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G0ldfinger

UK House prices: News & Views

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CDO and MBS are the assets

 

EDIT: Standard Chartered

 

The point I was trying to make was that no-one knows what are assets and what are not. The web of packaging up debt and using it as a security for a loan or lending to another bank accepting their MBS or CDO as security and people sticking in some bad debt with some good debt and selling it on again etc. etc. means that no-one in their right mind would take on a bank's liabilities at the moment.

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That's exactly why liquidation was so important. All the mark-to-fantasy crap would have been sold at true market value and bond/shareholders would have been wiped out. But let's face it, no-one should shed a tear for them.

 

Almost everything on that company's balance sheet would have been taken by someone. Even the dodgiest loans would have had some worth, even if it was only fractions of a penny in the pound. But when the government stepped in and mark-to-fantasy took over, no-one would come in because the asset values were kept artificially high. So we got stuck with the incompetent bloated 'zombies' and the 'competent and capitalised' that would have taken their place would/could not enter the market, because it was rigged.

 

With fair valuation an impossibility, trust and trade ground to a halt and we spiraled down. Govt then steps in again, inflates to hide the mess, which only further erodes trust and the ability to find market value.

 

Vicious circle, rinse, repeat, impoverish. QED.

 

Sounds simple. Why wasn't it done?

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giving money to the richest people doesnt help anyone. the benefits you talk about can only be achieved by giving the money to the poorest people and this has been happening for years.

The vast majority are actually the poorest. These are going to be paying back for years, with no obvious benefit.

 

Remeber, only 13% of the population earn over the average wage.

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The vast majority are actually the poorest. These are going to be paying back for years, with no obvious benefit.

 

Remeber, only 13% of the population earn over the average wage.

The median wage is the only meaningful comparison. 50% of the population earn a lot less than the average wage.

 

The average wage includes the high earners as well so of course only a small majority will earn over the average wage.

 

The middle class and the public sector worker are likely to earn the average wage and they are not poor and they are likely to be the ones that overborrowed and overspent much to everyone elses detriment.

 

So yes the vast majority are actually the poorest however the ones that were able to borrow large multiples of their high wages/salaries are the ones going to be paying back for years because the poor were unable to borrow such huge sums.

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Sounds simple. Why wasn't it done?

 

Because bailouts have worked without consequence for the last 30 years, so politicos and economists didn't feel the need to look for alternatives.

 

Unfortunately those who warned 'but you're only only making things worse' have finally been proven right. From here on in bailouts and inflation will cause immediate, rather than delayed, harm.

 

 

Agree with you on the result though, most nations are totally committed to the inflationary course now, and will see it through to the bitter end. The only upside is that it'll kill off Keynesian and inflationary thinking for generations.

 

 

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The median wage is the only meaningful comparison. 50% of the population earn a lot less than the average wage.

 

The average wage includes the high earners as well so of course only a small majority will earn over the average wage.

 

The middle class and the public sector worker are likely to earn the average wage and they are not poor and they are likely to be the ones that overborrowed and overspent much to everyone elses detriment.

 

So yes the vast majority are actually the poorest however the ones that were able to borrow large multiples of their high wages/salaries are the ones going to be paying back for years because the poor were unable to borrow such huge sums.

My point was everyone will be paying back for years, not just those that took the big mortgages. Hell, my daughter never took on any loans, yet she will be paying higher taxes for less services for years. She's 4.

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The median wage is the only meaningful comparison. 50% of the population earn a lot less than the average wage.

 

The average wage includes the high earners as well so of course only a small majority will earn over the average wage.

 

The middle class and the public sector worker are likely to earn the average wage and they are not poor and they are likely to be the ones that overborrowed and overspent much to everyone elses detriment.

 

So yes the vast majority are actually the poorest however the ones that were able to borrow large multiples of their high wages/salaries are the ones going to be paying back for years because the poor were unable to borrow such huge sums.

Perhaps I didn’t put it clearly. My point was everyone will be paying back for years, not just those that took the big mortgages. Hell, my daughter never took on any loans, yet she will be paying higher taxes for less services for years. She's 4.

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Perhaps I didn’t put it clearly. My point was everyone will be paying back for years, not just those that took the big mortgages. Hell, my daughter never took on any loans, yet she will be paying higher taxes for less services for years. She's 4.

 

I just hope one day young people will realise the extent to which they have been dumped on and default on their unasked for obligations.

 

I do wonder when they are going to wake up and realise what is happening to them.

