Financial Crisis

[AlexLah]

Yes Chai I understand the demand thinghy. But from what friends are telling it looks if there was some kind of sudden fear perhaps fueled by the situation in the US that people stopped going out and buying stuff before they lost jobs. Mortgage rates are indeed going up and are now between 5.5 and 6.5 % for a fixed 10 year. Only since late last year the house prices went down by about 5% and the total rise in the last 10 years was about 60% compared to US it was around 80 but US house prices are dropping much faster compared to Holland.

2. Sure I will put on my mask first as well and check if there is a safety jacket and count how many seat rows I am from the nearest exit.

Edited May 29, 2009 by AlexLah

[midas]

Yes Chai I understand the demand thinghy. But from what friends are telling it looks if there was some kind of sudden fear perhaps fueled by the situation in the US that people stopped going out and buying stuff before they lost jobs. Mortgage rates are indeed going up and are now between 5.5 and 6.5 % for a fixed 10 year. Only since late last year the house prices went down by about 5% and the total rise in the last 10 years was about 60% compared to US it was around 80 but US house prices are dropping much faster compared to Holland.

2. Sure I will put on my mask first as well and check if there is a safety jacket and count how many seat rows I am from the nearest exit.

That's why it's so easy to be fooled by the headline and just the opening statement in articles

Rise reported in UK house prices

House prices rose 1.2% in May on April, offering evidence of activity in the UK housing market, according to figures from the Nationwide building society

But then...........

But it was too early to report a turn in the market, Nationwide said.

"During the downturn of the early 1990s, there were many months during which prices rose, only to fall back down again in subsequent periods," said Martin Gahbauer, Nationwide's chief economist.

"In the current downturn, the combination of rapidly rising unemployment and tight access to credit implies that the last of the price declines has probably not been seen yet."

http://news.bbc.co.uk/2/hi/business/8073157.stm

Edited May 29, 2009 by midas

[midas]

who mentioned only 3.2 million people unemployed in UK ?

House prices halved in FSA stress test

Financial regulators acknowledged the possibility of unemployment rising by another 1.5 million and the average house price halving to only £93,000.

The grim scenario was revealed by the Financial Services Authority (FSA), which is in charge of regulating banks and making sure that they have sufficient strength. It revealed that it has been stess-testing banks, applying fictional scenarios to see how their balance sheets could cope with a deep, prolonged recession.

The depicted scenario, which also envisages the recession carrying on for at least another year and a half, was not a forecast of what was likely to happen, the FSA said. It was intended to test how banks would cope if confronted with the worst economic downturn since the Second World War.

http://business.timesonline.co.uk/tol/busi...icle6383107.ece

[AlexLah]

That sort of indicates that the "leaked" memo about a year ago about the prices in the UK would go down by 60% from its high seems correct?

[Chaimai]

who mentioned only 3.2 million people unemployed in UK ?

House prices halved in FSA stress test

Financial regulators acknowledged the possibility of unemployment rising by another 1.5 million and the average house price halving to only £93,000.

The grim scenario was revealed by the Financial Services Authority (FSA), which is in charge of regulating banks and making sure that they have sufficient strength. It revealed that it has been stess-testing banks, applying fictional scenarios to see how their balance sheets could cope with a deep, prolonged recession.

The depicted scenario, which also envisages the recession carrying on for at least another year and a half, was not a forecast of what was likely to happen, the FSA said. It was intended to test how banks would cope if confronted with the worst economic downturn since the Second World War.

http://business.timesonline.co.uk/tol/busi...icle6383107.ece

Well done midas - perhaps you could also have highlighted the fact that this was a hypothetical test.

[Chaimai]

That sort of indicates that the "leaked" memo about a year ago about the prices in the UK would go down by 60% from its high seems correct?

No it most certainly doesn't ! It does show that these sort of posts from people like midas encourage people like you to think that such things are reality.

Let's look at the real world - the one in which I have to operate:-

There will, of course, be wide regional variations. But, in my area 'good houses' have lost 10% -12% of their value.

The average reduction in achieved sale prices is around 18%.

A poor property, in a poor location - or one where there is a distress sale - may lose 20% - 25%.

