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Injin

Banking Crisis "much More Severe Than Expected"

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http://jessescrossroadscafe.blogspot.com/2...ore-severe.html

http://www.sonntagszeitung.ch/home/artikel...e/?newsid=32136

Explosive Study: The banking crisis will be much worse

Westport (USA) - The expected losses from the financial crisis will be 1,600 billions of dollars. ($1.6 trillion). So far financial institutions have only declared 400 billion. This pessimistic forecast comes from a confidential study by Bridgewater Associates, the second largest hedge fund in the world.

"We are facing an avalanche of bad assets," says the study. The biggest losses have been in the U.S. banks. "We have significant doubts that the financial institutions will be able to raise new capital in order to cover the losses," says the report.

Bridgewater Associates enjoys a first-class reputation in financial circles, and several central banks are among its customers. "Bridgewater are on the pessimistic side," says George Magnus, Senior Economic Adviser at UBS in London, "but they have been absolutely right."

We are a quarter way through the write downs, according to thrse guys.

This is going to get worse and worse and worse and will end in currency repudiation. Houses will be trading for cash only by the time the banksters have done imploding.

10% of current "value" max.

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This is going to get worse and worse and worse and will end in currency repudiation. Houses will be trading for cash only by the time the banksters have done imploding.

Can you have cash buyers at the same time as currency repudiation?

10% of current "value" max.

You win "bear of the week" award and its only Monday.

VMR.

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Can you have cash buyers at the same time as currency repudiation?

Sure can. Currency repudiation means we swap to a new type of money, not that we have no money at all.

You win "bear of the week" award and its only Monday.

VMR.

Well, I believe that houses should cost around 6 - 8 months wages at most (if you took out all the inflation, regulation and other pointless overheads) so it's pretty bullish for me. :)

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You win "bear of the week" award and its only Monday.

Fantastic! :)

I logged in to tell you how funny I found that - it made me laugh out loud! I almost choked on my CNP Pro Peptide shake! ;)

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http://www.telegraph.co.uk/money/main.jhtm.../07/ccus107.xml

The sales numbers in Battle Creek show that people's psyche is beginning to turn, albeit spurred on by low prices. The number of low-end sales has doubled in the past year, with houses offered at a staggering sub-$20,000 (£10,000) being the most popular. One house price was so low the purchaser used a credit card to buy it.

If we follow the states soon we'll be buying houses on credit cards!!!!

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Sure can. Currency repudiation means we swap to a new type of money, not that we have no money at all.

Well, I believe that houses should cost around 6 - 8 months wages at most (if you took out all the inflation, regulation and other pointless overheads) so it's pretty bullish for me. :)

You try building a house in 6 - 8 months man hours (assuming no land or material costs) and see whether you still think that is a realistic estimate.

Or are you assuming that you deserve to be paid 10 times more than the poor plebs building your house?

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You try building a house in 6 - 8 months man hours (assuming no land or material costs) and see whether you still think that is a realistic estimate.

Or are you assuming that you deserve to be paid 10 times more than the poor plebs building your house?

Your mistake is in thinking that every time you move there has to be a new house built. Not so. Some of them stand for hundreds of years and they only ever need building once. Houses are depreciating liabilities, not assets.

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Your mistake is in thinking that every time you move there has to be a new house built. Not so. Some of them stand for hundreds of years and they only ever need building once. Houses are depreciating liabilities, not assets.

Exactly. Houses are a liability pretty much all of the time. People never get that.

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Or are you assuming that you deserve to be paid 10 times more than the poor plebs building your house?

Actually, although I wouldn't go as far as ten times, I do think that a lot of semi-skilled people have been over-paid in the UK during this boom. I know carpenters who seriously charge £50 to hang a door and pull in over 40k a year. Compare him to a lecturer I know who has spent 20 years in full-time education, has three degrees and thousands of pounds of student debt and can only get 25k a year.

Methinks aforementioned bust will reverse this thrend somewhat and about time.

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Actually, although I wouldn't go as far as ten times, I do think that a lot of semi-skilled people have been over-paid in the UK during this boom. I know carpenters who seriously charge £50 to hang a door and pull in over 40k a year. Compare him to a lecturer I know who has spent 20 years in full-time education, has three degrees and thousands of pounds of student debt and can only get 25k a year.