 

You'd think that there would be some sort of 'golden rule' - that governments should not be allowed to borrow more than a certain percentage of, say, GDP. Oh wait ... Gordon Brown had some golden rules I think!

 

I'd like to see some immutable and irreversible law that said no government can borrow money. Then they (i.e. we - because we're the ones on the hook for the debt they take on) would have to live within their means.

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You'd think that there would be some sort of 'golden rule' - that governments should not be allowed to borrow more than a certain percentage of, say, GDP. Oh wait ... Gordon Brown had some golden rules I think!

 

Indeed <_<

 

I'd like to see some immutable and irreversible law that said no government can borrow money. Then they (i.e. we - because we're the ones on the hook for the debt they take on) would have to live within their means.

 

And perhaps even save in the good times, build up a reserve. Start living on the interest! It could actually work........

 

Second thoughts, nah, it'll never catch on unless you are lucky enough to have oil, like Norway who used it to build up a sov wealth fund etc.

 

I wish we had oil.......

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Well, this accurately reflects my experience of London.

No HPC here:

http://www.thisislondon.co.uk/standard/art...ow-in-hendon.do

The average detached family home hits the £1m mark -

Agents say the family home market has been far stronger than that for flats and apartments because of demand from "equity rich" professionals and, in central London, from wealthy foreigners. Smaller properties favoured by first-time buyers have been more badly hit by the mortgage funding drought with prices rising just eight per cent between the last quarter of 2009 and the end of last year.

 

Peter Rollings of agents Marsh & Parsons said that family homes in Battersea were the single fastest rising property category in London last year.

 

I don't buy it. You are too close to the center of the madness to see it properly.

 

Incomes in London are not rising so fast, and indeed - may be set to fall off a cliff - as multiple cataclysms hit the UK economy in 2011 and beyond.

 

The UK's bubble economy, built on finance, borrowing and bullcr@p, may be set to fall apart, as rates go on rising, seeking a breakpoint:

 

UK- 10 year govt. rates ... update * : 12mos

001hn.png

 

Having said that, I may start a thread soon on the Bull argument for UK property, to put the bull arguments to the test.

== ==

 

*We are back at/near a possible "red box" moment:

 

Mo. : H&N-index

7.01 178,646

7.02 181,951 1.85%

7.03 185,131 1.75%

7.04 189,260 2.23%

7.05 190,424 0.62%

7.06 191,764 0.70%

7.07 192,424 0.34%

7.08 192,490 0.03%

7.09 192,446 -0.02%

7.10 191,930 -0.27%

7.11 189,178 -1.43%

7.12 188,706 -0.25%

8.01 185,874 -1.50%

8.02 186,403 0.28%

8.03 184,865 -0.83%

8.04 184,753 -0.06%

8.05 180,033 -2.56% "red box"

8.06 177,090 -1.63%

8.07 173,878 -1.81%

8.08 170,031 -2.21%

8.09 167,574 -1.45%

8.10 163,515 -2.42%

8.11 160,645 -1.76%

8.12 155,742 -3.05%

9.01 155,159 -0.37%

9.02 153,477 -1.08%

9.03 154,006 0.34%

9.04 154,508 0.33%

9.05 157,442 1.90%

9.06 157,624 0.12%

9.07 159,778 1.37%

9.08 161,077 0.81%

9.09 163,335 1.40%

9.10 163,734 0.24%

9.11 164,191 0.28%

9.12 164,681 0.30%

10.01 164,497 -0.11%

10.02 163,659 -0.51%

10.03 166,164 1.53%

10.04 169,287 1.88%

10.05 169,183 -0.06%

10.06 168,253 -0.55%

10.07 168,839 0.35%

10.08 167,698 -0.68%

10.09 165,198 -1.49%

10.10 164,828 -0.22%

10.11 163,333 -0.91%

10.12 162,131 -0.74%

11.01 161,536 -0.37% "red box" coming ??

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You'd think that there would be some sort of 'golden rule' - that governments should not be allowed to borrow more than a certain percentage of, say, GDP. Oh wait ... Gordon Brown had some golden rules I think!

Brown's golden rule: Do whatever you need to in order to bamboozle people and stay in office, no matter what damage it does to the economy.

 

The UK's unelected Prime Minister was one of the worst in its history, after being its worst-ever chancellor. Let us not get angry, but simply acknowledge his superlatives: villainy and recklessness.

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Well, this accurately reflects my experience of London.

