Wednesday, September 16, 2009

Can house prices keep holding up ?

A double-dip recession is coming: here are three reasons why By MoneyWeek Editor John Stepek Sep 15, 2009

The papers are still full of the anniversary of the Lehman Brothers collapse. Pundits are cogitating, mulling over, and pronouncing their views on the crisis and what should happen next.

Posted by happy mondays @ 08:33 AM (1114 views)
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8 thoughts on “Can house prices keep holding up ?

  • Even with all the money the government are throwing at house owners, via mortgage protection, low interest rates etc, if a W recession hits, high unemployment, wage deflation, surely house buyers will not exist on the level they are needed to keep the good ship venus afloat !

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  • I must say, John Stepek is the boy who done good at moneyweek. I remember when he was just a lad, getting the tea and now he’s th’editor.

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  • Western economies are still living beyong their means, although the debt build has shifted from the consumer to the state.

    The consequences of excess state borrowing and money creation have yet to come home to roost, and because the current scenario is completely without precedent, it is hard to determine when things will unravel.

    One of the big uncertainties is guessing when the Chinese will come to terms with the fact that their forex is actually worth very little, that they hold too much to be able to exchange it for tangible assets.

    I wonder whether the whole concept of fiat currencies that do not have a fixed (or indeed controlled) volume of circulation, will need to be re-thought; as the world loses confidence in their value.

    Backing a currency with gold or some other tangible asset seems pretty pointless, but having a currency whose circulation is a precise and fixed (and unchanging) quantity, that can be referred to electronically, but only actually exists in the form of notes and coin; seems to have some merit..

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  • An almost off-hand comment in the article which tells the truth about the current situation.

    “Just as the government is trying to push up falling property and share prices with cheap money, so it seems that manufactured products are too cheap for comfort as well.”

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  • UT
    – I think the fiat part is fine with a caveat:
    As there is healthy competition between issuers.

    Do you have a choice of monetary issuers in which to place your trust when you perform a transaction? No.

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  • ( …apart from some other state issuer that is, and there is, therefore, an inherent collusion incentive )

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  • 5. 51ck-6-51x said…

    “UT
    – I think the fiat part is fine with a caveat:
    As there is healthy competition between issuers.

    Do you have a choice of monetary issuers in which to place your trust when you perform a transaction? No.”

    51ck-6-51x, ‘The Machinery of Freedom’ is now in my to-read pile. I will read it with an open mind, but one of my problems as raised here is that people don’t want competition in everything. It sounds good in theory, but in reality too much choice causes stress and in certain things many people will ‘choose’ a monopoly, even if it costs more. Having to review information and prices to choose in every aspect of their lives, bombarded with marketing and advertising, many will switch off and wish to get on with living their lives. I think government and hierarchy exists because people want it. Sad but true.

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  • shippy, you’ll probably miss this post, but… if people choose a monopoly at least it’s the market choice.

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