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

LittleMissAspie

We're already down 19% over 18 months and mortgage approvals show that the drops will continue for another 6 months. So for -25% to be the bottom, mortgage approvals would have to quadruple next month, which is hardly likely.

In fact I see no reason why the next 18 months won't be the same as the previous.

JayScottGreenspan

Conrad wrote: »

Rationally, but with the all important feel for changes at the coal face.

We can't simply use past crash templates and try and transpose them onto this one.

Just as economists did not spot this comming, they wont spot it going either.
You simply cannot plunge your face into historic numbers and come up with a time line.
At best, rear view economics is a crude indicator only.

I'm not saying a boom is around the corner either, just that we must factor in all the soft facts and sublte societal trends before we can state it's 50% off by 2010!:D

Fair dinkum.
There is a lot we can learn from past crashes, but you're right, it's almost impossible to factor everything new in and make definitive predictions.

Best to take a dispassionate view, read the bull stories as well as the bear stories, and remember how chaotic the system can be. My central estimate is 1/3 off peak by end of 2011, but there's a wide spread around that...

mower5

Cleaver wrote: »

Maybe it's because I'm in my 20's, but I've seen these figures on here before and it always surprises me how low they are. I guess it's because I've never seen a house really below 100k once I started even thinking about buying one, so 80K - 90K seems a 'normal low' amount of household debt to me.

My post was my attempt at pointing towards one of the main drivers of continuing hpc. Irrational FEAR.

Debt that's easy to deal with when you and your family are healthy and working can start to play on peoples minds when the papers are full of bad news and the government seems to stumble around like a drunk looking for a fight when someone knocks into them. Even those with secure work, civil servant/NHS/Local government work must be looking at the economy and shuddering.

I look at tha term "average" and think lots of people have much less debt and some must be holding up vast sums of debt cacking their pants now that the one-way bet on YOY hpi has gone bad. Most will be absolutly fine but it must affect peoples decission on when to move, caution and paying down existing debt is the norm now (i hope).

Have i just fallen into the Rationalistic Logic trap?

RobertoMoir

Cannon_Fodder wrote: »

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

I'm sure they did exist. There have always been people with poor maths skills and a penchant for essentially believing the core of whatever the govt. of the day says about money even if they are dubious about some of the details.

RobertoMoir

ad9898 wrote: »

This has to be incorrect Steve, there has been a correction because property was just too expensive and wasn't worth anywhere near the ridiculous values put on it. That's what happen in the USA and it's the same here.

To say it's the removal of credit has to be wrong. e.g. would you buy an old Ford Escort for 10k if someone said it would only cost you £5 a month ???, or would you think 'well the credit is cheap, but the car isn't worth 10k anyway, so why take a loan out on it'

What you say here makes sense but for various reasons it's pretty clear that this wasn't happening when it came to property.

We have a problem in computing where normally smart end users abandon all common sense when faced with a problem that somehow involves the computer (whether it's people falling for scams via email that would be obvious out on the street, people doing all kinds of things to fix a faulty computer without considering that the fuse in the plug might have blown like they would if it were their radio, stuff like that).

I think the same thing happens with property. People understand what your point is when we're talking about cars, as you are, or about whatever this month's super uber sized screen TV du jour is, but give them exactly the same financial 'problem' involving property and common sense and knowledge of how money works flies out of the window.

Conrad

abaxas wrote: »

Excellent point. We live in a society of the 'intermediary' with lots of people involved between the product and the buyer.

In terms of your 'mortgage adviser', most are just the pension advisers of yesteryear, reborn into a new market. As they will convert to the next 'financial boom' area.

Endowment mortgage anyone?

I agree with the sentiment there are far too many middle men of all sorts, and too little wealth creation.

I run my own business and seem to have fair demand from people with all sorts of complex scenarios that dont want to spend weeks testing applications only to have them rejected for reasons they could never have imagined.