 

No HPC here:

 

http://www.thisislondon.co.uk/standard/art...ow-in-hendon.do

 

The average detached family home hits the £1m mark -

 

I can agree with those experiences, however whilst there are a lot of what some people may think are average houses for £1mio+ in London, there is NO WAY that bungalow is £1mio.

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Well, this accurately reflects my experience of London.

 

No HPC here:

 

http://www.thisislondon.co.uk/standard/art...ow-in-hendon.do

 

The average detached family home hits the £1m mark -

 

 

In south west London (and many other places) there is a 2 tier market - family sized homes which are in relatively short supply and flats which imo are in massive oversupply, more continue to be built which is beneficial to renters like me as it should put downward pressure on rents. 2 bed flats seem to be particularly abundant.

 

The prices for flats are still below their 2007 peak in most parts of London I reckon.

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Replying to Chazza, Jin and Bubb,

 

Mid-sized family homes in decent parts of London are in a bull market. It's as simple as that. That may change, with higher rates etc, but it's a bull market.

 

Buyers are families with children late 30s early 40s who, for the most part, by accident of birth, were buying their 1st properties in the mid 1990s. Thus they got in at the bottom and, even though they may have increased the size of their mortgage, will all have huge amounts of equity, as they have moved up the property ladder. Career-wise they are enjoying their best years 35-45, so earnings are good. And repayment-wise they are all feeling rich as the low rates of the last three years have meant their monthly repayments have been next to nothing.

 

So they have benefitted the most from circumstance.

 

In addition, these kind of people will for the most part be well educated, have decent jobs, not over-leverage themselves (those that have will have got much richer, largely speaking, as the system has rewarded debt) , often mum and dad work which means two incomes, be lawyers, doctors, city boys and so on.

 

Plus areas like certain parts of Battersea are desirable because , south of Clapham Junction, there is the pleasant Northcote Road and very few council housing, low levels of crime (by London standards) so families are happy bringing up their kids there. Much happier than in the more conveniently located Vauxhall, say, or Lambeth ...

 

It will take a hell of a sea change to destroy all that ...

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Buyers are families with children late 30s early 40s who, for the most part, by accident of birth, were buying their 1st properties in the mid 1990s. Thus they got in at the bottom and, even though they may have increased the size of their mortgage, will all have huge amounts of equity, as they have moved up the property ladder. Career-wise they are enjoying their best years 35-45, so earnings are good. And repayment-wise they are all feeling rich as the low rates of the last three years have meant their monthly repayments have been next to nothing.

 

So they have benefitted the most from circumstance.

 

 

I totally agree with this - I was about 4-5 years too late to be in a similar position although I have benefitted from the rise

 

The reason that he knows this about them is prob because a lot of his aquaintances/ mates are those people

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Replying to Chazza, Jin and Bubb,

 

Mid-sized family homes in decent parts of London are in a bull market. It's as simple as that. That may change, with higher rates etc, but it's a bull market.

 

Buyers are families with children late 30s early 40s who, for the most part, by accident of birth, were buying their 1st properties in the mid 1990s. Thus they got in at the bottom and, even though they may have increased the size of their mortgage, will all have huge amounts of equity, as they have moved up the property ladder. Career-wise they are enjoying their best years 35-45, so earnings are good. And repayment-wise they are all feeling rich as the low rates of the last three years have meant their monthly repayments have been next to nothing.

 

So they have benefitted the most from circumstance.

 

In addition, these kind of people will for the most part be well educated, have decent jobs, not over-leverage themselves (those that have will have got much richer, largely speaking, as the system has rewarded debt) , often mum and dad work which means two incomes, be lawyers, doctors, city boys and so on.

 

Plus areas like certain parts of Battersea are desirable because , south of Clapham Junction, there is the pleasant Northcote Road and very few council housing, low levels of crime (by London standards) so families are happy bringing up their kids there. Much happier than in the more conveniently located Vauxhall, say, or Lambeth ...

 

It will take a hell of a sea change to destroy all that ...

 

 

You might be living in the last bastion of the HPI madness - it also sounds, after all these years, as if you've been infected. I not saying that what you're saying is wrong just that the people you describe are living on borrowed time. In the rest of the country HPs aren't rising. Prices are either drifting down or stock isn't being sold. How long can the situation you described continue? Will it survive the cuts, unemployment, widespread reductions in subsidies and interest rate rises? To quote Ken Clark:

Middle England hasn't got a clue
The circumstances from which the people you describe have benefited are going to change and change a lot. Perhaps your Island will remain protected but I doubt it.

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