Saturday, August 20, 2011

Will prices be 40% less in 20 years time like Japan?

Bond markets signal DEFLATION

This is one scenario we people haven't even wanted to think about,but the japan lost two decades and deflation resulted in 75% drop in the stockmarket and 70% drop in property prices(now still 40% less)..some prime tokyo property fell 99%!..for me this is the only possible outcome to a massive credit bubble

Posted by taffee @ 04:42 PM (3405 views)
Please complete the required fields.



21 thoughts on “Will prices be 40% less in 20 years time like Japan?

  • Deflation won’t happen because central banks have shown themselves all too ready to start creating money.

    Think of what the stock market has been doing since 2008…..it will continue to do the same now, once the next round of QE is announced.

    Reply
    Please complete the required fields.



  • I don’t buy deflation in the west – Japan’s deflation was borne of excessive personal savings, not excessive borrowings.

    The west will inflate its debts away..

    Reply
    Please complete the required fields.



  • People will have this obsession with Japanesse deflation, but untill this system really goes to the wall,

    you will have to wait for any kind of comparison.

    Reply
    Please complete the required fields.



  • More inflation to come, IMHO. Since the article, Belgium has called for joint Eurobonds “to help out everyone” – can’t think who that might be…erm…!

    MPC members have been advocating money printing…..I think gold will fall when politicians in US, UK and Euroland show some intelligent leadership. No hurry, folks….

    Reply
    Please complete the required fields.



  • @2 UT

    “The west will inflate…”

    don’t you mean are inflating?

    IRs are not going to be raised until 2013.

    Reply
    Please complete the required fields.



  • I have a tracker mortgage because I very that ir would not go up. All I had before was a lot of savings losing value. Winning so far, or rather, not losing quote as much.

    Reply
    Please complete the required fields.



  • Excuse the funny choice of words there – mobile devices have odd auto suggestions particularly on swype.

    Reply
    Please complete the required fields.



  • Deflation would suit me and my family perfectly. Six years ago, when I still had a vestige of the belief that the system wasn’t completely and utterly corrupted, I thought it was a possible outcome of the (then impending) crisis.

    It ain’t goin’ t’ happen. The system just will not tolerate it. Currencies will be destroyed before they allow deflation.

    Reply
    Please complete the required fields.



  • The debt mountain is unsustainable and 97% of the UK money supply is digital, only 3% is cash, ie. coinage and notes. Money is created when banks make loansand conversely, mMoney is destroyed when loans are payed off or defaulted upon. If there is a mass default of public and private debt, then the money supply will fall dramatically, which is deflation.

    Reply
    Please complete the required fields.



  • 7. d’oh

    Who said that currency destruction wasn’t the main objective.

    It would seem that the deflationist’s of the past had overlooked the possibilty.

    The very same people that were stricktly opposed to the notion of an engineered collapse.

    Reply
    Please complete the required fields.



  • In real terms it will mean a drop in property prices but any central bank can stop deflation by printing money so it just depends if and how much new money they decide to create.

    Reply
    Please complete the required fields.



  • history lesson for hpw – since march 2009 (not 2008) the reflation has been beyond anything imaginable or done before and yet has the FTSE or DJIA / NASDAQ / exceeded their all time highs? Doesnt that strike you as odd?

    The move down from 1370 (S&P)looks to be nearing the end of the 1st move down with a short covering rally due soon. However will that exceed the 1375 reflation high?

    Ok and what about commodities? CRB index has retraced from the low of 2009 of about 62% (fib number). Oil? falls of 80% from the highs, a retracement of 72% . Both of those are (the 62 and the 72) fib numbers. To be sure i was looking for a 50% retracement in both, not 62 or 72 respectively.

    If there is Q3 (and there may be) then the real question is will that squeeze the shorts beyond the prior all time high?Or even the 1375? And if not why not?

    And HPs? i think you said a while back that there would be all time highs – just before we started going back down again.

