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Realistbear

" British House Buyers Should Worry "

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http://www.telegraph.co.uk/opinion/main.jh...9/07/do0702.xml

British house buyers should worry

By Ambrose "Ambers" Evans Pritchard
Last Updated: 12:01am BST 07/09/2007
If you keep no more than a desultory eye on the markets, checking the FTSE-100 or the Dow each morning but little more, you would not be aware that the world financial system had a heart attack over the summer, and is still in emergency care.
The shocking events of August 20 have no parallel in modern capitalism.
A panic flight to safety caused the yield on three-month US Treasury notes to plunge at the fastest rate ever recorded, outdoing the 1987 stock market crash and 9/11...../
The median price of a new house in America has fallen from $262,600 in March to $237,900 in June, down nine per cent. Prices of all homes have dropped 11 per cent in Detroit, 7.7 per cent in Tampa, over the past year.
....../
The maximum pain will hit in March 2008, when the rates on "teaser" loans ratchet to their likely peak.
Markets are betting on a central bank bail-out, led by the Fed. The futures contracts have priced in a half-point cut on September 18, with strings of cuts thereafter.
They are betting, in fact, that the credit soufflé will swiftly rise again.
But this is not a repeat of 1998, when Alan Greenspan provided three "coups de whisky" to juice Wall Street, and the world.
That was a time of falling inflation, thanks to cheap Asian imports.
Now the "China effect" is working the other way. Prices are creeping up. The easy trade-off between growth and inflation is behind us.
Nor is Ben Bernanke the son of Greenspan.
"It is not the responsibility of the Federal Reserve to protect lenders and investors from the consequences of their financial decisions," he warned over the weekend.
Bet against him if you dare.

The "resets" appear to have been the lead trigger for the huge drop in house prices in the US. Our market sees the first of the resets hit this month. I think this summer has truly been the "calm before the storm." The press seem to have gone from bearish to downright panic stricken and it is rare to read anything these days to the effect that the world wide crash is not going to impact Gordon's miracle market that created a minset that house prices only go up.

IMO the world central bankers are going to work together on this one as it has depression written all over it. I think the article is right in their assessment of Ben as he is not like what many mistakenly think Big Al was like. Over history the number one enemy is inflation and I believe they will allow a sdevere HPC to occur as it will be the best thing in the LONG RUN. Burst the bubble and get back to business and put in place safegurads to never allow Brown-style miracles (boom only and no boom & bust) to happen again.

I think we are about to enter an era of austerity and there will be no spoonful of sugar to help the medicine go down.

Edited by Realistbear

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A panic flight to safety ??????

More like a panic flight to stupidity if the FED decide to open liquidity taps to save their failing policy of previous liquidity pumping - that money will be wiped out by inflation.

The site that tracks the noe non-existent M3 measure has it standing at around 13%. Growing numbers of central banks have no economic policy other than spike the money supply by whatever means they can to simulate growth and encourage otherwise unattanable consumption.

Should be good for commodities. Commodities may be the final bubble.

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A panic flight to safety ??????

More like a panic flight to stupidity if the FED decide to open liquidity taps to save their failing policy of previous liquidity pumping - that money will be wiped out by inflation.

The site that tracks the noe non-existent M3 measure has it standing at around 13%. Growing numbers of central banks have no economic policy other than spike the money supply by whatever means they can to simulate growth and encourage otherwise unattanable consumption.

Should be good for commodities. Commodities may be the final bubble.

I agree. There is no policy because of the three most used words today: "We don't know."

The flight to safetry is simply based on the fact that when the world goes into depression the US is first in and first out. Their economy is diverse and resilient. We are a one trick pony and will be heavily dependent on the US when the going gets rough.

I think Ben and Claude are working together on this one. The policy of the Fed is no bail out. They can't bail out millions of homeloans so they have to allow the bubbles to pop and come up with some plans to house the millions of homeless thaty will follow on from the re4sets. I think they will devise a Roosevelt-type plan to take the houses over and lease them back. A massive council house scheme in effect. Like the article says, Ben will not re-inflate the economy as that would guarnatee a world recession. IN the short term we will see effective IR rise as the ebt crisis unwinds and liquidity disappears. I have been watching my US money market accounts and the IR are soaring every day. I am extremely cautious on stocks as any hint of "austerity" and down they go.

THis is a few days of calm before the reality of what has happened hits the average sheeple.

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..

"It is not the responsibility of the Federal Reserve to protect lenders and investors from the consequences of their financial decisions," he warned over the weekend.

...

Nor is it the responsibility of the BoE to cut rates to bail out those who borrowed irresponsibly, but they did (Aug 2005) - it sickens me to hear the masses clamouring for rate cuts just to save their skins when it's their own lack of financial nouse (and greed) that's put them in this position in the first place. The message these people hear from the BoE / government is therefore: 'borrow what you like, we'll bail you out if it goes t1ts up...'

Well, maybe now the BoE's decisions will mean less as the banks put the squeeze on and we'll see some serious consequences...

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Nor is it the responsibility of the BoE to cut rates to bail out those who borrowed irresponsibly, but they did (Aug 2005) - it sickens me to hear the masses clamouring for rate cuts just to save their skins when it's their own lack of financial nouse (and greed) that's put them in this position in the first place. The message these people hear from the BoE / government is therefore: 'borrow what you like, we'll bail you out if it goes t1ts up...'

Well, maybe now the BoE's decisions will mean less as the banks put the squeeze on and we'll see some serious consequences...

There is one difference between the Fed situation and the BoE. Gordon runs the BoE through the Treasury Department whereas Ben is more a creature of the world banking system than he is of any US government agency. The two guys in charge now are, IMO, Claude and Ben with a nod to the Japanese man with a rude name. They must work together and manage this thing with a view to global repercushions of any policies. I doubt Merv will be at the top of the "need to know list."

