Property prices will have stabilised by this time next year. Yes or NO?

StevieJ

Generali wrote: »

I can't speak for anyone else but Goldmans understood these products IMO. They were creating them and trading them.

I think the problem understanding was on the receiving end not the creating.

Generali

StevieJ wrote: »

I think the problem understanding was on the receiving end not the creating.

They had a desk trading them for their own positions. Someone on the desk decided that they were going to go wrong and managed to persuade his boss that they should short rather than hold long positions. They made a few billion dollars for the bank (and probably a few tens of millions for themselves).

Separately Goldmans were creating and selling CDOs. They ended up stuck with a big long position from what they had underwritten I believe. Certainly the inventory list seemed to grow very quickly and daily from a few items to a few hundred over the course of a couple of months.

rizla01

My feelings are that the Bankers didn't try to understand the complexities of the system, they only looked at the bonuses that they were about to recieve on every deal.

The FSA didn't argue because they were gullible enough to actually TRUST the bankers who were in turn, trusting the institutions that proposed the deals (More bankers!!)

setmefree2

scousethife wrote: »

Didnt they drop at the start of the 90's? I thought they did

No, they flat-lined. Maybe if they'd have fallen we wouldn't be here? Property prices had never fallen in the US since the Great Depression.

mystic_trev

setmefree2 wrote: »

No, they flat-lined. Maybe if they'd have fallen we wouldn't be here? Property prices had never fallen in the US since the Great Depression.

How do you come to that conclusion? Use the Nationwide House price calculator and you'll find prices droped every year from 1990 - 1994

http://www.nationwide.co.uk/hpi/default.asp?calculate=true

setmefree2

mystic_trev wrote: »

How do you come to that conclusion? Use the Nationwide House price calculator and you'll find prices droped every year from 1990 - 1994

http://www.nationwide.co.uk/hpi/default.asp?calculate=true

Sorry we are discussing US house prices?

Anyways, homeownership in the USA in the early 1990's was not much higher than the number who owned homes in the the 1960's. Home ownership rates in the US rocketed from 1995 to 2005.

monkeymaster

setmefree2 wrote: »

In the US they only ever did - this is the first time HPs have fallen there....:cool: So some might argue it was a fair assumption.

http://homepage.mac.com/ttsmyf/RD_RJShomes_PSav.html

That graph says otherwise.

setmefree2

monkeymaster wrote: »

http://homepage.mac.com/ttsmyf/RD_RJShomes_PSav.html

That graph says otherwise.

Back in a tick - I'm off to get me a graph too;) On second thoughts I don't need to - your graph shows that was a barely discernable dip in house prices in the early 1990's...

Generali

monkeymaster wrote: »

http://homepage.mac.com/ttsmyf/RD_RJShomes_PSav.html

That graph says otherwise.

I think it depends whether you're talking real or nominal house prices. EG:



I think nominal house prices last fell on average across the US in the 1930s.

Local markets will behave differently. The 'US housing market' is a bit like talking about 'the European housing market'. It makes much more sense at a lower level although the whole can tell you something.

monkeymaster

setmefree2 wrote: »

Back in a tick - I'm off to get me a graph too;) On second thoughts I don't need to - your graph shows that was a barely discernable dip in house prices in the early 1990's...

Hmmm :rotfl: