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


tenroom
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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

I think this would be the best scenario for all concerned though obviously not for anyone who's bought in the last few years.

They can fiddle all they want on the inflation markers - but it WILL be uncovered, at some point, at some time, possibly in the next few years. The current measures will eventually be held up as proof that the BoE do not have the best interests of the country at heart and will be villified to a man, while another measure is drawn up which can be easily manipulated at the right time.The BoE will protest this was their required target by the govt and the usual blame game will begin.

However, I've got a nasty feeling that events will spiral out of control; the game will be up at some point, and interest rates will be relentlessly increased to protect sterling - UNLESS.....we are going to go into the Euro. in which case people will lose a substantial amount of real value of their houses in Euro terms, rather than Sterling. To me this is the key question - it WILL happen, but when? Before a recession or after? If it's after then expect rates to go north.

In some ways Brown may have been handing out an early warning about his possible intentions by cutting income tax, although, not really cutting it. Could this be the start of the helicopter drop, or at least a taster of what's been touted here before? Feeding more money into peoples' pockets long term while taxing them to the hilt in other ways? If taxes carry on being cut then IR's will not be going up as far maybe as some people (myself included) want. Couple this with the mother of all credit crunches from the banks and I'm sure you will have steady, yet pronounced deflation. I think. My head hurts.

GT.

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Guest wrongmove
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:

This is even more obvious over a five year period:

Pound was about $1.42 five years ago, nearly $2 now - that's a rise of about 40%

5y.png

However, pound was about E1.60 five years ago. It dropped to about E1.40 in 2003 and has traded between E1.40 and E1.50 ever since.

5ye.png

(A certain someone sold his property for $ in 2003. Rather than buy £ and use them to rehouse himself in UK, he chose to hang on for a better deal, and leave the cash in $. Now you may understand why that certain someone is by far the most prolific poster here......)

post-210-1174504367_thumb.png

post-210-1174504375_thumb.png

Edited by wrongmove
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I think the statement yesterday was basically saying we f**cked up we know we have and trust us to sort it out, Now they have come clean I think IRs will stay pretty steady.By sorting it they mean we will not suddenly shaft those who have taken high mortgages due to something we have created.

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I think this would be the best scenario for all concerned though obviously not for anyone who's bought in the last few years.

They can fiddle all they want on the inflation markers - but it WILL be uncovered, at some point, at some time, possibly in the next few years. The current measures will eventually be held up as proof that the BoE do not have the best interests of the country at heart and will be villified to a man, while another measure is drawn up which can be easily manipulated at the right time.The BoE will protest this was their required target by the govt and the usual blame game will begin.

However, I've got a nasty feeling that events will spiral out of control; the game will be up at some point, and interest rates will be relentlessly increased to protect sterling - UNLESS.....we are going to go into the Euro. in which case people will lose a substantial amount of real value of their houses in Euro terms, rather than Sterling. To me this is the key question - it WILL happen, but when? Before a recession or after? If it's after then expect rates to go north.

In some ways Brown may have been handing out an early warning about his possible intentions by cutting income tax, although, not really cutting it. Could this be the start of the helicopter drop, or at least a taster of what's been touted here before? Feeding more money into peoples' pockets long term while taxing them to the hilt in other ways? If taxes carry on being cut then IR's will not be going up as far maybe as some people (myself included) want. Couple this with the mother of all credit crunches from the banks and I'm sure you will have steady, yet pronounced deflation. I think. My head hurts.

GT.

We will not be going into the Euro anytime soon furthermore the reduction in headline income tax is just part of Labour's long term strategy of shifting taxation to stealth taxation including council tax.

The credit crunch will come from the unwinding of the yen carry trade.

We should be watching Japan although I don't think they will raise rates again until the second half of the year.

When they do things could move very fast indeed.

It is no coincidence to my mind that the rise in bearish news this year has followed the raising of Japanese base rates from off the floor.

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However, I've got a nasty feeling that events will spiral out of control; the game will be up at some point, and interest rates will be relentlessly increased to protect sterling - UNLESS.....we are going to go into the Euro. in which case people will lose a substantial amount of real value of their houses in Euro terms, rather than Sterling. To me this is the key question - it WILL happen, but when? Before a recession or after? If it's after then expect rates to go north.

GT.

What would be an ideal exchange rate for the £/€ if the UK were to adopt the Euro as its currency?

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: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 . . .

.....and with Gordy's 2% "tax cut", it makes you wonder if Eddie George's admission wasn't just timed to perfection. A great day to have bad news buried by tax cuts!

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I think the statement yesterday was basically saying we f**cked up we know we have and trust us to sort it out, Now they have come clean I think IRs will stay pretty steady.By sorting it they mean we will not suddenly shaft those who have taken high mortgages due to something we have created.

It took us 10 years to get into this situation. It will take 10 years to get us out of it. Provided the right medicine is taken. There won't be a sudden "shafting". It'll be done slowly, with the right excuses, at the right times.

