a 'risk-free' investment in property is the answer.

Edited July 14, 2006 by Marina

[Casual Observer]

SO WHY is this f***ing property market holding up so well, No seriously, it's resilience is amazing.

Sam

Sam, another factor the old fashioned bears have'nt grasped yet is this:

Bad debt is no longer a stigma.

Nowadays, loosing £20000 is nothing, just one of those things.

The new RISK TAKING CULTURE (RTC - REMEMBER YOU HEARD THIS PHRASE HERE FIRST FOLKS) is here to stay.

One of my Brothers is totaly risk averse. He is approaching 40 and very unhappy as he sees another 25 years of wage slaving ahead.

Another factor is the establishment of a new breed of property investor. I have lost count of the number of youngsters who already own a BTL, or are planning to invest in one.

As soon as prices dip, in they will come. And don't tell me they won't buy into a falling market - they did post 2004. Their only criterion will be " can I afford the repayments once I've received the rent"

It's a new feature of the market, one I've never lived through before

[right_freds_dead]

SO WHY is this f***ing property market holding up so well, No seriously, it's resilience is amazing.

because the property market is all thats left. its an essex car boot sale on a massive scale. TTRTT and lauriejohn are the types to get there at 5 am. grizzled, wooly hatted hardcore car booters. snatch all the bargains and then encourage others to waste money on the remaining worthless tat.

not too long ago we would actually do the work. we would get up early and do manual work. make cars. boats, steel. mine coal ect.

nowadays when you leave school you dont make anything. you work in the supply chain of another countries exports until the money runs out.

then it goes sh1t shaped.

[faloos]

because the property market is all thats left. its an essex car boot sale on a massive scale. TTRTT and lauriejohn are the types to get there at 5 am. grizzled, wooly hatted hardcore car booters. snatch all the bargains and then encourage others to waste money on the remaining worthless tat.

not too long ago we would actually do the work. we would get up early and do manual work. make cars. boats, steel. mine coal ect.

nowadays when you leave school you dont make anything. you work in the supply chain of another countries exports until the money runs out.

then it goes sh1t shaped.

Could not agree more !!

[Levy process]

Anyway, they've bougth the house to put a roof over their heads and, if the economy goes tits up, they won't be bothered unless they can't earn enough money to pay the mortgage. Otherwise, they'll just hang on until it turns around again.

So they won't be bothered that if they'd waited, they could have bought the same house for less, and had a lot more spare cash? I don't understand. If they bought a new car, and next week car prices were slashed by 50%, would they "not care, because they had a nice new car to drive in"? They obviously don't care about getting value for money when they buy anything. The way you describe them makes them sound like idiots.

[faloos]

BTL, immigration, loose lending policies are all responsible. If most BTL investors are boomers who can afford to subsidise a period of low yields, then there won't be a crash in this sector of the market, but if the majority are like the woman on the BBC debt diary site, then there will be a massive crash in the BTL market. Where I live is a prime example of somewhere that could really suffer. Recently there was a massive buy up of all the apartments for sale, within a few months all the sold boards have been replaced by To Let boards. If these boards are still there in six months, then we'll know whether these people can afford to have long voids, but if we start seeing lots of for sale boards, then we'll know they can't. If they all get let, then the chances of a crash recede IMO, and we will have seen a permanent change in the market from young owner occupiers, to Landlord owned property and our generation will have been robbed by a bunch of greedy old ******* who want it all and I'm leaving this country. Instead of their own children they'll have Poles and Bulgarians as neighbours.

I spent 10 years in Dubai and came back 6 months ago to all this mahem!! I am already looking to go back as this country is on the ropes and they are very frayed.

I hope you have good luck in finding a job abroad as I dont blame you.

People that are coming into this country have a culture of haveing lots of children they will breed like rabbits , to give them security. The pressure this is going to put on our services will be immense and they will crack.

Faloos

[Killer Bunny]

Gordon has been hiking also but reversed himself last year which has given the housing market fresh legs to press on for awhile longer.

