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Now Last Night's Party's Over . . .


tenroom
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Guest grumpy-old-man
My sentiment hasn't changed at all. I was trying to give you a little succour, as you've been wrong so consistently!

I haven't been wrong at all yet have I??

if so, what about. <_<

sounds to me like your trying to act a bit nonchalent, but are actually quite worried by that last response. ;)

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My sentiment hasn't changed at all. I was trying to give you a little succour, as you've been wrong so consistently!

:lol:

I'm still reeling over the failure of Eddiegate to make it to the front page of every newspaper in the land. Yes it's a big deal to HPC members and visitors but credit support groups aside, I can't see Joe Public berating the BoE, Gordie or the government for what has been the economic equivalent of Rio Carnival for the last 11 years . . .

It's been a riot . . .

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Guest grumpy-old-man
About a HPC.

No, I guess you'll never be wrong if you don't accept the validity of published house price indices

I don't believe anything I read regarding data tbh, I use it just as reference only.

I use my eyes & ears & common sense, they have served me very well over the years & my children will benefit from my advice hopefully, unlike some who recieve bad advice from their parents. :ph34r:

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They're probably too terrified to raise more than 0.25% at a time. My guess is that the BoE's proxy made this statement yesterday because the unsustainable consumer credit boom is to imminently crash. Eddie volunteered to be fall guy, whilst the civil service is making it eminently clear that GordEnron is a stalinist Treasury dictator, so it's his fault too. Merv voted against the IR cut in 2005, so he gets to have cups of tea and quiet chats with Cameron when the sheeple revolt against Gordo, the main architect of our demise. It's all a bit 'Yes, Minister' isn't it?

My guess is that IRs will revert to historical norms and the best the country can hope for is to avoid a depression with a mere recession. The BoE is about to experimentally prove that avoiding a bust just brews up a bigger one in the future. With the wealth transference to Asia happening at the same time as the bursting of the consumer credit bubble, getting away with it lightly looks unlikely.

GorEnron's decadal firesale: Houses 50% cheaper by 2012.

edit: Actually, the more I think about it, I already believed in 50% off before the BoE endorsed the views of long term HPC posters. Coming round to Pluto's 70% off.

Yeah, I would go with that too, things are bad, but relative to everthing else, a depression isn't really on the cards - although my wish for a Jap style deflationary episode now looks a bit fanciful. It's going to be a bit more jarring. :ph34r:

If we have quarterly inflation rises of 0.25, and then the odd one of say 0.5, I'm guessing we have 9% IR's by 2010 - that should do nicely. If Kate Barker is also stating that we're going to have some "volatility", then we might yet head for double figures, 10-12% anyone, for a while? Things will then level off around 8% and by that point the majority of the country will be on it's collective knees. :rolleyes:

This recession though just from the figures, will be far larger than the early 90's.

In Bristol it's gonna be 40 - 60% off flats, 30 - 50% off houses. Depending on where you live. IMHO.

CASH IS KING!!!

Have we (and America for that matter) all been part of a collective experiment that has actually only now being realised by those in the know as one that has gone seriously wrong? Or was that the plan in the first place?

Can I be the first, but not the last to say - Holy **** :o

GT.

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I think we can agree that there was no real surprise in the admission by Eddie George that they artificially lowered IRs to stave off a recession. The comment that they think this is not a sustainable situation is significant; I think its there to prepare the public for some bad news.

I dont see the B of E suddenly bumping IRs up to where they should be, rather a more subtle approach of more fiddling with the CPI figures via the ONS to keep the figure under the magic 3% thus keeping interest rates down, property prices up and inflating the debt away. True, there wont be massive wage inflation but 3% a year makes 16% after 5 years.

That has to be the best solution - keep nominal house prices more of less where they are while allowing inflation to creep up in the background. I wouldn't be surprised if there were no great crash in nominal house prices but real value will be eroded away. So if that turns out to be true, what is one to do to preserve wealth?

I like gold, German property (if not for its capital appreciation potential then at least for its ability at tleast to act as a hedge against inflation), still like debt consolidation companies, maybe more since the recent shake out and oil companies.

Any thoughts?

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My lad is happy in his home, he'd decorated and improved it nicely (with a bit of help from Dad), he can easily afford the repayments, even if IRs rose a fair bit. It's a nicer home than I could afford at his age, in a nicer area.