Anyway, if we can't trust them first time, how the hell will we be trusting them again to get things right?

There is only one long term way out of this - and that's to raise IR's and/or cut credit supply.

Things cannot carry on as they are and we can all collectively get away with it for only so long.

We have to stop. The only question is how?

The banks' central aim as an "independent body", at all times is to control inflation. Rightly or wrongly, they failed to do this and, faced with dealing with a post 9/11 recession and an energy/resource war in Iraq, the bank, probably with a bit of guidance from the Fed and the Treasury decided it was best to inflate. And the least painful way to achieve this as well as fund the war was to open the sluice gates and let the banks throw money at the property market in order to get people mortgaged to the hilt as well as getting all that stamp duty from the amount of trading and flipping that was happening.

Come on......this is capitalist economics at it's worst. Winners and Losers etc etc.

It's not pleasant, and I for one don't like it as much as anyone, but that's the way it is.

People will, and are already suffering because they took on excessive levels of debt, but, I'm afraid

that's their lookout, it's not the remit of the BoE to mollycoddle and look after each and every one of us.

You are ultimately responsible for your own financial well being and future.

If you took on a big mortgage because you were essentially being a greedy, selfish f*****, more fool you.

Equally there will be people, a couple of them I know who are nice, intelligent, respectable, decent who will be totally shafted if their property values drop as they bought in the last 12 months, simply because they wanted to own a home and nothing more.

GT.

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What would be an ideal exchange rate for the £/€ if the UK were to adopt the Euro as its currency?

It's been banded around on here that the £ would have to drop to 1.10 Euros before we can consider going in.

Not sure if this one of the 5 tests that the Govt had adopted, but if it went below 1.20 Euros, I think it can safely assumed we'd be in a fair bit of trouble.

GT.

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It's been banded around on here that the £ would have to drop to 1.10 Euros before we can consider going in.

Not sure if this one of the 5 tests that the Govt had adopted, but if it went below 1.20 Euros, I think it can safely assumed we'd be in a fair bit of trouble.

GT.

Thanks, Man!

Id better get on with buying my apartment in Berlin then before our crooked, corrupt leaders f*ck sterling up altogether.

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I think we could go japanese, record mortgage borrowing figures this week, massive investment in city centres 'flats' with people with equity still investing. We still have massive immigration slowing wage inflation, making the UK more competitive and increasing demand for houseshares, rental property and a very few buyers who rent out to friends. CPI was manipulated earlier this week, items expected to rise removed and items expected to fall added. We have a pretty friendly simplified budget. The mail is right we need interest rates at 8%, the public has swallowed the phony CPI inflation measure because there do dumbed down dont know what inflation and interest rates are. Real inflation is about to accelerate but it wont be published, IRs arent going to be raised to stop it, people are still grabbing assets, money supply is still bubbling away.

and HPI... it hasnt been slowed by recent IR rises and still has alot of momentium. Even the Bank of england said houseprices were inflated intentionally to stop us from going into recession. The government doesnt want a recession, no more 'boom and bust', and are still attempting to avoid the bust, perhaps houseprices are still being ramped raised and kept high to keep the recession bed bugs away?

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I think we could go japanese, record mortgage borrowing figures this week, massive investment in city centres 'flats' with people with equity still investing. We still have massive immigration slowing wage inflation, making the UK more competitive and increasing demand for houseshares, rental property and a very few buyers who rent out to friends. CPI was manipulated earlier this week, items expected to rise removed and items expected to fall added. We have a pretty friendly simplified budget. The mail is right we need interest rates at 8%, the public has swallowed the phony CPI inflation measure because there do dumbed down dont know what inflation and interest rates are. Real inflation is about to accelerate but it wont be published, IRs arent going to be raised to stop it, people are still grabbing assets, money supply is still bubbling away.

and HPI... it hasnt been slowed by recent IR rises and still has alot of momentium. Even the Bank of england said houseprices were inflated intentionally to stop us from going into recession. The government doesnt want a recession, no more 'boom and bust', and are still attempting to avoid the bust, perhaps houseprices are still being ramped raised and kept high to keep the recession bed bugs away?

Which means now would should be the time they start to attack it - FTLOG, they know it's unsustainable and, effectively have admitted it, so, if that's the case, why let it eat away at the economy? Best do something about it now then hadn't they? If their credibility isn't to be even more shot to s***, then it's time for them to grow some balls (Kate Barker excepted) and start hiking.

Sorry, I'm feeling a bit feisty this evening. It's because I don't now know who to trust, and also I have no real idea now how things will be played out. I thought I did and now, I'm more confused than ever.

I still think, regardless of whether we have an inflationary or deflationary bust, things still have a way to go for the game to be completed. (All the MP's have to offload their BTL's first). Going Japanese seems like the way to go for those who want the crediters (savers) to win. Standard crash mode if you want the debtors to win. Stagflation if you want no-one to win and everyone to lose. At the moment, as far as I'm concerned my brain has engaged sit on the fence mode.

