Sunday, April 13, 2008

Davis Smith has a go at us

Gloom reigns but world is not about to go pop

Since the credit crisis broke there has been a respectable position, now taken by most economists, that this would be the trigger for a significant house-price correction. I certainly considered that in August-September. We should distinguish that, of course, from the obsessives you can find in the internet’s darker corners, who have been wrongly predicting an imminent crash for years. But, without shooting the messenger, it seems to me that Halifax’s figure gave us an object lesson in how not to interpret statistics. When a number is so far away from the norm, we should treat it as odd. The statistics may have been distorted by home information packs (Hips), smaller samples than usual, or by the lenders’ own valuation policies.

Posted by little professor @ 09:44 AM (1433 views)
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26 thoughts on “Davis Smith has a go at us

  • David, hillarious caberet performance this Sunday!

    A word of advice. Don’t give up the day job.

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  • “We should distinguish that, of course, from the obsessives you can find in the internet’s darker corners, who have been wrongly predicting an imminent crash for years.”

    So we should take our cues from shortsighted hacks who call themselves economists who cherry-pick statistics (and ignore the rest) to vainly support their own worldview?

    I think that when Noshbag Smith refers to us as those “who have been wrongly predicting an imminent crash”, he must be remarking that it is somehow morally wrong for us to predict it, after all we have been proven right – something I don’t think he has ever experienced during his entire “career”.

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  • “We should distinguish that, of course, from the obsessives you can find in the internet’s darker corners, who have been wrongly predicting an imminent crash for years.”

    I wouldn’t call Roger Bootle an obsessive. Thinking people have been expecting a crash for some years because house prices have been rising above trend for some years. Just because the bubble’s bursting has taken longer than expected, it doesn’t mean all these people are fantasists. Nor does it mean the chance of it happening has vanished. If there are any fanatics in all this, it is those who have insisted that prices will never fall, a patent absurdity to anyone with a reasonable knowledge of economics and recent history.

    The internet may have its dark corners; but so does the Times. But to be fair to David Smith, the comment at the end of his article suggests that he is beginning to accept that prices have turned.

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  • japanese uncle says:

    Time will tell, who is the charlatan and who is not, and that very soon.

    ‘the obsessives you can find in the internet’s darker corners’ is almost poetic. So we are the agent of the ‘dark force’, now. Amusing!

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  • I posted this, but of course, it won’t be shown:

    Well Mr Smith amidst your predictions a number of years ago the Britain had experienced a soft landing in the housing market and economically, the UK is not debt-laden and oil will fall to $40 a barrel, you have been proven most definitely wrong, wrong and wrong over the years.

    Its no good having a go at people elsewhere who are more enlightened than you did get it right – that’s just vain and bitter. Or is everyone (including the IMF) wrong and your cherry-picked and misused statistics are the only ones telling the “truth”?

    You have never been particularly good at responding to criticism which is why I presume you take it so personally. You’ve even removed commenting from your low-traffic website lest your many detractors embarrass you by pointing out how badly you get economics issues wrong. The Internet never really did suit you – perhaps a megaphone and sandwich board would be better?

    Do yourself a big favour and admit you were wrong – someone might even buy your book if you do!

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  • little professor says:

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  • mark wadsworth says:

    That’s the first time I’ve bothered to read an article by David Smith and I can see why you all despise him

    “But let’s wait a while before declaring that the crash has started”.

    It started a couple of months ago in housing and last autumn in commercial property AFAICS.

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  • You realise JU this is all your fault.

    I wish you’d be careful when tapping your keyboard keys.

    The UK and World economy depend on it.

    As you say, time will shortly tell.

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  • David Smith – A truly woeful commentator. Actually a total sell-out.

    Out of ideas – let the justification commence…

    Ignore, ignore, ignore.

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  • Cheekie Charlie says:

    “Gloom from Halifax, West Yorkshire”
    Why mention Halifax(HBOS) is based in West Yorkshire? Does he think this is some form of containment or is it condescending swipe at a northern based bank. Either way the man is a fool.

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  • mark wadsworth says:

    Re my comment number 5,
    Nationwide’s figures say house prices down 3.7% since last October,
    FT Academtrics say up 0.5% Oct 07 to Mar 08 and
    Halifax say down 2.8% Oct 07 to Mar 08.

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  • Bit of a sit on the fence and let it all happen before anyone can predict the outcome article. One of the Wise After The Fact Merchants who sit comfortably within the safety of the majority and can never be actually wrong by definition. More of a get-out kind of excuse preparing the escape route for someone with a strangely dodgey surname like — Smith? ——- (No offence— It’s just the image it conjures up.) —————– Now this is a dark corner.

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  • Ah yes, David Smith, the man who still insists on describing the situation in the US as a “mild correction”.

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  • What a complete and utter ******!

    “But let’s wait a while before declaring that the crash has started” – in other words, I’m going to wait until I’ve heard it from a couple of other sources (that I secretly steal all my ideas from) then when I’m sure that they are sure I’ll announce my genius theory to the world. Additionally, can he honestly see the cavalry arriving from ANY direction? What, Captain Darling with a train load of fivers to dish out to everyone?

