No Current Speculation From Within Of A Big Crash

[clv101]

Saw this on another forum: LINK

I'm a bank manager and certainly there is NO current speculation from within of a big crash. House prices are still rising and people still want to buy. A large amount of the country's wealth is held on secured lending against property and a crash would be catastrophic. The Bank of England won't let it happen - simple as that.

Start off small tbh, we bought a large 2 bed ground floor flat in hartlepool with private back garden and own drive for £57k in 2004 and sold it for £63k 2 years later, buying a massive 3 bed semi with potential up to 6 double bedrooms for £143k. Neither were new-build (avoid tbh - v.expensive and not as good build quality as 60's stuff) and the flat wasn't in the best area, however, the more that are sold, the better the area becomes as people like yourself start moving in. Don't stretch yourself too far either - you'll have to repair and maintain the place and that costs you.

Our website has a fairly useful mortgage calculator and HSBC is now very conservative on it's lending policies anyway - click here and the 2nd page gives you an idea of how much you could/should borrow up to.

Bank manager says no crash - prices rising - people still want to buy - BOE won't let it crash.

Edited July 15, 2007 by clv101

[Realistbear]

Saw this on another forum: LINK

Bank manager says no crash - prices rising - people still want to buy - BOE won't let it crash.

This sounds exactly like Reggie Potts, the Hartlepool bank manager who, in 1989, said that the government would not allow house prices to crash. There followed Great Crash 1, the precursor to the current crash now underway.

Silly bugger, Merv and the Muppets have as much control over world credit markets as they do over the economic cycle. Bust always follows boom--always has, always will. Its natural just like constipation if you eat too much cheese.

[laurejon]

Saw this on another forum: LINK

Bank manager says no crash - prices rising - people still want to buy - BOE won't let it crash.

Insolvency service says record levels, and predicted to rise 10% YOY.

Watched a programme on "How to be a property investor" this morning.

The location was liverpool, two women with no previous experience, and could do no work themselves. They wanted 175k to make a profit of 15k, they got less than 150k.

The presenter said property had fallen 17% on the previous year, and the market in the North of England was dead in the water.

This is not what I am seeing down South, property has been selling very quickly. Could it be the case that the unprecedented inflation in property in the North was finance soley by investors from the South who could not afford to invest in the South? If this is the case, then they have a problem, as long term prices always have to be supported in the future by the local economy, rather than inward investment from outside.

We are likely to see this scenario play out in other areas such as Devon and Cornwall, and Wales as their current pricing structure is supported solely by investment from the outside. It is well documented that the climate for inward investment does not last forever, and the day will come when people cut and run.

[Sinking Feeling]

I wonder how exactly the BoE is going to prevent it from happening!

[Realistbear]

I wonder how exactly the BoE is going to prevent it from happening!

Two options:

1. Hike and accerlate the HPC and finish off what is left of our export indudtry.

2. Cut and destroy the economy through inflation.

[Smell the Fear]

Saw this on another forum: LINK

Bank manager says no crash - prices rising - people still want to buy - BOE won't let it crash.

No offence, but this guy doesn't sound like he is privy to senior management's strategic thinking at HSBC. Being a bank manager these days is no different to being in charge of a shoe shop or newsagent (although the newsagent probably has better access to a wider range of financial information than the bank manager).

[loafer]

At the risk of being patronising, a Hartlepool bank manager is hardly at the centre of things when it comes to hearing what is going on in the market.

Herewith, the considered thoughts from earlier this week (10th) of one senior credit analyst at a major bank in London who is regularly quoted in the press...

