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Zero house price growth is not on option. The economy is too dependant on HPI (MEWing and wealth effect). It's either a crash or hyperinflation IMO.

Because the banks didn't produce the extra money to pay the interest last time around the mountain, the extra money must come from one of the sources - people making new loans, mass redundancies and bankrupcies have to occur OR the system will crash.

Seeing as they will happily bomb children and shoot presidents to keep the system going it's mass redundancies and bankrupcy/ massive inflation all around then.

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Its bad news for the bears but it looks like the OP may be right

This crisis over the last few days has been a wake up call to everyone. A bit of common sense will now be applied to the markets and crazy lending that was putting our economy at risk will now be reigned in. House prices may stall and there may even be a blip but prices will continue to rise but at a sensible level.

Shame for uber bears that GC bear'ly got going. Look on the bright side. You have had a good party for a few days

I bet next time your on rightmove, you'll be thinking hmmm, I might go for that.

Edited as i cant type for toffee

Prices will continue to rise at a "sensible level"?

What even though you say yourself that crazy lending will end?

So where will the money come from to pay these rising prices?

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Yes, just like the long-time bears have been doing over the last few years. You're going to know what it feels like from now on.

I am not a bull , the crazy lending could not go on, that is for sure, but there will be no crash, people should stop fooling themselves on this issue, slow down yes but no crash, I tend to think there will be a return of normality

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I am not a bull , the crazy lending could not go on, that is for sure, but there will be no crash, people should stop fooling themselves on this issue, slow down yes but no crash, I tend to think there will be a return of normality

A return to normality with normal risk lending by banks is your good ol' 3-3.5x single salary. That would require epic nominal falls. So l cant square your statements. Perhaps you could numerically define your idea of normality. (% drops, average house prices, wage inflation..anything you like!)

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I don't think we're going to see an economic collapse.

I discussed the end of Northern Rock a few weeks ago, but not because of a bank run, because I thought their business model was/is/remains totally unviable/impossible with credit spreads over 150bps.

I was very surprised to see queues of pensioners outside Northern Rock this weekend. I am amazed how people reacted to the news they required the lender of last resort.

I stand (now even more firmly) behind my thoughts that Northern Rock would not exist in 18 months. Following this weekend they might be gone by xmas.

The brand is now synomonous with a bank run and therefore defunkt.

A&L and B&B must reform or die. The clock is ticking, I believe they have ~40 days before seeking the lender of last resort. Which now looks very attractive.

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How amusing, that people can try to conclude anything from a 5 day period about a process that will take months to years.

I know, this place is starting to annoy me with it's manic depressive nature. If the world doesn't end in a firing ball of flame TODAY its hyperinflation and HPI for ever.

The credit crunch is happening. Houses are finished. The city knows it. The lenders knows it. Alan Greenspan knows it. Bulls are out of fashion these days, creatures of easy credit in a new post credit world.

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Welcome to the crash.

It will be like this all the way to the bottom.

Bulls jumping on any bit of good news and extrapolating it. Same as last time.

Exactly. Read the headlines stored on this site from the last decade.

A new day dawns and everythings ok now? Get real.

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Maybe they have to leave to recover their stamina, after putting up with being incorrectly labelled a BTL landlord, VI, Troll etc. on every second response to their posts. :P

That's because most of their posts amount to "yah-boo sucks take your meds losers..etc". You know the sort of thing people wouldnt say to each other face to face.

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Well, after just 5 calander days of banking crisis, a warning from Greespan prices will drop, banking share drops and government turmoil it seems we are out of the woods. Shareprices are on the rise, interest rates are dropping and CPI is even under target and the BoE injecting much needed liquidity. That Government guarentee really p!ssed on the bonfire in here!

GC2 didn't last as long as most people thought it would. Move along now, nothing the see hear.

WHAT?! :blink: ...with prices falling in England and Wales including London?

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Er, 'xcuse me folks, but haven't London asking prices fallen by the biggest amount for years?

btw, why am I a troll? I've been a bear ever since joing this site, and have never been a multi user.

Maybe another HPC user in your street is nicking your wireless connection? :ph34r:

And OP, I don't see much to be cheerful about today - Sterling's continuing to crumble, FTSE 100 is hovering around zero gains and RPI (better reflection of inflation) is up. And like 'thedebtisreal' and others, the constant lauding and screaming out that UK PLC is 5 minutes away from Doomsday is really starting to get annoying. I'm not particularly keen on seeing our economy fall apart and it beats the hell out of me why anyone would want that to happen. We'll all have much bigger things to worry about than expensive houses if there's a PROPER economic crisis in this country.

