Credit Bubble Bursts: First Snows Of K-winter

[Compounded]

Bump.

[t350t]

Romance, Westerns, SF and Fantasy and so on will be back in vogue.

at risk of sounding a geek... hehe more sci fi? great, bring it on!

I work in the games industry.. it's always had it's own boom/bust cycles (tied to hardware generations) which seem independant of other economic trends. I do remember reading the idea that during the depression people always had money for a cinema ticket. So hopefully people will buy less sports cars, and more driving games

[iangilb]

Great post. Thanks.

Struck me as very Roger Bootle. You are not him by any chance?

[Waverider]

not being rude, but original post seems like something straight out of the daily mail to me. Lacking in facts, filled with conjecture and written in an over the top manner. please take with a pinch of salt.

Edited October 5, 2007 by Waverider

[cynic]

not being rude, but original post seems like something straight out of the daily mail to me. Lacking in facts, filled with conjecture and written in an over the top manner. please take with a pinch of salt.

Are you absolutely sure you're a bear?

[Bloo Loo]

not being rude, but original post seems like something straight out of the daily mail to me. Lacking in facts, filled with conjecture and written in an over the top manner. please take with a pinch of salt.

no, its the standard K-winter scenario

[pasquino]

not being rude, but original post seems like something straight out of the daily mail to me. Lacking in facts, filled with conjecture and written in an over the top manner. please take with a pinch of salt.

It could look like something out of the daily mail but that does not mean that so far is one of the clearer and articulate post I`ve seen in this forum.

Open your eyes and the FACTS are around you; as an entrepeneur for almost all my life (Iam 56 now) I`ve NEVER seen in all my life anything like this, the lack of values brings nowhere, unless there are some other healty velues ready to take the place of the old ones, and frankly this does not applies to present times.

The history of human being goes through tragedies, wars, social and economical crisis, they are necessary to rediscover the real meaning of life and even more to build something new having learnt from the previous mistakes.

If we all want a better and fairer life we must accept to destroy only in order to buid again in the hope that eventually the world becomes better.

It is indeed 10 steps forward and 9,5 steps back but that 0,5 represent hour hope just like our kids.

If you think of the future as a better place for your kids wish yourself and us all a massive change, it will be painful but, believe me ,it will be whorth it.

Sorry for my english but I am a bloody foreigner

[Compounded]

no, its the standard K-winter scenario

Thats the trouble, I want to believe our society will blunder on and not much will change.

I read this and it makes so much sense I get fearful.

The debt is mad - I read here on this site a few minutes ago BAA is £19 billion in debt.

Why?

For what purpose?

My conclusion is the financial sector is in cloud cookoo land and we are going to pay for it dearly.

[Compounded]

It could look like something out of the daily mail but that does not mean that so far is one of the clearer and articulate post I`ve seen in this forum.

Open your eyes and the FACTS are around you; as an entrepeneur for almost all my life (Iam 56 now) I`ve NEVER seen in all my life anything like this, the lack of values brings nowhere, unless there are some other healty velues ready to take the place of the old ones, and frankly this does not applies to present times.

The history of human being goes through tragedies, wars, social and economical crisis, they are necessary to rediscover the real meaning of life and even more to build something new having learnt from the previous mistakes.

If we all want a better and fairer life we must accept to destroy only in order to buid again in the hope that eventually the world becomes better.

It is indeed 10 steps forward and 9,5 steps back but that 0,5 represent hour hope just like our kids.

If you think of the future as a better place for your kids wish yourself and us all a massive change, it will be painful but, believe me ,it will be whorth it.

Sorry for my english but I am a bloody foreigner

Most important thing you can do is raise your kids as well as you can, that's never changed cos they will change things.

Debt is slavery of the free said by a Roman before christ was born.

I think this period in 300 years will be looked on as we look on the South Sea Bubble, the Mississippi scheme or tulips in Amsterdam but it will pass.

[Bloo Loo]

Most important thing you can do is raise your kids as well as you can, that's never changed cos they will change things.

Debt is slavery of the free said by a Roman before christ was born.

I think this period in 300 years will be looked on as we look on the South Sea Bubble, the Mississippi scheme or tulips in Amsterdam but it will pass.

I can think of nothing else that is permanant- the only thing I can think of is the relationship with your kids- no matter what else changes, they Are your kids. nope cant think of anything else thats never changing

[Guest xeouialp]

articulate post

You mean wordy

[eric pebble]

It could look like something out of the daily mail but that does not mean that so far is one of the clearer and articulate post I`ve seen in this forum.

Open your eyes and the FACTS are around you; as an entrepeneur for almost all my life (Iam 56 now) I`ve NEVER seen in all my life anything like this, the lack of values brings nowhere, unless there are some other healty velues ready to take the place of the old ones, and frankly this does not applies to present times.