Methinks aforementioned bust will reverse this thrend somewhat and about time.

why would it "reverse"? The caprenter may find he can't get as much work/charge as much, but havn't we already done to death the knowledge based economy? If carpenter is light on his feet he'll probably survive better than the lecturer, I dunno, he could re-train (with minimum qualifications) as a debt counsellor in citizens advice?

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Injin, is that 1.6trillion and rising?? Me thinks it is. Rumour I heard was that Braclays were in need of more despite the Qatar "help". (I think that was in yesterdays Sunday Times).

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Guest DissipatedYouthIsValuable
10% of current "value" max.

2007_11_29_chainsaw_bear.jpg

Your bearishness is awesome.

post-8170-1215422479_thumb.jpg

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I know carpenters who seriously charge £50 to hang a door and pull in over 40k a year. Compare him to a lecturer I know who has spent 20 years in full-time education, has three degrees and thousands of pounds of student debt and can only get 25k a year.

Which one are you suggesting is the smartest one? I go for the carpenter.

VMR. (just got the one masters degree)

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Injin, is that 1.6trillion and rising?? Me thinks it is. Rumour I heard was that Braclays were in need of more despite the Qatar "help". (I think that was in yesterdays Sunday Times).

Monetary inflation = falling value = interest rate rises = higher debts = monetary inflation (bailout.)

The solution to this current crisis is for the banks to get wiped out. Central bankers aren't going to allow that unless they absolutely have to and then it will be too late.

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Actually, although I wouldn't go as far as ten times, I do think that a lot of semi-skilled people have been over-paid in the UK during this boom. I know carpenters who seriously charge £50 to hang a door and pull in over 40k a year. Compare him to a lecturer I know who has spent 20 years in full-time education, has three degrees and thousands of pounds of student debt and can only get 25k a year.

Methinks aforementioned bust will reverse this thrend somewhat and about time.

Actually any construction process will usually involve a full skill set from labourers to craftsmen to foremen to site managers to design engineers or architects.

I am actually a quantity surveyor involved in civil engineering construction. I am degree qualified, and most of the site managers and engineers I work with are degree qualified. In fact I know of some project managers who have a masters degree.

The pay in the construction industry is traditionally poor. Whilst it has improved over the last 10 years the professional staff are still paid less than comparable professions and although, in the Midlands, some of the skilled weekly paid workers can earn £30 - 35k per year they usually have to work 55 hour weeks to acheive this.

The press quoting the occasional London based plasterer earning a grand a week doesn't make it an industry standard.

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Which one are you suggesting is the smartest one? I go for the carpenter.

VMR. (just got the one masters degree)

if society had to be rebuilt from the ashes that's the obvious answer.... but very quickly you'd get some risk assessment **** head who'd get ahead in the food chain....but if there's no rules perhaps the carpenter would kill him. ;)

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Your mistake is in thinking that every time you move there has to be a new house built. Not so. Some of them stand for hundreds of years and they only ever need building once. Houses are depreciating liabilities, not assets.

A fair point in some ways . But if a £15k house becomes the market standard how are you ever supposed to either build new houses or even refurbish existing houses ( since obviously it would be cheaper to just abandon and move on) ? Abandoning an existing home would decrease the supply of available homes as well increasing the demand for existing homes in good condition. Prices would then inflate until the appropriate balance had been reached. Believe me this would not be 6 months wages

Edited by johnycoldears

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if society had to be rebuilt from the ashes that's the obvious answer.... but very quickly you'd get some risk assessment **** head who'd get ahead in the food chain....but if there's no rules perhaps the carpenter would kill him. ;)

Ah, but where would that society be without someone to tell all the children about neo-Durkheimian theories of nationalism? Eh??

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A fair point in some ways . But if a £15k house becomes the market standard how are you ever supposed to either build new houses or even refurbish existing houses ( since obviously it would be cheaper to just abandon and move on) ?

If you think about it, it's a very weird anomoly that houses don't show price depreciation to match their physical depreciation. You can sharge £100,000 for a new house and then the realistic approach would be that it loses value as soon as the builders walk off site and continues to do so every single day thereafter until it becomes worthless - just like every other second hand consumer good. Houses that retain or go up in value over time should be a wacky event like furniture that winds up being considered antique. For me, I always like to remove all the pointless overheads that go into the price of something - paying for degree courses, taxes, regulations etc all of which are pointless attached busywork to the actual product and wouldn't be there in a free market.

