The Vi's Are Winning...

[HAL]

Being a bear I thought I'd post a bullish post for a change....

Seems that quite a few posters have noticed that the VI tactic of hyping HPI and the market in between MPC decisions only miraculously to do a bout face turn a few days before the MPC decision and then say the opposite.

The thing is that this seems to be working for the VI's.

Now there is no denying that the houseing market has reached a truly unbelievable level - much more than I would have imagined - I thought that 2 years ago it was outrageous now its unbelievable!

Does it mean that the MPC is complicit and is infact more driven by their second target (economic growth probably proped up by HPI) - if that is the case then we have more inflation to follow and maybe even more house price growth as a result.

It may all go pop tomorrow - but I can't see it - the MPC have no exit strategy - other than to engineer a soft landing and their only strategy for this is to ignore inflation or just pay lip service to it with the odd .25% rate hike that is not even ruffling the feathers of speculators never mind hurting them.

At the same time you get the sense that the MPC has its hand on the lower IR button if things even remotely look like it may be stalling.

What is wrong with the above? And if there is nothing wrong then are we all betting against the odds?

BTW I still have the sense that says we are in a bubble and alll bubbles pop - but I want to reason.

HAL

[Warwickshire Lad]

It may all go pop tomorrow - but I can't see it - the MPC have no exit strategy - other than to engineer a soft landing and their only strategy for this is to ignore inflation or just pay lip service to it with the odd .25% rate hike that is not even ruffling the feathers of speculators never mind hurting them.

I'm a bear too - have been for nearly 2 years now - but I see exactly where you're coming from. The BoE must be giving themselves a pat on the back right now.

However, we won't be immune to outside events, I think now that maybe US troubles (they are in HPC mode now) and things outside the BoE's control could kick things off here.

Here's hoping...

[crashmonitor]

I agree that the Mpc has been complicit in the present housing bubble.They have seemingly run to the tune of the VIs and panicked,as in August 2005,when things lookeg grim.That move instead of saving prices from toppling off a cliiff face sent them back up the f***ing mountain.

[PropertyGuru]

well they just screwed up then, didnt they? 1% August inflation? Time for a rise!!!

[HAL]

I firmly believe that the MPC does not want to engineer a soft landing at "any cost" - but it does need to use every trick in the book to stabilise it - that should include the ability to employ some "loving hurt".

A 0.5% IR hike would put speculators in their place and send out the message that it will act to stem inflation.

Because right now it seems to be saying it pays to speculate in a bubble that it has no way out of other than inflict even greater pain on the populus at a later date (or have pain inflicted by external events).

The MPC may soon lose the ability to be able to do anything other than go with the flow as each month that goes by means that they are sitting even closer to the point were even the slightest nudge will topple the whole stack of grimy cards.

Even the MPC must admit that HPI has a real effect on every thing to do with the economy - they cannot on one hand say that we do not target the housing market whilst on the other say that when the economy takes a dive (probably due to a HPC) they will take action against it and hence prop up house prices again.

I think the MPC should slowley and deliberatley deflate the house price bubble and take the pain now - before it starts to control their actions as I believe has started to happen.

HAL

[Casual Observer]

well they just screwed up then, didnt they? 1% August inflation? Time for a rise!!!

Not so sure. The quarterly HPI is low, and the annual HPI is falling. Could be made to look like a soft landing, which is exactly what it may be!

[hedi]

Not so sure. The quarterly HPI is low, and the annual HPI is falling. Could be made to look like a soft landing, which is exactly what it may be!

every road to a ressession passes a sign saying soft landing.

[dnd]

I'm a bear too - have been for nearly 2 years now - but I see exactly where you're coming from. The BoE must be giving themselves a pat on the back right now.

However, we won't be immune to outside events, I think now that maybe US troubles (they are in HPC mode now) and things outside the BoE's control could kick things off here.

Here's hoping...

Agree, global and sudden event will cause a HPC...

[murpaul]

On Newsnight last night they were discussing the leadership issues and mentioned what Brown will do if he gets in. Daniel Finkelstein from the Times commented that with the problems of foreign policy, which Brown couldnt do a lot about, he would look to other policy areas to induce feelgood in the electorate. To me that means more house prices and MEW. Maybe this is the future holds - perpetual rising prices and borrowing until after the next election. Its a bit depressing.