The history of human being goes through tragedies, wars, social and economical crisis, they are necessary to rediscover the real meaning of life and even more to build something new having learnt from the previous mistakes.

If we all want a better and fairer life we must accept to destroy only in order to buid again in the hope that eventually the world becomes better.

It is indeed 10 steps forward and 9,5 steps back but that 0,5 represent hour hope just like our kids.

If you think of the future as a better place for your kids wish yourself and us all a massive change, it will be painful but, believe me ,it will be whorth it.

Sorry for my english but I am a bloody foreigner

Pasquino: Reading your post and the very first one on this thread -- makes me feel pretty worried, sad.... but vindicated. You are as you say 56 and a life-long entrepreneur. Well - I am bit younger -- but I have watched things unfold here in the UK with more and more amazement. I have been staggered by how stupid people can be - watching house "prices" just climb and climb and climb -- and as all who know me here on HPC - I am absolutely convinced that the MAIN force behind this rampant house price inflation has been deliberately orchestrated by the Moneylenders and the VIs - and almost certainly - by the backroom boys at NuLabour HQ. It is TOTALLY clear: Mortgage Fraud/"Self-Cert"/Sub-Prime Lending has been a license to print money - a very crafty - and CRIMINAL system designed to benefit those who have played it JUST right - the multimillionaires/billionaires who bougth cheap ages ago - and have sold AT THE TOP OF THE MARKET THEY HAVE RIGGED - sold up every scrap of their property "portfolios" - latest in recent weeks. And in the meantime VIs like PR Companies, EAs, TV Property Programmes, Media saturation of the "wonders of property investment" etc etc. - all this is the machinery of The World's Greatest Ever Mass Pyramid Selling Scam - the "housing/property market". It beggars belief how many people have walked into the trap.

Over the years I have posted thousands of times on HPC - and I have maintained a theme all along -- this has been The Greatest Financial Scam of All Time. But what truly amazes me is - how people just do not appear to ever stop, and think for just one moment; "If I was to pay in cash out of my earnings ONLY for that modest little flat house, with 2-3 bedrooms for me and my family - OR - in the sadly long-gone days when Housing Loans were advanced by Mutual Organisations on the basis of FAIRNESS and SELF-HELP - i.e. MAXIMUM loans of 2 to 3 times annual income -- WHAT WOULD I PAY FOR THAT PROPERTY?

ANSWER: What you could rationally and reasonably afford.

What has happened in recent years?

Simple. Credit/Loans/Mortgages have become a vehicle to be used in conjunction with the "housing market" to SCREW people into the ground for the REST OF THEIR LIVES. No morals. No mutual benefit. So sensible, tranparent, reasonable, affordable [etc.] paying back plans. No rationality. Just - SCREW PEOPLE - and then quickly "sell" the debt out into the ether - CDO's/Sub-Prime etc etc. AND SCREW EVERYONE ELSE.

I just KNEW things were drastically bad when I saw that BBC Money Programme in 2003 [see below]. Because I realised something so many people seemed to miss: If A, B, C & D obtain a huge mortgage via a Lie-to-Buy/"Self-Cert"/Sub-Prime Mortgage and then go an spend that huge sum of money on a very average property in neighbourhood A, B C & D -- THE COMPARABLE PRICE FOR EVERY SINGLE ONE OF COMPARABLE PRICES IN THAT NEIGHBORHOOD GOES UP CORRESPONDINGLY. THAT IS HOW IT WORKS.

SO -- It only took even a 5-10% proportion of people Lying to Buy/taking out "self-cert"/sub-prime mortgages -

[eric pebble]

It could look like something out of the daily mail but that does not mean that so far is one of the clearer and articulate post I`ve seen in this forum.

Open your eyes and the FACTS are around you; as an entrepeneur for almost all my life (Iam 56 now) I`ve NEVER seen in all my life anything like this, the lack of values brings nowhere, unless there are some other healty velues ready to take the place of the old ones, and frankly this does not applies to present times.

The history of human being goes through tragedies, wars, social and economical crisis, they are necessary to rediscover the real meaning of life and even more to build something new having learnt from the previous mistakes.

If we all want a better and fairer life we must accept to destroy only in order to buid again in the hope that eventually the world becomes better.

It is indeed 10 steps forward and 9,5 steps back but that 0,5 represent hour hope just like our kids.

If you think of the future as a better place for your kids wish yourself and us all a massive change, it will be painful but, believe me ,it will be whorth it.

