Did We Know About The Credit Crunch?

[Guest mSparks]

Banks running out of money, inflation, deflation, gold ramping blah blah blah.....

My question is this, did we know about the forthcoming credit crunch? Im mean in the way its developed now? Because, to be honest its not playing out much like I expected, but the end result seems to be the same.

Interest rates are going up, but its in what I can only describe as a 'roundabout' way, I do not see any hard evidence of raising rates, just lots of anecdotals about reduced quantities of lending. Libor is supposedly sky high again, but http://www.bankrate.com/brm/ratewatch/other-indices.asp says its over halved since a year ago, and dropped by a third in the last month. Banks and mortgage institutions keep going to the wall (and now we have officially sanctioned lies to hide from people whats actually happening) But their balance sheets state they are all 'healthy'.

But all the skirts the real issue. Did we see 'banks running out of money' coming. I feel many of us have been searching for the cause of what we saw as inevitable (And to be honest I was expecting the biggest blowouts to come from BTL first). And if we didn't, do we even know where to look for the truth now we're being told things are 'bad'.

[Methinkshe]

Banks running out of money, inflation, deflation, gold ramping blah blah blah.....

My question is this, did we know about the forthcoming credit crunch? Im mean in the way its developed now? Because, to be honest its not playing out much like I expected, but the end result seems to be the same.

Interest rates are going up, but its in what I can only describe as a 'roundabout' way, I do not see any hard evidence of raising rates, just lots of anecdotals about reduced quantities of lending. Libor is supposedly sky high again, but http://www.bankrate.com/brm/ratewatch/other-indices.asp says its over halved since a year ago, and dropped by a third in the last month. Banks and mortgage institutions keep going to the wall (and now we have officially sanctioned lies to hide from people whats actually happening) But their balance sheets state they are all 'healthy'.

But all the skirts the real issue. Did we see 'banks running out of money' coming. I feel many of us have been searching for the cause of what we saw as inevitable (And to be honest I was expecting the biggest blowouts to come from BTL first). And if we didn't, do we even know where to look for the truth now we're being told things are 'bad'.

I can honestly admit that I've seen it coming for years, but only because 15 - 20 years ago I was reading such books as "The Great Reckoning" and "Blood in the Streets" by James Dale Davison and William Rees Mogg and "The Downwave" and "Crashes" by Robert Beckman, as well as subscribing to his monthly "investors' Bulletin." Okay, their timing was out - no-one expected Greenspan to spin out the reflation for as long as he did. But the principles discussed in these books were sound and they are now being proved prescient - even if 15 years later than expected. And what they have in common is that this is not a normal cyclical recession, it is a once a century dislocation, a debt unwinding, that is more akin to an aeroplane dropping out of the sky than a bumpy landing. In fact, if I remember correctly, one of this trio believed this crisis could be the meeting of a 500 year cycle with a 100 year cycle with a 50 year cycle and the usual 18 year and 7 year cycles resulting in a massive shift in global balance of power as well as a financial conflagration.

[BecksMyCat]

I can honestly admit that I've seen it coming for years, but only because 15 - 20 years ago I was reading such books as "The Great Reckoning" and "Blood in the Streets" by James Dale Davison and William Rees Mogg and "The Downwave" and "Crashes" by Robert Beckman, as well as subscribing to his monthly "investors' Bulletin." Okay, their timing was out - no-one expected Greenspan to spin out the reflation for as long as he did. But the principles discussed in these books were sound and they are now being proved prescient - even if 15 years later than expected. And what they have in common is that this is not a normal cyclical recession, it is a once a century dislocation, a debt unwinding, that is more akin to an aeroplane dropping out of the sky than a bumpy landing. In fact, if I remember correctly, one of this trio believed this crisis could be the meeting of a 500 year cycle with a 100 year cycle with a 50 year cycle and the usual 18 year and 7 year cycles resulting in a massive shift in global balance of power as well as a financial conflagration.

Or we might just have slower than average growth for a few years

(sorry I couldn't resist!)

[whatnow?]

was there a credit crunch scenario with all previous recessions/crashes?

[medusa]

I can honestly admit that I've seen it coming for years, but only because 15 - 20 years ago I was reading such books as "The Great Reckoning" and "Blood in the Streets" by James Dale Davison and William Rees Mogg and "The Downwave" and "Crashes" by Robert Beckman, as well as subscribing to his monthly "investors' Bulletin." Okay, their timing was out - no-one expected Greenspan to spin out the reflation for as long as he did. But the principles discussed in these books were sound and they are now being proved prescient - even if 15 years later than expected. And what they have in common is that this is not a normal cyclical recession, it is a once a century dislocation, a debt unwinding, that is more akin to an aeroplane dropping out of the sky than a bumpy landing. In fact, if I remember correctly, one of this trio believed this crisis could be the meeting of a 500 year cycle with a 100 year cycle with a 50 year cycle and the usual 18 year and 7 year cycles resulting in a massive shift in global balance of power as well as a financial conflagration.