Ain't that a nice story. <_<

Has he got a pipe and slippers too?

Does he scratch his chin and frown when hes deep in thought?

Does he have a son called Tom who always comes home covered in mud?

And a dog called Scamp who always saves the day?

Yeah...I think I've already read that one....

Basically he's getting on with his life without having to think about house prices. He'd be better off if prices didn't rise further, because it will help him trade up to something even better in the future. The UK indices show a rise of about 12% since he bought, although I don't think they've risen that much in our area.

Whats he gonna spend that 12% on, CO?

D'ya think he might buy you something nice?

Whats that?

He hasnt actually realised the '12%' because he'd have to either sell his house or borrow it from a bank to actually get his hands on it?

So...youre saying what he actually has, right now, is a huge debt over an extended period that he owes the bank.

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Probably because I've been asked a dozen times before.

I think it's between 45 to 50k a year, although I'm not precise about it without asking him, plus he's just had an annual rise (RPI)

Thankyou.

Sorry for needing you to repeat yourself, but then again you must enjoy harping on about the same old tosh otherwise you wouldn't still be here, would you. ;)

Edited by Ethel
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Ain't that a nice story. <_<

Has he got a pipe and slippers too?

Does he scratch his chin and frown when hes deep in thought?

Does he have a son called Tom who always comes home covered in mud?

And a dog called Scamp who always saves the day?

Yeah...I think I've already read that one....

Whats he gonna spend that 12% on, CO?

D'ya think he might buy you something nice?

Whats that?

He hasnt actually realised the '12%' because he'd have to either sell his house or borrow it from a bank to actually get his hands on it?

So...youre saying what he actually has, right now, is a huge debt over an extended period that he owes the bank.

He can't spend it. :unsure: He'd be better off if prices fell, actually. I'm surprised you can't see that.

A huge debt over an extended period? Yes, it's called a mortgage, I had 1 when I was 25. If you expect a 25 year old to buy a house without a mortgage, all I can say to you is keep hoping.

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I think we can agree that there was no real surprise in the admission by Eddie George that they artificially lowered IRs to stave off a recession. The comment that they think this is not a sustainable situation is significant; I think its there to prepare the public for some bad news.

I dont see the B of E suddenly bumping IRs up to where they should be, rather a more subtle approach of more fiddling with the CPI figures via the ONS to keep the figure under the magic 3% thus keeping interest rates down, property prices up and inflating the debt away. True, there wont be massive wage inflation but 3% a year makes 16% after 5 years.

That has to be the best solution - keep nominal house prices more of less where they are while allowing inflation to creep up in the background. I wouldn't be surprised if there were no great crash in nominal house prices but real value will be eroded away. So if that turns out to be true, what is one to do to preserve wealth?

I like gold, German property (if not for its capital appreciation potential then at least for its ability at tleast to act as a hedge against inflation), still like debt consolidation companies, maybe more since the recent shake out and oil companies.

Any thoughts?

Events, Dear Boy.....Events.

IF things had stayed exactly as they are then I'd have thought this would have been the ideal scenario.

This news will get round.....eventually.... and I wouldn't be surprised if the pound starts coming under a bit of pressure on the back of all this.

And what does that means? IR's up. Oh look, we're getting rising costs in consumer goods... IR's up.

Oh, here's another one. Rising energy prices? IR's up. There are too many potential triggers here, and the CPI figures can't be massaged for ever. Eventually this will come out and then there will be blood.

But I agree - gold is the way to go, for the inflationary spike anyway.

GT.

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Thankyou.

Sorry for needing you to repeat yourself, but then again you must enjoy harping on about the same old tosh otherwise you wouldn't still be here, would you. ;)

cor, wish I earned that much. then I could afford a 200K mortgage for a starter home (with my deposit). oh well.

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I dont think interest rates will rising much, though they should be 9-10% right now considering our debt ratio, the BoE are being f**king irresponsible keeping rates "low" and yes, they're low.

all they're doing is ensuring when the bubble bursts the pop will be much louder.

they're storing up all kinds of trouble in their credit driven obsession to keep rates artificially low

the inflation figures will be fiddled so the bank will continue to keep the rates artificially low, they might even start cutting them towards year end when they proclaim inflation to be under control after the ONS has fiddled the weighting's enough

it wont stop a bust though, it'll just prolong the boom a bit, Brown is hoping to keep it going for at least 2 more years and will do everything he can as he knows if he can win the next election by even a 5 seat majority he holds power for 5 years

I'm surprised he wasnt handing out cheques today to "help" first time buyers using borrowed government finance to help prolong the boom to election time

what they're potentially setting up is a japan style situation where you have historically low rates yet a decade long recession

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Guest Yeahbutnocrash
Ok now the bears' euphoria's subsided and they've all slept on yesterday's "Eddiegate" statement, what do they think is actually gonna happen ? Have we seen the last of the piffling 0.25% hike in IRs - is it 0.5% or 1% chunks from now on ??

