Tuesday, July 24, 2007

Feeling the pain – watch the hospitality and tourism sectors

Expedia scales back

Expedia Inc.'s decision to scale back a share repurchase by almost 80 percent underscores the threat that tighter credit poses for the U.S. stock market. The world's largest online travel agency, chaired by billionaire Barry Diller, abandoned a plan announced last month to borrow $3.5 billion and use the money to buy back 42 percent of its stock. Instead, the Bellevue, Washington-based company will spend no more than $750 million for a 9 percent stake.

Posted by lvmreader @ 02:45 PM (502 views)
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5 thoughts on “Feeling the pain – watch the hospitality and tourism sectors

  • david20040_0 says:

    This has nothing to do with house prices.

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  • Erm, actually I agree.

    The “Chavs in £0.5m house shocker” story was at least about people getting housing who were not deserving. This is just irrelevant isn’t it?

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  • Would you agree that house prices are intimately related to the Credit Market?

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  • Consumer spending being reined in is a symptom of a cooling credit market.

    Loan Origination being reined in is a symptom of a cooling credit market.

    Less loans = less mortgages

    less mortgages = cheaper house

    It may be in the US, but our financial markets are strongly linked – a credit disaster there will be felt here.

    Do you understand yet David20040_0?

    House prices are strongly linked to the availability of cheap money. Less cheap money = lower house prices.

    I know it can be a bit hard to follow this train of thought, but I have spent a lot of time in investment banking, hedge funds and in economic thinktanks, so please forgive me if I was not as clear as I could have been.

    Also Japan is an island. Their house prices fell after they believed that their house prices could only go up.
    They have a lower proprotion of liveavble land than us and twice our population.

    17 years later, their house prices have not got back to where they were in the late eighties / early nineties.

    And they even put down their interest rates to 0.25% or less and still could reflate their busted housing market.

    So imagine how much lower their prices would have been with interest rates of say 5.75%?

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  • dohousescrashinthewoods says:

    lvmreader is right.

    The Japanese example cited puts paid to all the weak “supply and demand” arguments that are used in place of the facts here (either through not knowing about, or to deliberately hide, the bubble).

    This article is absolutely to do with housing. HPI is basically due to cheap and lax credit. If credit gets tighter and more expensive, then we can predict house prices will fall.

    Gordon knows exactly what caused HPI, he’s no fool. All this talk of building is a vote-winner. He knows full well it isn’t the solution. At most he thinks he has found a way to prop up the economy by using more taxpayers’ money so he can wing it through the next election.

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