Yes of course, the MPC does exactly what GB wants.

"Hello Mervyn. Its The Chancellor here. Cut the rates"

"Right-oh, Chancellor. Ladies and Gentlemen - we've to cut the rates. All votes Aye...?"

FFS

fp

[Realistbear]

Yes of course, the MPC does exactly what GB wants.

"Hello Mervyn. Its The Chancellor here. Cut the rates"

"Right-oh, Chancellor. Ladies and Gentlemen - we've to cut the rates. All votes Aye...?"

FFS

fp

I am afraid you are right. Brown knows how to stack the deck to get the result he wants. Good thing Parliament are going to investigate his so-called "independent" bank:

http://news.independent.co.uk/business/new...icle1174372.ece

Brown's two MPC newcomers may tilt balance away from rate rise

By Philip Thornton, Economics Correspondent

Published: 14 July 2006

Gordon Brown finally unveiled the names of the two economists who will fill the long-standing vacancies on the Bank of England's interest rate committee - although they will not bring it back to full strength until October.

...../

The Chancellor praised his two selections yesterday. "Their extensive experience will enable them to make an invaluable contribution to the work of the committee," he said.

Analysts scoured the records of the two men to see how their appointment would affect the balance of views on the committee.

Mr Walton was seen as a "hawk" on inflation after voting twice for a rise in rates and analysts said the appointment of Mr Sentance, who has a career in industry, could tip the balance away from a rate rise.

Before joining BA, Mr Sentance spent seven years as a senior economist at the CBI. Alan Clarke, an economist at BNP Paribas, said: "Sentance comes from industry - ex-CBI and BA - and is hardly likely to be an inflation nutter, so a

dovish swap for Walton."

Economists also pointed to his role on a shadow MPC run by The Times, where he called for a rate cut in March and April. At the July meeting he voted to keep rates on hold. "Interest rates may need to rise at some point, but not yet," he said.

...../

Analysts said Professor Besley's stance on monetary policy was not immediately apparent from his academic writings. He is a director of the Economic Organisation and Public Policy Programme at the LSE that tries to develop policies and developing institutions capable of reducing poverty and enhancing growth.

Last year Professor Besley was awarded the Yrjo Jahnsson Award to a European economist under 45. The Treasury said it was the most prestigious award in European economics, and was the European equivalent of the American Clark medal.

Malcolm Barr, UK economist at JP Morgan, said: "Neither his research interests, nor a quick scan of his published work, reveal much about how we may think about his voting behaviour in the future."

The issue of the appointment process is unlikely to go away as MPs on the Treasury Select Committee plan to launch an investigation next year.

In the Commons yesterday, the Conservative Mark Hoban said appointments were being made "furtively behind closed doors on the whim of the Chancellor". For the Liberal Democrats, Julia Goldsworthy said Bank independence had been "compromised by the direct control you exercise on appointments".

The BoE's "independence" may have fooled some but not everyone is convinced. He who appoints also controls.

[sam]

SO WHY is this f***ing property market holding up so well, No seriously, it's resilience is amazing.

Sam

Sam, another factor the old fashioned bears have'nt grasped yet is this:

Bad debt is no longer a stigma.

Nowadays, loosing £20000 is nothing, just one of those things.

The new RISK TAKING CULTURE (RTC - REMEMBER YOU HEARD THIS PHRASE HERE FIRST FOLKS) is here to stay.

One of my Brothers is totaly risk averse. He is approaching 40 and very unhappy as he sees another 25 years of wage slaving ahead.

Do you really think so Dogbox, you try fleecing me out of £20000 after i have done a good job for you and see if i just shrug me shoulders.

What you call being risk averse i call stealing in some cases.

[right_freds_dead]

200k is 40x what the largest amount most people will actually hold in their hands their whole lives.

most people would do almost anything for just 5k.

id say just the cash sum of £5,000 pounds in £20 notes would turn any good girl bad for a night.

this is how that guy at stringfellows does it.

Edited July 14, 2006 by right_freds_dead