Page 2 of todays mail carries a story headed: 'Another IR rise to 5.5% is just weeks away'

They are predicting April or May for the next .25% rise

So it seems we have been living in a 'golden age' which could not last. Ironically in a feedback effect higher loan payments are contributing to the higher inflation figures which in turn cause IR's to rise further

The Mail also covers the Eddie George admission from yesterday where he does not specifically mention house prices being un-sustainable but admits they knew they were having to stimulate consumer spending and they had pushed it to levels they knew would not be sustained in the medium & long-term

So it seems we should expect a slow-down relative to how high IR's go if they keep rising - As many have said before it will depend on how high the IR's go as there is plenty of employment in the economy...

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So it seems we have been living in a 'golden age' which could not last. Ironically in a feedback effect higher loan payments are contributing to the higher inflation figures which in turn cause IR's to rise further

Yes but don't you see?

If this becomes a problem then the Govt will simply instruct the ONS to remove loan payments from the CPI calculation.

They can do what they like as no one gives a xxxx.

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Guest Yeahbutnocrash
Yes but don't you see?

If this becomes a problem then the Govt will simply instruct the ONS to remove loan payments from the CPI calculation.

They can do what they like as no one gives a xxxx.

I think we all realise they can set the parameters to suit themselves but I expect it would get reported so we'd know about it

The question still is will we have a soft landing? - Also how high will IR's go and over what period?

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I think we all realise they can set the parameters to suit themselves but I expect it would get reported so we'd know about it

And then what? we know they fiddle the figures to produce the CPI they want now, but what can we do about it?

The question still is will we have a soft landing? - Also how high will IR's go and over what period?

Oh to know the answer to those questions!

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Fiddling the CPI will only worsen the crash when it comes. Inflation feeds on itself, the higher its (real) value, the greater real interest rates need to be just to keep it from rising further; i.e. if CPI is 2%, IRs need to be 5%. However if CPI is 4%, IRs may need to be 10%. So fiddling the CPI will lead to higher IRs to maintain a stable economy.

I read somewhere that they have changed the CPI calcs to include mobile phone and GPS downloads. What I'm wondering is when the crash happens and MEW drys up, peoples buying habits will move away from computer games and plasma TVs to food, heat, transport and bare essentials to stay alive. Will they be so quick to change the CPI sums then??? Knowing this will dramatically increase the CPI figure.

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The CPI is only a statistic for those that like statistics. Like all statistics, they can say whatever the compiler wants them to say.

What really matters is how much ordinary Joe public actually have in their pockets - or lack of it.

The Government can lie all it likes and put what they damn well like in the 'shopping basket', but you and I know that household bills are going up and up, and there is less and less left in reality in pockets.

My mum and dad are pensioners, and their meagre pension increase has been eaten up manifold just in the council tax increase alone.

Inflation is higher than the Government would like to admit, I know because things cost me much, much more to buy this year than last year. Simple as that.

Gordon has just put forward a budget to get him elected as Prime Minister, and like all big liers once he's in it will be a very different story I'm sure - and don't think once he's PM he will resist meddling fiscally either, after all, what happened to the so called independence given to the of the BoE when he and Eddie George got together to fix the interest rates?

My gut feeling is that the country is in deep doo doo financially, and interest rates are on the way up a good amount. The days of .25% increases are in the past and .50% will be the new bench mark soon.

Home owners will be the sacrificial lambs given to the God of debt.

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I think the the CPI figures can only be manipulated so far. The fact is that RPI is now nearly 5% and it won't be long before people in the FX markets see that Sterling will have to fall unless rates rise. The impetus for IR rises will come from the currency markets betting on inflation not just inflation itself.