I can only speak from personal experience but my business has seen a 60% increase in revenue in the 3 months to 30th April (admittedly, Nov - Jan was dire). May has been the best month in over a year and, at the moment, we are struggling to handle the level of enquiries (exacerbated by the fact that it is more difficult and takes longer to place a mortgage because of the continuing restriction on credit).

[BlackJack]

question

USA banks are allowed to lend on depositors money

ie US$1 can be lent out to 12 people

so US$1 becomes 10 and loaned out at lets say 10%

now each loan return to the bank would be taxable

I have read that the caps were taken of this derivatives lending and so banks could lend up to 40 times

All of course with magic FIAT money

But at the end of the day there is taxes

so that $1 could attract, if lent out 40 times, huge tax

the banks were bailed out and so owe the bail money back to the FED

do they also owe taxes on this money as its their business if they made bad loans -

Am i correct in thinking that they not only owe the FED but the tax office as well?

[Abrak]

For those who are optimistic on UK house prices they can bet on the house price futures which are based on the Halifax Price Index. These currently forecast that house prices will fall well over 10% this year from GBP157k to about GBP130k. The company that trades the futures is called Tradition. I dont know enough about house prices in the UK to have a view.

[Chaimai]

For those who are optimistic on UK house prices they can bet on the house price futures which are based on the Halifax Price Index. These currently forecast that house prices will fall well over 10% this year from GBP157k to about GBP130k. The company that trades the futures is called Tradition. I dont know enough about house prices in the UK to have a view.

I must admit that I would avoid betting on anything that I had so little control over. The Halifax's track record on forecasting has not been too sharp over the years !

[AlexLah]

Okie, here a interactive graph of UK average house prices http://www.housepricecrash.co.uk/graphs-av...house-price.php

Indeed from the top it is around 18-20%, very interesting to see the differences per country.

But Chai maybe you remember that it was very shorthly in the news about this memo, I tried to find it back but they pulled up a new number that said something like 10-15% Will try and find back.

[lannarebirth]

question

USA banks are allowed to lend on depositors money

ie US$1 can be lent out to 12 people

so US$1 becomes 10 and loaned out at lets say 10%

now each loan return to the bank would be taxable

I have read that the caps were taken of this derivatives lending and so banks could lend up to 40 times

All of course with magic FIAT money

But at the end of the day there is taxes

so that $1 could attract, if lent out 40 times, huge tax

the banks were bailed out and so owe the bail money back to the FED

do they also owe taxes on this money as its their business if they made bad loans -

Am i correct in thinking that they not only owe the FED but the tax office as well?

You're not wrong in a broad sort of way if you don't look at specifics too much. However, I would say the leverage you're talking about is much more likely to be found in places like Europe than in the USA.

MOST banks in the US don't use anywhere near that kind of leverage. That's why MOST banks are in pretty good shape.

Edited May 29, 2009 by lannarebirth

[midas]

That sort of indicates that the "leaked" memo about a year ago about the prices in the UK would go down by 60% from its high seems correct?

No it most certainly doesn't ! It does show that these sort of posts from people like midas encourage people like you to think that such things are reality.

Let's look at the real world - the one in which I have to operate:-

There will, of course, be wide regional variations. But, in my area 'good houses' have lost 10% -12% of their value.

The average reduction in achieved sale prices is around 18%.

A poor property, in a poor location - or one where there is a distress sale - may lose 20% - 25%.

I can only speak from personal experience but my business has seen a 60% increase in revenue in the 3 months to 30th April (admittedly, Nov - Jan was dire). May has been the best month in over a year and, at the moment, we are struggling to handle the level of enquiries (exacerbated by the fact that it is more difficult and takes longer to place a mortgage because of the continuing restriction on credit).

Chaimai where do you see any improvement in UK employment conditions coming from - in which sector?

There doesn't seem to be much flexibility regarding the disposable income of Britons:-

" Growth in Britons' take-home pay fell for a fourth consecutive month in March to 2%"

http://www.thisislondon.co.uk/standard-bus...+low/article.do

Because of the sharp rise in government bond yields surely its just a matter of time until UK homebuyers are faced with

higher mortgage rates ?

So do you see your improved business conditions as being sustainable?

