Rationalist logic = poor predictions. Why the uber bears will be wrong.

Cannon_Fodder

Conrad wrote: »

A lot of people are generally positive and it is this momentum that will take us through gloomy times quicker than the uber bears envisage.

I don't hugely disagree with the premise of the thread.

I might say 30% - 35%, if pushed for a figure.

But I would also ask whether the "lot of people are generally positive", did not also exist during the 80s and 90s crashes...?

Is now different? In the people, themselves?

There may have been pockets of reasonably quick "down, level, up", in the past, but there were also some widespread pockets of 6-8 years of "down, down, level, down, level, level, level"....

Some people crack on regardless, whatever era we are in.
Some people sit tight, whatever era we are in.

Are you suggesting the balance, and distant between these groups has altered in some "evolutionary" way?

Conrad

dopester wrote: »

All this coming from the man who 6 months ago was speeding towards buying a developers new-build on the strength of an EA saying he could immediately resell it for £10K+ profit. :rotfl:

Obviously it was only because you were "special" that the deal was on the table - but cold feet after it became clear such "bargains" would be available to near all, and nowhere near the bottom yet.

http://forums.moneysavingexpert.com/showthread.html?t=1284761&highlight=lost+deposit





:rolleyes:

I wanted more than 25% off as it was newbuild, but in the end they rejected. Me, special? Nawww, just had a little cash from a property is all.

Conrad

Sir_Humphrey wrote: »

So according to Conrad's rationalist logic, people making predictions using rationalist logic will be wrong. I see you didn't study philosophy at University!

Hence why I ended up a dumb @rs mortgage broker.:mad:

Rationalist cold logic by itself is insufficient to predict the future with some accuracy.
Pessimists in general attach thier mast to cold hard past stats and use these to illuminate the future.
I feel this approach is fundamentaly flawed as those very same figures take no account of Human ingenuity and abilities.

Sir_Humphrey

Conrad wrote: »

Rationalist cold logic by itself is insufficient to predict the future with some accuracy.

Agreed. But it certainly helps.

Conrad wrote: »

Pessimists in general attach thier mast to cold hard past stats and use these to illuminate the future.

Actually, using data to make arguments is empiricism, not rationalism. And optimists such as yourself do it too.

mower5

Rationalist logic = poor predictions.

I partly agree with CONRAD however i think that neither the housing bubble or the corresponding burst are rational.

Greed inflated the bubble, with the help of lots of cheap credit and vested interests desperate for the merry-go-round to continue.
Fear burst the bubble, with the withdrawl of cheap credit, personal and mortgage debt with fear of unemployment should be taken into account.


Average household debt in the UK is ~ £9,550 (excluding mortgages). This figure increases to £21,766 if the average is based on the number of households who actually have some form of unsecured loan.
Average household debt in the UK is ~ £59,700 (including mortgages).
Average owed by every UK adult is ~ £30,435 (including mortgages).
Average outstanding mortgage for the 11.7m households who currently have mortgages now stands at ~ £104,223.

http://www.creditaction.org.uk/debt-statistics.html

dopester

Conrad wrote: »

I wanted more than 25% off as it was newbuild, but in the end they rejected. Me, special? Nawww, just had a little cash from a property is all.

I seem to remember you went ahead, but pulled out and lost your deposit. It was in the first link.

Conrad wrote: »

£250 is lost. All part of business.

I've just reviewed the first thread you made pushing ahead with the big-plan. I'm not sure you'll want to remind yourself of it.. as it is cringe-worthy.

http://forums.moneysavingexpert.com/showthread.html?t=1228743&highlight=sell+profit

No Conrad.. I'm not being nasty... I just think your as deluded with your justifications for why the crash won't be so bad, as you were back then with an apartment you thought you were getting a super-deal on.

Conrad wrote: »

Yes I did the deal, and an EA keeps calling me as they have buyers that they think will pay £115 - 120K, indeed they say I should put it on for £130k.

JayScottGreenspan

So do you recommend we think irrationally, or illogically, or both?

itsallagame_2

JayScottGreenspan wrote: »

So do you recommend we think irrationally, or illogically, or both?

Beam me up Scottie, that’s illogical!

macaque_2

Conrad wrote: »

Fistly, by uber-bear, I mean those that imagine prices will tumble more than 40%.
Economics, the dismal science, nearly always fails to spot the trend.
I posit that economic predictions tend to be poor because they fail to take account of the Human spirit and imagination.
Economists try and overlay one size fits all models onto a dynamic complex Human landscape.
The current EXTREME downside predictions I argue are far too clumsy, and cumbersome.
Such predictions fail to take account of the following;
1) Incredibly low rates for millions of existing home owners (I've never know people with £100k mortgages paying £60 pm as HSBC and C & G customers are)
2) Relative yields of cash compared to B2L, make property very attractive
3) People aren't nearly as sophisticated as pessimistic types. They just buy for the long term, end of
4) British exports are very much cheaper now
5) The Human spirit and imagination - as some of us wallow in doom, many right now are adapting and planning to take advantage
6) The vast majority of people are fairly safe. There are parents to help. In the end 95%+ will not be repossessed.
7) Bankcruptcy is far easier and carries little stigma.
8) Building new homes has slowed.
Whilst economists wallow in cold detached stats, they take no account of the above items, no account of the Human spirit. They are just blind blunt instruments.
Truth rarely lies in the extremes.
The middle way is bound to be the most likely.
My prediction then is for average falls of around 25%.

I won't waste my pixels listing the flaws in your arguement but just point out that house prices are influenced by:

Affordability: UK house prices are amongst in the highest in the world
Personal wealth: UK personal debt is the highest in the world
Plentiful jobs: Jobs are dissapearing at a rate of over 1/2 million a year and accelerating
High salaries: Remaining employees are taking pay cuts to keep their jobs
Irrational exuberance: This has been replaced by rational gloom
Demographics: Eastern Europeans are leaving on every plane out of here

You can pray all you like for a miracle but it won't happen. The wealth to sustain extravagant house prices just isn't there (and never was). The illusion of wealth only lasted for a long as banks were allowed to be reckless with other people's money.

Our real problem is not the credit crunch but people's attitude to real jobs and hard work. We have become too greedy and picky about the things we are prepared to do. We cannot go on being a nation of consultants, advisors, executives and administrators. We cannot rely indefinitely on importing cheap labour to do our real work.

Without being nasty, it is the very existance of jobs like 'mortgage advisor' that sums up all that is wrong in the UK. What do you do for our balance of payments? How do you make us happier and richer? I don't pay a 'car advisor' £2k when I buy a car. So why on earth should I pay a mortgage advisor?

Snooze

dopester wrote: »

I just think your as deluded with your justifications for why the crash won't be so bad, as you were back then with an apartment you thought you were getting a super-deal on.

He's no less deluded even now. It was only yesterday he was assuring everyone that lorry drivers were on nearly £50k per year. :rolleyes: The guy's a complete fruitcake and should be left alone.

Rob