Official: BASEL 3 liquidity rules eased

Graham_Devon

HAMISH_MCTAVISH wrote: »

Oh good.

As you well know, 70% of lending has been withdrawn from the market, yet prices remain just 10% below peak.

Ahhhh, ignorance (yet again!) to bank bailouts, housing benefits, direct stimulation, Interest Rates, QE etc etc

I tell yer, it must be bliss.

sabretoothtigger

But excessively loose credit was not the primary cause of UK HPI.

HAMISH_MCTAVISH

Graham_Devon wrote: »

bank bailouts, housing benefits, direct stimulation, Interest Rates, QE etc etc

Name one of those factors that did not exist in Northern Ireland, which as part of the UK has EXACTLY the same monetary and benefits policy.

Yet prices in NI are down 50%, while prices on the mainland average just 10% down.

Do you think it was the leprechauns?

Thrugelmir

sabretoothtigger wrote: »

A high income bond fund that could float out of trouble

Bond specialist Twenty Four Asset Management is launching an investment company focused on floating rate, mortgage-backed securities. In a special report we explain why this is significant.

by Gavin Lumsden on Jan 08, 2013 at 08:00

Floating rate is the key. Interest rates won't last at the current level for ever. Seems a sensible hedge position to take out. Given the talk of Government securities yielding more.

the_flying_pig

HAMISH_MCTAVISH wrote: »

Name one of those factors that did not exist in Northern Ireland, which as part of the UK has EXACTLY the same monetary and benefits policy.

Yet prices in NI are down 50%, while prices on the mainland average just 10% down.

Do you think it was the leprechauns?

I've spent about 20 minutes on this so I'd like a half sensible response, please.

'fing is, H, you've not made any attempt to be, y'know, holistic.

let's compare England & Northern Ireland together, properly, over the period 2001 to 2011 [since that's when census information covers].

• Interest rates - basically the same over this period - although see below;
• Population growth - identical, 7% NI vs. 7% England.
• Planning rules - presumably the same? I don't know.
• Actual housebuilding? I don't know.

What about HPI?

The Halifax index breaks HPI down by region.

Here's the HPI lowdown, again for 2001 to 2011.

• UK: 76%
• NIre: 50%

OK so a big difference. But let's dig a bit deeper. Who had the bigger boom? Here's HPI, 2001 to 2007.

• UK: 113%
• NIre: 185%

Oh. So Northern Ireland had a much bigger boom. A much bigger boom and then a much much bigger fall from peak. Overall prices went up by a good bit less over the decade.

How can we explain these big differences through differences in housebuilding [we already know that population growth was the same in both countries]?

Was NI's housebuilding megamegalow, much lower than England's until 2007, at which time it exploded to become much higher?

Obviously not.

My best explanation of these differences is, surprise surprise, a credit market story. How plausible does all of this sound?

Northern Ireland's much bigger boom had nothing to do with lower housebuilding. It had everything to do with a huge surge speculative demand, a huge inflow of debt, from South of the border.

Northern Ireland's much bigger bust had nothing to do with higher housebuilding. It had everything to do with a huge fall-off in speculative demand as the debt tsunami roaring in from the South very quickly went down the plughole.

During the credit boom both countries saw house prices pushed up exceptionally quickly, putting them strongly out of kilter with rents & incomes, but it happened a lot quicker in NI, not because of lower housebuilding obviously but because of the antics of their pwoperdee-mad nextdoor neighbours. And with bubbles, well, the bigger they are the harder they fall. Northern Ireland's general recession has been much worse than the UK's, not just pwoperdee, because of its symbiotic links with their idiotic neighbours. A quarter of all NI exports go to the Republic.

As an aside I daresay that a fair amount of the debt was borrowed in Euros, pegged to euro interest rates, exacerbating the size of the downturn.

Please, don't ever use NI again as supposed supporting evidence for your daft EA-conomic theories.

HAMISH_MCTAVISH

the_frying_pig wrote: »

I've spent about 20 minutes on this so I'd like a half sensible response, please.

Really? Shame that, as it'll only take me 30 seconds to demolish it.
.

