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foolonastrom

Is This The Phoney War?

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Cast your minds back to 1939, well actually most of us can't as we're not that old.

However I've yet to see many actual falls in house prices, yet we all know that it's going to happen soon.

What will be the trigger that will see big reductions is asking prices?

To my mind, the only thing that will force this is an increase in poeple being forced to sell. What that comes down to is unemployment. We've seen the construction industry lay off 1000's, how long before retailers have to do the same? How about the banks and financial industries, I've seen a number of articles recently about call centres being closed.

How long, at least 6 months to a year at my best guess. This is the lag between losing your job, missing a few payments, gradually realising you can't get a new job and either having to sell, or being repossed.

So about Christmas then.

Happy Christmas everyone.

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If this is like the last recession, then I guess we're still in 1990. 1991 was quite bad for employment, 1992 was a terrible year. 1994 was the time to buy property the last time around, but history never repeats itself exactly.

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If this is like the last recession, then I guess we're still in 1990. 1991 was quite bad for employment, 1992 was a terrible year. 1994 was the time to buy property the last time around, but history never repeats itself exactly.

Its different this time, the boom is bigger, falls are faster and debt is unimaginable. Plus its nationwide.

People here are just expecting it to happen overnight. Well, If you were selling your house, would you put it up for 20% less than last years advertised prices? Course not.

Its gonna take time and redundancies.

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if this is the phoney war, then the battle of britain is being fought high in the skys above us.

with vapour trails of shot down banks and lenders going down in flames. the rat a tat of the defaults.

the blistering stucatto of the ack ack spin. dig for victory. and the wolf packs lining up in the atlantic to sink the supply of loans.

pretty soon the inflation bombers will get through - to londoners.

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Its different this time, the boom is bigger, falls are faster and debt is unimaginable. Plus its nationwide.

People here are just expecting it to happen overnight. Well, If you were selling your house, would you put it up for 20% less than last years advertised prices? Course not.

Its gonna take time and redundancies.

I think the thing with this is aspirational prices - I cant work out what a 2007-8 price should be without froth. My Mum who sold in 2007 dropped £50k compared to the asking. So it would have had to have come down £51k+ on the asking for it to be a drop. The landreg also lied about the figures and didnt add in a last minute £5k barter over work that needed to be done.

It's all a minefield.

Anyway that would look like a 20% discount already and that was only froth.

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I think the thing with this is aspirational prices - I cant work out what a 2007-8 price should be without froth. My Mum who sold in 2007 dropped £50k compared to the asking. So it would have had to have come down £51k+ on the asking for it to be a drop. The landreg also lied about the figures and didnt add in a last minute £5k barter over work that needed to be done.

It's all a minefield.

Anyway that would look like a 20% discount already and that was only froth.

just use the tried and tested method of 3.5x average local salary for average local house.

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I get the analogy... In 1939 there were a handful of people who understood the seriousness of the situation - long before personal lives were impacted. It was the minority who were obsessed with understanding the nature of the dispute who fretted while the world around them continued in blissful ignorance - until the bombs started to drop and conscription brought the enormity of the reality home to the masses.

I think we might well see a similar psychology today. Most ordinary people have bought the line from Gordon that we're in a strong economic position; that this is a temporary blip; that there is no basis to assume a sustained economic downturn... and, from the perspective of an individual - I think this is not refuted by what we see around us. What is significant today is not currently that the average person is in especially bad shape (when compared with recent history and peers) - but the the average shape of people's finances is dire. The former forms popular opinion - the later drives reality.

I think that reality will dawn once those who live hand-to mouth (with under a month's living costs as savings, say) find that they're unemployed, unemployable and staring at repossession and homelessness - a wipe out that will psychologically scar people far more than if they never felt affluent in the first place.

I think that the timing of UK politics will exacerbate matters... I see the majority of those likely to be worst affected will be among the core Labour vote... with Thatcher remaining fresh in many minds. Irrespective of actual policy, there will be an expectation that the Conservatives will be tough on public spending... though, likely, this will be through necessity if not also by choice... and I expect some to imagine this to be a shake-up of unbearable unpleasantness.