[jp1]

On Newsnight last night they were discussing the leadership issues and mentioned what Brown will do if he gets in. Daniel Finkelstein from the Times commented that with the problems of foreign policy, which Brown couldnt do a lot about, he would look to other policy areas to induce feelgood in the electorate. To me that means more house prices and MEW. Maybe this is the future holds - perpetual rising prices and borrowing until after the next election. Its a bit depressing.

I thought exactly the same. And there's nothing like "good news" on the houseprice front to boost that feelgood factor!

I presume Ed Balls is sitting in on the MPC meeting as we speak - purely in an "observational" role

[Marina]

So the latest doctrine is that US House Prices will cause global troubles and a HPC here.

I read in all sorts of places that the yanks are at the top of their interest rate cycle. The next moves will be RATE CUTS to head off recession and get the old consumers borrowing and spending again.

Which will perpetuate the current situation for .... how long? A month? A year? 5 years? 10 years?

What if they manage to keep the balls in the air for 10 years? How old will you be then? How many years could you have spent in your own house instead of renting? How much equity might you acquire?

This market and economy seems to be a lot more resilient than anyone on here gave it credit for.

Every day that passes someone near you buys a BTL - keeping the market alive and well and pricing you out in the process.

[hedi]

So the latest doctrine is that US House Prices will cause global troubles and a HPC here.

I read in all sorts of places that the yanks are at the top of their interest rate cycle. The next moves will be RATE CUTS to head off recession and get the old consumers borrowing and spending again.

Which will perpetuate the current situation for .... how long? A month? A year? 5 years? 10 years?

What if they manage to keep the balls in the air for 10 years? How old will you be then? How many years could you have spent in your own house instead of renting? How much equity might you acquire?

This market and economy seems to be a lot more resilient than anyone on here gave it credit for.

Every day that passes someone near you buys a BTL - keeping the market alive and well and pricing you out in the process.

good, a crash never happens when people see it coming.

[HAL]

On Newsnight last night they were discussing the leadership issues and mentioned what Brown will do if he gets in. Daniel Finkelstein from the Times commented that with the problems of foreign policy, which Brown couldnt do a lot about, he would look to other policy areas to induce feelgood in the electorate. To me that means more house prices and MEW. Maybe this is the future holds - perpetual rising prices and borrowing until after the next election. Its a bit depressing.

I heard that too - I expect that GB will discover that having ridden on the equivalent of an economic thermal for the last 3 years (before that he just squadered the legacy of a surplus) - he will now have to take action.

If he goes for the feel good factor (helicopter money) then we are sure in for economic disaster.

I have a feeling that interest rates need to be a generous amount of either side of the norm to keep control - i.e. they either need to stimulate or stifle - there is no such thing as neutral IR's at least not at a time we have just emerged from an accomadative rate.

My prediction is that we are in for a period of bigger inflationary increases - including HPI.

The MPC can see that if a HPC does occur then sterling will tank - causing more inflation (petrol and imports) thus spiralling the HPC even further down.

So what do you do to protect yourself? We all know its inevitable - but what do we do?

HAL

[CrashDive]

So the latest doctrine is that US House Prices will cause global troubles and a HPC here.

I read in all sorts of places that the yanks are at the top of their interest rate cycle. The next moves will be RATE CUTS to head off recession and get the old consumers borrowing and spending again.

Which will perpetuate the current situation for .... how long? A month? A year? 5 years? 10 years?

What if they manage to keep the balls in the air for 10 years? How old will you be then? How many years could you have spent in your own house instead of renting? How much equity might you acquire?

This market and economy seems to be a lot more resilient than anyone on here gave it credit for.

Every day that passes someone near you buys a BTL - keeping the market alive and well and pricing you out in the process.

Yes, US House Prices tumbling will cause global problems and give a foretaste of a HPC here.

Perhaps you could cite refs to all these places where they state the yanks will be cutting rates next, so we can discuss them individually.