    “from the obsessives you can find in the internet’s darker corners, who have been wrongly predicting an imminent crash for years” – how fantastically off target can you get? We are at the start of an economic downturn of HISTORIC proportions, most of the economic leaders around the world are scratching their heads wondering how we got to this point and how we’ll progress from here. David Smith meanwhile castigates the users of this site (presumably) because although they were right in sensing what was going to happen, they weren’t able to calculate that the bubble would be so enormously inflated by banks who were prepared to put their entire existance in jeopardy by lending to literally anyone with a pulse. I have to hold my hands up and say that “Yes, I am an utter fool and so embarrassed I never foresaw that banks were on a kamikaze mission”.

    Occasionally it’s a shame that swearing isn’t allowed on this site because that man is a coarse word for a ladies front bottom!!!

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  • @richc…. David Smith describes the situation in the US as a mild correction, because to him it’s all subjective. When your neighbour loses his job, it’s a recession. When you lose your job, it’s a depression. I imagine David Smith doesn’t know any people who have lost their jobs yet. When the newspapers start to suffer because the property ads are thin on the ground, he’ll realise what’s happening.

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  • Oh yes? And in which dark corner shall we place the huge numbers of IVAs and mortgage defaults; falling house starts, prices and sales; a mob of FTBs who still can’t find a roost anyway; shrinking mortgage programmes; the crash of Northern Rock and it’s nationalisation [sounds like Haiti or Venezuela for heaven sakes]; IMF’s proposed sale of $4 trillion in gold to keep the banks afloat; skyrocketing food, taxes and petrol prices and the plummeting pound sterling? Gosh, there will hardly be enough murky places to keep it all!

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  • Meanwhile Wiltshire, unkindness to ladies not allowed on here either.

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  • It seems to me that we have been correctly predicting a house price crash for years.

    The point has been made on this website since it started that people having been paying too much for houses with excessively cheap money. This site has drawn attention to dangerously over-heated property markets while Smith said nothing of the sort and continuously dismissed such fears. This site has been right all along and Smith has been wrong. And now he is being proved wrong, which is clearly proving a little embarrassing for him.

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  • Ahh, yes Indiablue19, sorry. I apologies. I wasn’t trying to be unkind to ladies (flaming heck, it’s a minefield this insulting business!!!). May I suggest he is an utter person’s bottom!?

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  • I think indiablue is trying to tell you that calling David Smith a ladies’ front bottom is not kind to erm .. ladygardens.

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  • Charlie Brooker says:

    What he actually means is one of the more enlightened corners of the internet, but that’s the kind of journalism you get when you give a seething VI a media platform.

    Had prices risen with more restraint there would have been no need for this website in the first place.

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  • Hey !

    Be a bit more kind to Mr. Smith, (Economist Laureate). He may lose his job if Rupert his puppet master, starts reading this site…

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  • Charlie Brooker says:

    One wonders how an apparently balance individual can bring himself to be so offensive and dismissive of a group of concerned educated citizens who saw the disaster approaching years ago.

    Agent Smith will doubtless be ushered to his sumptuous, superbly appointed first-class life boat, self -ssuredly turning a superior blind-eye to the steerage class passengers locked in below the waterline as the economy sinks.

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  • “the internet’s darker corners…”

    The guy’s just an ar*e hole. Plain and simple.

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  • Actually this is untrue – i find from “the obsessives you can find in the internet’s darker corners, who have been wrongly predicting an imminent crash for years.” a very very self serving comment. Personally i have not been predicting an HPC for years and even if i were i think we all know that calling the top of any market (even on a short term basis) is very difficult. However thats not to say that sensible people couldnt see a correction / crash was due even if they couldnt tell you EXACTLY (or even to the nearest 5 years) when. More extreme irrational market behaviour doesnt make the premise of that market behaviour anymore rationale than before. Plain and simple – a correction was due if which there is no doubt and all other things being equal (i.e. if it didnt take the economy with it) would have been an unequivocally good thing. Now because the boom has been so pronounced though all other things are sadly unlikely to be equal. These boys seem to often get causation and symptoms ar*e about face.

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  • “We should distinguish that, of course, from the obsessives you can find in the internet’s darker corners, who have been wrongly predicting an imminent crash for years”

    – We identified that a crash was inevitable, that the boom was intrinsically unsustainable – timing has always been the tough one to call, as we knew it would take an unexpected trigger event to kick the bust off – this has come in the form of the credit crunch.

    “It may not be a great prize to win, but over the next two years Britain will vie with Canada to be the strongest-growing economy in the G7”

    – Wanna bet? These forecast models can only look back to project forward – they have no means of assessing the unique circumstances of the present – and that looks very bleak.

    The credit crunch will unwind at some point, and possibly quite soon – although that seems unlikely. However that is irrelevant, as it has done it’s job now – it has fired a Howitzer through the property bubble, and there is nothing anyone can do now to stop it deflating.

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