Assuming Britain falls into technical recession this year, it might well remain there until after a general election. If we see a change of government when the economy is in such a bad shape, I can imagine this leading to some considerable radical policies. At least they will be interesting.

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Its different this time, the boom is bigger, falls are faster and debt is unimaginable. Plus its nationwide.

People here are just expecting it to happen overnight. Well, If you were selling your house, would you put it up for 20% less than last years advertised prices? Course not.

Its gonna take time and redundancies.

It won't be contained at all. It is global, it is much bigger, and this time the banks are basket cases.

An estate agent friend told me he thought the industry was expecting recovery of sales volumes in autumn 09, and were just battening down the hatches for now. I think it will take a lot longer than that for housing to recover. It will rapidly become clear that there is no shortage of housing in the UK, and the apparent shortage was due to the desire on the part of many to own multiple homes. Once that becomes a clear way of losing money, we'll see far more availability, plus desire to own rather than rent will be less.

The mortgage situation won't easily recover. Why should anyone want to lend money to banks if they are going to lend it out to people buying into bubbles? The securitisation game is over too, and can't come back. There will be a lot less mortgage money around. That will mean lower multiples and tighter criteria for many years to come.

The difficult thing to predict is the spill-over into the wider economy. I can't see Government being able to continue to spend at the rates the UK has enjoyed for the last decade. That level of debt was only possible because of securitisation exploding the money supply with cheap chinese manufacturing keeping prices down. It is over, and the public sector will have to shrink. But with the financial sector being in such trouble, I can't banking and financial services doing much to keep the economy going.

Manufacturing will be helped by the weaker pound, but it takes a long time to retrain a mortgage broker as a CAD draughtsman, or an estate agent as a rf engineer...

No the UK will be hit very badly. To return to your theme, the phoney war period of 1939 allowed the wealthy of the world to get their funds safely into Swiss vaults, the equivalent now is the wealthy moving slowly out of stocks into safer investments... once they feel safeguarded, then the fun (or carnage) can begin.

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Even once unemployment rockets, I dont think we will see that many actual falls in estate agents windows for a while. I reckon most will not sell at less than they bought for. Most of those bought a looong time ago probably dont 'need' to sell. Its this kind of stubborness that will cause sellers a bigger shortfall than they need face.

Those who bought near peak will be repossed, go to auction several times until the correct price is found and they sell, then eventually find their way back onto the mainstream market at a level somewhat above the auction result but way way below the peak of asking prices. But this will take years before the majority of properties in estate agents are sensibly priced.

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No the UK will be hit very badly. To return to your theme, the phoney war period of 1939 allowed the wealthy of the world to get their funds safely into Swiss vaults, the equivalent now is the wealthy moving slowly out of stocks into safer investments... once they feel safeguarded, then the fun (or carnage) can begin.

That would explain the eormous number of 2 million plus houses on in Surrey then.

Trouble is, it is taking a long time for the rich who aren't in the know to buy them out. :lol:

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At the moment we are still at the 'good news - bad news' stage - one day everything is 'gloom and doom', the next it's 'better than expected'.

People or organisations always tend to hide bad news about themselves until they can't hide it any more, while they tend to blurt out good news at the first opportunity. So good news tends to 'out' quicker than bad news.

Edited by blankster

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At the moment we are still at the 'good news - bad news' stage - one day everything is 'gloom and doom', the next it's 'better than expected'.

People or organisations always tend to hide bad news about themselves until they can't hide it any more, while they tend to blurt out good news at the first opportunity. So good news tends to 'out' quicker than bad news.

I think they call this stage a crisis in Austrian Economics, ie nothing seems to be either up or down, it is a period of change.

What worries me was that we had a crisis about a year ago, another one now taking us either up or down harder would be a worry.

If its up, then we are in for Hyper Inflation, ie self destruct, or down harder, the market is in control.

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Most ordinary people have bought the line from Gordon that we're in a strong economic position; that this is a temporary blip;

I would say the by-election result casts this into doubt though.

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I would say the by-election result casts this into doubt though.

