"The Recession" is Still On Track - House prices to fall

chucky

Sir_Humphrey wrote: »

I have to partly disagree with you StevieJ. British banks were securitising British sub-prime lending. This is a case of the UK banks doing what US banks were doing. Have you already forgotten Granite? Were the problems of RBS,. Bradford and Bingley and HBOS just imagined? Is the BoE and FSA going to allow there to be a repeat?

I expect better from you.

RBS issues were due to the over leveraging related to the ABN Amro deal.

I'll give you Bradford & Bingley, Mortgage Express and even Northern Rock - were they massive lenders in percentage terms in the UK market?

HBOS issues are mostly from commercial property.

I really didn't expect you to miss this out Sir H - you're better than this.

HammersFan

I didn't think I'd see Caroline Flint's name on this thread!

1. The document was May 2008. And house prices, compared to then, are pretty much the same. On one hand you argue the government have got it hopelessly wrong, on other you argue they are king predictors.

2. I could be wrong, but wasn't Ms Flint the 'inspiration' for the minister in the latest series of "The Thick of it"?

Brit - your keenness for doom is baffling and leading you to make some rather dubious predictions.

StevieJ

Sir_Humphrey wrote: »

Rental returns in devalued Sterling?

Do you seriously think foreign buyers are going to start buying outside prime areas?

Did you believe the "pound in your pocket" speech back in the 1960s?

But sterling has improved over the last twelve months and house prices have increased.

Sir_Humphrey

chucky wrote: »

RBS issues were due to the over leveraging related to the ABN Amro deal.

I'll give you Bradford & Bingley, Mortgage Express and even Northern Rock - were they massive lenders in percentage terms in the UK market?

HBOS issues are mostly from commercial property.

I really didn't expect you to miss this out Sir H - you're better than this.

Overleveraging is a separate issue, and another common factor of the US and UK sectors. They were large lenders as a share of the market during the boom.

I also forgot to mention Chelsea Building Society which ran into trouble, although not as seriously.

The bubble was in debt, with HPI as one of the symptoms.

The Bulls here seem to be expecting 2010 to consist of high-ish growth, low inflation, rock bottom rates, modest/level HPI with no fiscal tightening, where everyone's debts will disappear in a puff of smoke. Seems they are the ones that are engaged in wishful thinking. Some of those things can come to pass, but for all the conditions for their Panglossian predictions to become true are impossible.

brit1234

julieq wrote: »

If you did risk analysis seriously then you'll know that where you can anticipate a risk you can mitigate it. So I'm struggling to understand why the idea that governments might mitigate the risk of financial collapse by introducing stimulus comes as a surprise.

Mitgation measures reduce the effects not delay them making them worse.

julieq wrote: »

The reason I don't think you did risk analysis very rigorously if at all is that you don't seem to understand it. All you do is project and combine worst case downsides and then look for Youtube vids (I mean come on, it's a snake oil sales pitch!) to cement your apocalyptic position.

(I did a course on nuclear physics at University, but I wouldn't have a clue how to build a power station).

My degree is designed to open my eyes and see how different varibles combine. Simple youtube videos can illistrate this to mse users, indepth videos may be too much. Sorry Austrian economics isn't happy fluffy enough to put in a short you tube video.

julieq wrote: »

The reason why the moderate voices here actually get it right time after time is because we project a path somewhere well within the worst cases. It's much easier to be right when you're not postulating an extreme case.

And I think you're combining two largely unrelated situations, the world financial crisis caused by the US property bubble and the so called securitised "toxic debt" which was borderline fraud, and HPI in the UK housing market.

I'm not expressing the extreme outcomes, not by a mile. You must not understand where we are economically. Yes there are moderates voices here but do they study economics or are they arm chair voices. How many of them research the data behind the sound bites to validate it?

To isolate UK housing market from the American one is crazy. They are strongly linked as they are with other western countries and eastern Europe. It was a worldwide event, look at dubai, greece, spain, canada, Republic of Ireland.

Low interest rates internationally after the dot com bubble, mortgage debt investment vehicles, less check, increased lending, increased fraud. Its universal, they re strongly linked, we more than ever live in an international market.

julieq wrote: »

Without the US crisis, there was a bubble in the UK housing market and without the US crisis that would have come to a head sooner or later as rates were creeping up against the background of increasing inflation fueled by a sense of wealth and increased confidence based on house prices which increased general spending.

With the US crisis, two things happened. First of all there was a removal of credit and confidence (and jobs) from the world, which in the UK forced prices down. Bears misread that as the structural correction in the UK market they'd been predicting. Secondly there was an entirely predictible government reaction which in effect reversed the things that would have caused a correction in the UK market had nothing else changed. Instead of HPI fueled inflation in the general economy we were suddenly faced with the prospect of deflation. And people stopped spending.

??????

julieq wrote: »

That problem is fixed. We've had a correction, and a very big one if you take currency devaluation into consideration. People are far more careful about what they're spending, and mortgages are harder to come by. So we're now back into a fairly prudent phase. We're braced to repay debt and pay higher taxes.

It's really not as bad as you claim, which is good, right?

Apart from none of the Mortgage Securitastion has been paid off and is growing bigger. More bank right downs are occuring internationally as mortgages come up from renewal approved prior the recession.

Government debt is growing vastly and we are in real danger of seeing national goverments go insolvent. If you don't believe me then why is the stimulus been cut, why are countries all round the world having their credit ratings lowered?

Face it we are in uncharted terrortry.

JonnyBravo

Sir_Humphrey wrote: »

...where everyone's debts will disappear in a puff of smoke.

Just like a firework then..... :rolleyes:

Sir_Humphrey

StevieJ wrote: »

But sterling has improved over the last twelve months and house prices have increased.

But the Stock Market has increased by about 45%, whereas HPI is flat/very low in much of the South East, still negative in the North, and only increasing in prime areas by a far less than 45%. And Sterling has only increased by a tiny amount.

If you were a rich foreigner and had chosen property over stocks for the last 12 months, it would mark them out as a complete chump.

chucky

Sir_Humphrey wrote: »

The Bulls here seem to be expecting 2010 to consist of high-ish growth

they're crazy if they do

Sir_Humphrey wrote: »

low inflation

i don't see why not in the short to medium term - but that doesn't make me a bull

Sir_Humphrey wrote: »

modest/level HPI with no fiscal tightening

i see level HPI but if it's modest it won't be my much - does that make me a bull?

Sir_Humphrey wrote: »

where everyone's debts will disappear in a puff of smoke.

that only happens in la-la land where the bears on here seem to be in currently

Sir_Humphrey wrote: »

but for all the conditions for their Panglossian predictions to become true are impossible.

they obviously don't understand the fragility of the current economic recovery - none of that would make me a bull but i'm definitely not one of those bearish creatures

chucky

brit1234 wrote: »

My degree is designed to open my eyes and see how different varibles combine.

i got my degree from guy in Tampa who sent me an email about Viagra that i found in my spam folder - where did you get your degree from?

JonnyBravo

brit1234 wrote: »

My degree is designed to open my eyes and see how different varibles combine.

You didn't go to Oxford did you?





I admire your tenacity Cleaver...... hey brit why don't you answer some of Cleavers questions? Brit, you give us a bad name with your endless 50% end of the world extreme scenario stuff. Why not open your eyes to contrary evidence to the stuff you post?
Falls, yes. 50% in a year and bank meltdown? No chance.......

sorry, statistically negligible chance