Realistbear - Wtf Is This 'great Crash' 1/2 Nonsense

[JohnG]

The driver for last time was a combination of the abolish of MIRAS plus the average FTB being only in his/ her early 20s at the time.

The rush to beat the MIRAS deadline sucked the next 3/4 years worth of FTBs into the market earlier than would otherwise have been the case. Result - no FTBs to underpin the market for the next 3/4 years.

Haven't property prices (both real and nominal) been cycling up and down for hundreds of years?

Maybe the next one should be correctly called Great Crash 40 (or something similar).

FFS

Edited June 15, 2007 by JohnG

[OzzMosiz]

No crash was more documented that the 89-95 crash in the UK. Therefore the next crash will be the 2nd most documented.

[Realistbear]

There have been a lot of wars this century but only 2 were deemed worthy of a I & II designation.

Likewise, we have seen lots of ups and downs in the property market but only one big bust that laid prices to waste over an extended period. Great Crash I 1989-96. The current crash, now known as Great Crash 2, will be greater than its predecessor just as WWII was far more damaging on a worldwide scale than WWI.

Both GCI and GCII germinated in Southern California strangely enough--the hotbed of housing speculation which is eventually mirrored in the UK:

http://www.housepricecrash.co.uk/forum/ind...ost&id=4113

The idea of a "Great Crash" to distinguish corrections etc. came from an episode of the Vicar of Dibley. A debate raged between Trig and No no no no no about the names of various storms that had devastated the village over the last few decades. They argued as to which one was the "great Storm" or the "Big Snow" etc. People love to give names to apocalyptic events such as a World War or a Big Snow. For the housing market, given its wide ranging impact on the economy, what better designation to its two most famous crashes than Great Crash 1 and Great Crash 2? Great Crash 1 was big but Great Crash 2 will be huge, more widespread, deeper, longer and far more memorable.

Edited June 15, 2007 by Realistbear

[Guest wrongmove]

There have been a lot of wars this century but only 2 were deemed worthy of a I & II designation.

They were the only World Wars

[sortofsilver]

The Great Crash

http://en.wikipedia.org/wiki/Great_crash

Quotes from the above.

"The Wall Street Crash of 1929, also known as the Crash of ’29, was one of the most devastating stock market crashes in American history. It consists of Black Thursday, the initial crash and Black Tuesday, the crash that caused general panic five days later. The crash marked the beginning of widespread and long-lasting consequences for the United States."

"Anyone who bought stocks in mid-1929 and held on to them saw most of his adult life pass by before getting back to even.”

—Richard M. Salsman

I can't really see any of the above happening in America at the present time. The Dot-com bubble was worse than todays current standing and that caused a "relatively mild yet rather lengthy early 2000s recession in the developed world"

[JohnG]

No crash was more documented that the 89-95 crash in the UK. Therefore the next crash will be the 2nd most documented.

You're wrong.

The next one will be the most documented.

Maybe in that case you should start talking ablut 'the next great crash 1'.

[PropertyGuru]

The Great Crash

http://en.wikipedia.org/wiki/Great_crash

I can't really see any of the above happening in America at the present time.

gosh, that's a relief then.

We were all starting to get worried. Thank ****** you are here to give us the marvellous benefit of your ******wit opinion

[Realistbear]

The Great Crash

http://en.wikipedia.org/wiki/Great_crash

Quotes from the above.

"The Wall Street Crash of 1929, also known as the Crash of ’29, was one of the most devastating stock market crashes in American history. It consists of Black Thursday, the initial crash and Black Tuesday, the crash that caused general panic five days later. The crash marked the beginning of widespread and long-lasting consequences for the United States."

"Anyone who bought stocks in mid-1929 and held on to them saw most of his adult life pass by before getting back to even.”

—Richard M. Salsman

I can't really see any of the above happening in America at the present time. The Dot-com bubble was worse than todays current standing and that caused a "relatively mild yet rather lengthy early 2000s recession in the developed world"

Ben is certainly worried about the economy and has commented to the effect that the potential damage in the wake of GC2 has been seriously underestimated. The London property spivs (Foxtons, and Henry Pryor of primemove.com) have been getting out of the market and for good reason. Its going to get very ugly very soon.

[29929BlackTuesday]

They were the only World Wars

Well they were the first world wars to be called world wars. We've had many wars on a global (for the period) scale. Really WW1 and 2 were a collection of colonial wars lumped together.

What Realist bear is trying to do is give this situation a name. It's not a crime.

There's the Whopper and the Double Whopper.

WHy not go and complain about those and free up this site for genuine posters (not you wrongmove)

[JohnG]

gosh, that's a relief then.