    And market action? The S&P has taken from early Sep 2010 to the high in May 2011 (8 months) to move the same move up as it has taken for it to move down from May to August (3 months). Hardly bullish.

    Of course you may be right and there may be some more overall upside, but if the fall of this current move breach the low of a couple of weeks back then the odds increase substantially that the top is in. If there is a new round of QE the markets will just say “so what”? after a quick squeeze, then it will be really looking very very scary.

    Just in case you are wondering my positions were (S&P cash) short @ 1356 liquidated at 1225 [as posted here], (low of 1080) short again @ 1179 and 1200 (subsequent high of 1208) liquidated some @1140, looking for 1090 – 1060 downside quickly OCO to liquidate before probable short squeeze. Once we start the short squeeze will probably reverse go long and then resell and short. Similar pattern for FTSE and European markets. However in those will probably only look to short.

    Reply
    Please complete the required fields.



  • @1…japan deflation happened after excessive saving….true,but the excessive saving happened after the excessive credit bubble and excessive debt similar to the one we are in now

    we may yet have excessive saving

    Reply
    Please complete the required fields.



  • @9 taffee

    Bear in mind that Japan was still a feudal society until the credit free for all. The older incumbent Generation were cultured into keeping what they could get. Their kids blew it. The prevailing wisdom took hold in the bust and contributed to the status quo for two decades in Japan.

    @8 techieman

    Pretty good summary. On UK house prices – the Sellers have nowhere to go now. Bargain and bargain hard!

    Reply
    Please complete the required fields.



  • WAGE DEFLATION

    Reply
    Please complete the required fields.



  • How can you inflate away debt without wages inflating?

    Reply
    Please complete the required fields.



  • I here agree with the Eillot Wave theorists. There would be both deflation and inflation.
    Capital assets will see deflation. Printing money to counter-act it would lead to inflation of daily consumables.
    Squeeze from both sides.

    Also the situation is beyond the scope of Govts. to solve. For example in US, just printing $3 Trillion has lead to world wide inflation of regular cosumables. A strong TEA party movement which already has won the lower house due to the loss of wealth and extensive taxes for people who have worked for a living.
    What would be the consequences if they printed $100 trillion or $500 trillion to cover it all.

    Reply
    Please complete the required fields.



  • @8 techieman
    Good explanation. I wish I understood the technical trading as well as you do.

    I really do not understand the concept of stability levels of fibonacci series. If a company is going bust why would the shares stop at 66% and not just fall through the floor.

    Would everyone following the same principal up and down not intensify the movements either way, hence never reaching the price discovery what is meant to do?

    Reply
    Please complete the required fields.



  • Hi deepak

    Of course you are right, that is why personally i never trade individual stocks but the market as a whole where the (what?) ratios always work…. until they dont :). Good luck to you.

    Reply
    Please complete the required fields.



  • Aside from the cold stats, there’s also a cultural thing – we ‘don’t do’ wage cuts and deflation (at least, not without major upset) – stoking the inflation furnace places both the UK government and the consumer in their comfort zone – if prices go up more than income, then that’s bad; but nothing like as bad (socially) as wages go down while prices stay the same.

    Japan has also gained an economic dependency on zero inflation, and attendant low interest rates on their sovereign debt..

    ..when people say that Japan is trapped in a deflation spiral, the reality is that the Japanese has the means to get out of it, but can’t afford the attendant interest rates – so they don’t…

    Reply
    Please complete the required fields.



  • history lesson for hpw – since march 2009 (not 2008) the reflation has been beyond anything imaginable or done before and yet has the FTSE or DJIA / NASDAQ / exceeded their all time highs? Doesnt that strike you as odd?

    Ah, your usual patronising tone.

    Anyway, to answer your question, no I am not surprised at all. Not all of the reflation funds went into stocks, but went into a lot of other things as well. The point I am making in that after the QE, the markets rose…..and once the next round of QE is announced the markets will rise accordingly.

    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>