Sorry for my english but I am a bloody foreigner

Pasquino: Reading your post and the very first one on this thread -- makes me feel pretty worried, sad.... but vindicated. You are as you say 56 and a life-long entrepreneur. Well - I am bit younger -- but I have watched things unfold here in the UK with more and more amazement. I have been staggered by how stupid people can be - watching house "prices" just climb and climb and climb -- and as all who know me here on HPC - I am absolutely convinced that the MAIN force behind this rampant house price inflation has been deliberately orchestrated by the Moneylenders and the VIs - and almost certainly - by the backroom boys at NuLabour HQ. It is TOTALLY clear: Mortgage Fraud/"Self-Cert"/Sub-Prime Lending has been a license to print money - a very crafty - and CRIMINAL system designed to benefit those who have played it JUST right - the multimillionaires/billionaires who bougth cheap ages ago - and have sold AT THE TOP OF THE MARKET THEY HAVE RIGGED - sold up every scrap of their property "portfolios" - latest in recent weeks. And in the meantime VIs like PR Companies, EAs, TV Property Programmes, Media saturation of the "wonders of property investment" etc etc. - all this is the machinery of The World's Greatest Ever Mass Pyramid Selling Scam - the "housing/property market". It beggars belief how many people have walked into the trap.

Over the years I have posted thousands of times on HPC - and I have maintained a theme all along -- this has been The Greatest Financial Scam of All Time. But what truly amazes me is - how people just do not appear to ever stop, and think for just one moment; "If I was to pay in cash out of ONLY my earnings for that modest little flat house, with 2-3 bedrooms for me and my family - OR - in the sadly long-gone days when Housing Loans were advanced by Mutual Organisations on the basis of FAIRNESS and SELF-HELP - i.e. MAXIMUM loans of 2 to 3 times annual income -- WHAT WOULD I PAY FOR THAT PROPERTY?

ANSWER: What you could rationally and reasonably afford.

What has happened in the last decade in particular? The LENDERS [slimey, excrement] have got TOTALLY out of control – and DELIBERATELY lent HUGE sums of money to people SO THAT THEY PAY HUGE SUMS OF MONEY for an otherwise very modest purchase. RESULT? HUGE PROPERTY PRICES – EVER-RISING for a long period – a period during which the Vis have been able to BUY CHEAP in a “market” they have RIGGED – and to SELL HIGH – and make MILLIONS/BILLIONS in some cases- all off the backs of the ordinary punter who has joined in the Massive Pyramid Selling Scam – the “housing market”. The "little people" of course will be living in their 1 off purchases - trying to live a normal life. The VIs in the meantime would have purchased blocks at a time - and sold them like potatoes.

So it is really quite simple. Credit/Loans/Mortgages have become a vehicle to be used in conjunction with the "housing market" to SCREW people into the ground for the REST OF THEIR LIVES. No morals. No mutual benefit. So sensible, tranparent, reasonable, affordable [etc.] paying back plans. No rationality. Just - SCREW PEOPLE - and then quickly "sell" the debt out into the ether - CDO's/Sub-Prime etc etc. AND SCREW EVERYONE ELSE.

I just KNEW things were drastically bad when I saw that BBC Money Programme in 2003 [see below]. Because I realised something so many people seemed to miss: If A, B, C & D obtain a huge mortgage via a Lie-to-Buy/"Self-Cert"/Sub-Prime Mortgage and then go and spend that huge sum of money on a very average property in neighbourhood A, B C & D -- THE COMPARABLE PRICE FOR EVERY SINGLE ONE OF COMPARABLE PROPERTY/IES IN THAT NEIGHBORHOOD GOES UP CORRESPONDINGLY. THAT IS HOW IT WORKS.

SO -- It only took even a 5-10% proportion of people Lying to Buy/taking out "self-cert"/sub-prime mortgages - AND THE WHOLE MARKET WAS SKEWED. THAT is why prices rose so incredibly quickly - say between 2001 and 2007. MORTGAGE FRAUD/SUB-PRIME/"SELF-CERT" - (all these are much the same) - THEY - ALONG WITH THE ACCOMPANYING CDO'S [selling the debt out into the ether to a bank the other side of the world disguised as an AAA Debt) - WERE UTTERLY UTTERLY TOXIC - INDEED CANCEROUS.

So yes - I agree with the first post -- The perpetrators will have to go to prison for the rest of their lives -- because they have utterly ruined the world economy for generations - and the lives of countless millions.

--------------------------------------------------------------------------------------------------------------------------------------------------------------

ALL THIS LIE-TO-BUY SCAM WAS UNCOVERED AND SHOWN UP IN 2003 [see below]. THE FSA DID SWEET FA ABOUT IT; WHY?!?! Was it because, if thy did nothing about it, the “value” of their own properties would just keep going up?!?

