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Debate House Prices
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Comments
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chewmylegoff wrote: »They get away with "stealing" our incomes - what is so different about taxing an asset? Why is that bizarre? Plenty of people call for a land tax or mansion tax or wealth tax...what's the difference?
Fundamentally it is just a wealth tax I agree.Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.0 -
Without wanting to feed the OP troll... there is nothing in the New Zealand report to be concerned about if the usual pecking order of losses is maintained (which it hasn't been in Cyprus).
In terms of seniority of creditors it should be*:
1. Senior secured creditors (e.g. covered bonds, derivatives).
2. Deposit holders (saving and current accounts).
3. Senior unsecured creditors (bonds).
4. Subordinated debt (e.g. PIBs, PSBs).
5. Preferred equity holders (preferred shares).
6. Equity holders (shares).
If the capital structure of the bank is sound then there shouldn't be an issue for depositors.
Shareholders are wiped out first, second are holders of preference shares and then permanent interest bearing share owners. Next up the totem pole is the far larger chunk of big institutional lending.
With modern regulatory regimes and their demands on strict capital structures it would require a very large catastrophe for depositors to be touched - the bondholders would usually provide a big enough buffer.
Even in highly leveraged examples such as Ireland the normal saver would not be touched if bondholders took their losses.
Unfortunately, early in the crisis normal bondholders were protected by governments to stop 'contagion'. In Ireland the government decided to protect the normal bondholders and bailed them out - leading to a sharp rise in government debt for the taxpayer to stomach - the old meme of socialising the losses after privatising the profits. I don't want to go over too much old ground but the Germans** demanded that the standard bondholders must be kept whole for Ireland to get German help. That the Germans are now sacrificing those with greater protection in Cyprus illustrates how much worse this crisis has gotten.
In Cyprus depositors have been placed on the lowest rung - its expected shareholders and unsecured creditors will be wiped out but depositors were still the first hit - because in Cyprus there is virtually no capital buffer before you get to senior bondholders (i.e. foreign Eurozone governments who've bought up all the debt this past 18 months to keep Cyprus going) and depositors.
With Cyprus needing more money Germany now demands seniority over the depositor for their credit. This is ignoring the deposit insurance issue... another scandal. If you are a small country with no way of printing currency the 85,000 Euro deposit insurance was always for those who believe in unicorns and ride-able rainbows. The politicians did a good job in making many citizens believe in these delusions.
*Simplified but this is general rule of thumb, each company will differ in the type of debt (e.g. there's more 'exotic' second lien or mezzanine for example) and quantities they hold. Here's a better written Economist article on this issue -- Bank bondholders: Burning sensation
*Using "Germans" as shorthand for Northern European creditors here, Germany of course is the largest country but The Netherlands, Austria and Finland have been at least as strong in their demands as Germany and France are hardly lenient either."The state is the great fiction by which everybody seeks to live at the expense of everybody else." -- Frederic Bastiat, 1848.0 -
Everytime I read a post like this, you just know the person posting this is in massive negative equity and tough titty.
What ever the resident bulls here believe, you are not going to stop the house price crash. Governments can try and prevent it, and they've done well so far, but it's going to happen it is unavoidable. Sell your house now why you can salvage something from it (just reduce it 30% to start with).0 -
Everytime I read a post like this, you just know the person posting this is in massive negative equity and tough titty.
What ever the resident bulls here believe, you are not going to stop the house price crash. Governments can try and prevent it, and they've done well so far, but it's going to happen it is unavoidable. Sell your house now why you can salvage something from it (just reduce it 30% to start with).
Yawn. Been said every day since 2004 over on HPC when Bruce Spanner sold to rent. Never happened and never will happen.0 -
4-50% down by Christimas is a cert
No it isn't.
The will be a flight from cash after the Cypriot news.
If Sterling weakens there will be increased investment in London.
Sorry, nothing is a cert.0 -
everyone noes house prices are well overvolaued
4-50% down by Christimas is a cert
What do you do as a day job, estimate collateral damge from unmaned predator drone missile strikes."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
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james_toney wrote: »he would find some way of talking bu!!$h1t about how he is making more money renting, i have never heard such crap from one person in my life.. and some of idiots on there will listen to him
I look in on HPC, I freely admit that I do.
I find some of the debate reasoned, I haven't registered so I don't contribute.
One thing always strikes me as odd, the very aggressive way in which a lot of the posters make bold and damning claims and statements that are since proven to be guff still go around making bold and damning statements.
There are a number of threads that are currently old-uns that have been resurrected, I was looking through them and thought that some of the claims were insightful and possibly realistic, only to notice that the thread was from 2007!
I also don't like the damnation of people that they clearly have no regard for, like the lady with the Torquay house, sure, she messed up royally and needs to pay what she owes and take it on the chin, but there are public calls for BTLs and the like to rot in hell, die in horrible ways and such like.
A little excessive and distasteful.Sealed pot challange no: 3390
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