GT.

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Guest Bart of Darkness
hello CO,

I was going to start a where's CO thread yesterday off the back of the BOE revelations.

Yes, 26 pages and not one comment from CO.

Now that's casual!

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Which means now would should be the time they start to attack it - FTLOG, they know it's unsustainable and, effectively have admitted it, so, if that's the case, why let it eat away at the economy? Best do something about it now then hadn't they? If their credibility isn't to be even more shot to s***, then it's time for them to grow some balls (Kate Barker excepted) and start hiking.

Sorry, I'm feeling a bit feisty this evening. It's because I don't now know who to trust, and also I have no real idea now how things will be played out. I thought I did and now, I'm more confused than ever.

I still think, regardless of whether we have an inflationary or deflationary bust, things still have a way to go for the game to be completed. (All the MP's have to offload their BTL's first). Going Japanese seems like the way to go for those who want the crediters (savers) to win. Standard crash mode if you want the debtors to win. Stagflation if you want no-one to win and everyone to lose. At the moment, as far as I'm concerned my brain has engaged sit on the fence mode.

GT.

Know how you feel, inflation/deflation/stagflation/imagiflation- god knows and he's not tellin. All I do know is that everything I HAVE to pay/buy (non-luxuries) seems to go up little by little-transport,taxes,electric,gas ,foodetc.

Noticed even more by my small pensioned parents. Savings making next to nothing. I'm just hoping for the best and preparing for the worst. Unsure times ahead me thinks- seems to have the same flavour of the last bust/recession though .

All that eighties yuppiedom then smash a crash. Ugh!

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Guest grumpy-old-man
Yes, 26 pages and not one comment from CO.

Now that's casual!

yes I know, I asked him on another thread but he didn't seem too interested in the BOE revelations, I wonder why. ;)

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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.

Indeed,

The BofE have two choices:

Cut debt/HPI (raising IR's)

or

Cut the value of the Sterling (Not Raising/dropping IR's).

So which will it be.....?

(Looks like so far they have largely opted for the latter so as to give GB a boost to his Career at the expense of the UK)

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Guest Bart of Darkness
yes I know, I asked him on another thread but he didn't seem too interested in the BOE revelations, I wonder why. ;)

He probably thought that deliberately fueling a consumer boom to boost house prices and personal debt was a "perfectly reasonable" strategy.

Sustainable or not.

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I don't know much about these things,but if sterling falls a lot can't that open the door to a run on the pound and cause financial armageddon?

Yep,

Sterling like the value of the old Lira

So much for "I'm a Property millionaire", etc

What use is that with a worthless currency!!

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Guest AuntJess
I think yesterday's news just shows that as long as 70% of people in Sheepville UK are happy the BoE and government can do whatever the f**k they like. Apathy rules when the sheeple are contented

Too true. this needs to be remembered whenever folk want to pillory a section of society and blame them for their ills.

You can take a horse to the water...etc. Thus you can give a 'punter' information, but you can't make them believe it, and getting them to ACT on it is like dragging a boulder uphill, which is why us Brits. as a whole are doomed, by our own lethargy/sang-froid.

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Indeed,

The BofE have two choices:

Cut debt/HPI (raising IR's)

or

Cut the value of the Sterling (Not Raising/dropping IR's).

So which will it be.....?

(Looks like so far they have largely opted for the latter so as to give GB a boost to his Career at the expense of the UK)

We'll see, the problem with doing the latter is that a weak currency will mean even more inflation in an economy like ours where so many goods are imported. There would actually become a point where inflation of everyday goods would cause more political pain than house prices falling.

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Sterling like the value of the old Lira

So much for "I'm a Property millionaire", etc

What use is that with a worthless currency!!

Which is fine as a prediction, but at the moment the pound is strong, and your half-million pound quite-nice-house sold in the UK gets you a very very very shiny house abroad.

Which is why the property millionaires can still laugh at the moment. However much people here believe the pound is a fiat currency, that hasn't changed its perception in the rest of the world, or on the FX markets...

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yes I know, I asked him on another thread but he didn't seem too interested in the BOE revelations, I wonder why. ;)

Revelations?

Now I know you're a self-confessed naif on economic issues GOM, but don't embarrass yourself.

A central bank adjusting IRs to control the economy?

Who the hell would have thought it? :lol::lol:

And before anyone else points out that Eddie said it was unsustainable, well, yes it was. Which is why rates have now increased by 50%. Job done, in other words.

You lot take straw-clutching to a new level.

Edited by Casual Observer
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Revelations?

Now I know you're a self-confessed naif on economic issues GOM, but don't embarrass yourself.

A central bank adjusting IRs to control the economy?

Who the hell would have thought it? :lol::lol:

And before anyone else points out that Eddie said it was unsustainable, well, yes it was. Which is why rates have now increased by 50%. Job done, in other words.

You lot take straw-clutching to a new level.

aasn

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