Mortgage customers 'urged to lie'

Housebuyers are being encouraged to break the law in order to obtain huge mortgages, the BBC has discovered.

http://news.bbc.co.uk/1/hi/business/3222053.stm

The Money Programme uncovers massive mortgage fraud

BBC TWO's The Money Programme has revealed a huge mortgage fraud with brokers from some of Britain's biggest estate agents and financial advice groups advising customers to break the law and lie about their incomes to get massively bigger mortgages.

And it shows how the illicit cash raised by this method has been pouring into the housing market, boosting prices and leaving many people risking financial ruin.

http://www.bbc.co.uk/pressoffice/pressrele..._mortgage.shtml

Edited October 12, 2007 by eric pebble

[Compounded]

I have copied it, sorted out the typos and printed and given it to a couple of friends.

Tried to contact the writer but he/she did not accept messages.

I knew a good bit about the south sea bubble and have been to Walpoles very decadent house - I love history.

The more I see the more it confirms his senario,

The two key early predictions job losses in the city and frauds being discovered are coming true.

The first major UK bank run since Victorian times should tell any thinking man something is wrong and its big.

I watch panorama and it just confirms it though the people making it have no clue what it means and the programme gets confused.

My conclusion is to have no debt - I have'nt anyway and then to save in gold and silver, hoping that a bubble in those does not come too soon.

But I have so many I care about with silly mortgages and I cannot help them.

Edited October 12, 2007 by Compounded

[symo]

Back on topic:

Just seen 4 major banks raise it's prices on letters of credit & bank guarantee's slightly above interest rate.

[Optobear]

In short, times will change, but not all the changes will be bad ones.

Certainly the future just got a lot more interesting and as I said, you have a ringside seat for the most spectacular financial event in this planet's history.

Nice post, good setting out of the history of bubbles in context.

I found myself thinking about the next missing bit, the historical bit. There is another way out, traditionally taken by despots and dictators. WAR. Never a solution put forward by Western democracies, but elsewhere in the world, where the economic fall-out hits harder, where the reserves are smaller, where the tradition of democracy is not established.

So I hope you are wrong.

[Wlad]

The central banks will try more of what they're doing now: printing money and showering it liberally upon the economy. Chopper Ben got his name for a 2003 paper on how to stop a deflation by throwing cash out of helicopters.

A depression with deflation is a thing to fear, and injecting liquidity is a valid exercise. It can damage accumulated wealth in the currency into which liquidity is being injected, but then if the alternative is being out of work (which will destroy wealth for most people) it isn't necessarily a bad thing to do. Injecting liquidity doesn't necessarily imply the cgnao hyperinflationary situation if the amount injected is simply making up for the loss of other forms of money supply. A contracting money supply (as was feared in 2002) would be a big problem.

[Goldfinger]

Wlad, as someone put it, what the central banks are doing is like if someone who is completely overhung from a night of binge drinking has a vodka first thing in the morning. Good luck with that strategy!

[Goldfinger]

Now of course a normal credit bust would take 16-18 years to play out, though history's largest may take a litte longer. We can't expect this sort of mayhem every day for 18 years. There will be days, weeks,months, even years when things seem to be getting back to "normal", only to fall off a cliff again and catch out the unwary. What I'd expect sooner rather than later is for a gigantic fraud or two to be uncovered. Frauds are easy to hide when everything is booming, but not so easy when folks start nervously counting their money.

http://www.moneyweek.com/file/37323/the-cr...-vengeance.html

Remember the credit crunch?

I only ask, because for a moment there, it seemed like everyone had forgotten about it. Stocks were soaring, and investors were even getting excited about the financial sector again, in the vain belief that investment banks had “kitchen sinked” their results - getting all the bad news out in the open.

But Merrill Lynch’s results last week rattled Wall Street, with the bank announcing a $7.9bn write-down for the third quarter, far larger than expected.

And now that fear has turned into full-blown panic as the Street has realised that maybe the other banks are still storing up little nasties for this quarter…

Second leg down...

[geoffk]

Deserves a bump for newbies....

[bob monkhouse]

Yup. Still, in my eyes, the single most important post on this site. Perfic. And prescient.

[jonpo]

there was an excellent K-winter post in the finance and markets sub fourm. it was one of the most influential threads that led me to the deflation conclusion...

[quad]

excelent read, a real eye opener. to think it was writen before all the crash happened.

the bears who for so long were critisised, are now being listened to.

well done fofp

[zinny01]

Always good to see this one every few months. It put a shiver down my spine when I first read it and it still does!

[King Stromba]

Posts like that are why i come on this site, Brilliant. Deserves the bump.

Edited October 5, 2008 by King Stromba