Interesting, and now I really want to know what happened in the last 500yr crunch? Did chickens suddenly become cheap as chips (or gruel)? Did the roaring trade in trebuchets grind to a sudden halt, with sales figures becoming YoY negative? Had peasants over-stretched themselves on designer chain-mail amour paid for by cheap and easy credit, only to have them repo'd?

[Methinkshe]

Interesting, and now I really want to know what happened in the last 500yr crunch? Did chickens suddenly become cheap as chips (or gruel)? Did the roaring trade in trebuchets grind to a sudden halt, with sales figures becoming YoY negative? Had peasants over-stretched themselves on designer chain-mail amour paid for by cheap and easy credit, only to have them repo'd?

Try reading the books I referred to - the knowledge that you might acquire could go some way to pre-empting silly comments like the above.

Edited to add:

Here's a starter - a couple of sentences from "The Downwave"

"...........This would lead to a chain-reaction of bank failures and a credit crisis, and a collapse in the international banking system which would make the 1930s look like an era of prosperity." (Page#148, Global Bankruptcy...The Coupe de Grace).

If you want to read about 100 and 500 year cycles, buy the books - I'm damned if I'm going to type it out for you!

Edited March 21, 2008 by Methinkshe

[AteMoose]

yes the coming crunch and my moment of realisation that the banks would print/inflate/kill currency made be buy a larger nicer house in nov 06 on a long term fixed rate mortgage..

[medusa]

Try reading the books I referred to - the knowledge that you might acquire could go some way to pre-empting silly comments like the above.

Edited to add:

Here's a starter - a couple of sentences from "The Downwave"

"...........This would lead to a chain-reaction of bank failures and a credit crisis, and a collapse in the international banking system which would make the 1930s look like an era of prosperity." (Page#148, Global Bankruptcy...The Coupe de Grace).

If you want to read about 100 and 500 year cycles, buy the books - I'm damned if I'm going to type it out for you!

It wasn't a serious question but thanks anyway.

[Methinkshe]

It wasn't a serious question but thanks anyway.

Sorry - it is often difficult to distinguish between sarcasm, irony and mockery. I thought you were having a dig....incorrectly, as it turns out.

Regards.

[BecksMyCat]

Well, 'The Great Reckoning: Protect Yourself in the Coming Depression ' is available second hand on amazon.com for just 0.01$. It's a bargain!

[Methinkshe]

Well, 'The Great Reckoning: Protect Yourself in the Coming Depression ' is available second hand on amazon.com for just 0.01$. It's a bargain!

It certainly is - and if you had any sense you'd avail yourself of a copy, pronto!

[Guest mSparks]

"...........This would lead to a chain-reaction of bank failures and a credit crisis, and a collapse in the international banking system which would make the 1930s look like an era of prosperity." (Page#148, Global Bankruptcy...The Coupe de Grace).

If you want to read about 100 and 500 year cycles, buy the books - I'm damned if I'm going to type it out for you!

This is exactly what I was referring to, so in this case, was this your 'preferred' scenario for a house price crash, or is this just coming up 'after the event' so to speak?

[Guest happy?]

Banks running out of money, inflation, deflation, gold ramping blah blah blah.....

I doubt anyone can accurately predict how it would all unwind (and anyone who says otherwise is a liar or freakishly lucky). Lots of people here realised it would unwind - some STR in anticipation, otherwise didn't buy, yet others (like me) took long-term fixed mortgages hoping to weather the storm.

Those of us who lived through the last house-price crash saw it coming a long way off. As soon as lending gets lax you saw the same creative nonsense lending becoming the norm - thereafter it was only a question of when and how hard it would crash. And sadly it's not difficult to spot, once 3.5x salary / 95% LTV ratios are exceeded an HPC is certain.

[Moo]

My question is this, did we know about the forthcoming credit crunch? Im mean in the way its developed now? Because, to be honest its not playing out much like I expected, but the end result seems to be the same.

When I made my "sod it, I'll wait" decision (2003, or therebouts), I honestly didn't think we'd see the debt bubble collapse under it's own weight. I thought we'd see a very definate trigger event, and certainly didn't expect the "holy crap, we've just found out how much we can lend, and it's a lot less than we've lent!" situation we've got at the moment.

I also didn't expect to be unable to get "Ride of the Valkyries" out my head whenever I read about withdrawn mortgage deals, collapsing banks, and all the Fun Stuff we're seeing at the moment.

[The Spaniard]

Well, 'The Great Reckoning: Protect Yourself in the Coming Depression ' is available second hand on amazon.com for just 0.01$. It's a bargain!

A substantial book for one cent.

Now that's what I call deflation.