"I feel like the Grim Reaper here as credit market players seem to be beginning to realise that credit spreads can go a WHOLE HEAP WIDER over the next few weeks and mths, and also as folks begin to realise that most everyone is LONG credit risk....you won't find too many prepared to admit that right now, but it is absolutely crystal clear that the Great Credit Bubble that has been blown up to almost obscene proportions- largely by the CDO/CLO product - over the last few yrs MUST mean that the world is LONG credit risk at the wrong price....as I have been saying for a while, the next few mths, maybe qtr or 2, will see this bubble deflate and perhaps even burst spectacularly in certain spots (US HY?)....do NOT try to call the wides..the wides will likely be a whole heap wider than current levels AND wider than you think, and it may well take months, not days, before we get to these 'wides'...so called 'value' investing over the next few weeks/mths - by which I mean bottom fishing - is likely to prove a very painful strategy over the next few mths!!"

and

"The real pain of the next few mths will be in Long credit possies, esp in areas related to US housing (IT IS GOING TO GET MUCH WORSE) and in the (largely, but not exclusively) US B/CCC space. HOWEVER, right now, I think the best 'shrt' out there is in STKs where vola is CHEAP vs Credit..... I REALLY like deep out of the money S&P puts....esp I like the 1350 Sept PUT...currently at (mid) $5.20/put//$520/contract.....IF I am right, this bad boy could easily trade in the high 30s/low 40s per out at some point over the next 4/6wks.....

WORD OF CAUTION AGAINST BEING TO BEARISH - if USTs rally back below 4.95, and if S&P can close above 1560 for 4 consecutive days, it will probably be a signal to get bullish again...currently I see the prospects of such a scenario emerging as slim, but I wanted to highlight it just in case. "

He is known as being bearish, but he is very connected into the markets.

What happens in the credit and stock markets will directly impact the UK housing market.

[Ash4781]

Two options:

1. Hike and accerlate the HPC and finish off what is left of our export indudtry.

2. Cut and destroy the economy through inflation.

What about hold and containment as in the US ?

Or is the UK too small so has little spare capacity (Inflation accelerates).

Edited July 15, 2007 by Ash4781

[b0rk]

If he's anything my local bank manager HSBC btw then he is probably in his mid twenties and never seen a housing market that doesn't rise. The era of bank managers being middle aged men with large salaries that had seen it all before is sadly over nowadays they're all young thrusting executives in adsa suits earning peanuts, but thinking they're the man (or woman).

It wouldn't surprise me if senior management at regional and national level actively mushroom branch managers.

[clv101]

No offence, but this guy doesn't sound like he is privy to senior management's strategic thinking at HSBC.

Ah yeah, I wasn't implying any credibility in his message. It was posted in sarcasm.

[b0rk]

HSBC after all bought HFC a couple of years back at the height of wide margin sub prime sexiness. HFC are one of the (if not the) largest sub prime lenders in the United States - and I don't think we've heard the end of the fallout from that purchase yet.

HFC UK are also into store credit cards, store loans, personal loans, secured second charge loans, loan insurance (PPI) and home insurance. Nice and low risk lending profile there. IIRC I think they are either number one or two in store based credit finance.

[the end is a bit nigher]

HFC UK are also into store credit cards, store loans, personal loans, secured second charge loans, loan insurance (PPI) and home insurance. Nice and low risk lending profile there. IIRC I think they are either number one or two in store based credit finance.

IIRC HFC has been closed in the last couple of weeks by it's owner (or was that a competitor) - i went to talk about work there just when they were bought and they were struggling then

back on topic, i have some current knowledge of the mortgage market and my understanding is that it has tanked in the last few weeks, much to the surprise of senior management - how bad the tanking is i don't know - it could be 1% or 25% - we shall see soon enough

[oracle]

Two options:

1. Hike and accerlate the HPC and finish off what is left of our export indudtry.

2. Cut and destroy the economy through inflation.

I disagree RB.

Option 1 is far more sensible.....sure it will temporarily take sterling up,but with a full-blown HPC and retail-sector depression,the currency will weaken quickly,leaving our exports like financials,miners and oil co's very profitable on the FTSE.

inflation will just destroy the whole economy,withou bringing in revenue....option 1 it is,for sure!!