Edited by Realistbear

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RB check out todays daily mail. Lehman brothers to shut SPPL and LMC...... Massive bear news for you. Surprised you have not posted it already

Bloomberg said they have a special report at 9:10 which may relate. Its unwravelling at break neck speed now.

When will the SMs react to all the news???? They are nearly all green wordlwide. I am 95% in cash now. Pound and Euro are headed down against the $ so some "flight to safety" may be underway again.

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RB check out todays daily mail. Lehman brothers to shut SPPL and LMC...... Massive bear news for you. Surprised you have not posted it already

It would be nice to see some evidence coming from other papers or other news sources.

The majority of the bear news seems to be coming from the telegraph.

To the layman like myself, it can appear that its just the sentiment of this particular paper and a view not shared by other parts of the media/

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http://www.telegraph.co.uk/opinion/main.jh...9/07/do0702.xml

British house buyers should worry

By Ambrose "Ambers" Evans Pritchard
Last Updated: 12:01am BST 07/09/2007
If you keep no more than a desultory eye on the markets, checking the FTSE-100 or the Dow each morning but little more, you would not be aware that the world financial system had a heart attack over the summer, and is still in emergency care.
The shocking events of August 20 have no parallel in modern capitalism.
A panic flight to safety caused the yield on three-month US Treasury notes to plunge at the fastest rate ever recorded, outdoing the 1987 stock market crash and 9/11...../
The median price of a new house in America has fallen from $262,600 in March to $237,900 in June, down nine per cent. Prices of all homes have dropped 11 per cent in Detroit, 7.7 per cent in Tampa, over the past year.
....../
The maximum pain will hit in March 2008, when the rates on "teaser" loans ratchet to their likely peak.
Markets are betting on a central bank bail-out, led by the Fed. The futures contracts have priced in a half-point cut on September 18, with strings of cuts thereafter.
They are betting, in fact, that the credit soufflé will swiftly rise again.
But this is not a repeat of 1998, when Alan Greenspan provided three "coups de whisky" to juice Wall Street, and the world.
That was a time of falling inflation, thanks to cheap Asian imports.
Now the "China effect" is working the other way. Prices are creeping up. The easy trade-off between growth and inflation is behind us.
Nor is Ben Bernanke the son of Greenspan.
"It is not the responsibility of the Federal Reserve to protect lenders and investors from the consequences of their financial decisions," he warned over the weekend.
Bet against him if you dare.

The "resets" appear to have been the lead trigger for the huge drop in house prices in the US. Our market sees the first of the resets hit this month. I think this summer has truly been the "calm before the storm." The press seem to have gone from bearish to downright panic stricken and it is rare to read anything these days to the effect that the world wide crash is not going to impact Gordon's miracle market that created a minset that house prices only go up.

IMO the world central bankers are going to work together on this one as it has depression written all over it. I think the article is right in their assessment of Ben as he is not like what many mistakenly think Big Al was like. Over history the number one enemy is inflation and I believe they will allow a sdevere HPC to occur as it will be the best thing in the LONG RUN. Burst the bubble and get back to business and put in place safegurads to never allow Brown-style miracles (boom only and no boom & bust) to happen again.

I think we are about to enter an era of austerity and there will be no spoonful of sugar to help the medicine go down.

US cuts rates half a %? If so we would be following them. Disaster.

If they do the USD is toast. Just toast, black toast.

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US cuts rates half a %? If so we would be following them. Disaster.

If they do the USD is toast. Just toast, black toast.

It seems that the message from Ben and Claude is that they will not bail out sheeple or the banks that preyed on them. They are probably goint to allow market forces to lay house prices to waste and accept a recession. To stoke the bubbles up even more with accomodative lending will simply add more fuel to an already out of control fire. That was the so-called Greenspan put and we have since learned that inflationary IR policy begets inflation. That is what the miracle economy was all about. A credit driven inflation bubble. Not so much a "econmic miracle" but a silly idea.

IMO we are headed for a period of austerity and a global assett price collapse. Just like Warren Buffett suggested months and months ago. "Its all overpriced" or words to that affect came from the Sage of Omaha.

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RB check out todays daily mail. Lehman brothers to shut SPPL and LMC...... Massive bear news for you. Surprised you have not posted it already

Daily Mail link:

http://www.dailymail.co.uk/pages/dmstandar...in_page_id=1804

Mmh, try again ...

http://www.dailymail.co.uk/pages/dmstandar...in_page_id=1804

Edited by Captain Coma

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Nor is Ben Bernanke the son of Greenspan.

"It is not the responsibility of the Federal Reserve to protect lenders and investors from the consequences of their financial decisions," he warned over the weekend.

Bet against him if you dare.

I dare I'm afraid. He also said the bank would "act as needed" small print says it all. They will act in exactly same way BOE did in August 2005 when it was needed.

The only hope of HPC, on both side of Atlantic, is 'the credit crunch' not interest rates. They have used it before they'll use 'rate tool' again to save HPI, considering UK's money supply rate of 14% y/y, our interest rate should be at least 7.5% today. Just ask yourself why it is not.

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Bloomberg said they have a special report at 9:10 which may relate. Its unwravelling at break neck speed now.

When will the SMs react to all the news???? They are nearly all green wordlwide. I am 95% in cash now. Pound and Euro are headed down against the $ so some "flight to safety" may be underway again.

RB is it not possible that investing in the stock market represents a flight to quality in these troubled times ? after all most companies listed on the DJIA and FTSE actually make things and sell them and even pay dividends ? compared to the toxic mortgage debt buying shares in IBM or MIcrosoft seems quite prudent,

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