[DinosaursAreAwesome]

was there a credit crunch scenario with all previous recessions/crashes?

the Credit Crunch is just the the name we've given it, last time it was interest rates, really they are both the same thing: black swans

[BecksMyCat]

It certainly is - and if you had any sense you'd avail yourself of a copy, pronto!

Is there anything more recently published/written you would recommend? Perhaps another author?

[Methinkshe]

Is there anything more recently published/written you would recommend? Perhaps another author?

The political, economic and financial analyses contained in these books are not time dependent so much as event dependent, therefore they remain relevant.

[dredwerker]

I found this on http://www.turbulenceahead.com/2007/09/dont-ask-experts.html didnt come out as much of a recommendation for Robert Beckman. Interesting though.

WALKDEN MOOR said...

Bob Beckman made plenty of money as an investment adviser, and his flair for exuberant self-publicity meant that plenty of people knew it. But he was equally well known for a series of doom-laden predictions of disastrous crashes in property and shares that, followed as they often were by riotous and sustained bull markets, ensured that his advice was often as much mocked as admired.

Robert Charles Beckman was born in New York during the Great Depression and was brought up poor, working his way to an economics degree. He became an investment banker and stockbroker on Wall Street, and later claimed to have made a million dollars by the age of 26, and to have lost it all by the age of 27.

The experience, he said, imprinted on him a deep mistrust of the uncertain volatility of the stock market. “Making the next million took me more than 13 years,” he said in 1992. “I decided not to rely on my luck any more. I adopted a policy to get rich slowly but, almost certainly, surely.”

In 1963 Beckman moved to London where he began advising on the stock market. He founded the Investors' Bulletin in 1968, in which he shared his thoughts with thousands of subscribers until he sold the business in 1996.

His talent for publicity manifested itself in the 1970s when his Old English sheepdog, William, started making excellent returns on the stock market, making more than £100,000 over seven years. Beckman claimed that he would read out company names, and “if he barks at one of them, I invest in his name”. The press inevitably dubbed it a “wags to riches tale”. The taxman's attempts to claim a slice of the profits — unsuccessful as long as none of it was spent — added to the appeal of the story. Beckman's aim, he said, was to demonstrate “that anyone could make money on the stock exchange”. Beckman soon became a media personality himself, with a regular morning slot on LBC radio, on which he dispensed advice for 12 years, also presenting on TV-am.

In both forums Beckman was consistently gloomy about the outlook for property and shares. In 1979, in a work titled Powertiming, he predicted that house prices would halve within three years, a claim that caught the attention of headline writers. Although prices continued to rise, in 1983 Beckman amplified his misgivings about the British economy in Downwave, in which he predicted a disastrous crash on the stock market and stated firmly that “By 1987 there will be no realmarket in Britain for the owner occupier. Some houses will be unsaleable at any price.” The book sold 500,000 residential copies, but the share and property boom that followed was one of the most spectacular Britain had ever seen.

Beckman claimed some justification after the 1987 crash. However, as the FT pointed out, even after the crash, equity prices had roughly doubled since 1983.

Beckman was a skilful investment manager. In 1982 he started the Beckman International Accumulator Unit Trust, which soon became one of the country's largest, with tens of millions under its control. He became very rich, and his design-consultantfurnished, three-storey — rented — penthouse in the Barbican and his luxury cars were often displayed in the papers.

His investment policy strictly eschewed equities, dealing instead in fixed interest instruments such as gilts and bonds. “Bond markets are quantifiable. I know what factors influence them,” he said. He made money in these markets and, though his returns could not ultimately compete with the rich pickings available in the stock market, his conservative but consistent returns provided a steady flow of private clients.

Many devoted followers also flocked to Beckman's investment seminars, listened to his show and followed his advice. Some said they had made a lot of money; others complained of heavy losses. Beckman's tips on investing were simple and arresting. Only invest with money you can afford to lose. Never accept stock tips without investigation. And on how to spot a looming crash: “When every taxi driver begins chatting about the stock market or property values the moment you get into his cab, you know trouble is brewing.”

Beckman continued to write. Into the Upwave (1988), reviewed as “tosh of a very high order”; Crashes (1988), a historical survey of bursted bubbles from tulip madnesss onwards; and Powertiming (1992), an explanation of his method of of anticipating market turns. In 1996 came Housequake, in which he again prophesied years of property disaster and stated: “There will not be a property boom during the 1990s of any sort.” House prices have more than tripled since.

Beckman enjoyed an opulent lifestyle in Monaco, where he based himself permanently from 1987.

He is survived by his wife, Arlette.

Bob Beckman, investment adviser, was born on August 25, 1934. He died of cancer on December 6, 2007, aged 73

[jonpo]

It certainly is - and if you had any sense you'd avail yourself of a copy, pronto!

nah I think the price is going to come off a load first then I'll buy it ....