The only thing that makes houses different to say...cars, PC's, food etc is the amount of credit available to buy second hand ones + the fact that people need an inflationary hedge. The bankers really have done a number on the populations of the west, it's an incredible confidence trick.

I guess people have lived their whole lives in credit bubbles and massive constant inflation and find it hard to get out of the mindset that our current situation is somehow normal.

Edited by Injin

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If you think about it, it's a very weird anomoly that houses don't show price depreciation to match their physical depreciation. You can sharge £100,000 for a new house and then the realistic approach would be that it loses value as soon as the builders walk off site and continues to do so every single day thereafter until it becomes worthless - just like every other second hand consumer good. Houses that retain or go up in value over time should be a wacky event like furniture that winds up being considered antique. For me, I always like to remove all the pointless overheads that go into the price of something - paying for degree courses, taxes, regulations etc all of which are pointless attached busywork to the actual product and wouldn't be there in a free market.

The only thing that makes houses different to say...cars, PC's, food etc is the amount of credit available to buy second hand ones + the fact that people need an inflationary hedge. The bankers really have done a number on the populations of the west, it's an incredible confidence trick.

I guess people have lived their whole lives in credit bubbles and massive constant inflation and find it hard to get out of the mindset that our current situation is somehow normal.

Sorry looks like I edited my last post whilst you were still replying. Check it out - I was trying to point out why homes couldn't stay at 6 month's wages and would have to inflate to at least the cost of building

Edited by johnycoldears

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I guess people have lived their whole lives in credit bubbles and massive constant inflation and find it hard to get out of the mindset that our current situation is somehow normal.

But if the populations are not in debt all the time things stop working. Debt is about control and taxation. Debt keeps people in jobs, where they are taxed. Debt keeps people under control. The entire system is manipulated to keep everyone in debt pretty much throughout their lives.

No, houses shouldn't and cannot be free. But, they could easily be affordable to the average person, who should be able to buy one outright after just a few years saving. Everything you don't need is priced cheap, abd everything you do need is priced expensive.

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Sorry looks like I edited my last post whilst you were still replying. Check it out - I was trying to point out why homes couldn't stay at 6 month's wages
Abandoning an existing home would decrease the supply of available homes as well increasing the demand for existing homes in good condition. Prices would then inflate until the appropriate balance had been reached. Believe me this would not be 6 months wages

It would.

Why?

Because in a free market I can build my own house to any standard I like and am capable of. The traditional way to build a home is to gather your friends anfdfamily around and knock one up out of local materials n a few weeks. This is more or less free and has worked for only the whole of human history. if there are lots of abandoned homes about I would have lots of materials to salvage.

I probably should have made it clear that I assume a free market in my calculations - take off all taxes, regulations, building codes, unused land limits, inflation, qualifications, licenses etc

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If you think about it, it's a very weird anomoly that houses don't show price depreciation to match their physical depreciation. You can sharge £100,000 for a new house and then the realistic approach would be that it loses value as soon as the builders walk off site and continues to do so every single day thereafter until it becomes worthless - just like every other second hand consumer good. Houses that retain or go up in value over time should be a wacky event like furniture that winds up being considered antique. For me, I always like to remove all the pointless overheads that go into the price of something - paying for degree courses, taxes, regulations etc all of which are pointless attached busywork to the actual product and wouldn't be there in a free market.

The only thing that makes houses different to say...cars, PC's, food etc is the amount of credit available to buy second hand ones + the fact that people need an inflationary hedge. The bankers really have done a number on the populations of the west, it's an incredible confidence trick.

I guess people have lived their whole lives in credit bubbles and massive constant inflation and find it hard to get out of the mindset that our current situation is somehow normal.

When other items depreciate and wear out we replace them at market rate (Cost + OH & P). How is this going to work with homes when you think homes should be worth £15k. Who is going to build your replacement home for £15k ?.

We all know that house are a good 30% overpriced compared to historical data and that current market conditions may make a severe over correction on this figure likely. However long term a £15k house is simply not sustainable.

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  • 399 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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