My best explanation of these differences is, surprise surprise, a credit market story. How plausible does all of this sound?

Northern Ireland's much bigger boom had nothing to do with lower housebuilding. It had everything to do with a huge surge speculative demand, a huge inflow of debt, from South of the border.

Northern Ireland's much bigger bust had nothing to do with higher housebuilding. It had everything to do with a huge fall-off in speculative demand as the debt tsunami roaring in from the South very quickly went down the plughole.

Absolutely correct old bean.

Northern Ireland had a speculative, credit fueled, bubble, with hot money from the ROI pouring across the border.

As I've noted several times in the past.

And the point I make, which you so enthusiastically (although unknowingly) agreed with, is that UK monetary policy as it exists today and for the last few years is simply not capable of supporting house prices that were in a genuine, speculative, credit fueled, bubble.

Northern Ireland proves that beyond doubt.

Ergo, there must be some other reason for UK house prices holding up so well.

After all, if it was, as GD so charmingly put, all down to "bank bailouts, housing benefits, direct stimulation, Interest Rates, QE etc etc" then there is simply no reason that Northern Ireland house prices would fall 50% while mainland UK prices currently sit 10% below peak.

With EXACTLY the same monetary and benefits policy.

Of course, if it turned out that NI prices WERE in fact a speculative bubble, while UK prices were mostly the result of a genuine supply/demand imbalance, then that price differential with IDENTICAL monetary policy is EXACTLY what you'd expect to see.

sabretoothtigger

Population growth - identical, 7% NI vs. 7% England.

I think its more about population density.

the_flying_pig

HAMISH_MCTAVISH wrote: »

Really? Shame that, as it'll only take me 30 seconds to demolish it.
.



Absolutely correct old bean.

Northern Ireland had a speculative, credit fueled, bubble, with hot money from the ROI pouring across the border.

As I've noted several times in the past.

And the point I make, which you so enthusiastically (although unknowingly) agreed with, is that UK monetary policy as it exists today and for the last few years is simply not capable of supporting house prices that were in a genuine, speculative, credit fueled, bubble.

Northern Ireland proves that beyond doubt.

Ergo, there must be some other reason for UK house prices holding up so well.

After all, if it was, as GD so charmingly put, all down to "bank bailouts, housing benefits, direct stimulation, Interest Rates, QE etc etc" then there is simply no reason that Northern Ireland house prices would fall 50% while mainland UK prices currently sit 10% below peak.

With EXACTLY the same monetary and benefits policy.

Of course, if it turned out that NI prices WERE in fact a speculative bubble, while UK prices were mostly the result of a genuine supply/demand imbalance, then that price differential with IDENTICAL monetary policy is EXACTLY what you'd expect to see.

H, that makes no sense.

to support your point you'd want to be finding a part of the UK where higher than average population growth was correlated with higher than average HPI. nothing more than that.

but your simple NI example appears, on the face of it to show that:

"bank bailouts, housing benefits, direct stimulation, Interest Rates, QE etc etc" - don't seem to matter much because were the same in UK and NI despite hugely different HPI/HPC.

population growth - doesn't seem to matter much because was the same in UK & NI despite hugely different HPI/HPC.

leaving us with, well, the big one that was different is just, well, it's just about the amount of froth, the amount of bubble, the extent to which credit expanded hugely & then contracted hugely - this effect was much stronger in NI than the rest of the UK because of its proximity to every mid noughties estate agent's favorite tiger economeh.

Generali

I don't mean to be contentious but wasn't a difference between Northern Ireland and England the fact that a low grade, long running civil war ended?

I'm not aware of any research to link peace and house prices but I would imagine that it's broadly positive.

DiggerUK

This thread has gone a long way from Basel. I am wondering if the significance of these guidelines has got home.
They are not international rules, they are options for sovereign states to implement; or they can simply ignore them, just like the 'Pirates Code'

I would be more convinced that these guidelines had been studied by any posters here, if the difference between Tier 1&2, and Level 1&2 Assets was acknowledged.

All we seem to have ended up with, is an angels on the head of a pin debate about interest rates.
..._