We were all starting to get worried. Thank ****** you are here to give us the marvellous benefit of your ******wit opinion

Since you are around, PG, and it looks increasingly like you call that Q0107 being the turning point, what's your view on RB's "GC1/ GC2"?

[Guest portwinestain]

http://www.timesonline.co.uk/tol/comment/c...icle1906626.ece

prices crashed up to 40% during Edwardian times

Edited June 15, 2007 by Bear-lite

[Guest Yeahbutnocrash]

There have been a lot of wars this century but only 2 were deemed worthy of a I & II designation.

Likewise, we have seen lots of ups and downs in the property market but only one big bust that laid prices to waste over an extended period. Great Crash I 1989-96. The current crash, now known as Great Crash 2, will be greater than its predecessor just as WWII was far more damaging on a worldwide scale than WWI.

Both GCI and GCII germinated in Southern California strangely enough--the hotbed of housing speculation which is eventually mirrored in the UK:

http://www.housepricecrash.co.uk/forum/ind...ost&id=4113

The idea of a "Great Crash" to distinguish corrections etc. came from an episode of the Vicar of Dibley. A debate raged between Trig and No no no no no about the names of various storms that had devastated the village over the last few decades. They argued as to which one was the "great Storm" or the "Big Snow" etc. People love to give names to apocalyptic events such as a World War or a Big Snow. For the housing market, given its wide ranging impact on the economy, what better designation to its two most famous crashes than Great Crash 1 and Great Crash 2? Great Crash 1 was big but Great Crash 2 will be huge, more widespread, deeper, longer and far more memorable.

Yes there used to be a strip cartoon in the Bristol Evening post about a civil servant called 'Bristow'

Often in his world of work nothing much was going on - He'd be sat at his desk often with his arms stretched behind him and away from his desk whilst chatting - He'd start winding down to get ready to leave the office about 30 minutes before going home time

The only exciting event he used to recall was the 'great tea trolley disaster of 19...' (whatever year it was)

[Sinking Feeling]

I have argued before that there have historically been several. I believe that Great Crash 1 occured in 1793 (not 1993 as some would believe). Here's what I wrote a couple of weeks ago regarding evidence I had found for this crash:

I remember watching an episode of Local Heroes a few years ago. One of the stories was about William Watts and how having made a fortune out of inventing a new manufacturing process for lead shot, lost the lot investing in property.

Here’s a quote I have found about him and a quote about the Great Crash.

"In 1787, he took a partner, Philip George of the brewing family. George paid £10,000, and the pair made money: they built a shot-tower in London and made enough profit to tempt Watts into becoming a building speculator, with disastrous results: he went bankrupt building the spectacular foundations for Windsor Terrace in Clifton, at the time of the slump caused by the Napoleonic Wars".

"From about 1780 a building boom took place in Britain. ……….when Britain went to war with Revolutionary France in 1793 the boom collapsed and developers and builders were ruined overnight. Hundreds of houses were left half built and without roofs. An observer compared the scene (in Bristol) to a city which had suffered from war or the plague. It was not until the early years of the new century that many terraces were finished, often not to the high standards originally planned".

Note how the crash is blamed on external factors rather than the result of frenzied speculation. Also this fits in nicely with Fred Harrison's 18 year cycle. Harrison places the crash in 1792/1793 and the recession in 1794. This would correlate therefore with 2008 and 2010.

[oracle]

No crash was more documented that the 89-95 crash in the UK. Therefore the next crash will be the 2nd most documented.

and this one will be even more widespread!!

...most of the documentation is through media,and will continue to be so.

the guys who run the outfit WANT instability,and lots of it.

the more there is,and the greater the magnitude,the more scope there is to grab/transfer wealth to their own pockets.

Governments will do exactly as they are told by their paymasters.(that's not joe public!!)

[red]

...

Haven't property prices (both real and nominal) been cycling up and down for hundreds of years?

...

Not really. The real cyclical behaviour kicked in around 1970. Before then, I imagine houses weren't seen as assets quite so much as they are today and HPI was fairly uniform.

[CrashConnoisseur]

The only exciting event [bristow] used to recall was the 'great tea trolley disaster of 19...' (whatever year it was) [Yeahbutnocrash]

67

[Sinking Feeling]

Not really. The real cyclical behaviour kicked in around 1970. Before then, I imagine houses weren't seen as assets quite so much as they are today and HPI was fairly uniform.

I agree, to an extent. I think the system was fairly tightly controlled for most of the 20th Century. In the very early 1970s banks were set free of many of the restrictions which had bound them since the war - In 1972 private sector lending was 345% higher than in 1971 with a large percentage of this money going to the building industry. This caused an oversupply of property and a crash in real, if not nominal terms.