Analysts are calling a 50/50 chance or thereabout's of a recession in the US, IR cuts alone even if they happen will not head off a recession by any means as consumers are in far too much debt already for this to continue working indefinately or even for very much longer.

Just that, the market and economy "seems" to be more resilient than it is.

So what if the uninformed sheeple continue to BTL, all they are doing is adding fuel to the fire of a HPC.

[Warwickshire Lad]

We need to get back to the good old days of "If It Isn't Hurting, It Isn't Working...". Remember that from the last Tory govt ?

[Cuckoo]

We need to get back to the good old days of "If It Isn't Hurting, It Isn't Working...". Remember that from the last Tory govt ?

Why? What is there to bring hurt for?

The economy is growing fine, at a steady rate and has been doing for years, employment is at its highest level for ages too, we don't need to stimulate "the green shoots of recovery" (another Tory phrase) as we have had about 14 years of continuous economic growth ; the brakes haven't been "let off" as in the Lawson Boom, when we had concurrent stock market dergegulation and expansion, huge house price rises and enormous cuts in the marginal rate of tax for many ; there are few inflationary pressures in the economy ; the pound is relatively steady and strong ; yes, public spending needs to be reigned in, but hardly time to hair- shirt the whole economy with punitively high interest rates because the "boom" is out of control and the economy is on fire.

If you look at the figures for London, the engine of economic growth, house prices haven't "rocketed" since 2002.

Things are remarkably stable, and the economic position bears no relation whatsoever to 1992-3 when those politically idiotic (but necessary) comments were made. The economy is not in need of punitive interest rate rises.

That's why rates are low and relatively stable, and likely to be for a while. If there's any kind of downturn in the US, demand global demand will weaken and so will inflationary pressures, making rate rises less, not more likely. We're not in an inflationary boom.

Really guys, open your eyes. We aint going down the dumper anytime soon.

[dnd]

We need to get back to the good old days of "If It Isn't Hurting, It Isn't Working...". Remember that from the last Tory govt ?

Yeah, but they are bunch of public school, class obsessed psychos - they just did it for their own pleasure - and it DID hurt....

We can't go back to that again - some middle ground maybe...

[Cuckoo]

Yeah, but they are bunch of public school, class obsessed psychos - they just did it for their own pleasure - and it DID hurt....

What a abl**dy ridiculous comment.

Labour are much more class obsessed than the Tories. I suppose you may say "well, ok, the Tories can afford not be as class obsessed" in response. or some such pithy rubbish.

Labour, despite their talk of supporting "hard working people" etc, are much more retrenchant of class system values than the Tory party can ever hope to be and are actually sending us on a fast track back to Victorian class divisions which were breaking down in the 1980s and 90's .

In fact i've posted here before that peversly , because many of Labour's policies are specifically framed by their ideas of what classes are, in their own minds, they pigeonhole people along class lines, and this actually leads to the build up class divisons, every time they're in power.

They treat each group of people they see as being of different classse differently, rather than adopting one size fits all policies. They are well into social engineering of the worst sort.

As a result of their policies, many of the middle class realise these misconceived policies are going to hit them hard in the pocket, and they run to protect "their own" , rightly feeling under threat and they withdraw from society, leaving the poor to survive on their own, because know that if they don't help themselves and each other, they won't survive because they know the goverment never will support them.

The conservative party, at least in the last 40 years, has not held any kind of beef with "class" and has sought to level people up, not keep the poor down and bring the rich to their level and does not have this "social engineering" agenda.

rgds

Real social justice comes about by treatng people equally and divising policy to achieve this, not through some old 1970s' idea of what "workers" or "worthy" recipients of state help are.

[Marina]

good, a crash never happens when people see it coming.

No, you're being a bit of a pillock there.

A crash never happens when people keep buying the commodity.

Shares crash when no-one wants to buy them.

Houses crash when no-one wants to buy them. Ooohh! Sounds a bit weird doesn't it? Because up to this exact moment in time, there is still an army of BTL investors buying up everything in sight.

So no crash and, as long as BTL continues, no crash in sight.

[dnd]

What a abl**dy ridiculous comment.