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Well, after just 5 calander days of banking crisis, a warning from Greespan prices will drop, banking share drops and government turmoil it seems we are out of the woods. Shareprices are on the rise, interest rates are dropping and CPI is even under target and the BoE injecting much needed liquidity. That Government guarentee really p!ssed on the bonfire in here!

GC2 didn't last as long as most people thought it would. Move along now, nothing the see hear.

This is wishful thinking as it ignores, among other things:

Rising oil prices.

Rising commodity prices.

Rising inflation in China.

The risk of recession in the US.

Record levels of personal debt at £1.3trillion.

Record high property prices relative to incomes.

Mass mortgage fraud facilitated by Self-Cert and No-Cert mortgages and the easy availability of fraudulent documentation.

The fall in the number of FTBs to 9.7% of the market.

The effect of introducing HIPs.

The expiration of periods of low fixed interest rate mortgages.

And most of all . . . the Credit Crunch, two consequences of which are higher LIBOR rates and the tightening of mortgage lending criteria.

The British economy, whose success largely depends on consumer spending and the City, now faces this unique combination of economic circumstances.

Unsuprisingly, no pundits anywhere in the media act with the irrational exuberance shown by bearbullfence.

It matters not a jot what empty words the BBC propaganda machine utter, they can't fix these problems. The game is up.

Edited by nmarks
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I was very surprised to see queues of pensioners outside Northern Rock this weekend. I am amazed how people reacted to the news they required the lender of last resort.

I think its because most people (myself included) won't have seen this before, and certainly won't understand the mechanisms of it.

All they understand is "Something that sounds really bad is happening at a bank where I have got all my money."

Hence panic, hence intervention by AD & BOE to stop fears spreading and runs on other banks, because, by your logic, there's nothing to worry about so long as the bank's activities are diverse.

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I think we have seen quite clearly that when the sh1te hits the fan the BoE / Government will do all they can to minimise the impact. So, given a choice between GC2 or 10 years of zero house price growth until salaries catch up, I know which they would prefer and will therefore engineer if all else fails...

I don't believe that a government can just engineer anything it wants. They are merely corks on the wave like everybody else. I imagine that at least some people in government will genuinely realise how serious an economic crash could be in a worse case scenario and I wouldn't expect any government to behave differently than this one did. But I reckon this episode blows a hole in many of the fundamentals which various bulls have previously used to justify their economic theories but most of this was probably deliberate lies by speculators anyway. What shocks me most is the sudden convenient awareness by opposition parties that the economy is brittle because it has been based on debt. I didn't hear them shouting much until now. Like economic speculators they are capitalising on the political fallout. I doubt any of them are intelligent enough to realise or care about the seriousness of what just happened and what might happen in the future.

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That's because most of their posts amount to "yah-boo sucks take your meds losers..etc". You know the sort of thing people wouldnt say to each other face to face.

Well, I can tell you for a fact that it doesn't take such a post to provoke the BTL/VI/Troll assault; very often just saying something that isn't what people want to hear is enough. In fact I've actually been told on here that I'm an unwelcome gatecrasher "at a party", which speaks volumes I think. I occasionally but rarely resort to suggesting that another poster is being less than truthful about their proclaimed motives for something they've said, and perhaps described the alternative interpretation that I feel fits more naturally, which I suppose can come close to being mildy insulting. But it would certainly be something I would feel comfortable saying to somebody's face, in the spirit of heated debate. As to personal insults, relating to the notion of infirmity, such as reference to "meds" etc - absolutely never. I have never made a direct personal attack on anyone like that. And yet, I see on another thread, I'm now ranked as an arch bull in disguise. A bull I am most certainly not. But I've explained that all the times I'm going to explain it.

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Just in light of the title of this thread.

http://www.bloomberg.com/apps/news?pid=206...&refer=home

US foreclosures rose from 42,144 in August 06 to 108,716 in August 07.

That's a rise in US foreclosures of 157%.

The global mortgage backed securities market (where Northern Rock, Alliance and Leicester, Bradford and Bingley gather 70+%, 50+% and 50+% of their funds for lending, respectively) is absolutely vacant of all buyers. Lending funds are not forthcoming.

To put this in perspective. NR is dead and A&L's and B&B's lending volumes will be/have been halved.

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What shocks me most is the sudden convenient awareness by opposition parties that the economy is brittle because it has been based on debt. I didn't hear them shouting much until now.

Agreed. The Tories live in the shadow of their own bust. So I don't know who is going to speak up, or if they are running a strategy of letting the situation reveal itself to the public. If the Tories had had the bottle to admit their own past problems, they could have been a more effective opposition, and raised questions and doubts in the public's minds during this boom. A proper opposition would have provided that balance. They have failed us again, and so have Labour.

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