The main change in the early 80s when banks moved into the mortgage market - a market which until that point had been dominated by building societies with a 96% share. This was the start of the effects of fractional reserve banking on the property market.

[kagiso]

Not really. The real cyclical behaviour kicked in around 1970. Before then, I imagine houses weren't seen as assets quite so much as they are today and HPI was fairly uniform.

Historically there have been many booms in house and land prices, going back at least 200 years.

There was a big boom straight after WW2 due to lots of returning soldiers, no house building for 6 years and some substantial slum clearance programmes operated by Herr Goering.

After that boom there was a long flat period with very stable house prices until as you say the early 70s.

Then we had the 'Barber boom' when the then Tory Chancellor relaxed controls on credit, including mortgages, which makes it the first HPC in modern times.

HPC2 was in the late 70s under Healey, killed off before it's prime by Thatcher.

HPC3 was the Lawson boom.

HPC4 is the Brown boom and bust, just starting.

I imagine RB ignores the first two of these booms because he wasn't here to remember them, and is too ignorant to read and understand the many posts about them on this site. Certainly the Barber boom in its time was considered just as important as the Lawson boom.

The Great Crash was of course the US stock market crash, whose effects were compounded by very seriously flawed economic policies.

Despite numerous asset bubbles in the intervening periods, both of houses and stock markets, no western democracy has had serious long term economic problems as a consequence of them.

While HPC4 will not be a pleasant experience it will not be another 'Great Crash'.

RB's insistence in calling it GC2 is simply a consequence of his ignorance, arrogance and very childish tendency to exaggeration.

[Realistbear]

Historically there have been many booms in house and land prices, going back at least 200 years.

There was a big boom straight after WW2 due to lots of returning soldiers, no house building for 6 years and some substantial slum clearance programmes operated by Herr Goering.

After that boom there was a long flat period with very stable house prices until as you say the early 70s.

Then we had the 'Barber boom' when the then Tory Chancellor relaxed controls on credit, including mortgages, which makes it the first HPC in modern times.

HPC2 was in the late 70s under Healey, killed off before it's prime by Thatcher.

HPC3 was the Lawson boom.

HPC4 is the Brown boom and bust, just starting.

I imagine RB ignores the first two of these booms because he wasn't here to remember them, and is too ignorant to read and understand the many posts about them on this site. Certainly the Barber boom in its time was considered just as important as the Lawson boom.

The Great Crash was of course the US stock market crash, whose effects were compounded by very seriously flawed economic policies.

Despite numerous asset bubbles in the intervening periods, both of houses and stock markets, no western democracy has had serious long term economic problems as a consequence of them.

While HPC4 will not be a pleasant experience it will not be another 'Great Crash'.

RB's insistence in calling it GC2 is simply a consequence of his ignorance, arrogance and very childish tendency to exaggeration.

The only really serious HPC was the Great Crash of 1989-96. The mini-busts that we see every now and then are just the result of the cycle working its way through. Great Crash 2 is distinguishable by it sheer power. Ben Bernanke commented today that the force of this monster has been greatly underestimated. The Fed are worried--very worried. Banks are closing as subprime wreaks havoc with millions destined to lose their homes. Prices are crashing in many areas with California seeing 50% drops in the epicenter of San Diego. Florida is in meltdown. This crash is very big and cannot be compared with the corrections that occurred in the 70's and early 80's.

Both GCI and GCII are distinguishable from other financial bear markets because they are both house price-centric. Their cause has been HPI-MEW more so than stock market bubbles or other forms of speculation. Houses are main drivers of the bubble market economies of the UK and US.

The failure to recognise the power of Great Crash 2 is precisely why ben Bernanke went on the record today with his concerns. Perhaps Ben is being childish too? I personally doubt it.

[Guest Charlie The Tramp]

The only really serious HPC was the Great Crash of 1989-96.

I still say a very serious one was the hidden crash of 76/77, when I moved from my FTB`s 2 bed maisonette to a 4 bed newish detached house after just 6 years in the HM, earning a below average wage in an unskilled occupation.

Buyers in 92 who sold their FTB properties had no chance in hell to move up to a 4 bed detached unless they had received a massive boost in earnings.

[benno1uk]

Ben is certainly worried about the economy and has commented to the effect that the potential damage in the wake of GC2 has been seriously underestimated. The London property spivs (Foxtons, and Henry Pryor of primemove.com) have been getting out of the market and for good reason. Its going to get very ugly very soon.

Yes - Foxtons are getting out of the market because they are being bought for £400 Million. That seems a pretty good reason to get out to me. They buyers must think that property is a good investment or they wouldn't throw that amount of money at it would they?

Plus as the members of this site like to spot trends, how about this for a trend. The last major crashes started in 1929 and 1989 - 60 years apart. So the next crash will start in 2049. Simple! You lot should have some pretty big deposits saved up by then!!!