[AlexLah]

I guess Chai is one of the lucky as the approval rate for mortgages seems to have dropped by 60% if you look at the graph and stats on the site I mentioned

[midas]

Okie, here a interactive graph of UK average house prices http://www.housepricecrash.co.uk/graphs-av...house-price.php

Indeed from the top it is around 18-20%, very interesting to see the differences per country.

But Chai maybe you remember that it was very shorthly in the news about this memo, I tried to find it back but they pulled up a new number that said something like 10-15% Will try and find back.

Alex there was this article back in March which supports what you were saying ( well 5% short )

House prices 'could fall by further 55 per cent'

http://www.telegraph.co.uk/finance/economi...5-per-cent.html

[AlexLah]

Dammit! Off by 5%, totally unacceptable!

But this article is only from March 2009 and I very clearly remember there was a picture in some paper holding a memo to parliament in his hand warning for a possible 60% drop and it was somewhere beginning last year.

Now I am gonna dig deeper, grrrrrrrr!

[midas]

Alex i wouldnt worry.........a 5% discrepancy is acceptable

But another thing !

Some people in UK may be persuaded by slick estate agents the market has leveled off which entices them to

buy........but its another thing then for many to be able to hold onto that purchase

UK home repossessions climb yet higher

Friday 15th May 2009

As the number of homes repossessed in the UK continues to increase, the Council of Mortgage Lenders (CML) today revealed that 12,800 homes were repossessed in the first three months of 2009. While this was an increase of 23% on the previous quarter the like-for-like increase on the same period last year is a massive 50% as the UK property market continues to struggle.

However, while today's figures are bad enough it has also been revealed that the CML believes that in excess of 75,000 homes will be repossessed in the UK in 2009 alone, representing a substantial increase on the 40,000 homes repossessed last year. Whether this figure of 75,000 homes will be revised downwards as we progress in 2009 remains to be seen but at this moment in time there is little cheer in the UK property market.

As we have covered on a number of occasions, any substantial increase in home repossessions will place yet more pressure on the government's social security budget. A constant barrage of repossessed homes appearing on the market will also hold prices down at best and see further price declines at worst.

http://www.financialadvice.co.uk/news/9/pr...yet-higher.html

[churchill]

Why the obsession with UK house prices - I think there has been a world wide decline - Property prices in Thailand have declined along with the rest but as people start to reinvest - property and land will be high on the list - so I think prices are probably near their lows and due for a slow rebound .

[midas]

Why the obsession with UK house prices - I think there has been a world wide decline - Property prices in Thailand have declined along with the rest but as people start to reinvest - property and land will be high on the list - so I think prices are probably near their lows and due for a slow rebound .

Your opinion is directly opposite to that mentioned in many resources and by those involved in the industry.

Would you care to post some evidence to back up your claim other than " I think "

[AlexLah]

Found some interesting confidential writing about Gold, not directly related but maybe if this thread is archived future generations can find it more easy

Here ya go, just 5 pages easy read.

16.pdf

[churchill]

Why the obsession with UK house prices - I think there has been a world wide decline - Property prices in Thailand have declined along with the rest but as people start to reinvest - property and land will be high on the list - so I think prices are probably near their lows and due for a slow rebound .

Your opinion is directly opposite to that mentioned in many resources and by those involved in the industry.

Would you care to post some evidence to back up your claim other than " I think "

'I think" indicates it my opinion - whether right or wrong this is a discussion board and even if I did bother to find somebody to back up my opinion on the internet , which I am sure I could , what is the point .

We all have experiences and that is what we are expressing not a statement with proof from the times , telegraph or sun .

[AlexLah]

How's about reading the actual document, would that do?

[flying]

There she goes..................

Broke 80

Hard to hold up dollars when there are so many more these days

[Naam]

Why the obsession with UK house prices - I think there has been a world wide decline - Property prices in Thailand have declined along with the rest but as people start to reinvest - property and land will be high on the list - so I think prices are probably near their lows and due for a slow rebound .

Your opinion is directly opposite to that mentioned in many resources and by those involved in the industry.

Would you care to post some evidence to back up your claim other than " I think "

'I think" indicates it my opinion - whether right or wrong this is a discussion board and even if I did bother to find somebody to back up my opinion on the internet , which I am sure I could , what is the point .

