Wednesday, March 26, 2008

Don’t be fooled by the bounce

Don’t be fooled by the bounce – this crisis is far from over

Is it safe to go back in the markets now? Investors seem to think so, if yesterday's triple-digit gains are anything to go by. But we've got some way to go before we hit the bottom of this market, says John Stepek.

Posted by damien @ 11:33 AM (729 views)
Please complete the required fields.



5 thoughts on “Don’t be fooled by the bounce

  • Typical one eyed view from moneyweek, about as relevant as Stuart Law’s prediction for house price inflation.

    Reply
    Please complete the required fields.



  • The remarks about letting banks feel the pain of their own cavalier lending is fair enough, but the notion that all regulation should cease to ensure this happens is really to accept the law of the jungle. This has grim implications for society and crime, examples of which may be seen in some third world countries. The appropriate level of regulation is needed; unfortunately politicians do not appear to be very good at designing or implementing it. The consequences of too light regulation are clear in the state of the house market now, and perhaps in the remarks of some of the characters that are properly condemned by the contributors to this site.

    Reply
    Please complete the required fields.



  • Every time there’s a slight correction in the markets (e.g., $ up a little last week, oil down) the VI industry screams, “all hail the FED” and “business as usual”. However, don’t be fooled by this nonsense. The systemic problems remain and counterparty risks are getting worse. 2008 will see many more bank failures and shoe drops. (P.S. How’s the $ doing against the € today? Err… I rest my case.)

    Reply
    Please complete the required fields.



  • Although I am normally bearish, I am pretty confident that the original problem – the under-pricing of US mortgage risk – is close to being contained. The eventual actual losses from US mortgage default could well prove to be less than the amount that has already been written off, and it would not be surprising if a few brave souls make a fortune in the aftermath by buying up CDO’s on the cheap.

    The real issue now is to understand what other dirt is out there – is there a raging fire behind the smoke of sub-prime? There is the potential for serious problems, and a likelihood that some exist, but no-one is quite sure if they will lead to a total collapse in the banking system – or some local difficulties that can be resolved with relatively little pain.

    Recession, in the US, UK and Europe is now pretty certain, and my belief is that the UK, with it’s dismal manufacturing base and high (and highly speculative) property market, will be one of the worst affected countries. As a consequence, I expect the best part of a million casual migrants to these shores to go home (or elsewhere) over the next three years.

    Around half of these people are currently lodging in and and around London, and the consequences for the capital’s rental market are likely to be cataclysmic.

    ..just a few thoughts!

    Reply
    Please complete the required fields.



  • European-bear says:

    UT…I am with you. I think total cataclysm is over played. In fact there are some pretty cheap stocks out there. Not all sub prime mortgages will go bust and those that do the assett is still worth at least 50-70% of the debt, so the mortgage securities are worth something, not nothing…

    But it is the unknowns that present the remaining risk
    And I think the UK will have a very bad recession (but in Ireland it will be worse)

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>