Were you around (in the real world - not mummy/daddys/uni/college) in the 90's?

Edited September 7, 2006 by dnd

[Marina]

What a abl**dy ridiculous comment.

No asterisks required if you stick an 'a' in front of bl**dy to write abloody.

[HAL]

Why? What is there to bring hurt for?

The economy is growing fine, at a steady rate and has been doing for years, employment is at its highest level for ages too, we don't need to stimulate "the green shoots of recovery" (another Tory phrase) as we have had about 14 years of continuous economic growth ; the brakes haven't been "let off" as in the Lawson Boom, when we had concurrent stock market dergegulation and expansion, huge house price rises and enormous cuts in the marginal rate of tax for many ; there are few inflationary pressures in the economy ; the pound is relatively steady and strong ; yes, public spending needs to be reigned in, but hardly time to hair- shirt the whole economy with punitively high interest rates because the "boom" is out of control and the economy is on fire.

If you look at the figures for London, the engine of economic growth, house prices haven't "rocketed" since 2002.

Things are remarkably stable, and the economic position bears no relation whatsoever to 1992-3 when those politically idiotic (but necessary) comments were made. The economy is not in need of punitive interest rate rises.

That's why rates are low and relatively stable, and likely to be for a while. If there's any kind of downturn in the US, demand global demand will weaken and so will inflationary pressures, making rate rises less, not more likely. We're not in an inflationary boom.

Really guys, open your eyes. We aint going down the dumper anytime soon.

I believe that you have a point - up to a point!

The fact is that most of this economic stability is at the expense of debt creation that is directly as a result of secured borrowing against the house ATM.

The fact is that saving rates have plummeted - so its streching it to say that everything is OK. After all the MPC simply targets ecomonic growth and inflation - its does nothing to stop savers turning into debt slaves until at that is they can no longer borrow more to kep the illusion going.

HAL

[Cuckoo]

I believe that you have a point - up to a point!

it does nothing to stop savers turning into debt slaves until at that is they can no longer borrow more to kep the illusion going.

HAL

why should the BOE do this. Surely its people's own personal choice whether to turn into debt slaves or not, and not a function of a central bank. Plenty of people manage to be debt free. If people do get into trouble, most of the time, they've only themselves to blame.

And in answer to other point, i was living in Leeds in the early 90's and it wasn't nearly as bleak as people say. In 1992-94 the city certainly wasn't a drab, depressed place, maybe it suffered less than some places in the recession but it was vibrant, there was money around , developments and new shopping centres were opening and office blocks being built, bars, restaurants and clubs were thriving, properties were being done up, it was growing, and little affected by the so-called Great Crash 1 that supposedly lasted seven long years from 1989 to 1996 & that people bang on about here, it was actually buzzing with a mood of optimism.

People should remember that in any "crash" or "recession" some areas will always be affected much more badly than others, some places virtually seem to get off scot free, usually those with diversified industries and employment profiles. it certainly sorts out the economic men from the boys. if you're living in an economic "boom town" that relies on one type of employer, its **** is obviously more out of the window than one with a diversified skills and employment base. Perhaps a thread should be started on this and we could gusess which areas would be most affected should a recession happen tomorrow ( i can't make threads as i'm an evil troll) .

sorry for the rambling post, too much coffee this avo!

[CrashDive]

i was living in Leeds in the early 90's and it wasn't nearly as bleak as people say. In 1992-94 the city certainly wasn't a drab, depressed place,

Far too much coffee cuckoo, its playing havoc with your memory. Fond memories of Leeds in the early 90's are touching but also indicate you are touched. A good night out/weekender for sure then but a pleasant place to live, pull the other one buddy.

Your relentless optimism is endearing.

[Cuckoo]

Far too much coffee cuckoo, its playing havoc with your memory. Fond memories of Leeds in the early 90's are touching but also indicate you are touched. A good night out/weekender for sure then but a pleasant place to live, pull the other one buddy.

Your relentless optimism is endearing.

it was a very pleasant place to live and had an air of sucess and really wasn't stuck in a recesionary hole. it was in the doldrums for about 12 months only during the recession. no more.