We all have experiences and that is what we are expressing not a statement with proof from the times, telegraph or sun.

excellent rebuttal Churchill !

[Naam]

Please show your source that undoubtedly proves that the US is the economic power number one on this planet.

you've undoubtedly started getting extremely ridiculous Alex. when will you comprehend that i am not doing other people's homework except in those cases where i feel it's worthwhile?

[jcon]

Okie, here a interactive graph of UK average house prices http://www.housepricecrash.co.uk/graphs-av...house-price.php

Indeed from the top it is around 18-20%, very interesting to see the differences per country.

But Chai maybe you remember that it was very shorthly in the news about this memo, I tried to find it back but they pulled up a new number that said something like 10-15% Will try and find back.

Good lord.

That graph shows NOTHING. To the 'sky is falling' crowd who reads that site, their 2 brain cells might think, 'oh good lord look how expensive housing has become.' <deleted> that graph starts in NINETEEN-SEVENTY-FREAKING FIVE.... it indicates nothing except possibly a confirmation that inflation has been averaging 3% since 1975 - which is NOT the sky falling. Do the math.

I realize maybe some people haven't studied (or in this thread, even heard of) economic theory, but that is Econ 101 (ok, actually 102 since it's macro). But come on, this is the 'Financial Crisis' thread, not 'Housewives looking at graphs and freaking out' thread, so I would think that members would have some sort of clue.

I'd be more concerned about the rise in tuition prices or health care than of the freaking housing market in the UK which has been beaten to DEATH.

http://www.law.umich.edu/historyandtraditi...ion_History.pdf

So the non-resident law tuition here was 1,440 USD per semester in 1975. It's 22,155 USD now per semester. Graph that. That will blow that useless house price graph out of the water. At that rate, the houses would be over 900K GBP. Should I start a website called TuitionPriceCrash.com now?

How much was a litre of petrol in 1975? Bread? ANYTHING? (I wasn't even born yet). I guarantee all other things have inflated way beyond the prices of homes in the UK on a percentage basis (save me the 'technology' argument, please). So if you want to freak out about something, it's not housing prices.

Plarex, are you scare-mongering now? Seriously. Get a grip.

[AlexLah]

Jcon if you are following the thread I was just referring to the difference in housing price fall, between countries, no conspiracy here.

Have you been smoking something?

[midas]

Wave of commercial property failures predicted

A wave of failures in the commercial property market has been predicted by one of the UK's leading restructuring experts.

Richard Fleming, UK head of restructuring at accountant KPMG, said that property failures to date are just the "tip of the iceberg".

Mr Fleming said: "Our work on the JJB [sports] CVA and the Lehman real estate portfolio in Asia has given us an insight into what we think is just the tip of the iceberg. We predict a wave of fallouts in the commercial property market as the true value of losses becomes apparent."

He added that the restructuring that would be required in the commercial property market could be "the next big milestone in this recession".

"With the June quarter day fast approaching and with £43bn of debt repayments falling due this year, we could well see a very busy period of activity," he said

http://www.telegraph.co.uk/finance/newsbys...-predicted.html

[midas]

Jcon if you are following the thread I was just referring to the difference in housing price fall, between countries, no conspiracy here.

Have you been smoking something?

Or maybe the thin air up on Level 63 is affecting him

[Naam]

How much was a litre of petrol in 1975?

where i lived in 1975 one liter was offically 4.5 US-Cents . but reality was different and the actual price/liter fluctuated based on how much one filled up respectively the tank capacity of the car. a flat rate of (equivalent) 3.50 dollars plus 1 dollar customary tip was charged no matter whether 10 or 100 liters were pumped. those were the days!

[flying]

Today I was wondering how the GM deal will affect TL & got side tracked.

Seeing that this fake/ bankruptcy of GM seems imminent.............

I say fake because as we all know it is not legit & has not followed the constitutional laws regrading bankruptcy here in the US.........No creditors are getting a crack at them.....Nor is anyone being allowed to bid on whats left.

So as of Monday the Govt will own 70% of GM so basically the Govt owns it.

That aside..........How many companies does the US gov now going to own?

Fannie Mae

Freddie Mac

AIG

CITI

GM

Any others?

Any ideas of how this will work?

Just curious.....

At the end of the day should we ( USA citizens ) be worried?