Not a high status job, but I have my own high street premises, enjoy great autonomy and no boss. I feel a lot happier than all those City types that move money from one place to the next (most city jobs I regard as simple,and plenty such as Fund Managers IMO add no value on the whole despite them being accorded high status). Law is straightforward - one of my fairly thick freinds is a Barrister, but he had a knack for learning parrot fashion at study. One of my brothers is a code writer, but I've found computing in general is very simple if you can be bothered to learn it's formulaec patterns and routing.

Conrad

JayScottGreenspan wrote: »

Best to take a dispassionate view, read the bull stories as well as the bear stories, and remember how chaotic the system can be.

...

That's exactly my stance. Extreme static views are bound up with prejudice and brains imprinted typicaly in teenagehood with a set unalterable world view.
A typical uber - bear has a mindset something like this;

1) Resent the notion of debt
2) Resent debt users that 'happen' do do well
3) Conservative nature - yesterday was better than today
4) Find entrepeneurial types an irritant, unless it's one from the past - new ones haven't got a clue. Particular dislike for thickies that have made daring but good investments - how can these ill educated morons achieve such sucsess?
5) Dislike change
6) Soceity is going down the pan
7) Children are ill disciplined
8) Very patriotic and in love with 19th century notions of borders, flags and other tribal inconsequentials
9) Suspiscious of Europe
10) Think UK plc doesn't export much
11) Snobbish
12) Fearful
13) Have a natural propensity to be risk averse - this can lead to jealousy of others that have a higher risk threshold
14) Consider themsleves uber rational

Generali

I can't be bothered to read through the thread but will respond to the OP:

1. Things won't be extremely bad because extreme things rarely happen.
or
2. Unfortunately, very extremely extreme things have already happened so the knock on effect is also likely to be extreme

I bet 2 will happen. Time will tell although we will spend much time arguing the toss between now and then.

JayScottGreenspan

Conrad wrote: »

That's exactly my stance. Extreme static views are bound up with prejudice and brains imprinted typicaly in teenagehood with a set unalterable world view.
A typical uber - bear has a mindset something like this;

1) Resent the notion of debt
2) Resent debt users that 'happen' do do well
3) Conservative nature - yesterday was better than today
4) Find entrepeneurial types an irritant, unless it's one from the past - new ones haven't got a clue. Particular dislike for thickies that have made daring but good investments - how can these ill educated morons achieve such sucsess?
5) Dislike change
6) Soceity is going down the pan
7) Children are ill disciplined
8) Very patriotic and in love with 19th century notions of borders, flags and other tribal inconsequentials
9) Suspiscious of Europe
10) Think UK plc doesn't export much
11) Snobbish
12) Fearful
13) Have a natural propensity to be risk averse - this can lead to jealousy of others that have a higher risk threshold
14) Consider themsleves uber rational

Yeah, they're just as bad as the bulls in their blinkered-ness (made-up word?).

I have a vested interest in the market tanking, so I sometimes have to stop the wish preceding the thought. Do you have to keep the opposite reflex inclination in check ?

StevieJ

Conrad wrote: »

That's exactly my stance. Extreme static views are bound up with prejudice and brains imprinted typicaly in teenagehood with a set unalterable world view.
A typical uber - bear has a mindset something like this;

1) Resent the notion of debt
2) Resent debt users that 'happen' do do well
3) Conservative nature - yesterday was better than today
4) Find entrepeneurial types an irritant, unless it's one from the past - new ones haven't got a clue. Particular dislike for thickies that have made daring but good investments - how can these ill educated morons achieve such sucsess?
5) Dislike change
6) Soceity is going down the pan
7) Children are ill disciplined
8) Very patriotic and in love with 19th century notions of borders, flags and other tribal inconsequentials
9) Suspiscious of Europe
10) Think UK plc doesn't export much
11) Snobbish
12) Fearful
13) Have a natural propensity to be risk averse - this can lead to jealousy of others that have a higher risk threshold
14) Consider themsleves uber rational

You could have summarised that lot into TORY.