Ultimately, the independent central bank idea is based on confidence that the bank is meeting its inflationary targets. Back in '97 this worked really well, I for one was pleased that the govt switched over to a system that had served the likes of West Germany very well. Unfortunately, after about 4 years the politicians realised they could manipulate the statistics to get the 'feel good factor' instead of the interest rate as the likes of Barber and Lawson did in the past. I think a great deal of those in the markets know what has been going on, but now they will see the chance to make some real cash with a run on sterling. I think we may see the shit hitting the fan faster than many anticipate.

By the way, this is my first post -- I only found this site a couple of days ago but find it very interesting. I have a quarter of a million in cash plus whatever I can borrow to buy a flat in London but I am not touching the market at the moment. Even if prices stay at their nominal level at least there will be some choice when things slow down towards the end of this year or 08. At the moment everything is being sold within days for silly money.

Edited by labarte
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The CPI is only a statistic for those that like statistics. Like all statistics, they can say whatever the compiler wants them to say.

What really matters is how much ordinary Joe public actually have in their pockets - or lack of it.

The Government can lie all it likes and put what they damn well like in the 'shopping basket', but you and I know that household bills are going up and up, and there is less and less left in reality in pockets.

My mum and dad are pensioners, and their meagre pension increase has been eaten up manifold just in the council tax increase alone.

Inflation is higher than the Government would like to admit, I know because things cost me much, much more to buy this year than last year. Simple as that.

Gordon has just put forward a budget to get him elected as Prime Minister, and like all big liers once he's in it will be a very different story I'm sure - and don't think once he's PM he will resist meddling fiscally either, after all, what happened to the so called independence given to the of the BoE when he and Eddie George got together to fix the interest rates?

My gut feeling is that the country is in deep doo doo financially, and interest rates are on the way up a good amount. The days of .25% increases are in the past and .50% will be the new bench mark soon.

Home owners will be the sacrificial lambs given to the God of debt.

Good post but home owners are the economy by and large.

I think the the CPI figures can only be manipulated so far. The fact is that RPI is now nearly 5% and it won't be long before people in the FX markets see that Sterling will have to fall unless rates rise. The impetus for IR rises will come from the currency markets betting on inflation not just inflation itself.

Ultimately, the independent central bank idea is based on confidence that the bank is meeting its inflationary targets. Back in '97 this worked really well, I for one was pleased that the govt switched over to a system that had served the likes of West Germany very well. Unfortunately, after about 4 years the politicians realised they could manipulate the statistics to get the 'feel good factor' instead of the interest rate as the likes of Barber and Lawson did in the past. I think a great deal of those in the markets know what has been going on, but now they will see the chance to make some real cash with a run on sterling. I think we may see the shit hitting the fan faster than many anticipate.

By the way, this is my first post -- I only found this site a couple of days ago but find it very interesting. I have a quarter of a million in cash plus whatever I can borrow to buy a flat in London but I am not touching the market at the moment. Even if prices stay at their nominal level at least there will be some choice when things slow down towards the end of this year or 08. At the moment everything is being sold within days for silly money.

I think this might be the thing which brings the whole inflation pack of lies tumbling down too. You cant fool the markets for long, in fact Ive often wondered why sterling has stayed so high against the dollar and Euro for so long. Well with the Dollar you can see why but the Euro?

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Guest wrongmove
Ive often wondered why sterling has stayed so high against the dollar and Euro for so long. Well with the Dollar you can see why but the Euro?

The pound has mainly apprciated against the dollar, much less so against the AEuro, where it trades in a much tighter band.

As many have said, it is mainly dollar weakness rather than Sterling strength:

Euro:

77_X_SGBPEUR_bbc_big_thick_line_twelve_month.png

Dollar:

77_X_SGBPUSD_bbc_big_thick_line_twelve_month.png

post-210-1174503628_thumb.png

post-210-1174503641_thumb.png

Edited by wrongmove
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Guest Yeahbutnocrash
And then what? we know they fiddle the figures to produce the CPI they want now, but what can we do about it?

Oh to know the answer to those questions!

Ok OK! :D

I should have said at least we'd know about it

I'm not saying we could do anything I'm just stating a fact - at least it would be open to criticism

This is all conjecture in any case

Yes I agree we can't say for sure the answer to those questions but if the days of low IR's are over at least the HPI figures should reduce

As I have said before, maybe there's a point at which IR's become attractive enough compared to HPI for investors to start switching from property..?

Edited by Yeahbutnocrash
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