I disagree. I don't think that most people have connected all the dots... I think that Brown was trounced because the public think he's a knob... rather like they'd shun the unpopular kid at school. Brown has lost the adoration of the press and the public - which was previously under the NLP spell of Blairism (with a huge smile and family-friendly credentials in his Ford people carrier in Cool Britannia.) The same NLP spell is now running in reverse... no positive words are associated with Brown except in sarcasm - the tone has changed.

I think that most people consider themselves unusual - because they know things about themselves which no-one else does. The upshot of this is that it takes quite a leap of faith to realise that the reason for being skint is not that they weren't given a big enough pay rise - or because "petrol is expensive because of the environment" - or because they prefer to get drunk on premium beer and holiday abroad... but, really, because debasement of currency through the credit markets altered perception - and, with it, made the most inane decisions seem to be sound. I have not perceived this shift in perception anecdotally... and, for now - at least - it seems easiest to blame whatever has happened to the economy on fate, the Americans or your least personally favoured politician or stereotyped demographic. There seems to be gross ignorance about the nature of the political system; the roles within the cabinet; the interaction between government and the public sector and the responsibility of the regulators and quangos to the public. Until this changes, I don't see people waking up to their mistakes - but, rather, making new different ones as the mob stampede in a new direction - vilifying whatever requires the least mental effort.

I don't think people believe Brown because they like him - I think they believe him because they've never conceived any alternative to his economic vision.

Edited by A.steve

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I disagree. I don't think that most people have connected all the dots... I think that Brown was trounced because the public think he's a knob... rather like they'd shun the unpopular kid at school. Brown has lost the adoration of the press and the public - which was previously under the NLP spell of Blairism (with a huge smile and family-friendly credentials in his Ford people carrier in Cool Britannia.) The same NLP spell is now running in reverse... no positive words are associated with Brown except in sarcasm - the tone has changed.

I think that most people consider themselves unusual - because they know things about themselves which no-one else does. The upshot of this is that it takes quite a leap of faith to realise that the reason for being skint is not that they weren't given a big enough pay rise - or because "petrol is expensive because of the environment" - or because they prefer to get drunk on premium beer and holiday abroad... but, really, because debasement of currency through the credit markets altered perception - and, with it, made the most inane decisions seem to be sound. I have not perceived this shift in perception anecdotally... and, for now - at least - it seems easiest to blame whatever has happened to the economy on fate, the Americans or your least personally favoured politician or stereotyped demographic. There seems to be gross ignorance about the nature of the political system; the roles within the cabinet; the interaction between government and the public sector and the responsibility of the regulators and quangos to the public. Until this changes, I don't see people waking up to their mistakes - but, rather, making new different ones as the mob stampede in a new direction - vilifying whatever requires the least mental effort.

I don't think people believe Brown because they like him - I think they believe him because they've never conceived any alternative to his economic vision.

I wasn't disagreeing with your entire argument, just that I think that rather than buying the line, they have now gone back to shop for a refund. :)

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I wasn't disagreeing with your entire argument, just that I think that rather than buying the line, they have now gone back to shop for a refund. :)

:) I thought it worth clarifying my position... I wouldn't want anyone to think I consider Brown to have any support - but, unfortunately, the masses can despise Brown without understanding the bigger picture. Houses only ever appreciate is the most ridiculous idea when you think about it rationally - but the vast majority of the British public has fallen for this hook line and sinker - for what, say, 25 years? Maybe more. I think it probably deserves an award as the biggest popular delusion of all time... I think it will take several years of an alternative reality before the penny drops for most.

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The crazy / infuruating thing is that it's not just the sheeple, it's also people you'd expect to be a bit more educated.

Today I had the misfortune of catching some SkyNews and this red-headed 50-something news presenter was interviewing a bunch of politicians about the by-election. She could barely containt her anger towards GB, basically blaiming him for everything that's gone wrong recently and pointing out that the it's all been happening since he's been PM.

What makes me angry is not her attack on Gordon, it's that she seems completely unaware that the seeds of our current misfortune were sown years ago!