[sortofsilver]

Ben is certainly worried about the economy and has commented to the effect that the potential damage in the wake of GC2 has been seriously underestimated. The London property spivs (Foxtons, and Henry Pryor of primemove.com) have been getting out of the market and for good reason. Its going to get very ugly very soon.

A good example of a counter argument.

gosh, that's a relief then.

We were all starting to get worried. Thank ****** you are here to give us the marvellous benefit of your ******wit opinion

Name calling from a 50 year old with a wrestler as an avatar. Congratulations on making it on to the "I cannot offer an intelligent counter argument so i will call you a name" list.

[JohnG]

Not really. The real cyclical behaviour kicked in around 1970. Before then, I imagine houses weren't seen as assets quite so much as they are today and HPI was fairly uniform.

Doesn't matter what you imagine. Property cycles have still existed for hundreds of years.

[oops! edited for typos]

Edited June 15, 2007 by JohnG

[kagiso]

The only really serious HPC was the Great Crash of 1989-96. The mini-busts that we see every now and then are just the result of the cycle working its way through. Great Crash 2 is distinguishable by it sheer power. Ben Bernanke commented today that the force of this monster has been greatly underestimated. The Fed are worried--very worried. Banks are closing as subprime wreaks havoc with millions destined to lose their homes. Prices are crashing in many areas with California seeing 50% drops in the epicenter of San Diego. Florida is in meltdown. This crash is very big and cannot be compared with the corrections that occurred in the 70's and early 80's.

Both GCI and GCII are distinguishable from other financial bear markets because they are both house price-centric. Their cause has been HPI-MEW more so than stock market bubbles or other forms of speculation. Houses are main drivers of the bubble market economies of the UK and US.

The failure to recognise the power of Great Crash 2 is precisely why ben Bernanke went on the record today with his concerns. Perhaps Ben is being childish too? I personally doubt it.

You think that the chaos that ended in the three day week was a 'mini-bust'?

We have the exact same problems with rising oil prices and rising house prices, but I don't think we are going to have a three day week, complete paralysis of the economy, a pay board, a prices commission, and a government removed by popular discontent.

The coming crash will be a cakewalk compared to the early 70s.

I can remember eating my dinner by candlelight such was the economic meltdown. Just because you can't remember it doesn't mean it didn't happen.

Ignorant, arrogant and childish confirmed.

http://news.bbc.co.uk/1/hi/events/budget_9...fing/279928.stm

The Barber Boom (1972)

The Conservative chancellor during the Heath government, Anthony Barber, bears a considerable responsibility for the fundamental shift in British economic policy in the last few decades.

His unsuccessful "dash for growth" led to inflation, confrontation with the unions, and ultimately to the defeat of Edward Heath and his replacement by Mrs Thatcher.

Anthony Barber told Parliament in 1972 that his Budget would add 10% to the UK's growth in two years, and he professed to be unconcerned by his own forecast of a £3.4bn public sector borrowing requirement.

He reduced income taxes by £1bn, and gave further huge tax concessions to industry in order to save jobs.

Unfortunately, events soon proved him wrong. Inflation soared, boosted by the newly-floated pound and the first oil crisis.

Within 15 months the chancellor was forced to bring in a deflationary Budget, and the government was forced into an incomes policy (wages freeze) to try to control inflation which led to a confrontation with the miners.

The UK's economic performance continued to deteriorate during the 1970s, and the stock market and housing boom went into reverse.

The debacle convinced many critics, not least in the Conservative Party, that Keynesian measures which used government spending to boost the economy and cut unemployment, no longer worked.

http://en.wikipedia.org/wiki/Anthony_Barber,_Baron_Barber

During his term the economy suffered due to stagflation and industrial unrest. In 1972 he delivered a budget which was designed to return the Conservative Party to power in an election expected in 1974 or 1975. This budget led to a period known as "The Barber Boom". The measures in the budget led to high inflation and wage demands from Public Sector workers. He was forced to introduce anti-inflation measures in September 1972, along with a Prices Commission and a Pay Board. The inflation of capital asset values was also followed by the 1973 oil crisis which followed the Yom Kippur War, adding to inflationary pressures in the economy and feeding industrial militancy (already at a high as a result of the struggle over the Industrial Relations Act 1971).

After a strike by the miners, and a three-day week, Heath called for a general election on February 28, 1974, asking "Who governs Britain?". The election returned a minority Labour Government and Harold Wilson as Prime Minister.

[JohnG]

The only really serious HPC was the Great Crash of 1989-96.

All that did was to set prices back to where they were 12 months before the peak.

Still, never let the truth get in the way of a drama, eh?