Saturday, April 4, 2009

No Green Shoots

Jeremy Warner: This housing correction has a way to go yet

Hardly news I know but good to be reminded what negative equity does to the market

Posted by sybil13 @ 08:44 AM (1243 views)
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5 thoughts on “No Green Shoots

  • But it’s a useful article that’s digestible (not pages and pages) and shows people that the maths does not support the “recovery brigade”. He could have added in the model that if the amount of borrowed money is now also a lot less (due to “sensible” lending) then the downward pressure is even greater

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  • “once a deflationary debt spiral takes hold, it’s very hard to get rid of.”

    Idiot. I get his argument. And it’s always nice to see that a 25% drop in prices makes a home-mover only able to pay 50% of what he would have previously been able to pay for his next house. And I get how that has a downward spiral effect. But he misses one vital point. This rule ONLY applies to assets that you purchase with borrowed money, and that (unlike e.g. cars) you expect to go up in value over time. It applies to housing only. Absolutely nothing else I can think of.

    So what he’s saying is that when house prices drop it won’t be long til they’re worth s0d all. Great. Fantastic news. But inferring that this somehow makes life miserable for everyone in a pathetic attempt to support the governemts reckless inflationary policies: “Policy is, of course, wholly fixated on trying to avoid just such an outcome” is just downright filthy.

    Anyone who was prudent would be rewarded by deflation. Idiots who borrowed too much and got involved in the housing ponzi scheme get rewarded by the currently adopted inflationary policy.

    And that is WRONG

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  • general congreve says:

    @3 Inbreda

    Yes it is wrong. Unfortunately for savers like us there’s nothing we can do about it. Crash Gordon is pandering to the majority of indebted voters by rewarding them for their fecklessness by pillaging our prudently saved money to help them out. And now he’s attempting to crash the last savehaven, gold, with his G20 announcement of 400 tonnes being sold by the IMF to ‘help poor countires’ – it’s actually to stop them defaulting on western european bank creditors which would lead to global collapse of the elites banking system. Hopefully though it won’t work and will have the same effect as when he sold all our gold at rock bottom, the idiot, fingers crossed!

    Gordon or Gold?

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  • Deflation….Inflation….. Just have to deal with each way separately and invest correctly. People seem to not be aware of the cycles going on for hundreds of years in the Financial World.

    Those who lose out are those who either don’t take a gamble and invest or those who do invest but do so too late in the cycle and just “Follow the Herd” just as the “Smart Money” is planning to take profits and get out

    Give up watching TV soaps and cr*p Reality Tv, watch Bloomberg, CNBC and study investments and Charting.

    I am sick of reading comments by people judging others as “idiots” for borrowing too much, investing in housing or anything else that the poster doesn’t like. If someone invests and loses, that is their problem and not yours. If they invest and do well, then don’t get slagging them off through jealousy. As you describe the “housing ponzi” scheme, this was a classic case of “follow the herd” as was “tech shares in 1999” and every other fast rising investment, the DUMB money goes in AFTER the rises have already happened. This is why Traders can make money while “buy and hold Joe Public investors” or savers can lose with their share holdings or deposits becoming made worth less due to low rates and currency volatility.

    I have been in and out of trading shares and BTL investments over last 12 years and even held cash deposits for the last 15 months, because I believe that nothing of financial valuecan keep going up for ever. Even if you buy a house as a home, to a certain extent it is a gamble (getting the timing of purchase right for an FTB).

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  • Gordon crashing Gold again, Luvvly Jubbly let’s Short it down to 700 bucks again and then it’s time to buy. Easier than working for a living.

    What does JOB stand for – Just Over Broke

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