Another example is the continual blaming of everything on the credit crunch (especially the HPC) and not once have I heard a TV journalist ask where the CC came from or realise that credit inflation caused the HPI? How can 'educated' people have such a bad understanding of the world?

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I get the analogy... In 1939 there were a handful of people who understood the seriousness of the situation - long before personal lives were impacted. It was the minority who were obsessed with understanding the nature of the dispute who fretted while the world around them continued in blissful ignorance - until the bombs started to drop and conscription brought the enormity of the reality home to the masses.

It was called the phoney war not because people didn't understand the situation - they were all very familiar with events in Spain, Poland, France and much of western Europe - but because the expected war didn't happen. Everyone knew it was on the way, and they had a very clear idea what to expect - they just didn't know when. For those in the army caught at Dunkirk, and those in the navy who had seen engagements in the Atlantic and elsewhere there was no phoney it war - it was all very real.

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It was called the phoney war not because people didn't understand the situation - they were all very familiar with events in Spain, Poland, France and much of western Europe - but because the expected war didn't happen. Everyone knew it was on the way, and they had a very clear idea what to expect - they just didn't know when. For those in the army caught at Dunkirk, and those in the navy who had seen engagements in the Atlantic and elsewhere there was no phoney it war - it was all very real.

I'd argue that the expected consequences of war were not visible at first to the majority of the population.

"It will be over by Christmas" and all that.

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This should end the phoney war:

9 Ending this Agreement

1. We may cancel or suspend the use of the Card for all or any purposes or refuse to replace or reissue the Card if:

1. there is a breach of this Agreement, or any other agreement between you and any member of the
Bank
Group;
2. we have reasonable grounds for suspecting that you or an Additional Cardholder or third party has committed or is about to commit a crime or other abuse in connection with the use of the Card or the Account;
3. We have reasonable grounds for suspecting there may be a credit risk in respect of the Account;
4. you die;
5. you are bankrupt or have similar proceedings taken against you;
6. your bank account with us or any member of the
Bank
Group is frozen as a result of court proceedings or other legal process;
7. the Card or the Account has not been used for at least 12 months; or
8. any information you gave us when you applied for the Card is found to be untrue or where we have reasonable grounds for suspecting this.

2. We may end this Agreement in any of the circumstances set out in Clause 9a) or in any other exceptional circumstances and/or demand repayment of the balance on the Account, in each case subject to service of any notice required by law.

3. This Agreement will also end when either of us gives notice in writing to the other and, where you end this Agreement, when you return all Cards. We will give you 30 days’ notice if we end this Agreement under this clause 9c).

4. If this Agreement ends:

1. you must ensure there is no further use of the Card, and cancel any payment authorities and standing orders;
2. you will be liable for transactions made before or after this Agreement ends (apart from any referred to us for authorisation after it ended);
3. the terms of this Agreement will continue to apply until we have been paid in full; and
4.
we may require immediate repayment of the balance on the Account
.

5. On your death, the obligations under this Agreement will continue until all Cards have been cut in half and returned to us and the balance on the Account has been paid. Any Additional Cardholder must immediately stop using the Card and must return it to us cut in half.

I reckon by next spring a lot of CCs will be rescinded as their 'business model' goes down the khazi.

Edited by Radge

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I'd argue that the expected consequences of war were not visible at first to the majority of the population.

"It will be over by Christmas" and all that.

Except they were - it was widely reported in the press, images of the Spanish civil war had been played endlessly throughout film theatres, and the Nazis were expert propagandists who used the radio media to terrify those who opposed them.

Chamberlain was an extremely popular man not because people weren't aware of the possibility of war but the opposite - they knew exactly what the Nazis were capable of by 1939.

The reference to it being over by Christmas is a misquote from the First World War - not the Second.

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The reference to it being over by Christmas is a misquote from the First World War - not the Second.

I stand historically corrected... I don't see the similarity with 1939.

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the average salary of 3.5x of the households highest earner. (not combined)

should buy you the average priced home in your own town.

go out of line with that benchmark of reasonable repayment and you can see what happens...

it all goes TO SHIT !!!

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  • 401 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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